2024 (3) TMI 1463 - HC - Indian Laws

Owner of suit patents - bar on counter claim of the defendant - permanent injunction of defendant from infringing the plaintiff s patents - invalidity of suit patents - inventions claimed by Ericsson in the suit patents are mere algorithms - Inventions claimed in the suit patents are not novel and do not involve ant inventive step - specifications of the suit patents do not sufficiently or fairly describe the claimed invention and also the method in which the claimed inventions are to be performed - Suit patents were obtained by making misrepresentations to he patent office - declarations filed by Ericssion before ETSI - Impled waiver - Essentiality of suit patents - Infringement of suit patents - Doctrine of Exhaustion - High Court of Delhi Rules governing Patent Suits 2022 - Lava negotiated with Ericsson in good faith or not - Can fraud rate be used as a measure of damages - damages can be granted only on the basis of the smallest saleable patent practising unit - damages can be granted only for asserted suit patents and not for the entire portfolio - adoption of top-down approach - relevancy of Siprolabs program for WCDMA SEPS - Ericsson s offer to License the portfolio of patents results in hold up or royalty stacking - Lava s conduct leads to Hold out or not - licenses filed on behalf of Ericsson are comparable licenses or not - offers made by Ericsson to Lava were within frand range or not - damages can be granted only for three years prior to filing of the suit or not. Whether Ericson is the owner of the suit patents? - HELD THAT - Ericsson has filed certified copies of the Patent Certificates in respect of all the suit patents issued by the Office of the Controller General of Patents Designs and Trade Marks - The documents have not been denied by Lava in their affidavit of admission/denial filed on 22nd January 2016. Neither has this issue been disputed by Lava either in its written note of arguments or in the oral submissions made before this Court. It is the case of Lava that the grant of patents to Ericsson was invalid which would be the subject matter of Issue no.4 to be discussed later in the present judgment - Accordingly it is held that Ericsson has filed sufficient material to establish its ownership of the suit patents. Hence Issue no.1 is decided in favour of Ericsson and against Lava. Whether the counter claim of the defendant is barred? - HELD THAT - Under the scheme of Patents Act a challenge can be made to the patent at multiple stages. A patent can be challenged before the grant of patent after its publication or after its grant. Further in terms of Section 64 read with Section 104 of the Patents Act a patent can be revoked by way of a counter claim in an infringement suit. Section 64 of the Patents Act also provides the grounds for revocation of the patent - In view of the unambiguous language of Section 64 read with Section 104 of the Patents Act it cannot be said that the counter claim filed on behalf of Lava is barred. Further no time limit has been prescribed for filing a counter claim in the Act. In the present case Lava has duly filed its counter claim along with its written statement seeking revocation of the suit patents granted in favour of Ericsson - Issue decided in favour of Lava and against Ericsson. Whether the defendant is liable to be permanently injuncted from infringing the plaintiff s patents? - HELD THAT - Ericsson did not press the aforesaid issue in view of the interim orders passed in the suits and the fact that the term of the suit patents expired during the pendency of the present suit particularly when the matter was taken up at the stage of final arguments. Consequently it is held that the Issue no.6 has become infructuous and need not be decided. Whether the suit patents are invalid in nature and are liable to be revoked in light of the grounds raised by Lava in its counter claim? - HELD THAT - In the present suits before the Court the issue of the validity of the suit patents has emerged as a focal point of contention drawing extensive pleadings evidence and arguments from both parties. Consequently a substantial amount of the legal proceedings and have been dedicated to examining the grounds raised by Lava in its counterclaim for the revocation of the suit patents. Further the issue of validity of suit patents is of paramount importance as it directly impacts the enforceability of the suit patents. This in turn is crucial for determining the standing of the claim of infringement and also plays a significant role in the broader context of setting and determining FRAND rates. Whether the inventions claimed by Ericsson in the suit patents are mere algorithms - HELD THAT - What has to be seen is that if the algorithms are directed at enhancing the functionality of a system or a hardware component the effect or the functionality derived by the system or the hardware