India’s smartphone patent war rages on, and its latest development is Ericsson’s provisional victory over Lava. The Delhi High Court passed an interim order in the ongoing case of Telefonktiebolaget LM Ericsson v. Lava International Ltd. which, operative from the 21st of June 2016, is an injunction order that prevents Lava from importing, exporting, manufacturing, and selling any mobile phones that use Ericsson’s patents and technology. Although this is binding only until a final order is passed, it seems unlikely that much of the order will be altered.
We have blogged extensively about Ericsson’s disputes with Micromax, Intex, Xiaomi and iBall, and here – in an order strikingly similar to his judgement in the Intex case, (read Kartik’s posts on the order here and here), Justice Manmohan Singh found in Ericsson’s favour in almost all counts. Interestingly, this case dealt with exactly the same suit patents as in Intex – and related to: GSM (5 AMR), EDGE(1) and WCDMA/3G (2) technology.
Due to this, it is difficult not to view the case to be, in effect, an appeal against the Intex order, as it concerns the same patents, and is being heard by the same judge. It is then not surprising that Lava has consistently maintained that their case was to be differentiated from Intex, and an impartial view needed to be taken. In this post, I discuss Justice Manmohan’s interim order in the Lava case, as well as compare it with his holding in Intex.
Essentiality of Patents
Ericsson’s main allegation was that Lava’s phones utilize eight of its Standard Essential Patents (SEP’s), and that this was a clear case of infringement as there was no licensing agreement in place. The Court began with affirming that Ericsson was the undisputed owner of the registered suit patents, and then turned to the question of whether the patents were in fact, SEP’s as claimed by Ericsson.
While Lava’s defense was largely built on the fact that Ericsson had not furnished the correct technical specifications, the Court disregarded their arguments, as well as the expert witnesses provided by them, due to the material placed on record by Ericsson. The Court found that Ericsson had sufficiently built a prima facie case to prove the essentiality of the suit patents, by setting out the relevant standards, mapping said standards with claims, carrying out requisite tests where implementation was optional, and where it was necessary – providing expert affidavits.
In a manner reminiscent to Intex’s arguments before the CCI, Lava had instituted a suit in the Noida District Court, where they admitted Ericsson’s patents to be SEP’s in their plea to the Court to direct Ericsson to grant them an irrevocable license for the patents on fair, reasonable, and non-discriminatory (FRAND) terms. Such an admission went against their arguments in this present suit, just like as it did for Intex – who, in their complaint to the CCI had accused Ericsson for abuse of dominance, and admitted the essentiality of the very patents they refuted in their suit before the Delhi High Court.
In the Intex judgement, Justice Singh concluded in much the same manner – he found Ericsson to have placed sufficient material on record in order to establish infringement as well as the proof of essentiality of the suit patents, in the form of claim chart mapping that was supported by expert affidavits, along with test reports. He noted that Intex, in comparison, had failed to file any technical or scientific material to show even a prima facie case of invalidity or non-essentiality of the suit patents. Where Justice Singh slightly differed was where he had held Intex’s submissions to the CCI to have rendered their arguments regarding ownership and essentiality before the Court to have ‘no force’, he did not take as strong a view of Lava’s submissions in their Noida suit.
In correspondence that began in 2011, the Court noted that Ericsson had approached Lava to enter into a licensing agreement for the SEP’s in question, after which several meetings took place between the parties. The Court recognised Lava’s continued requests for technical information relating to the patents even through Ericsson had, in their opinion, provided all that was required of them. The Court went on to note that Lava’s conduct amounted to nothing but a means to delay the execution of a FRAND license, and signified their unwillingness to conclude the same.
In stark contrast to Ericsson’s abuse of dominance – CCI dispute that is yet to be concluded, the Court importantly noted that it was Lava who had an unfair advantage in the market, by delaying FRAND determination, and not paying Ericsson royalties as Micromax, Gionee, Xiaomi and IBall currently are. This led the Court to conclude that Lava was an unwilling licensee, in light of their conduct in the negotiations, something that Justice Singh had labelled Intex to be as well.
With regard to Section 3(k), the Court dismissed Lava’s arguments of the patents being nothing but algorithms and hence not patentable. Following the Intex order, the Court held that the bar of 3(k) does not apply when algorithms are employed by hardware components to produce a technical function. The Court went on to state that the suit patents were not computer programmes per se, abstract algorithms, or mathematical methods, and that prima facie, the inventions had resulted in an improvement, a technical advancement, and resulted in actual physical representation.
Although Lava is not party to the CCI dispute, the decision would have major ramifications for them, as well as any other smartphone company in use of Ericsson’s patents. Another important development to be kept in mind in Ericsson’s unfolding SEP saga is the fact that the Delhi High Court found Ericsson to have concealed information pertaining to royalties that they were receiving from Qualcomm for two of the patents involved in this dispute as well. Such a charge must not be overlooked, and ideally should have been given more weight in the Lava order. Justice Singh merely mentioned it in passing, and even disregarded the Ericsson-Qualcomm agreement as relevant to the Lava dispute, as it was limited in scope, and could not be interpreted to exempt companies from entering into licensing agreements with Ericsson.
Since this case does not bring up new jurisdictional points, and mainly reiterates what was held in Intex, it will be interesting to see if there are any changes in the final order. While the Court had ordered Intex to pay 50% of the royalties from the filing of the suit to Ericsson, it is slightly strange that the Court only mandated that Lava pay fifty thousand rupees to be deposited with the Prime Minister’s National Relief Fund, besides passing the injunction order. The Court also provided Lava with the option of depositing fifty crores with the Court as security before the 20th of June, 2016, which would suspend the interim order until the case is finally decided upon; and directed Lava to file quarterly statements of accounts with the Court until the final order is passed.
The original order is available here. Hat-tip: Mr. Shiwprasad Wanve for bringing this case to our attention!
(Image taken from here)