Centre for Internet & Society

An analysis of the commonalities in big-ticket patent infringement lawsuits pertaining to mobile devices.

Last updated: April 29, 2016

A detailed compilation of important facts of patent infringement lawsuits pertaining to mobile technologies in India has been published previously. This blog post is an attempt to join the dots in the lawsuits.

Who has sued and been sued?

Ericsson has sued Kingtech (2011), Micromax (2013), Gionee (2013), Intex (2013), Xiaomi (2014), iBall (2015), and Lava (2015). Vringo filed two different suits against ZTE (2013 and 2014), which were later clubbed, and one suit against Asus and its distributor in New Delhi, Nusol (2014). Vringo and ZTE as well as Ericsson and iBall have settled the respective suits out of court. The rest of the suits are sub judice in the Delhi High Court at the time of writing.

Telefonaktiebolaget LM Ericsson provides communication services and infrastructure. Ericsson was a "mobile phone manufacturer" until it parted ways with Sony Corp. in 2011.[1] As of 2013, Ericsson claimed to hold a third of 2G standard essential patents (SEPs) and a quarter of 3G SEPs.

Kingtech, Gionee, and Xiaomi are based in China and manufacture low-cost mobile phones. Micromax, Intex, iBall, and Lava are low-cost Indian mobile phone firms with original equipment manufacturers (OEMs) in China.

US-based Vringo Infrastructure Inc. owns several portfolios of patents pertaining to mobile technologies. To quote from a description on its website, Vringo is “engaged in the development and monetisation of intellectual property and mobile technologies”.

ZTE is a multinational company headquartered in China. It manufactures products in the telecom infrastructure, telecom equipment, systems, mobile phone, and telecom software spheres and also provides services in these domains. As of mid-2014, ZTE claimed to hold more than 17,000 patents worldwide.

Asus is a large multinational company based in Taiwan. It manufactures computer hardware, desktop computers, laptops, tablets, and mobile phones.

What have they sued over?

Ericsson has sued Micromax, Gionee, Intex, Xiaomi, and iBall over the alleged infringement of eight of its SEPs -- five adaptive multi-rate (AMR) patents, two 3G patents, and one 2G (EDGE) patent; Kingtech was only sued over the five AMR patents. These patents are applicable to technologies that go into the baseband chip of the mobile phone. The companies sued by Ericsson used baseband chips manufactured by MediaTek on account of their comparatively low cost. These technologies are also critical to mobile devices. In simple terms, they pertain to the audio quality of calls, the handling of services in a mobile devices, and transmission and reception of calls.

Vringo sued ZTE in 2013 over the alleged infringement of an SEP pertaining to the cdma2000 family, and in 2014 over a 2G and 3G infrastructure SEP. Vringo sued Asus and one of its distributors in New Delhi in 2014 for allegedly infringing on a non-SEP pertaining to text prediction software in its devices. Asus claimed in court that the software was licensed by Google, so the latter was made a party to the suit.

What damages were awarded?

Micromax, Intex and Xiaomi received ex-parte interim injunctions on the sale, import, distribution, advertising and manufacture of their mobile devices that implemented 3G, AMR and EDGE standards.

iBall and its agents and affiliates have been restrained from importing devices that are allegedly infringing in nature from September 9, 2015 until the court hears the case next. No publicly available information about whether an injunction was granted against iBall was found.

Micromax entered into an agreement with Ericsson in March 2013 to pay interim royalty:

  • For phones or devices implementing GSM -- 1.25% of the sale price of every unit.
  • For phones or devices implementing GPRS and GSM -- 1.75% of the sale price of every unit.
  • For phones or devices implementing EDGE, GPRS, and GSM -- 2% of the sale price of every unit.
  • For mobile phones and tablets that support voice calling implementing WCDMA/ HSPA -- 2% of the sale price of every unit.
  • For dongles and data cards -- USD 2.50 for every unit sold.

(These rates were revised in November 2014 to include royalties to be paid till 2020).