component is a patentable subject matter However the algorithm itself is not a patentable subject matter. To illustrate we may consider the example of a smart thermostat algorithm that dynamically adjusts the heating or cooling of a room in a building based on real-time weather data occupancy patterns and energy prices. This algorithm by itself is a series of computational steps and may not be patentable. However the implementation of this algorithm within a device even if the said device is a general-purpose computer in such a way that it transforms the computer s capabilities and leads to tangible benefits like reduced energy consumption cost savings and improved comfort levels for occupants can be considered as a patentable subject matter - refusing such inventions as nonpatentable would be against the legislative mandate. Whether inventions claimed in the suit patents are not novel and do not involve ant inventive step? - HELD THAT - Ericsson has argued that Lava s experts did not have the necessary expertise in the field involving suit patents. However this submission fails to take into consideration that a person skilled in the art is a person who possesses average knowledge and ability in the relevant field of technology. The person skilled in the art need not be an expert in the specific field of the invention. Therefore this submission aimed at discrediting or disqualifying Lava s witnesses not accepted on the ground that they are not persons skilled in the art. If this submission of Ericsson was to be accepted it would in effect mean that the inventors of suit patents or patents related to the suit patents are the only persons skilled in the art which clearly was not the objective of using the reference point of person skilled in the art. Lava has also questioned the credibility of Ericsson s expert witnesses i.e. PW-2 and PW-3 as they are interested witnesses being in full-time employment of Ericsson. In my considered view their evidence cannot be disregarded only on the ground that they are employees of Ericsson. The evidence given by them has to be tested on merits. Revocation of suit patents - specifications of the suit patents do not sufficiently or fairly describe the claimed invention and also the method in which the claimed inventions are to be performed - HELD THAT - The patent claims of Ericsson read with the complete specifications fairly and sufficiently describe the invention to enable the person skilled in the art to work the invention. I do not find any merit in the objection taken by Lava that the suit patents do not sufficiently or fairly describe the invention or that the method by which the claimed invention is to be performed or implemented is not disclosed. Consequently the ground for revocation taken by Lava under Section 64(1)(h) and Section 64(1)(i) of the Patents Act is devoid of merits. Suit patents were obtained by making misrepresentations to he patent office - HELD THAT - A patent can be revoked only if such misrepresentation or omission is proven to be intentional inasmuch as the statutory framework governing patents law is designed to ensure that patents are granted based on accurate and truthful disclosures. When a claim of fraud or misrepresentation is made it challenges the very foundation of the granted patent and by extension the credibility of the patent system. Consequently the threshold for proving such allegations is understandably high requiring clear and convincing evidence of intentional wrongdoing. Mere allegations are not sufficient to revoke a patent; there must be a clear demonstration of intentional deceit. Therefore given the lack of concrete evidence from Lava to support its contentions for revocation of the patents under Sections 64(1)(j) and 64(1)(m) of the Patents Act the said claim is found to be unsubstantiated and is therefore rejected. Invalidity of suit titled as Linear Predictive Analysis by Synthesis Encoding Method and Encoder - HELD THAT - Maintaining coding efficiency is a natural goal in speech encoding where the aim is to reduce the amount of data (bitrate) required to encode audio signals without significantly compromising quality. With this clarity I shall move on with the assessment of the patentability of the Claims of IN 203034. Whether declarations filed by Ericssion before ETSI were proper? - HELD THAT - The declarations can be made either in respect of a project or a standard or technical specification. There is no mandatory requirement to make a declaration in relation to a specific ETSI standard or a technical specification or for all applicable standards. In the present case Ericsson made declarations before ETSI at the project level which include GSM/UMTS projects. Moreover as per clause 6.2 of the ETSI IPR policy the parties are required to make a declaration only with respect to one member of the patent family which shall then be applicable to the entire family - these declarations can be regarded as adhering to the fundamental stipulations of the ETSI IPR Policy. Impled waiver - HELD THAT - Nothing has been placed on record by Lava to show that Ericsson obtained any unfair benefit on account of delay in filing the declarations before ETSI. Lava has only raised an unsubstantiated challenge of implied waiver without adequately pleading the essential components of implied waiver. Therefore Lava has failed to make out a case for implied waiver. Essentiality of suit patents - HELD THAT - Ericsson has successfully established the essentiality of its suit patents by way of the claim charts which are demonstrating the alignment of the suit patents with the relevant standard. The said claim charts have been filed on record and have not been rebutted by any of the witnesses of Lava. Consequently in light of the correspondence exchanged between the parties admissions made by Lava and the evidence placed on record and arguments advanced during final arguments it is clear that Ericsson has been able to prove essentiality of the suit patents. Infringement of suit patents - HELD THAT - It is pertinent to mention that the burden of proving infringement of the suit patents lies on Ericsson. Doctrine of Exhaustion - HELD THAT - The suit patents were not the subject matter of the agreement between Ericsson and Qualcomm as the license granted by Ericsson to Qualcomm pertained only to CDMA applications whereas the suit patents pertain to GSM GPRS and EDGE. Hence the agreement of Ericsson with Qualcomm would not come to the aid of Lava - Lava s preliminary defence invoking Doctrine of Exhaustion is untenable against Ericsson s claim of infringement of the suit patents. Consequently in terms of Section 48 of the Patents Act Ericsson cannot be precluded from proceeding against Lava seeking infringement of its patents. High Court of Delhi Rules governing Patent Suits 2022 - HELD THAT - Even though the DHC Patent Rules were framed in 2022 they provide a useful guidance to the courts towards the approach to be followed in the SEP infringement cases. Two step test for establishing infringement - HELD THAT - Considering the established principles of patent law as applied to SEPs and taking into account the twostep test as approved by the Division Bench in Intex v. Ericsson (supra) it logically follows that the infringement of Ericsson s SEPs is an inevitable outcome. This conclusion is drawn not only from the regulatory and technical compliance of Lava s products but also from the broader legal context of SEPs where adherence to a standard implies the use of patented technology. Thus in light of the evidence and arguments presented coupled with the regulatory framework in place it is reasonable to infer that the standard-compliant nature of Lava s devices leads to the infringement of the suit patents. Further given that the test reports have been placed on record by Ericsson showing compliance of Lava s devices with the optional standards to supplement the admissions and statutory compliance the onus fell on Lava to not just claim the use of alternate technology but also demonstrate the same which it has failed to do. Lava has failed to furnish any test report to counter Ericsson s Test Reports nor has it led any evidence or expert analysis to prove that the conclusions drawn in Ericsson s Test Reports are incorrect or misleading. Whether Lava negotiated with Ericsson in good faith - HELD THAT - Lava did not engage in negotiations with Ericsson in good faith. Lava s actions including the failure to respond to queries the strategic filing of a lawsuit just before a scheduled meeting the insistence on third-party confidential information and the lack of responsiveness to Ericsson s offers and even the Court queries collectively demonstrate a pattern of behaviour that is inconsistent with the principles of fair and constructive negotiation. Consequently Lava can aptly be described as an unwilling licensee in respect of Ericsson s SEPs. Can fraud rate be used as a measure of damages - HELD THAT - The damages have to be awarded to Ericsson based on royalties payable at FRAND rates as the damages are in the nature of compensation quantified in terms of the royalty that the patent owner would have earned from the licensee. Had Lava entered into a license agreement with Ericsson at the time it started selling its products in India Ericsson would be entitled to royalties on FRAND terms. Since this was not done Ericsson rightly claimed damages based on the amount of royalties it would have earned calculated on FRAND rates. Whether damages can be granted only for tested devices? - HELD THAT - The devices of Lava are compliant with the ETSI standards as also the optional standards. Therefore there is no merit in the submission of Lava that the damages should only be granted in respect of the tested devices. Whether damages can be granted only on the basis of the smallest saleable patent practising unit - HELD THAT - The royalty rates agreed upon by the parties in the aforesaid licenses are based on the net selling price of the end-device. In none of the aforesaid licences has the royalty been calculated on the value of the chipset or any other component. 