Delhi High Court orders Lava to pay INR 244 Crores to Ericsson

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Delhi High Court orders Lava to pay INR 244 Crores to Ericsson

Lex Witness Bureau | April 2024

In a massive victory for Ericsson, the Delhi High Court in its first final ruling on Standard Essential Patents in telecommunications has decreed the suit of Ericsson against Lava, directing it to pay a sum of Rs. 244,07,63,990/- for use of Ericsson’s 2G and 3G patents. The Court has also awarded actual litigation costs to Ericsson.

For the FIRST time in India, a Court has undertaken the mammoth exercise of doing a FRAND determination in a litigation of this scale. The Court, also followed the two-step infringement test as set out in Intex v. Ericsson 2023:DHC:2243-DB, and held sales of 2G and 3G phones by Lava infringed Ericsson’s SEPs.

This judgment was eagerly awaited and will contribute immensely to the landscape of SEP jurisprudence in India and across the world.

This landmark judgment by Hon’ble Justice Amit Bansal deals with various issues involved in the suit in a comprehensive manner. A summary of various findings is as under:

On Essentiality and Infringement

Two-step test for establishing infringement of SEPs has been recognized, which involves mapping the suit patent(s) to the standards and showing that the implementer’s devices also comply with the standard.
Ericsson has established the essentiality of suit patents through claim charts.
In cases involving optional standard(s), test reports to show compliance with the optional standard to be filed.
The Court accepted the test reports filed by Ericsson showing compliance of Lava’s devices with optional standards and held that Lava has failed to show use of alternate technology.
Lava’s devices held to be infringing in nature.
In order to claim benefit of defence of exhaustion, a defendant must provide clear and convincing evidence that the product was purchased in a legitimate manner.

On Frand and Damages

FRAND protocol balances equities between a proprietor and an implementer, ensuring that neither party has unjust bargaining power in negotiations.
Lava has been held to be an unwilling licensee due to its failure to negotiate with Ericsson in good faith by consistently delaying licensing negotiations, and its failure to respond to offers or present any counteroffer.
The purpose of filing declarations of essentiality to SSOs is to bind patent owners to FRAND commitment.
The declarations filed by Ericsson were held to be compliant with ETSI IPR Policy.
Ericsson is entitled to receive damages based on the loss of royalty/ license fees it would have received, had Lava executed a FRAND license agreement
Damages are payable for all devices that comply with the relevant standards, not just the tested devices.
The Court rejected Lava’s argument of fixing royalty on chipset basis and awarded damages on end-user device.
Licensing of entire portfolio of SEPs is essential for ensuring interoperability in the telecommunications industry.
Comparable licenses used to determine if offers made by Ericsson were FRAND and to determine FRAND rates.
Allegations of royalty stacking and Hold-Up against Ericsson rejected.
Lava held guilty of Hold-Out
Rates offered by Ericsson held to be FRAND.
Court fixed 1.05% of the net selling price of the devices sold by Lava as FRAND rate for damages.
Damages can be claimed from the date of publication of the patent application under section 11A(7) of the Act.

On Invalidity

Under section 3(k) of the Act, only those inventions are non-patentable which are solely algorithms, mathematical methods, business methods, or computer programs per se.
Inventions that result in technical effect which transforms or enhances functionality and effectiveness of a general-purpose processor, not hit by section 3(k).
A ‘Seven Stambhas Approach’ has been formulated by the Court as a guidance for determination of Novelty. This approach recognizes that novelty can be hit by implicit/inherent anticipation.
7 suit patents (out of 8 suit patents) were held valid on all counts.

The attorneys involved

Saya Choudhary Kapur (Sr. Partner), Ashutosh Kumar (Sr. Partner), Vrinda Bagaria (Principal Associate), Vinod Chauhan (Principal Associate) and Radhika Pareva (Associate), from Singh & Singh Law Firm LLP.

About Lex Witness

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