Constitution of confidentiality club for Telecom Patent dispute resolution

The Delhi High Court in a recent decision has allowed an application of the plaintiff, Ericsson to constitute a Confidentiality club (See decision  here- )Ericsson v Xiaomi- Confidentiality Club Order (2). Ericsson had filed a suit for permanent injunction against the defendants, XIAOMI seeking a restrain from violation and infringement of its rights in its patents being as (i) IN 203034; (ii) IN; (iii) IN 234157; (iv) IN 203686; (v) IN 213723; (vi) IN 229632; (vii) IN 240471; (viii) IN 241747. The said suit is pending adjudication before Delhi High Court and is currently at the initial stages of trial.

Ericsson filed an application seeking constitution of confidential club. It was argued by Ericsson that the court has to determine as to whether Ericsson has offered to XIAOMI a licence on fair, reasonable and non-discriminatory (FRAND) terms and whether Ericsson is entitled to damages or payment of royalties from the Defendants for sales made by it devices infringing Ericsson’s patented technology and if so, for what period and on what terms. It was further argued that in order to assist Court, Ericsson would be producing various patent licensing agreements with similarly placed parties, including competitors of the Defendants. These agreements are highly confidential in nature and contain, apart from licensing rates, business sensitive information relating to such similarly placed parties, hence the plaintiff is seeking constitution of confidentiality club wherein all confidential licence agreements relating to similarly placed parties be permitted to be filed in sealed cover and be kept in the safe custody of the Registrar General and its access shall be to limited personnel from either side.

The defendants were not averse to the constitution of such confidentiality club but pressed the defendant/clients be allowed to be a party to such club or to have an access to the information.

The Court appreciated that in today’s world of globalization, where competition is at its peak, the organizations may not be inclined to disclose trade secrets/confidential agreements or its details, it had entered with different parties lest may cause serious prejudice to such parties. Hence the Court held that there is no impediment if the confidential club is created and its access is limited with procedure to be adopted as below :

  1. All confidential license agreements relating to similarly placed parties be permitted to be filed in a sealed cover and be kept in the safe custody of the Registrar General;
  2. Each party be directed to provide on an affidavit, a list of no more than five lawyers (who are not and have not been in-house lawyers of one of the parties) and no more than three external expert witnesses, who alone will be entitled to see the aforesaid confidential documents/patent license agreements;
  3. Said lawyers and expert witnesses will be bound by confidentiality orders passed by this Court and will not make copies or disclose the contents of the said aforesaid confidential documents/patent license agreements to anyone else or anywhere else, including in other legal proceedings, oral and written communications to the press, blog publications etc., so that the spirit of the confidentiality regime would be preserved;
  4. The parties i.e. the Plaintiff and the Defendant No.l and Defendant No. 2 will be allowed to inspect said patent license agreements only through the confidentiality club members and no copies will be made of such confidential documents/license agreements. After the inspection, the aforesaid confidential documents/patent license agreements be resealed and again deposited with the Registrar General of this Court;
  5. Direct that during recordal of evidence w.r.t aforesaid confidential documents/patent license agreements etc. only members of the confidentiality club shall be present;
  6. During proceedings of this Court, when the said documents are being looked at, would be in camera to the effect that only members of the confidentiality club be permitted to be present.
  7. The parties would give copies of the aforesaid confidential documents/patent license agreements to the members of the confidentiality club only after redacting the confidential information including the name of the parties. However, the rates/products will not be redacted.
  8. Any evidence by way of affidavit/witness statement which may contain aforesaid confidential information/terms of the agreement(s) shall be kept in a sealed cover and would only be accessible to the members of confidentiality club. However, a party filing such evidence by way of affidavit would give to the opposite party a copy of such affidavit after redacting the confidential information/ terms of the agreement(s);

 

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Dolby sues Oppo and Vivo

Dolby has sued two Chinese phone manufacturers, Oppo and Vivo, at the Delhi High Court stating that the two companies are using Dolby’s SEPs without a license. The Hon’ble Delhi High Court has held the following: –

  1. That Oppo and Vivo shall deposit royalty with the Court @ INR 34 per unit manufactured/sold/imported by 8th of every succeeding month.
  2. That Oppo and Vivo shall furnish details of the units manufactured, sold and imported, to Dolby by 5th of every month.
  3. That Oppo and Vivo shall continue to manufacture, sell and import their units in the interim while licensing negotiations based on Fair, Reasonable and Non-Discriminatory (FRAND) terms between the parties is ongoing.