712. The international jurisprudence on this aspect is unanimous that the basis for calculating royalty should be the end-product and not the chipset. In light of the settled legal position as well as the evidence on record it is clear that the calculation of royalty on the basis of a SSPPU is inconsistent with the licensing practices in the telecommunication industry. Therefore the royalty in the present case has to be calculated on the basis of the net selling price of the end-device. Whether damages can be granted only for asserted suit patents and not for the entire portfolio - HELD THAT - The requiring implementers to license the entire SEP portfolio is a justifiable and balanced approach. This strategy not only facilitates the smooth operation and progression of technology but also aligns with the interests of both licensors and licensees. It upholds the principles of fairness and proportionality in the technological ecosystem. Granting damages only for the asserted patents rather than for the entire portfolio would not only deviate from industry practices and FRAND principles but also potentially disrupt the balance and fairness in the licensing ecosystem. In any case when an implementer is implementing a standard it is automatically implementing all the patents essential to that standard. Therefore the license it would need to take would be for all the SEPs and not just a representative set of SEPs which have been asserted in a suit. Consequently the damages would have to be assessed on the basis of the entire portfolio of patents and not just the asserted suit patents. Whether top-down approach can be adopted - HELD THAT - The comparable licenses provide for FRAND rates that have been negotiated between parties in similar circumstances which makes the comparable licensing agreements highly reliable for determination of royalties for a prospective licensee. Therefore the comparable licenses can be looked at by this Court for determination of FRAND rates payable by Lava. Whether Siprolabs program for WCDMA SEPS is relevant to this case? - HELD THAT - The SIPROLAB Patent Licensing Pool deals with patents under the WCDMA standard. Out of the eight suit patents only two patents have been asserted to the 3G/WCDMA standard and the rest of the six patents have been asserted to the EDGE and AMR standards. This is the first indicator of a potential mismatch in the applicability of SIPROLAB rates and benchmark rates computed and used by Shankar Iyer (DW-4). Notably the rates provided by SIPROLAB do not specifically address AMR and EDGE standards which are the subject matter of six of the suit patents. Further Lava has not even led evidence to contend that two of the suit patents relating to the 3G standard are part of the SIPROLAB Licensing Program which further undermines their reliance on SIPROLAB s rates and terms. 757. Moreover there is no indication that Lava had sought or attempted to obtain a license from the SIPROLAB patent pool even when Ericsson approached Lava in November 2011 with its offer for FRAND licensing. Throughout the negotiation period Lava did not make a reference to the SIPROLAB raising questions about the sudden reliance on SIPROLAB s licensing rates and program in the present case. This approach seems contradictory especially given Lava s earlier claim that royalty rates should be calculated based on the chipset and on a patent-by-patent and country-bycountry basis which contrasts with the SIPROLAB Licensing Program s method of calculating royalties on a global portfolio basis and based on the net selling price of the device. Based on the evidence on record and the arguments in my considered view the SIPROLAB Licensing Program for WCDMA SEPs is not relevant to this case. Whether Ericsson s offer to License the portfolio of patents results in hold up or royalty stacking? - HELD THAT - The absence of a clear answer especially after a direct query from the court casts significant doubt on Lava s engagement with SEP holders on the aspect of licensing and royalty payments. The counsel s failure to address this crucial aspect despite being given the opportunity is indicative of Lava s attempt to free ride over patented technology. To make a valid argument for royalty stacking or hold-up an implementor must present concrete evidence as emphasised in Ericsson v. D-Link (supra) and reiterated in the present case. Specifically the implementor must demonstrate that post-adoption of the standard the SEP holder has started to demand higher royalties than those initially offered. In the absence of specific evidence that would prove even the