The Delhi High Court has directed LAVA to compensate Ericsson with over Rs. 244 crore for infringing its patents on 2G and 3G technologies. This underscores the importance of fair licensing terms for Standard Essential Patents (SEPs).
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DELHI: Recently, The Delhi High Court has directed Indian mobile manufacturer LAVA to compensate Swedish telecom giant Ericsson with a staggering sum exceeding Rs.244 crore. This development follows LAVA’s violation of Ericsson’s patents related to 2G and 3G technologies, emphasizing a significant juncture in the ongoing discourse on Standard Essential Patents (SEPs) and the need for fair, reasonable, and non-discriminatory (FRAND) licensing terms.
Justice Amit Bansal, in a comprehensive 476-page judgment dated March 28, affirmed the validity of seven out of the eight SEPs claimed by Ericsson, emphasizing the critical nature of these patents in the realm of mobile communication. Ericsson’s claim was rooted in the alleged infringement of patents across three key technological areas: Adaptive Multi-Rate (AMR) speech codec, Enhanced Data Rates for GSM Evolution (EDGE), and certain features integral to 3G technology.
Ericsson contended that it had approached LAVA with an offer to license these essential patents on FRAND terms. Despite these attempts, LAVA proceeded with its operations without securing a license, leading to the legal confrontation. LAVA countered by questioning the validity and essentiality of the patents.
It recognized LAVA as an “Unwilling Licensee,” attributing this status to the company’s protracted delays in licensing negotiations and its failure to engage constructively with Ericsson’s offers.
“Lava has been determined to be an Unwilling Licensee due to its lack of willingness to negotiate with Ericsson in good faith. The company continuously delayed licensing discussions, failed to respond to offers, and did not present any counteroffers. Furthermore, Lava’s non-response to the court’s specific inquiry regarding its readiness to accept royalty rates equivalent to those of Micromax further highlights its reluctance to engage constructively in the licensing proceedings.”
– the court elucidated.
On the contentious issue of damages, the court elucidated that Ericsson was entitled to damages calculated on the basis of lost royalty/license fees, had LAVA agreed to a FRAND license from the onset of its operations. This methodology aligns with prevailing legal precedents and underscores the court’s commitment to ensuring rightful compensation for patent owners.
Furthermore, the judgment clarified the appropriate base for calculating royalties, rejecting LAVA’s proposition to limit it to the chipset value.
“For mobile devices, where network connectivity is the primary function, determining royalties at the end-product level is the most suitable method.”
-the court stated, advocating for a valuation method that mirrors industry standards and promotes economic efficiency.
Justice Bansal also addressed the licensing scope, affirming the necessity of licensing the entire portfolio of SEPs to guarantee interoperability and foster technological advancement within the telecommunications sector. The court emphasized the impracticality and inefficiency of licensing individual patents from a portfolio, citing potential administrative burdens and increased transaction costs.
Justice Bansal commended the efforts of both legal teams and the intellectual property division of the High Court, highlighting the significant contributions made. He specifically recognized the efforts of Aman Sinha and Palak Batra, Law Researchers, for their invaluable assistance in understanding the intricacies of the patents and FRAND licensing aspects of the case.
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This judgment not only reaffirms the principles of patent law as it evolves in India but also highlights the delicate balance between safeguarding access to standardized technologies and protecting intellectual property rights. Justice Bansal expressed hope that India would emerge as a prominent neutral venue for global SEP resolution, reflecting on the case’s broader implications for innovation and standardization in the telecommunications industry.
Senior Advocate Arun Kumar Varma, along with a team of advocates, representing LAVA.
While Ericsson’s legal representation included Senior Advocate Sandeep Sethi and a team of skilled advocates.
Case Title:
LAVA International Limited v. Telefonaktiebolaget LM Ericsson
