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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Non-compliant defendants face permanent injunction

DSM Sinochem Pharmaceuticals has been granted permanent injunction against Sinopharma Weiqida pharmaceuticals as the defendants failed to timely submit the defense (written statement) and pay the costs imposed by the Court.

The Plaintiffs DSM Sinochem Pharmaceuticals sued Sinopharma Weiqida pharmaceuticals for permanent injunction to restrain them from using , manufacturing , distributing, selling, offering for sale or dealing directly or indirectly in API Amoxixillin Trihydrate produced by a process that amounts to infringement of Indian Patent number 247301, or a formulation thereof.

The defendants did not file the written statement inspite of three opportunities and did not pay the costs imposed by the court. During a hearing on 16th May 2017, the counsel of the Defendants said that the written statement is ready, an advanced copy of which would be handed over to the counsel of the Plaintiffs and the cost imposed would be remitted in the course of the day.  The matter was listed for the next day, provided an additional cost of 50,000 is paid.

During the hearing on the next day, the Court observed that no written statement has been filed nor the cost imposed on the Defendants has been paid. Considering the same, the Court closed the rights of the Defendants to file a written statement. The Plaintiff’s in the absence of any challenge to its patent was considered to be entitled to a decree of permanent injunction in its favour.

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.

Concealment of material fact by Ericsson and vacation of injunction on Xiaomi

The Delhi High Court on April 22, 2016 revoked the interim injunction on Xiaomi in the ongoing patent tussle with Ericsson in India. The Court in its judgement has pronounced that there was a greater onus on Ericsson to disclose the material fact- in this case the Multi Product License Agreement which it had with Qualcomm, especially when it was seeking an injunction ex-parte.

On December 9, 2014, the Delhi High Court (DHC) had passed an interim order ordering an interim injunction against Xiaomi.  The Division Bench of the DHC had then allowed Xiaomi allowed to sell its devices subject to certain conditions – to only sell Qualcomm based devices and not Mediatek-chipset based devices.

However, this development emerged as a result of Xiaomi telling the court that it had already got a license for patents (Ericsson’s 3G patent -; IN229632 and IN240471) through Qualcomm, which had in turn secured license from Ericsson. Xiaomi averred that Ericsson had deliberately suppressed the existence and contents of Multi Product License Agreement which it had with Qualcomm wherein Ericsson had granted license in respect of some of its patents to Qualcomm to make, use, sell and import and therefore, the claim of Ericsson that it is not getting royalties is moot. Moreover and additionally, Xiaomi also averred that Ericsson was fully aware that Xiaomi was using Qualcomm’s chips especially in view of the documents and the fact that testing was conducted on a device using Qualcomm’s chipsets.

The battle continues…

For those of us who thought that Roche vs CIPLA dispute concerning Erlotinib Hydrochloride was over following from the findings by the Division Bench, here is an update –  CIPLA has now filed a SLP before the Supreme Court of India.

Stay tuned for more updates on this segment.

SWEET VICTORY FOR ROCHE -VALIDITY OF PATENT UPHELD; INFRINGEMENT OF PATENT ESTABLISHED

In another landmark judgement by the Delhi High Court towards expounding and interpreting the Patent law in India in F-Hoffman La Roche vs CIPLA_2015, the Court not only upheld the validity of the suit patent but also ascertained that the patent is being infringed.

The suit patent (IN196774) was granted in February 2007 by the Controller of Patents, covering patent rights over Erlotinib Hydrochloride molecule which demonstrated breakthrough capabilities as an Epidermal Growth Factor Receptor (EGFR) inhibitor which spiked survival benefit in cancer including non-small cell lung cancer (NSCLC) patients.

This decision is in respect of the appeal/cross-appeal filed against the order of the Single Judge, Justice Manmohan Singh of the Delhi High Court. The Division Bench in the appeal reversed the finding of the Single judge and held that as CIPLA’s Erlocip, admittedly one particular polymorphic form of the Erlotinib Hydrochloride compound (Polymorph B) clearly infringes the IN ‘774 patent. Further, the Bench maintained the finding of the Single judge in terms of validity of the patent. The patent is considered to be non-obvious and complaint with section 8 of the Patents Act.

However, keeping in view of the fact that the life of the patent is soon to expire in March, 2016, the Bench did not grant an injunction as prayed for by Roche against CIPLA, keeping in view that there is no interim injunction enforced against CIPLA. Roche has also been awarded cost of Rs. 5 lakhs.

A detailed analysis of the order will follow shortly.

GENERAL PRINCIPLES OF PATENT INFRINGEMENT RE-ESTABLISHED BY BOMBAY HIGH COURT

In a recent order of Bombay high Court in CTR Manufacturing Industries Limited vs Sergi Transformer Explosion Prevention Technologies Pvt. Ltd, Hon’ble Justice G. S. Patel re-established the general principles of a patent infringement as follows:

Claim Construction

 In a combination patent, the invention cannot be a mere arrangement or rearrangement of previously known integers all functioning independently in a known way. These integers, though all themselves previously known, may be combined in a previously unknown way, acting inter-dependently, each of them essential, to produce a new and improved result. Each of the integers must be essential. If indeed any one of the integers can be taken out without affecting the final result, it is not essential.

Additionally, if a patent claim is overbroad by including every single non-essential and essential addition, then the patent may be prima facie invalid for want of novelty. No person can claim such a monopoly as would result in a bar to future improvements. If the patent is, on the other hand, so narrow that it excludes the addition of another essential integer, then there is no infringement.

Further, where a patent has been granted on the patentee disclaiming a particular integer, i.e., by saying it is not essential to his product, then the addition of that nonessential integer does not, per se, defeat the claim for infringement. It must be shown that the additional integer is essential, required and returns a result that is as or more efficient than that produced by the patent. Adding something superfluous to the essential integers does not defeat an infringement claim. It must be shown that what is added is also essential and that it satisfies the previous tests of interdependency, producing as good a result or a new and improved result. The patent must be read in a purposive manner to determine what constitutes its ‘pith and marrow’.

Validity

 At an interim stage, a Court is not required to examine the validity of a patent so much as its vulnerability; and this is to be tested not on a mere say-so, but with the aid of cogent and persuasive technical and scientific material, including reliable expert opinions and other data.

Further, the fact that a patent has been granted is not wholly immaterial at an interim stage. While the grant is not a complete answer to a charge of prima facie invalidity or vulnerability, it is still a factor to be considered and given appropriate weight.

The speed of grant of a patent is wholly irrelevant, particularly if it is made without a substantiated (and substantial) case on illegality and malafide intentions.