Nokia filed an application under Order 39 Rule 10 in the Delhi High Court to seek direction to Oppo to deposit, with the Court, an amount which, according to Nokia, would represent the royalty, at Fair, Reasonable and Non-Discriminatory (FRAND) rates to use Standard Essential Patents (SEPs).
Background
Nokia alleged that Oppo is implementing its 2G, 3G, 4G, and 5G standards as disclosed in the below patents.
- Indian Patent No. 286352: System and Method for Providing AMR-WB DTX Synchronization,
- Indian Patent No. 269929: Method Providing Multiplexing for Data Non-Associated Control Channel; and
- Indian Patent No. 300066: Additional Modulation Information Signaling for High-Speed Downlink Packet Access.
Nokia’s allegation
Nokia alleged that Oppo had earlier taken a license from Nokia, which expired in 2021. As Oppo has not renewed the license Agreement or taken any fresh license from Nokia, therefore, the continued use of Nokia’s SEPs, by Oppo is construed as an act of infringement. Nokia, with its suit, prayed, that Oppo be restrained from continuing to infringe the said SEPs or, in the alternative, that an alternate interlocutory arrangement be put in place.
Oppo’s submission
Oppo challenged Nokia’ claims by submitting that Nokia is required to demonstrate that alleged patents are indeed SEPs, thereby challenging their validity and that said patents are used by Oppo in its devices. Oppo contended that taking a license for permission to use a particular patent does not, therefore, estop the licensee from contesting the validity of the patent. It also pointed that Nokia is required to establish, that:
(i) the royalty rates at which license was being offered by the Nokia was FRAND, and
(ii) the Oppo was unwilling to take a license at such rates.
Further, Oppo also submitted that to examine whether the rates at which licenses were offered by the Nokia were FRAND would require the Court to examine third party licensing agreements, which is not placed on record by Nokia.
Oppo further submitted that, Oppo has always been willing to take a FRAND license from Nokia for the true value of its patent portfolio, which has never been established by Nokia either during pre-suit communications or even during the currency of the present suit.
What is an SEP and points to be considered
To evaluate the matter, the Delhi High Court relied upon on the following points related to SEP:
- SEP is a patent without using which it is impossible to work a particular technology. For this purpose, the SEP must map onto the standard set by Standard Setting Organizations (SSOs) and adopted by the European Telecommunications Standard Institute (ETSI).
- An SEP holder is not entitled to any absolute monopoly on the SEP, as is generally applicable to other holders of patents. He must necessarily be ready and willing to allow others to use the SEP on licence basis.
- The license must be made available by the SEP holder on FRAND terms.
- No person who is unwilling to take a license from the holder of a SEP on FRAND terms is entitled to use the SEP. Such a person would be an unwilling licensee, and any such use of the technology contained in the SEP would amount to infringement within the meaning of Section 108 of the Patents Act, 1970.
Primary issues
In view of the above submissions by both the parties, the Court emphasized on three primary issues in this matter, i.e., whether
- the suit patents are SEPs,
- Oppo is using Nokia’s suit patents, and
- the rate at which the Nokia is willing to license the patents to willing licensees is FRAND.
Conclusion
Justice C Hari Shankar vide order dated November 17, 2022 said that a clear, categorical and unequivocal admission is required that the defendant (i.e., Oppo) is holding monies of the plaintiff (i.e., Nokia) or that certain monies are due from the defendant (i.e., Oppo) to the plaintiff (i.e., Nokia) The Court further opined that Oppo has contested Nokia’s allegations at all levels and the offers and counter offers between Nokia and Oppo do not indicate any unequivocal admission of liability by Oppo. Further, Oppo had reserved its right to question the essentiality of the suit patents and the liability of Oppo to pay royalty to Nokia for the exploitation at any rate.
Most importantly, regarding the primary issues mentioned above, the Court opined that:
“These are all matters which require trial and on which, in the absence of a trial, it would be hazardous to venture even a prima facie opinion, as the present application would require this Court to return. I am unable to glean, from the material on which Nokia has sought to place reliance, any admission of liability of Oppo‘s part, as would be sufficient to justify an order under Order XXXIX Rule 10 of the CPC.”
Thus, the Delhi High Court dismissed Nokia’s application for deposit of royalty payable by Oppo for use of Nokia’s Standard Essential Patents (SEPs).