By Ahona Chakrabarty, KIIT School Of Law, Bhubaneswar.
This case relates to an application filed by a company called Ericsson against a Chinese company called Xiaomi. The case is being heard in the Hon’ble High Court at Delhi and recently the Court has passed an injunction order on the defendants, which by another order has been partly lifted. In order to understand the facts certain terms and phrases have to be explained.
A patent is an exclusive right granted for an invention, which is a product or a process that provides a new way of doing something, or offers a new technical solution to a problem. Patent protection means that the invention cannot be commercially made, used, distributed or sold without the patent owner’s consent. These patent rights are usually enforced in a court, which, in most systems, holds the authority to stop patent infringement. Conversely, a court can also declare a patent invalid upon a successful challenge by a third party.
An injunction is an equitable remedy in the form of a court order that requires a party to do or refrain from doing specific acts. A party that fails to comply with an injunction faces criminal or civil penalties, including possible monetary sanctions and even imprisonment. Injunctions can be of several types like Preliminary Injunctions, Preventive Injunctions, Mandatory Injunctions, Permanent Injunctions, Restraining Orders etc.
Standard Essential Patents are patents that cover technologies that are considered an established standard in a particular industry. Some standards are de facto, meaning a particular industry has simply chosen to adopt that standard without any pre-existing agreement or intentional coordination; others are de jure, meaning a government agency has imposed that standard on the industry; and still others have been adopted by a standard setting organization (SSO) to which many, if not all, of the participants in a particular industry belong on a voluntary basis.
The Plaintiffs, in this case, state that they are the owner of eight patents i.e., IN203034, IN203036, IN234157, IN203686, IN213723, IN229632, IN240471 and IN241747. The suit relates to three technologies in the field of telecommunication pertaining to 2G and 3G services. As per the averments made in the plaint, the Plaintiff had previously invited. As per the plaint the Plaintiff had previously invited the Defendants to use the Plaintiff’s ownership of Standard Essential Patents qua GSM/GPRS/EDGE/WCDMA technology. The Plaintiff had specifically requested the Defendants to obtain a licence qua the Plaintiff’s patents but in spite of this, instead of obtaining licence, Defendants launched its infringing devices in India in July 2014. The Court found a prima facie case and ordered an ad interim injunction against the defendants. As per order dated 8th December 2014, the court restrained the Defendants from manufacturing, assembling, importing, selling, offering for sale, or advertising products in relation to the mentioned patents so as to prevent infringement till further orders. The Central Board of Excise and Customs has also been directed not to allow the import of mobiles, devices, handsets, tablets etc which are of infringing nature and the Customs Authorities are directed to inform the Plaintiffs as and when any consignment is imported by the defendants and any objections therein will be decided by the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007.
There is no separate category of patents called SEPs under Indian law. Rather Indian law simply provides that any patent that is registered in India can be enforced. Injunctions are available to all patentees who have a registered patent in India. And they can be granted against any Defendant who is making or selling the patented invention within the territory of India, even if that Defendant is headquartered outside. The Plaintiffs have also filed petitions against a few other companies like Micromax, Intex and other brands which are still pending before the Indian Courts. It is in the very basic nature of law in every legal system to allow both the parties to express themselves and it is the inherent responsibility of the Courts to hear both sides. The rule of audi alterem partem is a part of the rules of natural justice which says that every party should be given a chance to be heard. However, ex-parte injunctions are very commonly used to ensure speedy remedy. The term ex-parte means a situation where an order is passed in the absence of the party against whom the order is being passed or any other party. Hence, an ex-parte order is a commanding, directing, or restraining court order granted after hearing only one party in matters of great urgency, without notice to the defendant or other parties. A full hearing with notice to all concerned parties is then held on a later date.
In certain cases, the Plaintiff pleads a grave situation where it is a case of grave emergency. In such cases undergoing complete procedures and by giving every party a chance to be heard and adequate notice may become extremely time consuming and may result in huge loss of income, business, sale and dignity of the aggrieved party and it becomes expedient for the court in such situations to weigh the stakes and pass an ex-parte injunction as a means for immediate remedy. It is used as a fastrack measure to prevent further damage to the Plaintiff’s property. The Defendants are then given a future date after the initial protective measure has been taken to present their case and based on that the final decision is taken. An ex-parte injunction is often in the form of an interim preventive relief. The final decision is only taken after all the procedures have been followed and all the parties have been given a reasonable opportunity to be heard. Hence, taking into consideration these points, one can say that an ex-parte order does not in its true sense violate a person’s right to be heard. It is only used in emergency situations when an immediate action is necessary.
In the present case, the Plaintiff’s have stated that the Defendants are marketing and gaining profit out of a technology over which the Plaintiff’s have registered patents. Hence, if they build up a prima facie case showing their loss that has been caused or could be caused unless immediate action is taken, it is absolutely justified that the court pass an ex-parte injunction order against the defendants. However, by a further order dated 16th December 2014 after an appeal by Xiaomi, the Delhi High Court allowed Xiaomi to sell certain devices in India subject to certain conditions. By this order, Xiaomi is allowed to sell mobile phones and tablets, which use chipsets that have been imported from Qualcomm Inc. which is a licensee of Ericsson. Xiaomi was also told to deposit Rs. 100 for every device it has sold in India or sells till 3rd February, 2015.