Shereen Moza
Class of 2025 | Rajiv Gandhi National University of Law
Photo by Scott Graham on Unsplash
Introduction
India is experiencing an evident increase in Standard Essential Patents (“SEPs”) along with its quick progress in technology and growing connection to worldwide markets. SEPs are mainly patents necessary for using certain technological standards. They are vital in guaranteeing that devices work together across different sectors like telecommunications, electronics and software. The intersection between SEPs, Competition Law and Intellectual Property Rights – particularly about fair, reasonable and non-discriminatory (“FRAND”) licensing duties – highlights the need for a complex legal environment. India, in the contemporary times, faces the challenge of managing the rights of patent owners to protect their creations against the need to control anti-competitive actions, so that everyone in the market can access important technologies fairly.
The recent Delhi High Court judgment of Lava International Limited v. Telefonaktiebolaget LM Ericsson (“Lava v. Ericsson”) signifies a considerable advancement in SEPs jurisprudence in India. It not only brought clarity to the standards for judging novelty within SEPs, but also provided understanding regarding interpretation and application of FRAND terms, licensing discussions and actions taken to enforce rights related with SEPs. As India has become an important participant in worldwide technological activities, how it manages SEPs under its legal system carries deep significance for competition and economic growth. Therefore, the analysis of the case is of profound importance.
Factual Background
Relevant Facts
Ericsson alleged that it offered Lava multiple chances for negotiating a licensing agreement related to its SEPs under FRAND terms, but even after these offers were made, Lava carried on its business in India without getting any license from Ericsson for their SEPs portfolio.
Ericsson, the SEPs holder and Plaintiff, has a strong presence worldwide as a designer, manufacturer, and installer of telecommunications equipment and systems. They possess an extensive 60,000+ collection of patents, which includes many SEPs that are crucial for implementing standards set by organizations such as European Telecommunications Standards Institute (“ETSI”) and other Standard Setting Organisations (“SSOs”).
The Defendant in the cross-suit, Lava International Ltd. (“Lava”), is a company from India that deals with mobile phones, dongles, storage devices and tablets. In this lawsuit against Lava, eight SEPs of Ericsson were claimed to have been infringed upon. These patents cover various technologies such as EDGE, 2G and 3G among others. Multiple allegations were made by Lava against Ericsson. The claim of lack of novelty was used to argue that the suit patents were not valid or essential. They also asserted that Ericsson did not fully and fairly reveal its SEPs, nor provide licensing terms that were FRAND, which means it went against its FRAND requirements towards Lava.
Timeline
The legal battle in Court started back in 2015, when Lava initiated a lawsuit at the District Court of Noida, praying for an official declaration from the Court that Ericsson is prevented from imposing its Indian patents owing to their unfair behaviour. As a result, Ericsson initiated a cross lawsuit against Lava at Delhi High Court to stop Lava from using or making any items that breach their SEPs, and they also prayed for compensation. Additionally, they requested the court to declare their SEPs’ rates as FRAND. Later, Lava filed a counter claim and asked for the case initiated by Ericsson to be disposed of. After Ericsson submitted a petition to transfer the Noida suit in 2015, it was shifted to the Delhi High Court and combined with Ericsson’s suit. During the pendency of Delhi suit, vide order dated in 2016, an interim relief was granted to Ericsson and an order to pay INR 30,00,00,000 was granted pre-trial of the combined suit. The final hearing was initiated in February 2023 and concluded in May 2023.
Court’s Ruling
Establishing a New Test for Infringement
Lava disputed the Doctrine of Exhaustion in opposition to Ericsson’s claim. The Doctrine of Exhaustion is a well-known rule in Patent Law which can be defined as the circumstance when once a product is sold by a patent owner, the purchaser cannot be sued for having an authorized copy of the patented product. The court refused Lava’s defence based on this doctrine.
For ascertaining infringement, the court set up a test from legal precedents and mentioned Fujitsu Ltd. v. Netgear Inc., as well as Intex v. Ericsson. This test had two steps: firstly, mapping the patent claims to the standard and secondly, mapping the accused product onto that same standard. It was observed by the court that Lava had confessed in its Noida claim to conform to worldwide standards accepted by India, making compliance inevitable because of ETSI Standards.