Gionee and Intex were ordered to pay interim royalties to Ericsson by the court based on the same rates as Micromax.

Xiaomi was ordered to deposit Rs. 100 towards royalty for every device it imported to India from the date of the launch of the device in India to January 5, 2015.

The injunctions against Micromax, Intex and Xiaomi on the sale et cetera of their devices were lifted by the court after the total royalty amount, or a part of it, was paid or deposited.

On a related note, Ericsson had sued Saral Communications, a security electronics company based in New Delhi in 2013 over the alleged infringement of SEPs pertaining to wireless technologies. A court order reveals that Ericsson cranked up the royalties demanded from Saral to equal those being paid by Micromax and terming it a way of complying with the non-discriminatory part of the “FRAND” commitment. Ericsson claimed in court that an email sent to Saral earlier mentioning lower royalty rates was a “mistake”.[3]

Kingtech, the first mobile phone manufacturer to be sued in India by Ericsson was somewhat an exception. Ericsson notified the Customs department to detain a consignment of Kingtech’s mobile phones and submitted lab test reports and an affidavit by an expert (who has not been named in publicly available documents). Customs officials detained the goods under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 but later released them following an order of the Delhi High Court. The court observed that the Commissioner of Customs was not the appropriate and competent authority to determine if the goods in a shipment infringed on patents, and that only the courts were empowered to do so. Subsequently, Ericsson approached the Delhi High Court and not the Customs Department with its claims of patent infringement against other low-cost smartphone makers.

Who is an “expert”?

In all the suits filed by Ericsson, the court upheld its claims of patent infringement. The claims were supported by reports from laboratory tests conducted in-house by Ericsson on “representative” infringing handsets and affidavits submitted by an “independent expert” appointed by Ericsson. In December 2011, when the Delhi High Court ordered for the release of Kingtech’s mobile devices detained by the Customs department, Ericsson requested that sample mobile phones from Kingtech’s intercepted consignment be lab-tested by a third-party to determine patent infringement. Subsequently, the court ordered for a sample to be sent to two laboratories, Sasken and CanvasM. There is no publicly available information about the results of the lab tests.

Sasken is an engineering R&D and IT services provider headquartered in California, US with a multinational presence. CanvasM is the mobility unit of Tech Mahindra with a laboratory capable of testing 3G devices.[2]

In the suit against Intex, Ericsson’s lab test reports were accompanied by affidavits from India-based telecom expert Vijay Ghate and Max Olofsson, the Director of Patent Licensing at Ericsson.

The question of who could be a neutral, independent expert agreeable to all litigating parties came close to be answered in the Vringo vs. ZTE case. Vringo had submitted an affidavit by one Regis J. Bates to support its claims of patent infringement. A Single Judge of the Delhi High Court observed in his ruling that Bates had stated in his affidavit that he was not a patent attorney nor did he intend to provide “expert opinions” on Indian patent law in his report. Additionally, he did not possess a degree in science, technology, or engineering; had served in only managerial positions throughout his career; and did not possess practical or research experience. Citing Rule 103 of the Patents Rules, 2003 and Section 45 of the Evidence Act, 1872, the court held that Bates was not an expert. The Single Judge directed that a panel of three “scientific advisors or experts” be appointed from three premier engineering colleges in Delhi by the heads of the respective institutions.

(Rule 103 of the Patents Rules, 2003 states that before a person is qualified to be claimed as a scientific advisor, he must fall in all the three categories:

a) He holds a degree in science, engineering or technology or equivalent

b) He has at least fifteen years practical or research experience; and

c) He holds or has held a responsible post in a scientific or technical department of the Central or State Government or in any organisation.)

In response to an appeal made by Vringo on the above order, a two-member bench of the Delhi High Court opined that a person without an academic degree in a specialised field could be an expert by virtue of their vocation or avocation. The Bench upheld Bates’ verification of Ericsson’s lab test report in his capacity as an expert. For the first time since litigation over mobile technology patents started in India, the court agreed to appoint a “scientific advisor” from a list of experts to apprise the court about the technical and scientific evidence placed on record. The list was to be drawn up by the litigating parties. Owing to the lack of publicly available information, it is not known yet if the advisor has been appointed or if she has submitted her evaluation to the court.

