In a recent order, the Delhi High Court rejected Nokia’s application under Order XXXIX Rule 10 of the CPC for deposit of royalty payable by Oppo for use of Nokia’s Standard Essential Patents (SEPs). The SEPs in the case relate to 2G, 3G, 4G, and 5G technologies. The patents asserted by Nokia are as follows:

(i) Indian Patent No. 286352 (IN ‘352) titled ―System and Method for Providing AMR-WB DTX Synchronization,
(ii) Indian Patent No. 269929 (IN ‘929) titled ―Method Providing Multiplexing for Data Non Associated Control Channel and
(iii) Indian Patent No. 300066 (IN ‘066) titled ―Additional Modulation Information Signaling for High-Speed Downlink Packet Access.

Nokia argued in the case that Oppo is implementing 2G, 3G, 4G, and 5G standards, and is therefore certainly using its patents, and that Oppo has admitted to the same. It further submitted that Oppo had earlier taken a license from Nokia, which expired, and that Oppo has been resisting a license after its expiry.

Oppo countered Nokia’s arguments stating that the earlier license was not limited to the patents in suit, and that Nokia’s patent portfolio had undergone a change requiring fresh negotiations. It also pointed out that Nokia has to prove that the patents in suit are SEPs, and that it had challenged the validity of the patents. Oppo further pointed out that Fair Reasonable and Non-Discriminatory (FRAND) terms are applicable to SEPs, and that Oppo had not admitted to any particular royalty value.

After reviewing the facts and submissions of parties, the Court came to the conclusion that Oppo is not required to make any deposit under Order XXXIX Rule 10. Relevant paras of the Court’s order read as follows:


87. In the light of the above, I do not deem it necessary to burden this decision with any further discussion on the dynamics of the proposals and counter proposals between Nokia and Oppo for two reasons. The first is that the Court in the present case is seized only with the application under Order XXXIX Rule 10 of the CPC, which requires a clear, categorical and unequivocal admission that the defendant is holding monies of the plaintiff or that certain monies are due from the defendant to the plaintiff. For the reasons already elucidated hereinabove, no such unequivocal admission of liability can be said to exist in the present case. Though there may be substance even in the contention of Mr. Rajagopal that the present suit is essentially restricted to three patents, I do not deem it necessary to return any categorical finding in that regard, as it is not necessary, in my opinion, to do so. Suffice it to state, that even if the present plaint were to be considered as encompassing the entire SEP portfolio of Nokia, no case for directing interim payment under Order XXXIX Rule 10 of the CPC can be said to exist. The first FRAND license agreement has, admittedly, expired. There has been no consensus, ad idem, between Nokia and Oppo on the terms at which, the agreement is to be extended or continued further. Oppo has, in its communications, clearly stated that it had reservations regarding the reasonability of the terms at which Nokia was seeking to grant a license to Oppo to exploit its patent portfolio and as to whether they were actually FRAND. Oppo has, at all times, reserved its right to question the essentiality of the suit patents, as also the liability of Oppo to pay royalty to Nokia for the exploitation thereof, at any rate.

88. Besides, and secondly, in the written statement, filed by way of response to the plaint instituted by Nokia, Oppo has contested Nokia’s case at all levels. It has disputed Nokia’s contention that the suit patents are SEPs, as also that it was exploiting the said suit patents and that the royalty rate at which Nokia was willing to permit such exploitation were FRAND.

89. These are all matters which require trial and on which, in the absence of a trial, it would be hazardous to venture even a prima facie opinion, as the present application would require this Court to return. I am unable to glean, from the material on which Nokia has sought to place reliance, any admission of liability of Oppo’s part, as would be sufficient to justify an order under Order XXXIX Rule 10 of the CPC. The offers and counter offers between Nokia and Oppo are no more than what they purport to be, i.e. offers and counter offers. In its email dated 5th December 2021, Oppo has laid to rest any impression that Nokia may have had, to the effect, by extending such offers or counter offers, Oppo was admitting its liability to take a license from Nokia for operationalizing its devices.

Conclusion

90. For the aforesaid reasons, I am not convinced that Nokia has been able to make out a case for issuance of a direction to Oppo, under Order XXXIX Rule 10 of the CPC, to make any deposit, at this stage of the proceedings. I.A. 7700/2021 filed by Nokia under Order XXXIX Rule 10 of the CPC is accordingly dismissed.

What are Standard Essential Patents?

