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How Delhi HC upheld tech developer’s right to property – BusinessLine

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Cellular technological standards such as 2G, 3G, 4G and now 5G are bringing enormous and are crucial to . Standardised technologies are often protected by standard essential patents (SEPs), which are typically available for licensing on ‘fair, reasonable and non-discriminatory (FRAND)’ terms. FRAND terms are to be determined by the parties (technology users and developers) in good faith licensing negotiations. benefits to the whole economydriving the Internet of Things
If the parties cannot agree on the terms, they may litigate, potentially in different jurisdictions. When this happens, implementers are increasingly seeking an anti-suit injunction (ASI) — that is, an order by a court in one country restraining a party from initiating or continuing proceedings in foreign courts. As a result, some Chinese courts have recently issued ASIs prohibiting technology developers from enforcing their SEPs and from litigating FRAND licensing terms anywhere in the world until the relevant Chinese case is concluded. Consequently, the SEP owner was forced to withdraw or suspend litigation in other countries or face a daily fine for non-compliance.
In the parties had been unsuccessfully negotiating a FRAND licence for six years when Xiaomi brought suit asking the Wuhan Court to determine the global FRAND royalty rate for Interdigital’s entire SEP portfolio. In response, Interdigital initiated a patent infringement suit against Xiaomi in July 2020 before the Delhi High Court, involving six Indian SEPs. On September 23, 2020, however, the Wuhan Court issued an ASI: (1) ordering Interdigital to immediately withdraw or suspend any pending SEP litigation before the Delhi High Court; and (2) prohibiting it from initiating any SEP suit against Xiaomi or requesting adjudication of FRAND royalty terms before any other court anywhere in the world, until the case before the Wuhan Court is resolved. If Interdigital failed to comply, it would be liable for a penalty of 1 million Chinese yuan (about ₹1.15 crore) per day. Interdigital vs Xiaomi
The Delhi High Court responded by granting an anti-anti-suit injunction (AASI) prohibiting the enforcement of the Wuhan ASI in a preliminary order dated , which was later confirmed in . The Delhi High Court pointed out the negative impact of Wuhan’s ASI on the rights of Indian citizens to have access to justice. According to the Court, the right to obtain civil redress is “the very essence of civil liberty”; it is “sacred and fundamental”, deriving from fundamental constitutional rights. In the Delhi High Court’s view, it is impermissible for a court in one jurisdiction to prevent a party from pursuing an infringement case before a court of another country, except where the “continuation of the infringement proceedings are vexatious or oppressive to the proceeding pending before the injuncting court”. The court also emphasised that “no vexation or oppressiveness” was found on the side of Interdigital as it was only exercising its right to enforce its national patents. The court noted that allowing Wuhan’s ASI to proceed would require the SEP owner to helplessly watch as its patents are continuously infringed without being able to “lift a finger to prevent it”, rendering the Patents Act “both otiose and impotent”. October 2020May 2021
Two additional aspects of the AASI are important. First, the Delhi High Court noted that the two cases (filed in China and in India) were of a different nature. The Wuhan Court was asked to determine the terms of a global FRAND royalty rate for Interdigital’s whole SEP portfolio, while the Delhi High Court was asked to rule on whether there was an infringement of six Indian SEPs and to decide whether to grant an injunction in case Xiaomi refuses to acquire a licence at the established FRAND rates. The Delhi High Court also stated that it would look at the FRAND royalty rate only for the patents in suit and would not, as it currently stands, determine a global FRAND portfolio rate as in the Wuhan proceedings. Second, the Delhi High Court considered the Wuhan Court’s ASI as oppressive and unjustified as it prevented Indian courts from adjudicating claims of infringement of Indian patents. This was held to be against international comity, warranting an AASI. Interdigital vs Xiaomi prima facie
The Delhi High Court’s AASI order is in line with the practice and views of European courts. In the cases in and , courts also granted AASIs, holding that a foreign ASI goes against an SEP owner’s fundamental rights to property and effective judicial protection, both guaranteed under the EU Charter of Fundamental Rights and the European Convention on Human Rights. Moreover, the added that an implementer who threatens or requests an ASI cannot be regarded as a ‘willing licensee’ and risks an injunction for infringement of SEPs. Hence, the Delhi High Court reached an outcome that protects the fundamental rights of technology developers and follows international best practices. IPCom and LenovoFrancethe UKMunich Regional Court
The writer is a research fellow at European University Institute, specialising in intellectual property rights and competition law
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