demand for higher royalties there can be no case made out that royalty stacking or holdup is occurring. Without such evidence the implementor s claim lacks the necessary factual and evidentiary basis to substantiate allegations of anticompetitive behaviour by the SEP holder. Thus no question of royalty stacking arises in the present case as Lava is not paying any royalty to any party in respect of any of the SEPs being implemented by it in its devices. Further the fact that Ericsson has negotiated with Lava for more than 4 years and has in fact made various FRAND offers from time to time despite the fact no counteroffer was ever given by Lava also shows that there was never a situation of hold-up in this case. Whether Lava s conduct leads to hold out? - HELD THAT - Hold-out strategies lead to the continuous use of patented technology without the payment of appropriate royalties. As a result the implementers gain undue advantages such as prolonged access to the technology without financial obligations. This approach can be deemed unfair and unreasonable as it disrupts the balance between the rights of the patent holder and the interests of the implementer. Such hold-out actions undermine the principles of FRAND licensing which are designed to ensure equitable access to SEPs while providing fair compensation to the patent owners. In the context of this negotiation Lava s hold-out strategy not only hampers the resolution of licensing terms but also poses a challenge to the integrity of the FRAND framework affecting the overall ecosystem of SEPs. Whether the licenses filed on behalf of Ericsson are comparable licenses - HELD THAT - The said licensing agreements are indeed comparable inasmuch as they have been executed with the entities which were similarly placed to Lava and the license rates offered therein were almost identical to rates offered to Lava. This conclusion is further strengthened by the fact that some of the licensing agreements which have been evaluated were executed with the parties competing with Lava in the mobile handset market in India. It has sufficiently been proved on behalf of Ericsson that (HIDDEN MATTER) were companies that were similarly placed as Lava selling mobile phones in India and therefore the rates offered to these companies by Ericsson would be relevant for the determination of FRAND rates in relation to Lava. Whether offers made by Ericsson to Lava were within frand range? - HELD THAT - The royalty rates that were offered by Ericsson to Lava in March 2015 were similar to the rates in the GPLA entered into by Ericsson with (HIDDEN MATTER) - In 2015 (HIDDEN MATTER) and Ericsson re-negotiated the agreement that provided for a single global rate. The royalty rates offered to Lava in November 2015 were based on the amended 2015 Agreement entered into between Ericsson and (HIDDEN MATTER) Subsequently the same rates were also accepted by (HIDDEN MATTER). - the rates offered by Ericsson to Lava are within the FRAND range. Whether damages can be granted only for three years prior to filing of the suit? - HELD THAT - There is no doubt that the publication of the eight suit patents took place between 1998 and 2000. However Ericsson asserted its rights in respect of the aforesaid patents and its portfolio of SEPs for the first time in its email dated 1st November 2011. It was in the said email that Ericsson informed Lava about its patents and asserted that Lava s products involve Ericsson s patents and hence Lava should obtain the necessary license from Ericsson. Therefore in the facts and circumstances of the present case the relevant date for determining damages would be 1st November 2011. A decree is accordingly passed in favour of Ericsson and against Lava in the following terms i. Recovery of sum of Rs. 244, 07, 63, 990/- (Two hundred forty-four crores seven lakhs sixty-three thousand nine hundred and ninety only) towards damages along with interest @ 5% per annum from the date of this judgment till the realization of the said amount. ii. Ericsson shall pay the additional court fees on the differential amount awarded in favour of Ericsson within three weeks. iii. The Registry is directed to release the amount deposited by Lava before this Court in Fixed Deposit along with the accrued interest after deduction of TDS in favour of Ericsson. For the said purpose the parties as also the Manager Union Bank of India Nehru Place Branch shall appear before the Registrar General of the Court on 13th May 2024 at 11 30 am. This amount shall be adjusted against the sum payable by Lava as per (i) above. iv. The counter claim filed on behalf of Lava is allowed to the limited extent of revocation of the suit patent being IN 203034 titled as Linear Predictive Analysis by Synthesis Encoding Method and Encoder . v. Ericsson shall also be entitled to taxed costs in respect of both the suits.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

