I provided an overview of the 21 February 2024 Delhi High Court judgment in the earlier post. I will analyse the judgment in this series.
Broadly speaking, I am unable to agree with the concept of providing an interim deposit when there is a clear timeline in place for completing the trial. The award of interim deposit, when the Court has not even conducted a prima facie review of the case, is counter-intuitive.
I pose questions (rather than offer comments) with regard to the Court’s approach on bank guarantees.
This post does not, in any manner, get into the arena of willingness or unwillingness of defendants to enter into a licensing agreement. That is a different matter altogether. It may be the case that the defendants are unwilling licensees. But my concern is about the procedural fairness and I am trying to evince the same through this post.
Background
The Petitioner, InterDigital (“ID”), initiated patent infringement proceedings against Oppo, One Plus and Redme (“defendants”) concerning 8 standard essential patents. These patents concern wireless communication technology standards (IN 262910, 295912, 313036, 319673, 320182) and H.265 high efficiency video coding standards (IN 242248, 299448 and 308108).
The negotiations between ID and defendants commenced in October 2014 (para 10). Initially, ID held one-to-one discussions with OnePlus (commenced in 2018), Oppo (commenced in 2014) and Redme (commenced in May 2021). The parties commenced joint negotiations in 2021. Since parties could not arrive at a settlement, ID initiated patent infringement proceedings against the defendants in UK, Germany and India.
By consent order dated 6 October 2022, Oppo submitted bank guarantees issued by HSBC-Paris. The High Court directed HSBC- India to confirm the bank guarantee; to which HSBC-India objected on the ground that HSBC-India and HSBC-Paris are two different entities. The High Court took the stand that “… the original bank guarantees, which may be in possession of InterDigital and are subject to the jurisdiction of German courts or other Courts, cannot serve as security for InterDigital in India (para 34).” The Court directed the defendants to provide an interim deposit for the years 2021 – 24 within a period of 3 months commencing on 21 February 2024 (para 34, 43).
The Court also imposed INR 5 lakhs upon the defendants for causing delay. The Court envisaged the completion of trial by the end of 2024. If the trial spills over to 2025, the defendants will have to bear the cost for that as well.
Comments
Style and Structure of the Judgment
It is a lucid judgment.
Interim Deposit
Many SEP disputes are multi-jurisdictional in character. As far as I know (I am open to be corrected), there is no jurisdiction that awards pro tem (interim) deposits without conducting a prima facie review of the case. The High Court judgment refers to the earlier judgment of the Delhi High Court in Nokia v. Oppo (2023) – where procedural delay is cited as a reason for directing the implementer to provide interim deposits without prima facie review.
On the one hand, procedural delay is a real concern. But if the timelines are strictly adhered to, then the need for providing interim deposit becomes otiose. In the given case, the Court has clearly laid down the timelines. The Court had earlier envisaged the completion of trial by the end of 2023. The revised deadline is now towards the end of 2024.
If timelines are clearly laid down as in the given case and the party causing the delay has to pay a heavy cost for its conduct (especially in terms of inviting the judicial wrath for breaching the timeline), what is the legal basis for providing an interim deposit when there is not even a finding of prima facie case against the defendants? What about the opportunity cost associated with making of interim deposit if some of the concerned patents are later held to be invalid? For example, the Swedish Patent and Market Court invalidated two of Nokia’s standard essential patents which were the subject-matter patents in an earlier litigation in Germany.
I believe, the above policy questions militate against the concept of providing interim deposit – especially when they are awarded without even conducting a prima facie analysis.
(Will be continued..)