CCI’s holding in Micromax, Intex and iBall's cases

In the lawsuits against Micromax, Intex, and iBall, the Competition Commission of India (CCI) found Ericsson to be, prima facie, dominant in “the market of standard essential patents [SEPs] for 2G, 3G and 4G technologies in GSM standard-compliant mobile communication devices in India”. In all three cases, the justification given by the CCI was:

As of 2013, Ericsson held 33,000 patents worldwide, with 400 granted in India. Ericsson claimed to hold a third of 2G SEPs and a quarter of 3G SEPs. As the largest holder of SEPs pertaining to these technologies, Ericsson was deemed to be in a dominant position. Further, in the absence of an alternative technology in India, Ericsson enjoyed complete dominance over its present and prospective licensees in the relevant market.[4][5][6]

The CCI directed an investigation over Ericsson's abuse of dominant position, to be conducted by the Director General of the CCI after clubbing the Micromax and Intex cases as well as in the iBall case.

Delhi High Court's response to writ petions made by Ericsson against the CCI

In all three cases, the Delhi High Court (DHC) immediately restrained the actions of the CCI. The court found that the CCI had “entered into an adjudicatory and determinative process by recording detailed and substantial reasoning at the Section 26(1) stage itself”, which rendered the remedy available to Ericsson under Section 26(7) of having the facts known through a more detailed investigation almost “illusory”. The court allowed the Director General to continue with his investigations but issued a warning that the findings of the CCI ought not to prejudice the DG's investigations. The court also specified that the final report of the DG's investigation shouldn't be made public and that the CCI not pass a final order on the matter. Justice Manmohan, the Single judge in the three matters, also restricted the DG’s ability to investigate by specifying that any Ericsson official residing outside India who needed to be questioned could only be summoned after taking permission from the court.[7] [8] [9]

In a judgement dated March 30, 2016, the court dismissed all the writ petitions and applications pertaining to the role of the CCI before it and made these observations:

1. Jurisdiction of the CCI: According to Ericsson, neither patents nor licences for patents are "goods" or "services". Therefore, a patent holder cannot not be considered an "enterprise" under Section 2(h) of the Competition Act, in the context of any allegation of demand of excessive royalty or imposition of unfair and unreasonable terms for grant of patent licences. The court held that patents are goods, and consequently, Ericsson would fall within the definition of an "enterprise". The court also noted that the subject matter of the complaints made by Micromax and Intex cannot be excluded from the purview of the Competition Act and that, "...whether there is any abuse of dominance is solely within the scope of the Competition Act and a civil court cannot decide whether an enterprise has abused its dominant position and pass orders as are contemplated under Section 27 of the Competition Act."

2. Conflict between the Patents Act and the Competition Act: The court held that in the event of any irreconcilable inconsistency between the two legislations, the Patent Act being a specialised statute, would override the general statute, even though the general statute contains a non obstante clause (section 60 of the Competition Act, 2002).

3. Scope of section 3 of the Competition Act: The court held that there is no overlap or inconsistency of section 3, which pertains to anti-competitive agreements, with the Patents Act. It also observed that the proceedings under the Competition Act are not in the nature of a private suit and that the scope of enquiry under section 3 would be restricted to whether there has abuse of dominant position as per the Competition Act.

4. Abuse of dominant position by Ericsson: When Micromax was about to declare an Initial Public Offer (IPO), Ericsson threated it with complaints to the Securities and Exchange Board of India (SEBI). The court held that, "Such threats were, undoubtedly, made with the object of influencing Micromax to conclude a licensing agreement... in certain cases, such threats by a proprietor of a SEP, who is found to be in a dominant position, could be held to be an abuse of dominance".

