In yet another instance of a patent infringement spat between a domestic handset manufacturer and a global technology provider, the Delhi High Court has termed Lava International an unwilling licensee and guilty of patent infringement in its dispute with Swedish technology major Ericsson and in its interim order asked it to deposit a sum of R50 crore with the court, failing which Lava will not be allowed to import mobile phones under the patents and technology, which are subject of the suit patents, and sell them in the market directly or indirectly through agents, shopkeepers, dealers, distributors or any other person on its behalf. The court has even made exports subject to the deposit of the prescribed amount.
While the order comes as a relief for Ericsson in yet another patent dispute case — it has earlier got similar favourable orders in its disputes with other domestic handset makers such as Micromax, iBall and Intex — what is notable that in the 67-page order, justice Manmohan Singh has unambiguously and in rather strong language termed Lava an ‘unwilling licensee’ that adopted delaying tactics and never showed any interest in negotiating the terms of the patents with Ericsson despite the latter making efforts towards that end.
The court has ordered that Lava, in addition to depositing the amount, file the statement of accounts for the period of May 31, 2011, to May 2016 and continue to file the same every quarter till the final judgment is delivered in the case. It has allowed Ericsson to move an application for further deposit in case the final hearing of the suit is delayed on account of Lava.
Holding Lava guilty of patent infringement and dismissing its petition for relief by terming it as false and frivolous, the court imposed a cost of R50,000 on it which is to be deposited in the Prime Minister’s National Relief Fund.
When contacted by FE, Lava International’s chairman and managing director Hari Om Rai said he did not want to comment on the issue, since the matter is in the courts. “We have no comments,” Rai said.
Legal experts told FE that in the current case as well as in the ones in the past, the court has basically gone on the premise that essential patents which are regulated by a standard development body needs negotiation between the patent holder and implementers for arriving at the royalty rates payable and wherever it is established that the implementers have not bothered to enter into negotiations with the patent holders on the royalty rates, they have been asked to make interim payment till the final suit is decided.
The negotiations for the royalty rates are done on the principle which are fair, reasonable, and non-discriminatory (FRAND) in nature.
The court in its order has quoted several instances to show how Ericsson was willing to negotiate the royalty rates under FRAND but Lava did not bother. “Thus, the plaintiff (Ericsson) has been able to make out a strong prima facie case in its favour and against the defendant (Lava). Balance of convenience also lies in favour of the plaintiff and against the defendant. In case the interim order is not passed or the defendant is not ready to enter into FRAND agreement with the plaintiff, the other licensee would also take the same stand which is being taken by the defendant,” the court said in its order.
It quoted Ericsson’s senior counsel as stating that from a very small business in 2011, when the negotiations started, the defendant’s (Lava’s) business has increased extensively. “At present, the business of defendant in mobile industry is about R7,000 crore. The defendant is the leader amongst the other traders and it is intentionally and deliberately not entering into the agreement with the plaintiff. The defendant has also failed to disclose this court as to under which technology its phones are being used,” the order observed.