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.

Registration of license/assignment deed under the Patent Acts –Not mandatory for Validity

In an interesting twist, a division bench of the Delhi High court in a cross-appeal between Sergi Transformer and CTR Manufacturing Industries Ltd., held that it is not mandated for a license/assignment to be registered for it to be valid. The license/assignment would be valid the moment it is executed and the non-registration thereof does not invalidate the same. At the prima facie stage, the court can always refer to the assignment deed without formal proof thereof.

The Hon’ble court further held that the learned Single Judge on 16 April, 2014 in the case ‘Sergi Transformer Explosion vs. Kumar Pratap Anil & Ors.’ has erred in holding that the exclusive license agreement is not to be considered in evidence by the Court and the benefit of the document for the purpose of seeking relief in a case of infringement would accrue as and when the said document is registered in the office of the Controller.

In order to understand the aforementioned, the scope of Section 68 was analysed by the court. The Hon’ble Court drew a comparison between Section 68 as it stood prior to the year 2005 amendment and as it stands post the 2005 amendment. The comparison showed that an assignment had to be registered for it to be valid prior to 2005 . The amended Section 68 however does not mandate that that an assignment  has to be registered for it to be valid. The amended provision requires that the assignment should be in writing and the agreement between the parties is reduced to a form of a document embodying all the terms and conditions governing their rights and obligations and duly executed.

The Hon’ble court also noted that the Parliament has specifically excluded from the amended provision the words ‘and the application for registration of such document is filed in the prescribed manner with the Controller within six months from the commencement of this Act or the execution of the document, whichever is later or within such further period not exceeding six months in the aggregate as the controller on application made in the prescribed manner allows’.

The fact that the above words have been omitted from Section 68 clearly shows that registration is not mandatory for an assignment to be valid,  and the limitation for applying for registration has also been done away with. This clearly shows that under the amended provision there is no period prescribed for making an application for registration of the agreement. The omission of the proviso to section 68 prior to its amendment i.e. ‘PROVIDED that the document shall, when registered, have effect from the date of its execution’ shows that he registration was a must prior to the amendment for the document to be valid and once registered, the assignment would be valid from the date of its execution. Post deletion, registration is not a pre-condition for the document to be valid and the assignment is valid from the date of its execution. In light of this, in the present case, the licence agreement was stated to have been executed on 01.08.2006 and  the application seeking registration has been filed with the Controller of Patents on 15.03.2010. The suit has been filed on 06.08.2010.

The Hon’ble court further held that for consideration of an application under order VII rule 11 of Civil procedure Code (CPC) what is relevant is that prima facie it is seen whether there is an assignment deed in terms of section 68 of the Act. Further, merely because the document is not registered on the date of the filing of the suit does not ipsofacto imply that the suit would not be maintainable. The fact that a document has been set up by the plaintiff stating the document to be a licence agreement, the plaint cannot be rejected at this stage under Order VII Rule 11 of the CPC.

In addition to that, reading of Section 69(5) shows that the said provision does not completely prohibit the admission of a document by Controller or by any Court as evidence of title under each and every circumstance. The court or the Controller before whom an unregistered licence agreement is produced as an evidence of title is empowered, for reasons to be recorded in writing, to accept the same as an evidence of title. Admissibility of such an agreement is not completely prohibited. The Court or Controller are empowered to admit such an agreement in evidence even though the same may not have been registered with the Controller of Patents. Prima facie it cannot be said that the document i.e. a deed of assignment would not be admissible under each and every circumstance in the absence of registration. At the prima facie stage of consideration of an application under Order 39 Rules 1 and 2 of the CPC for grant of injunction or otherwise, the court would be empowered to take into consideration the same as a document of title.