5. If a willing licensee could enter into licensing negotiations and also challenge the validity of the patents: The court held that, "A potential licensee cannot be precluded from challenging the validity of the patents in question". The court noted that being a potential licensee does not indicate willingness to accept licenses for invalid patents or to waive the right to challenge the [validity of] patents.

Delhi High Court's response to claims made by Intex and iBall before the CCI

A contradiction emerges in Intex’s statements, which were repeated by iBall later.

Intex

On one hand, Intex claimed that it was not aware of the essential nature of the patents held by Ericsson; on the other hand, it filed a complaint before the Competition Commission of India against Ericsson alleging abuse of dominant position. Intex alleged in its complaint to the CCI that owing to the large number of SEPs held by Ericsson and the absence of an alternative technology, Ericsson’s patents were essential to conform to the relevant technical standards. Intex also alleged that Ericsson was abusing its dominant position by charging discriminatory and unreasonably high royalty rates.[10]

The Delhi High Court held that Intex was aware of Ericsson's SEPs and their infringement, because:
a. Paragraph 3.2 of Intex’s complaint to the CCI states that it was unaware of Ericsson’s patents and any infringement thereof. Paragraphs 8.6 to 8.8 of the same complaint state “that the Standard Essential Patents (SEPs) of plaintiff, which form a part of the 2G/3G technology, are necessarily to be applied/used by any Indian telecom/mobile phone operator, in light of the notifications by Department of Telecom and the UASL Agreement thereby leaving defendant and all such companies with 'no non-infringing alternatives' than to implement the SEPs owned by Ericsson in the domain of 2G/3G technology, including the suit patents.”[11]

b. Ericsson had communicated to Intex that the latter was in violation of its SEPs in December 2008 with regard to more than 10 of Intex’s GSM-compliant products. In January 2009, Ericsson  provided an illustrative list of its SEPs to Intex, in response to Intex’s claim that it was not aware of Ericsson’s SEP portfolio in India.[12]

c. Intex’s responded in March 2013 that it respected the SEPs held by Ericsson in India and was willing to obtain a FRAND license.

Further, Intex raised the contention that the patents in question were not essential and therefore not valid only after Ericsson initiated legal proceedings against it.

iBall

In Ericsson v. iBall, the latter alleged that it was unaware of the patents its mobile devices infringed on. Setting aside the claim that iBall was an “innocent infringer”, the Delhi High Court found that, prima facie, iBall should have been aware of the patent infringement. This was because:
d. It was iBall's responsibility to check the validity of patents held by the original equipment manufacturer in China before importing goods.
c. Ericsson had sued Micromax and Intex in the past for infringement of its SEPs relating to 2G and 3G technology and details of such SEPs held by Ericsson were common knowledge, besides being publicly available.
b. Ericsson had made available to iBall a document entitled, “Identification of illustrative iBall products that were using Ericsson’s standard essential patents; Illustrative list of Ericsson’s standard essential patents; Presentation about standards and licensing, 2G/3G example patent lists and 8 claim charts, on March 3, 2015.”[13]

a. Any good that purports to be EDGE, GSM, 3G-compliant must necessarily conform to the standards set by the Department of Telecommunications.[14]

Thus, Intex must necessarily have been aware that it was violating the rights of those who held the patents necessary for the implementation of the standard, especially since no alternate technology to do so is available.[15]

Edited, October 23, 2015: To add information about litigation involving iBall as well as Lava.


[1] Sony Ericsson splits after 10 years in Sony cash buyout, Zack Whittaker, ZDNet, October 27, 2011, http://www.zdnet.com/article/sony-ericsson-splits-after-10-years-in-sony-cash-buyout, Last accessed May 31, 2015.

[2]http://www.business-standard.com/article/press-releases/canvasm-establishes-its-first-3g-device-test-lab-in-india-110122200122_1.html, Last accessed May 31, 2015.

[3] http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=214864&yr=2013, Last accessed May 31, 2015.