- Whether the plaintiff is the owner of the eight suit patents asserted.

- Whether the defendant's counterclaim seeking revocation of the suit patents is barred.

- Whether the plaintiff is entitled to a permanent injunction against the defendant for infringement.

- Whether the suit patents are invalid on grounds raised by the defendant, including non-patentable subject matter under Section 3(k) of the Patents Act, lack of novelty, lack of inventive step, insufficient disclosure, and alleged misrepresentations to the Patent Office.

- The validity and patentability of each of the eight suit patents individually.

- Whether the defendant is infringing the suit patents.

- Whether the declarations filed by the plaintiff before the European Telecommunications Standards Institute (ETSI) were proper and compliant with the ETSI IPR Policy.

- Whether the suit patents qualify as Standard Essential Patents (SEPs) and the essentiality of the suit patents.

- Application of the 'Doctrine of Exhaustion' as a defense to infringement.

- The nature and calculation of FRAND (Fair, Reasonable, and Non-Discriminatory) licensing commitments and rates.

- Whether the defendant negotiated with the plaintiff in good faith for licensing.

- Whether damages can be granted only for tested devices, only on the basis of the smallest saleable patent practicing unit (SSPPU), or only for the asserted patents rather than the entire portfolio.

- Whether comparable licensing agreements or a top-down approach is appropriate for calculating damages.

- Whether the SIPROLAB W-CDMA licensing program is relevant for determining FRAND rates.

- Allegations of patent hold-up, royalty stacking, and whether the defendant's conduct amounts to hold-out.

- The admissibility and comparability of licenses filed by the plaintiff.

- Whether the offers made by the plaintiff to the defendant were within the FRAND range.

- Whether damages can be granted only for three years prior to the filing of the suit.

- Calculation of damages and costs.

- Relief to be granted.

2. ISSUE-WISE DETAILED ANALYSIS

Ownership of Suit Patents

The plaintiff established ownership by filing certified copies of patent certificates and extracts from the Register of Patents, which were not disputed by the defendant. The Court held that the plaintiff sufficiently proved ownership of all eight suit patents.

Admissibility of Counterclaim

The defendant's counterclaim seeking revocation of the suit patents was held to be admissible under Sections 64 and 104 of the Patents Act. No time limits bar such a counterclaim, and the Court decided in favor of the defendant on this issue.

Permanent Injunction

The plaintiff did not press the issue of permanent injunction as the suit patents expired during the pendency of the suit, rendering the issue infructuous.

Invalidity of Suit Patents

The defendant challenged the validity of the suit patents on multiple grounds:

• Non-patentable Subject Matter (Section 3(k)): The defendant argued that the patents claim mere algorithms, which are excluded from patentability. The Court examined the legal provisions, including Section 3(k) of the Patents Act, and the 2017 Guidelines for Examination of Computer Related Inventions (CRI Guidelines). The Court noted that algorithms per se are not patentable, but inventions incorporating algorithms that produce a technical effect or improve hardware functionality may be patentable.
• Novelty and Inventive Step: The Court applied the 'Seven Stambhas Approach' for novelty assessment and the Windsurfing/Pozzoli tests for inventive step. It reviewed prior art references including ITU-T Recommendation G.729, ETS 300 726, and research papers by Schroeder, Ubale, McElroy, Zinser, and others. The Court held that one patent, IN 203034, lacked novelty and was directed to non-patentable subject matter, thus liable to be revoked. The other seven patents were held valid, novel, and inventive.
• Sufficiency of Disclosure: The Court held that the suit patents sufficiently and fairly describe the invention to enable a person skilled in the art to work the invention, rejecting the defendant's challenge under Sections 64(1)(h) and (i).
• Misrepresentation to Patent Office: The defendant alleged fraud and misrepresentation under Sections 64(1)(j) and (m) and Section 8(1) of the Patents Act. The Court held that such allegations require clear and convincing evidence of deliberate misrepresentation, which the defendant failed to provide, and thus the claim was rejected.

