ARTICLE
18 April 2024

Ericsson Scores Big Win In FRAND Ruling In Patent Infringement

SR
S.S. Rana & Co. Advocates

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S.S. Rana & Co. is a Full-Service Law Firm with an emphasis on IPR, having its corporate office in New Delhi and branch offices in Mumbai, Bangalore, Chennai, Chandigarh, and Kolkata. The Firm is dedicated to its vision of proactively assisting its Fortune 500 clients worldwide as well as grassroot innovators, with highest quality legal services.
In a recent landmark judgement, the Hon'ble Delhi High Court in the case of LAVA International Limited v. Telefonaktiebolaget LM Ericsson, directed LAVA to pay INR 244 crores (Approx. 29.9 Million USD) along with 5% annual interest ...
India Intellectual Property
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In a recent landmark judgement, the Hon'ble Delhi High Court in the case of LAVA International Limited v. Telefonaktiebolaget LM Ericsson,1 directed LAVA to pay INR 244 crores (Approx. 29.9 Million USD) along with 5% annual interest to ERICSSON for infringing upon its 2G and 3G patents. This ruling is considered to be one of the highest damages awarded in India for a patent infringement suit involving Standard Essential Patents (SEPs).

A Brief about "SEPs"

Technological advancement has transformed the look of the mobile telecommunication sector in India. Starting from the bulky analogous phone popular in the 1900's to using cutting edge smartphones, technology has come a long way. To keep up with the evolution of mobile phones, telecom networks too evolved from 2G systems to high speed data networks like 3G, 4G LTE and 5G facilitating smooth communication. This transformative journey was only possible because of the development and implementation of "Standards".

Standards are defined as "agreed upon specifications or protocols that ensure products, services and systems are compatible and interoperable across various environments and technologies"2 The Standard Setting Organizations (SSO) ensures that innovations taking place in the mobile telecommunication sector is universal in nature allowing consumers across the globe to benefit from the latest technological advancements. Hence, manufacturers of telecommunication devices such as mobile phones, tablets, dongles that include components like 2G/3G/4G/5G for functionality needs to adhere to certain technical standards. These technical standards are only possible by using certain patents known as Standard Essential Patents (SEPs).

LAVA International Limited v. Telefonaktiebolaget LM Ericsson: Background of Cross Suit

  • Year 2015
  • In 2015 Lava (Plaintiff) filed a case against Ericsson (Defendant) in the District Court of Noida (CS (OS) 01/2015), claiming that Defendant was not offering its Standard Essential Patents (SEPs) for a fair licensing fee.
  • Year 2016
  • Later on, in the case of Telefonktiebolaget Lm Ericsson (Publ) vs Lava International Ltd, Ericsson filed a suit against Lava in the Hon'ble Delhi High Court, alleging that Ericsson is the owner of patents that are considered as Standard Essential Patents (SEPs) and stated that all manufacturers of equipment or devices that are compliant with 2G, EDGE or 3G technology are supposed to use the patented technology of Ericsson.. Plaintiff alleged that Defendant has infringed the Plaintiff's Patent by using the AMR technology in 3G and 2G and EDGE capabilities in their devices without FRAND License. Plaintiff further contended that it had made efforts to negotiate a Fair, Reasonable, and Non-Discriminatory (FRAND) licensing rate with LAVA, but the Indian smartphone manufacturer was unwilling to agree to the terms. Aggrieved by the Defendant's action Plaintiff filed a patent infringement suit against Defendant seeking permanent injunction restraining Lava from "manufacturing/assembling, importing, selling, offering for sale, advertising including through their and third party websites, products (telephone instruments, mobile handsets, tablets or any future models that included Plaintiff's Patent." The Hon'ble Delhi High Court also held "the Defendant liable for infringement and passed an injunction order in favour of the Plaintiff restraining the Defendant from manufacturing, importing, selling, offering for sale its devices including phones, tablets, dongles, etc. which infringe the Plaintiff's patented technology"

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Facts of the Case

In the cross suit3 i.e. CS (COMM) 65/2016 and CS (COMM) 1148/2016 field between Lava and Ericsson. The Defendant (Ericsson) licenses its patents to companies involved in the selling and manufacturing of telecommunications equipment. A major portion of global portfolio of patents owned by Defendant, are Standard Essential Patents (SEPs) which are used in implementation of various standards set by the Standard Setting Organizations (SSOs). The Defendant alleged that the Plaintiff (Lava) was using Defendant's SEP's without obtaining any license from them on Fair, Reasonable, and Non-Discriminatory (FRAND) terms. The Defendant further claimed that they had requested the Plaintiffs to enter into negotiations and offered to license their SEP's to the Plaintiff on FRAND terms, However the Plaintiff ignored Defendant's request and continued manufacturing of devices without license thereby infringing patent rights of Defendants.

