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Ericsson has a (i)Ball at the Court
On 2nd September, 2015, Hon’ble Mr. Justice Manmohan Singh of the Delhi High Court, issued an interim injunction, restraining the Mumbai-based company, iBall from importing any allegedly infringing devices until the next hearing in the case, I.A No. 17351/2015 in CS(OS) 2501/2015.
The Swedish major Ericsson, which provides services, software and infrastructure in the information and communications technology space, had filed a suit for permanent injunction restraining infringement of patents, damages, rendition of accounts, delivery up etc. against the Indian company iBall which imports computer peripherals, smartphones and tablets.
The law suit relates to three technologies in the field of telecommunications pertaining to 2G, EDGE and 3G devices (mobile handsets, tablets, dongles etc.). The three technologies are:-
- Adaptive Multi-Rate (AMR) speech codec – a feature that conserves use of bandwidth and enhances speech quality; (AMR)
- Features in 3G phones – Multi service handling by a Single Mobile Station & A mobile radio for use in a mobile radio communication system; (3G)
- Enhanced Data Rates for GSM Evolution (EDGE) – A transceiving unit for block automatic re-transmission request; (EDGE)
These technologies are essential for mobile devices (handsets, tablets, dongles etc.) to inter-operate with network equipment, as per the standards prescribed by international standardization bodies that have been adopted and implemented in India by the Department of Telecommunications (DoT).
Contentions of the defendant:
- The counsel for the defendants (iBall) contended that iBall and Ericsson had several meetings and exchange of communication from 2011 to 2015, but the plaintiff (Ericsson) did not provide relevant details to the defendant so that the defendant could be aware of the legal rights of the plaintiff.
- The plaintiff had an obligation to provide all the necessary details before execution of any kind of agreement and the plaintiff had failed to do the same.
- The plaintiff in the present matter is refusing to amend the terms of confidentiality under the NDA which prohibits the defendant from verifying with the Chinese manufacturers for any alleged claims of infringements.
- The defendant is not the manufacturer, and is merely an importer of the products in question and it is only the Chinese manufacturers who could verify the claims of patent infringement, if any. Thus, by maintaining the terms of the NDA as such, It is actually the plaintiff who is unwilling to negotiate on the terms of the NDA.
- The conduct of the plaintiff is thus unfair and onerous.
Contentions of the plaintiff:
- The defendant was provided with all the relevant details and had made many admissions in their complaint, about the legal rights of the plaintiff, including the complaint made by them to the Competition Commission of India (CCI).
- The plaintiff approached the defendant in November, 2011 and informed them about the factum of its ownership of the portfolio of standard essential patents relating to the 2G and 3G technology and disclosed its willingness to discuss a licensing arrangement on FRAND terms, which would be beneficial to both the parties
- Instead of approaching the plaintiff for seeking a FRAND license, the defendant claimed that it was merely a vendor and imported all its telecommunication devices from China and as such was not aware about any such infringement and if there was an infringement, it was only ‘an innocent infringer’.
- The plaintiff provided the following information to the defendant, to conclude the execution of the NDA so as to enable both the parties to initiate commercial discussions.
- Identification of illustrative iBall products that were using Ericsson’s standard essential patents;
- Illustrative list of Ericsson’s standard essential patents and
- Presentation about standards and licensing, 2G/3G example patent lists and 8 claim charts;
Findings of the Court:
The Hon’ble Court found that the plea of the defendant, that it was not aware about the rights claimed by the plaintiff, had no force in the light of the assertions made in the plaint and the documents filed by the plaintiff. The expert affidavit filed by the plaintiff along with reports of the internal tests which were performed on three devices namely; iBall Andi Xotic, iBall Cobalt Oomph and iBall Andi Sparkle, confirmed that the three mentioned devices used AMR speech codecs as defined in the relevant standard of ETSI (European Telecommunications Standards Institute.) for 3G technology and were thus infringing the plaintiff’s AMR patents in 3G mode and secondly, that the mentioned devices of the defendant used AMR functionality in 2G mode as well and were thus infringing the plaintiff’s AMR patents even when the said device operated on a 2G network.
The Court also took note of the fact that Ericsson had placed on record technical specifications of the three tested devices, which indicated that all three were compliant with 2G, EDGE and 3G technology.
Further, the Court observed that iBall was aware about the claim of Ericsson’s portfolio of standard essential patents related to GSM, GPRS, WCDMA etc. technology for which there is no substitute and which are necessarily used by telecommunication devices claiming to be GSM, GPRS, WCDMA etc. The Court arrived at this conclusion because before the matter reached it, iBall had filed a case before the CCI alleging that Ericsson was abusing its dominant position.
The Hon’ble Justice stressed on the fact that, in India it takes almost 8-10 years before a patent is even granted and if 4-5 years are spent only in negotiations, just about 5 years of patent protection remains thereafter. Under such circumstances, it becomes imperative that patent rights be determined in one way or another on an urgent basis.
The Hon’ble Court thus made the case in favor of Ericsson, and justified the grant of interim injunction, stating that the plaintiff would suffer irreparable loss and injury in the absence of an interim order, because of the reason that the defendant would keep on marketing the mobile devices without the FRAND agreement and without paying any royalty to the plaintiff. The interim order becomes effective from 9th September, 2015.
The Delhi High Court had earlier ruled in favor of Ericsson in November 2014 in its fight against Micromax who was asked to pay a royalty that amounted up to 1% of the selling price of its devices to Ericsson for using its patents on technologies that are essential to manufacture the products.
This interim order thus comes as a double whammy to Ericsson with a back to back victory, although a temporary one in this case. The interim order holds until 31st December, 2015, which is the deadline set by the Court to conclude the trial. Who would celebrate the New Year in its true meaning, is a game of wait and watch!
Authored by Gaurav Mishra