In addition to this, the court also stressed on how Ericsson’s Test Reports showed that Lava’s devices were following optional ETSI Standards such as EDGE for 2G. Lava did not give opposing Test Reports or proof to question Ericsson’s discoveries. Therefore, the court decided that devices from Lava did not meet the standards which insinuated infringement.
Establishing New Test for Novelty
The test known as “Seven Stambhas,” was established by the Delhi High Court which gives a systematic way to find out the novelty of a patent. It starts with going through the claims made about the invention and checking similar old knowledge that came before it. It is vital to understand what the inventor’s claim is because they define specialty in the invention. Next, all relevant prior art is carefully collected. This can be any type of knowledge that was available before the patent application being considered, such as publications, patents (or applications for patents) which came earlier than the particular one under review. Consequently, one looks into available prior arts. An analysis of the disclosures is conducted afterwards. The disclosures can be implicit and explicit. Explicit disclosure is the situation where prior art directly describes the invention that is claimed. Implicit disclosure refer to the situation where the prior art either describes elements or aspects so similar to the claimed invention that a direct link can be drawn. Comparison between text content and technical characteristics of these references is done with what was claimed in the invention’s claims so one can point out clear or hidden disclosures. This process would help the court to understand if the available prior art openly describes the same invention as claimed or not. This evaluation considers novelty in its entirety.
The analysis and determination of novelty need to be documented, making everything clear for everyone involved. It is of key importance because this documentation shows why certain sections of the prior art are referenced by name and how they affect both claim novelty as well as inventive step in an invention review process. This leads to a final decision that is formal, based on the analysis’ outcomes. If the prior art contains the invention or any claimed elements, it is non-novel. On the other hand, if the invention is not revealed by prior art, its novelty would be confirmed. This shows how methodical and legally significant this process can be in patent law.
This method of dealing with patent disputes has resolved many legal gaps in Patent Law and now its established across the Indian setting.
Clearing the Fog on Applicable Tests to Determine FRAND Rates
The Delhi High Court’s statement about FRAND rates and its related complexities has given more understanding to the details of determining these rates, along with the difficulties linked with applying them in India. This judicial explanation comes from ideas made clear in two important foreign decisions: Huawei Technologies Co. Ltd v. ZTE Corp., and Unwired Planet International Ltd v. Huawei Technologies Co. Ltd & Others. These two cases essentially discussed the multiple approaches that are ideal for calculating royalty rates and are widely utilised in the present judgment to come to a conclusive method suitable in the Indian landscape. When we recognize how important global standards are for the telecommunications industry, especially in a country like India that has one of the biggest telecommunications sectors worldwide; this stance by the Delhi High Court shows a change from the restrictive view of only focusing on local issues. Instead, it demonstrates a broader perspective that acknowledges the possibility of global standards and common practices shaping how things are done in India’s telecommunications sector.
Conundrum between Comparable License & Top-Down Approach
The Court’s remark about the assessment of damages highlighted that the Comparable License Approach is more usual. The Comparable Licensing method uses FRAND rates which were agreed upon between parties in similar situations (in this instance, Micromax), making it a strong reference point for calculating royalties for future licensees over Top-Down Approach. The Top-Down Approach assesses the collective value of a standard, rather than individual values of specific patents when calculating royalty rates. This removes the issue of stacking down in SEP Licensing.
Conclusion
The Lava v. Ericsson case is a big step for India’s patent law as it is an important ruling in the area of SEPs and FRAND licensing obligations in the last decade. The use of the “Seven Stambhas” method to check if a patent is novel shows a careful and thorough framework that matches with worldwide practices. Also, it signifies Delhi High Court’s recognition of international precedents such as Huawei Technologies Co., Ltd v ZTE Corp and Unwired Planet International Limited v Huawei Technologies Co., Ltd & Others. This highlights how important it is for India to adopt global standards as its own laws change over time. The Court’s support for the Comparable License Approach in determining damages showcases how crucial it is to have uniformity in mediating intellectual property disputes.
It also shows the commitment of the country’s legal system to create an atmosphere that encourages technological progress and fair competition. As India keeps dealing with the intricacies of intellectual property rights within a connected world, choices such as these lead towards a more clear, expected and just patent system.
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