Ericsson on a spree of favourable orders

Delhi High Court passed an interim injunction order in the ongoing case of Telefonktiebolaget LM Ericsson v. Lava International Ltd that prevents Lava from importing, exporting, manufacturing, and selling any mobile phones that use Ericsson’s 8 SEP patents and technology.The defendant is also barred from exporting the impugned goods. The Custom Authorities have also been directed to not release the impugned mobile phones if received from overseas countries under technology of suit patents of the plaintiff. 

The interim order, which is passed on merit, directed defendant to  deposit a sum of Rs.50 crores with the Registrar General of the Court by way of FDR as security amount on or before 20th June, 2016, the operation of interim order shall remain stayed till the final disposal of the main suit. In addition to that, the defendant was also asked to file the statement of accounts for the period of 2011 to 31st May, 2016 before Court by 10th July, 2016 and continue to file the same every quarterly till the final judgment is delivered in the main suit.

Section 3(k)

With regard to Section 3(k), the Court held that, the ultimate object of the invention is an efficient encoder rendering the synthesized speech quality in relation to radio resource needed for transmission is as high as possible. The Court noted that the speech quality is an effect perceptible by the humans and is not just as abstract entity. The judge pronounced that:

 “Prima facie, it appears that these inventions which have resulted in an improvement (technical advancement) in telecommunication technologies and have had a huge effect upon the manner in which these technologies function thereby resulting in practical implementation and actual physical representation Mere mention of an algorithm or a mathematical formula in a patent document should not be inferred to mean that the invention is nothing but an algorithm. The similar issue has already been dealt by this court in a suit filed against INTEX in great details wherein the arguments of doubtfulness were rejected. Thus, no different view is possible in the present case.”

The Court also held that product patents cannot be labelled as algorithm because they are not a set of instructions and are not theoretical in nature. The Court further held the defendant has failed to raise any credible challenge to the suit patents.

As regards the licence agreement, the Court held that the defendant has been consistently delayed execution of the agreement with the plaintiff and in such a case, unlike in trademark and copyright matters, the infringement ought to go in favour of the plaintiff. The Court also held that the plaintiff has been trying to correspond and negotiate with the defendant for the past 4 years and that itself is a huge factor that militates any grant of further time to the defendant , especially in cases of standard essential patents, where a patentee always endeavors to negotiate before filing for an injunction. Moreover, it was held that the fact that the defendant was aware of the plaintiff’s patents but did not challenge the validity goes in favour of injunction.

iBall restricted from importing handsets to India;Ericsson directed to negotiate FRAND license with iBall

The Delhi High Court restricts imports by iBall including mobile handsets and tablets in Ericsson vs. iBall interim order. This is similar to the case filed by Ericsson against Micromax, in which the court had ordered the Indian handset maker to pay royalty as an interim measure.

In the present case, it has been established in the court of law that iBall has failed to agree to sign a license agreement on standard-essential patents, required for making mobile phones and other devices. It was also established that iBall has not entered into a licensing agreement under the Fair, Reasonable, and Non-Discriminatory (FRAND) terms (covering patents on wireless technology standards such as GSM, EDGE and third generation).

Hence, on the day of the hearing on August 21, 2015, the lawyers for iBall sought time to take instructions from their client to decide if it was willing to sit with the  representatives of Ericsson and discuss the matter. However, no communication was received from iBall till September 2, 2015. iBall , in its defence also cited the recent Huawei vs ZTE decision to argue that Ericsson had not provided enough information and thus the suit could not proceed.Ericsson alleged that iBall had admitted the essentiality of Ericsson’s patents numerous times in its complaint to the CCI.

The Court, however pronounced that the suit filed by Ericsson is not premature and is maintainable. It further held that if the interim direction/order is not granted, Ericsson will suffer irreparable loss and injury for the reason that iBall will keep marketing mobile devices without the FRAND agreement and without paying royalty.It also restrained iBall from importing mobile handsets and other devices (including tablets) that infringe Swedish telecom equipment manufacturer Ericsson’s registered patents.The interim order was to become operative beginning 9th September.

However, an appeal was then filed by iBall against the interim order.The Appeal Court has directed the parties to try and reach a settlement in about 2 weeks.Ericsson has been directed to negotiate a FRAND license with iBall only for its Indian patents at this stage.The operation of the interim injunction has now been postponed till the next date of hearing as well.The appeal was re-notified to September 21, 2015.