While pronouncing the order, Justice Hari Shankar, gave a simple overview of Standard Essential Patents in the following words:

3. SEPs form a category of patent sui generis, as has been noted by this Court in its judgment in Interdigital Technology Corporation v. Xiaomi Corporation1, though SEP litigation, at least in this country, is governed by the same fundamental substantive and procedural principles that govern any other litigation. Unlike normal patents, the use, by another of a patent held by one party, does not, ipso facto, entitle the party, as a right, to an injunction restraining the other party from using the patent. This is because SEPs, by their very nature, constitute standards for operation of technologies which are required worldwide and form an integral part of telecommunication across the globe. An inalienable element of public interest, therefore, is ingrained in allowing accessibility to such patents.

4. No SEP holder is, therefore, entitled to monopolise the SEPs held by him. He is entitled to hold the SEPs only if he offers the SEPs to others, who need to use the SEPs for working the concerned technology at rates, which must be Fair, Reasonable And Non Discriminatory (FRAND). If a person who desires to use the technology contained in a SEP held by another, he must be willing to obtain a licence from the latter on payment of FRAND royalty rates. Equally, the SEP holder must be willing to offer use of the SEPs held by him at FRAND rates to every willing licensee. A person, who is unwilling to pay licence fees at FRAND rates, is, therefore, condemned as an ―unwilling licensee and is not entitled to use the SEP.

5. It is necessary, before proceeding further, to understand the concept of SEP as well. In telecommunications, interoperability in instruments is essential. For this, the instruments must be compatible to one technology. The technical specifications of the technology used by these instruments must, therefore, conform to a common design. Industry groups, which set such common standards in different areas of technology, are known as Standard Setting Organizations (SSOs). A ―standard is defined by the IPR policy of the ETSI as meaning ―any standard adopted by ETSI including options therein or amended versions and shall include European Standards (ENs), ETSI Standards (ESs), Common Technical Regulations (CTRs) which are taken from ENs and including drafts of any of the foregoing, and documents made under the previous nomenclature … the technical specifications of which are available to all MEMBERS, but not including any standards, or parts thereof, not made by ETSI.

6. Certain standards are essential. In order for a standard, on the basis of which telecommunication technology can be implemented and operated to be treated as essential, the technology must be incapable of implementation without using that particular standard. In other words, a person who employs that technology must necessarily be using that standard. That standard must, in other words, be essential for using that particular technology. The IPR policy of ETSI defines ―essential, with respect to a particular standard, as a standard without which ―it is not possible on technical (but not commercial) grounds, taking into account normal technical practice and the state of the art generally available at the time of standardization, to make, sell, lease, otherwise dispose of, repair, use or operate Equipment or Methods which comply with a Standard without infringing that IPR.

This is further clarified by postulating that ―in exceptional cases where a Standard can only be implemented by technical solutions, all of which are infringements of IPRs, all such IPRs shall be considered Essential. The plaint, in the present case, seeks to simplify this concept by explaining that ―an essential patent in context of a given standard, or a standard essential patent implies that it is technically not possible to manufacture, sell, lease etc. equipment or technology which complies with such standard without making use of the patented technology in question In other words, ―it is not possible to comply with the given standard, without infringing upon the patents which are essential to that standard. This, in my considered opinion, is a reasonably accurate description of a SEP and, the defendant, too, in its written statement filed by way of response to the plaint as well as in its reply to the present application, does not seriously question it.

7. For the purposes of the present application, one need only bear in mind the following factors:
(i) A SEP is a patent without using which it is impossible to work a particular technology. For this purpose, the SEP must map onto the standard set by SSOs and adopted by the ETSI.
(ii) A holder of a SEP is not entitled to any absolute monopoly on the SEP, as is generally applicable to other holders of patents. He must necessarily be ready and willing to allow others to use the SEP on licence basis.
(iii) The license must be made available by the SEP holder on FRAND terms.
(iv) No person who is unwilling to take a license from the holder of a SEP on FRAND terms is entitled to use the SEP.

Such a person would be an unwilling licensee, and any such use of the technology contained in the SEP would amount to infringement within the meaning of Section 108 of the Patents Act, 1970. Such a licensee could be injuncted from the use of such patent.

Case Citation: Nokia Technologies Oy vs Guangdong Oppo Mobile … on 17 November, 2022 Indian Kanoon – http://indiankanoon.org/doc/56297912/

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