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.

DELHI HIGH COURT REFUSES TO STAY ANTI-COMPETITIVE INVESTIGATION AGAINST ERICSSON

The Delhi High Court judgment by Justice Vibhu Bakhru released on March 30, 2016 states that the Competition Commission of India (CCI) can continue to carry out its investigation into Ericsson’s apparent anti- competitive practices.

Facts of the case:

  1. Micromax and Intex had complained to the CCI about Ericsson’s abuse of dominancy by way of demanding huge amount of royalties in respect of the SEPs that it holds, refusing to disclose licensing terms with other licensees and aggressively enforcing their patents to force parties to settle on unfavourable licensing terms.
  2. Ericsson moved the Delhi High Court to prevent this investigation and quash CCI’s order. Ericsson claims that its SEPs are being infringed by Micromax and Intex.
  3. Ericsson contended that any issue regarding a claim for royalty falls within the scope of Patents Act, 1970 and not under the Competition Act.

Judgment and teachings:

    1. The Patents Act is a special legislation compared to the Competition Act for patents and provides for prevention of abuse of patents under Chapter XVI and Section 140.
    1. However, the Patents Act and the Competition Act can be harmonized as :
  • They provide different remedies.
  • Section 90 (1) (ix) of the Patents Act refers to a situation where a competition authority adjudicates abuse of a patent.
  • Section 21 and 21 A of the Competition Act permit the CCI and a statutory authority (including the Controller of Patents) to refer issues to each other.
  • Section 60 of the Competition Act does not over rise the special provisions of the Patents Act and should be read to mean as follows: “Section 60 is enacted only to restate and emphasize that notwithstanding agreements, arrangements, practices and conduct which may otherwise be legitimate under the general laws would nonetheless be subject to the rigors of the Competition Act”.
    1. Therefore, the CCI’s jurisdiction in patent matters is not ousted.
    1. Seeking injunctive reliefs by an SEP holder in certain circumstances may amount to abuse of dominant position.
    1. Disputes, being subject matters of suits, could be entertained by the CCI:

    Merely because a set of facts pleaded in a suit may also be relevant for determination whether Section 4 of the Competition Act has been violated does not mean that a civil court would decide that issue”.

    1. A potential licensee cannot be precluded from challenging the validity of patents in question.
    1. The validity of an order under Section 26(1) of the Competition Act can be examined under Article 226 only from the perspective of:
  • Whether the allegations made in complaints before the CCI could form subject matter before the CCI?
  • The complaint must be examined on a demurer :Whether the impugned orders are perverse?
    1. The Court remarked that “in the given facts and circumstances, it is difficult to form an opinion that the conduct of Ericsson indicates any abuse of dominance…however it is not open for this court, in proceedings under Article 226, to supplant its views…” and dismissed Ericsson’s writ petitions.

DIPP RELEASES A DISCUSSION PAPER ON SEPs

The ICT space has managed to garner a lot of heat in the recent past. After the release of CRI guidelines which has created a furore amongst the stakeholders, the Department of Industrial Policy & Promotion (DIPP) has published a discussion paper on “Standard Essential Patents, and their availability on FRAND terms” on March 1,2016.

The idea behind the paper is claimed to build a suitable policy framework to define the obligations of SEP patent holders and their licensees.

The DIPP invites views from the concerned stakeholders regarding the following issues for resolution and the last date to respond to it March 31, 2016. A digest on this paper, our observations and comments shall follow very soon.

Stay tuned for further updates on this section.