Validity of Individual Patents

The Court conducted detailed claim construction and patentability analysis for each suit patent:

• IN 203034: Found invalid for lack of novelty and being directed to algorithms without patentable hardware.
• IN 203036: Valid patent directed to an apparatus with physical components and technical effect, not merely an algorithm. Novel and inventive over prior art including ETS 300 726 and Schroeder.
• IN 234157: Valid patent involving multiple codebooks and deterministic selection procedure, novel and inventive over prior art including G.729, Ubale, McElroy, ETS 300 726, and Zinser.
• IN 203686: Valid patent concerning alternating transmission of codec mode information, novel and inventive over prior art including Milnor, IEEE 802.11, WO'549, AMR Study Group Report, and others.
• IN 213723: Valid patent on generating comfort noise in speech decoders, with physical apparatus components and technical effect. Novel and inventive over GSM 06.31, GSM 06.12, and ETS 300 971.
• IN 240471: Valid patent on event-based reporting for handover and power control in mobile radio systems. Novel and inventive over Daniel Wong, Blakeney, Srinivasan, and ETSI/3GPP standards.
• IN 229632: Valid patent on multi-service handling by a single mobile station, novel and inventive over Mobiware, Internet RFC 2212, and ETSI Technical Report.
• IN 241747: Valid patent on transceiving unit for block automatic retransmission request with adaptive modulation/FEC coding schemes. Novel and inventive over prior art including EP 0054118, Al-Zoman, Joel Morris, US 5559810, and Kousa.

Declarations Filed Before ETSI

The Court held that the plaintiff's declarations at the project/standard level complied with the ETSI IPR Policy. The timing and details of declarations are contractual matters between the plaintiff and ETSI, and the defendant has no locus to challenge them. The declarations bind the plaintiff to its FRAND commitments.

Essentiality of Suit Patents

The plaintiff proved essentiality through claim charts mapping the patents onto relevant standards, which were not rebutted. The defendant failed to demonstrate any alternate technology or implementation that avoids the plaintiff's patents. The Court held the suit patents essential to the standards.

Doctrine of Exhaustion

The defendant's defense based on the doctrine of exhaustion failed as the defendant did not prove that the chipsets used in its devices were licensed by the plaintiff. The defendant admitted it had no indemnity or license from chipset manufacturers. The Court held that the patents relate to the end-user devices, not just chipsets, and the plaintiff's rights are not exhausted by chipset licenses.

Infringement

Applying the two-step test for SEP infringement, the Court held that the defendant's devices comply with the standards incorporating the suit patents, and therefore infringe the patents. Test reports admitted by the defendant confirmed implementation of AMR and EDGE standards. The defendant failed to prove use of alternate technology or non-infringement.

FRAND Commitment and Licensing Negotiations

The Court explained the FRAND principles as fair, reasonable, and non-discriminatory licensing commitments made by SEP holders to SSOs. The plaintiff's FRAND commitment is contractual and aims to balance patent holder and licensee interests.

The defendant was held to be an unwilling licensee due to its failure to negotiate in good faith, delaying signing of NDAs, refusing to respond to offers, and filing suit just before scheduled negotiations.

Damages and Royalty Calculation

The Court held damages are to be calculated based on royalties payable under a FRAND license. The plaintiff's offers to the defendant were within the FRAND range, supported by comparable licenses with similarly situated Indian companies. The Court rejected the defendant's contentions that damages should be limited to tested devices or calculated on the basis of the smallest saleable patent practicing unit (chipset), holding that the end-product is the appropriate royalty base.