The Plaintiffs argued that the Defendants had failed to make full and fair disclosure about their SEPs and provide FRAND terms of licensing of its SEPs and further contended that the Defendant's patents are neither valid nor essential as per the terms of the Patent Act, 1970.

The Hon'ble Court followed a two-step test established in the case of ERICSSON v. INTEX4. This test involved of mapping the patent to the standard to determine if it was an SEP, and then confirming that the implementer's device also aligned with that standard. Upon conducting the examination, the Hon'ble Court determined that Plaintiff's devices adhered to the standards imposed by Defendant in the lawsuit. Plaintiff's claims that they did not require a license for Defendant's patents for importing mobile handsets from licensed entities into India were dismissed by the court. Nevertheless, the court emphasized that the responsibility to pay a license fee to the patent owner lies with the brand owner who sells the device to end consumers, rather than the manufacturer.

Issues

  • The issues of both the suits were consolidated to determine whether Ericsson is owner of the SEPs those were important for smartphones of Lava or not?
  • Whether the defendant is infringing any essential patent licensing norms?
  • Determining the appropriate compensation.

Patent Infringement and determination of damages

Lava has asserted that the 'top-down approach' is the preferred method for calculating damages, rather than the 'comparable licensing approach'. Lava has supported this argument by referring to the ruling of the Patents Court of England and Wales in the case of Unwired Planet (supra).

Per contra, Ericsson argued that licenses of a similar nature have a substantial impact on determining royalty rates. These comparable licenses, according to Ericsson, provided valuable evidence that could be utilized to establish FRAND rates.

The Hon'ble Court decided to use the 'Comparable licensing approach' to determine the pending royalties, focusing on similar licensors instead of a 'top to down approach'. In terms of the actual royalty rates, the court found that Ericsson's offers fell within the FRAND range and were similar to the rates offered to other Indian companies of a comparable size to Lava. Furthermore, Hon'ble Justice Amit Bansal determined that seven out of eight Standard Essential Patents (SEPs) claimed by Ericsson are valid, with only one being invalidated. Consequently, the royalty rates must be recalibrated to account for this weakened portfolio.

Conclusion

Lava has been instructed to remunerate royalties for the complete duration starting from the initial contact made by Ericsson to the smartphone manufacturer in November 2011, until the expiration of the last of Ericsson's claimed patents in May 2020 and pay damages to Ericsson with more than INR 244 crores (Approx. 29.9 million USD) for infringing upon its 2G and 3G patents. Additionally, Lava has also been held liable for the expenses incurred during the litigation process.

Swayamsiddha Das, Associate and Shivam Malvi, Patent Associate at S.S. Rana & Co. have assisted in the research of this Article.

Footnotes

1. LAVA International Limited v. Telefonaktiebolaget LM Ericsson, CS(COMM) 65/2016

2. Para 3. LAVA International Limited v. Telefonaktiebolaget LM Ericsson, CS(COMM) 65/2016

3. Para 9. LAVA International Limited v. Telefonaktiebolaget LM Ericsson, CS(COMM) 65/2016

4. CS(OS) No.1045/ 2014

For further information please contact at S.S Rana & Co. email: info@ssrana.in or call at (+91- 11 4012 3000). Our website can be accessed at www.ssrana.in

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
18 April 2024

Ericsson Scores Big Win In FRAND Ruling In Patent Infringement

India Intellectual Property

Contributor

S.S. Rana & Co. is a Full-Service Law Firm with an emphasis on IPR, having its corporate office in New Delhi and branch offices in Mumbai, Bangalore, Chennai, Chandigarh, and Kolkata. The Firm is dedicated to its vision of proactively assisting its Fortune 500 clients worldwide as well as grassroot innovators, with highest quality legal services.
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