[4] M/s Best IT World (India) Private Limited (iBall) and M/s Telefonaktiebolaget L M Ericsson (Publ) and M/s Ericsson India Private Limited, Competition Commission of India, Cci.gov.in, Case no. 04/2015, Paragraph 12, Page 6, May 12, 2015, http://www.cci.gov.in/sites/default/files/042015_0.pdf, Last accessed November 17, 2015. “In view of the foregoing…”

[5] Micromax Informatics Limited and M/s Telefonaktiebolaget L M Ericsson (Publ), Competition Commission of India, Cci.gov.in, Case no. 50/2013, Paragraph 16, Page 7, November 12, 2013, http://www.cci.gov.in/sites/default/files/502013_0.pdf, Last accessed November 17, 2015.

[6] Intex Technologies (India) Limited v Telefonaktiebolaget LM Ericsson (Publ), Competition Commission of India, Cci.gov.in, Case no. 76/2013, Paragraph 16, Page 6, January 16, 2014, http://www.cci.gov.in/sites/default/files/762013_0.pdf, Last accessed November 18, 2015.

[7] In the High Court of New Delhi, W.P.(C) NO. 5604/2015, Telefonaktiebolaget LM Ericsson (PUBL) v Competition Commission of India, September 15, 2015, Last accessed October 20, 2015. http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=194339&yr=2015

[8] In the High Court of New Delhi, W.P.(C) NO. 464/2014, Telefonaktiebolaget LM Ericsson (PUBL) v Competition Commission of India, January 21, 2014, Last accessed November 18, 2015. http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=10114&yr=2014

[9]

In the High Court of New Delhi, W.P.(C) NO. 1006/2014, Telefonaktiebolaget LM Ericsson (PUBL) v Competition Commission of India, February 17, 2014, Last accessed November 18, 2015. http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=33798&yr=2014

[10] Intex Technologies (India) Limited and Telefonaktiebolaget LM Ericsson (Publ), Competition Commission of India, Cci.gov.in, Case No. 76/2013, Paragraph 16, Page 6, January 16, 2014, http://www.cci.gov.in/sites/default/files/762013_0.pdf, Last accessed November 19, 2015.

[11] Intex Technologies (India) Limited and Telefonaktiebolaget LM Ericsson (Publ), Competition Commission of India, Cci.gov.in, Case No. 76/2013, Paragraph 16, Page 6, January 16, 2014, http://www.cci.gov.in/sites/default/files/762013_0.pdf, Last accessed November 19, 2015.

[12] In the High Court of New Delhi, CS(OS) 1045/2014, Telefonaktiebolaget LM Ericsson vs.Intex Technologies (India), Indiankanoon.org, Paragraph 83, March 13, 2015, Last accessed March 15, 2015. http://indiankanoon.org/doc/74163100

[13] In the High Court of New Delhi, I.A. No.17351/2015 in CS (OS) 2501/2015, Telefonaktiebolaget LM Ericsson (PUBL) v M/S Best IT World (India) Private Limited (iBall), September 2, 2015, Paragraph 17, Page 10, http://lobis.nic.in/ddir/dhc/MAN/judgement/03-09-2015/MAN02092015S25012015.pdf, Last accessed October 23, 2015.

[14] The damages and privity problem in SEP infringement suits: Will legislation solve the case?, Thomas J Vallianeth, Spicy IP, September 7, 2015, http://spicyip.com/2015/09/the-damages-and-privity-problem-in-sep-infringement-suits-will-legislation-solve-the-case-part-i-of-ii.html, Last accessed November 19, 2015.

[15] In the High Court of New Delhi, I.A. No.17351/2015 in CS (OS) 2501/2015, Telefonaktiebolaget LM Ericsson (PUBL) v M/S Best IT World (India) Private Limited (iBall), September 2, 2015, Paragraph 18, Paragraph 23, http://lobis.nic.in/ddir/dhc/MAN/judgement/03-09-2015/MAN02092015S25012015.pdf, Last accessed October 23, 2015.

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