DVDs are long gone from our markets, yet their SEPs continue to be on pause, play, rewind!
A momentous decision has been delivered by the Delhi High Court today – a big, refreshing and important update for the developing standard essential patent (SEP) jurisprudence. The division bench decision comes from Justices Hari Shankar and Om Prakash Shukla and is a turning point in the decade long SEP litigation between Philips and Rajesh Bansal. The case was among the initial SEP litigations before the Indian courts and had resulted in the first post-trial Indian SEP judgement. Will the new, seemingly landmark, observations once again change the game?
First, a quick recap of the facts. Philips has alleged infringement of its DVD-related SEP (Indian Patent IN-184753) through defendants’ importation and sale of standard-compliant DVD players. The Defendants, father and son Bansal, imported the components from China and assembled the DVD players in India. In 2018, the Delhi High Court held in favour of Philips, eight issues were framed and the decision was based largely on essentiality certificates of corresponding US and EU patents and evidence of the plaintiff’s witness. Defendants argued against such blind reliance on foreign documents and that there was a lack of proof that the technology was in fact disclosed in the patent claims. The Bansals also challenged the validity and essentiality of the suit patent, argued of a lack of adequate claim mapping and sought protection under the patent exhaustion doctrine. The decision became an initial precedent in the Indian SEP jurisprudence, but was criticised for its general lack of analysis and inconsistent punitive damages calculation.
A set of long posts analysing the details of the new 150-page judgement will definitely be out soon; for now, here are the key takeaways. In the appeals, the Bansals have continued their challenge to the SEP status of the suit patent, argued for non-infringement in their business activities, international exhaustion of patent rights and arbitrary quantification of damages. The court spends significant ink (a total of 25 pages) yet again detailing what SEPs entail; it then moves on sequentially to all the core issues.
SEP: Swathi Sukumar argued for the Defendants that foreign patents offered for comparison were methods patents while the Indian patent was a product patent that pertained to one component of the DVD player. Philips membership of a relevant SSO was also questioned. The DB agreed that the suit patent was vague in that the title and claims did not match the description. Further, no person related to the essentiality certificates was presented and examined as a witness. Authors of expert evidence were required to be available for cross-examination. The suit patent was not proved to be essential, and hence, could not be considered an SEP.
Infringement: The DB found that Philips made no attempt to map the suit patent onto the standard allegedly set by the DVD Forum, failing the indirect test of infringement. The Plaintiff’s main evidence forwarded by a technical expert could not be relied upon since he did not testify or was deposed, in examination-in-chief, to the correctness of the assertions in the affidavit.
Exhaustion: MediaTek was an authorised licensed dealer/seller in China. Shauntak and Sheen Land were registered vendors of MediaTek. From the latter, the Bansals imported their supplies. Section 107A(b), inserted by the Amendment of 2002, specifically provides, “importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product, shall not be considered as an infringement of patent rights.” The DB agreed.
Comparable Licenses & Damages: In the last couple of years, the DHC has shown its preference for comparable licences and/or top-down royalty rate calculation. While the court these days often does ask for industry-based data, in 2018, it had made no such demand. In the appeals, the fact of the lack of comparable licenses takes ground. More importantly, this court finds a total lack of the FRAND negotiation protocol. The DB agrees that the calculation of damages on a per-device basis was wrong. Instead, the royalty rate should have been decided on a per-chip basis.
The timing of this appeal is such that it takes obvious benefits from the SEP precedents that have been delivered in the course of the pendency of this particular suit. The Philips patent is not an SEP; neither the direct, nor the indirect test of infringement has been satisfied; principle of evidence law assume a central place in the ruling, as do basic principles of FRAND behaviour and royalty calculation.
Stay tuned for full analysis and more updates! In the meantime, while we put together our details, readers are most welcome to share their thoughts in the comments.