The Court also held that damages should be calculated for the entire portfolio of SEPs, not just the asserted patents, as this aligns with industry practice and ensures interoperability.

The defendant's proposed top-down approach and reliance on SIPROLAB licensing program were rejected as irrelevant and unsupported.

Allegations of Patent Hold-Up and Royalty Stacking

The defendant failed to provide evidence of patent hold-up or royalty stacking. The plaintiff's multiple offers and negotiations over four years without counteroffers negated such claims. The defendant's conduct was characterized as hold-out, delaying licensing and enjoying use of patented technology without payment.

Comparable Licenses

The plaintiff's comparable licenses were held admissible and relevant, involving entities similarly situated to the defendant, supporting the FRAND rates offered.

Offers Made to Defendant

The plaintiff made multiple offers, including in 2013, 2014, 2015, and 2015 (oral), which the defendant did not accept or counter. The offers were consistent with court-approved rates in similar cases.

Limitation Period for Damages

The Court held that damages can be claimed from the date of publication of the patent application, not limited by the three-year limitation under the Limitation Act, as the Patents Act provisions prevail. The defendant was aware of the patents and infringement from November 2011, so damages were awarded from that date.

Calculation of Damages

The Court applied the FRAND royalty rate of 1.05% of the net selling price of devices, adjusted to reflect the invalidation of one patent out of eight. Using sales data provided by the defendant, damages were calculated to be approximately Rs. 244 crores, with interest.

Costs

The Court awarded actual costs to the plaintiff, considering the extensive litigation, conduct of the parties, and the defendant's lack of good faith in negotiations.

Relief

The Court decreed damages in favor of the plaintiff, allowed revocation of the invalid patent, directed issuance of certificates of validity for the remaining patents, and ordered costs.

3. SIGNIFICANT HOLDINGS

"The inventions that are solely directed towards algorithms, mathematical methods, business methods or are computer programmes per se, would not satisfy the test of patentability and would consequently, not be inventions. However, an invention that merely incorporates algorithms, sets of instructions, mathematical or business methods within a method or system, and satisfies all the criteria for patentability, is not inherently non-patentable."

"The 'Seven Stambhas Approach' provides a clear framework for assessing novelty, reflecting the distinction between novelty and non-obviousness."

"The patentability of inventions involving computer programs should be assessed based on the technical advancements and practical application in solving real-world problems, not merely on the presence of algorithms or computer-executable instructions."

"The 'Doctrine of Exhaustion' requires clear and convincing evidence that the product was sold by or with the consent of the patent holder; mere importation from a licensed chipset manufacturer without proof of license extending to end products does not suffice."

"The two-step test for infringement of SEPs involves (i) mapping the patent claims to the standard, and (ii) showing that the implementer's device conforms to the standard."

"FRAND commitments require licensing on terms that are fair, reasonable, and non-discriminatory, balancing the interests of patent holders and implementers, and preventing both patent hold-up and hold-out."

"Damages for infringement of SEPs are to be calculated based on royalties payable under a FRAND license, typically using the net selling price of the end-product as the royalty base, not the smallest saleable patent practicing unit."

"Licensing of the entire portfolio of SEPs is necessary to ensure interoperability and avoid administrative burdens; seeking royalties only for asserted patents is impractical and contrary to industry practice."

"Comparable licensing agreements provide the best evidence of FRAND rates, with the top-down approach serving as a cross-check."

"Patent hold-up and royalty stacking claims require concrete evidence; absent such evidence, allegations are rejected."

"The defendant was an unwilling licensee, having failed to negotiate in good faith, delayed signing NDAs, and filed suit to avoid licensing."

"Damages are payable from the date the defendant was aware of the patent and infringement, not limited by the Limitation Act but governed by the Patents Act."

"The Court awarded damages of Rs. 244,07,63,990/- plus interest, directed issuance of certificates of validity for seven patents, and allowed revocation of one patent."