K K Bansal vs Koninklijke Electronics Nv
- Court
- Delhi High Court
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 17 December 2025
Pronounced on: 18 May 2026
+ RFA(OS)(COMM) 17/2018, CM APPL. 31483/2018, CM
APPL. 26137/2023, CM APPL. 38867/2023, CM APPL.
38868/2023 & CM APPL. 66350/2024
K K BANSAL .....Appellant
Through: Ms. Swathi Sukumar, Sr. Adv.
with Mr. S. Santanam Swaminadhan, Mr.
Naveen Nagarjuna, Mr. Ritik Raghuwanshi,
Mr. Kartik Malhotra, Mr. Anindit Mandal
and Ms. Shreya Mansi James, Advs.
versus
KONINKLIJKE PHILIPS
ELECTRONICS NV .....Respondent
Through: Mr. Pravin Anand, Ms.
Vaishali R Mittal, Mr. Siddhant Chamola
and Mr. Gursimran Singh Narula, Advs.
+ RFA(OS)(COMM) 18/2018, CM APPL. 31488/2018, CM
APPL. 25194/2023, CM APPL. 38819/2023, CM APPL.
38820/2023 & CM APPL. 66349/2024
RAJESH BANSAL .....Appellant
Through: Ms. Swathi Sukumar, Sr. Adv.
with Mr. S. Santanam Swaminadhan, Mr.
Naveen Nagarjuna, Mr. Ritik Raghuwanshi,
Mr. Kartik Malhotra, Mr. Anindit Mandal
and Ms. Shreya Mansi James, Advs.
versus
KONINKLIJKE PHILIPS
ELECTRONICS N V .....Respondent
Through: Mr. Pravin Anand, Ms.
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Vaishali R Mittal, Mr. Siddhant Chamola
and Mr. Gursimran Singh Narula, Advs.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
% JUDGMENT
18.05.2026
C. HARI SHANKAR, J.
Facilitative Index to the Judgment
S. No. Subject Para Nos
1 A Standard Essential Patents – A
Prefatory Note
1 – 26
2 B The lis 27 – 35
3 C Issues which arise for
consideration
36 – 37
4 D The Impugned Judgment 38 – 65
5 I Nature of the invention forming
subject matter of the suit
39 – 41
6 II Rival contentions before learned
Single Judge
42 – 45
7 III Issues 46
8 IV Observations and Findings 48 – 64
9 IVA Re. Issues (i) and (ii) 49
10 IVB Re. Issue (vi) – Whether the suit
50 – 56
patent was an SEP in respect of
DVD player technology
11 IVC Re. Issue (iii) – Whether the
57 – 61
Bansals infringed the suit patent?
12 IVD Re. Issue (v) – Whether Philips
62
with other members of the DVD
forum were misusing their
position to create a monopoly and
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earn exorbitant profits by creating
patent pools?
13 IVE Re. Issue (vii) – Whether the
Bansals were bound to pay license
fee to Philips and if so at what
rate? and Issue (viii) – whether the
Philips was entitled to damages or
any other relief?
63
14 IVF Conclusion 64
15 E Rival Contentions 66 – 69
16 I Submissions of Ms. Swathi
Sukumar on behalf of the
appellants (the Bansals)
66 – 67
(i) – (v)
17 IA The suit patent resided in a chip –
Suit patent is a product patent,
whereas US’505 and EP’254 are
method patents
18 IB Patent exhaustion – Section
107A(b) defence
(vi) – (xiii)
19 IC Royalty could not have been
worked out on per DVD video
player basis
(xiv)
20 ID Philips had failed to prove the
existence of a standard or
essentiality of the suit patent
(xv) – (xix)
21 IE Claims in the suit patent not
mapped to the standard
(xx) – (xxii)
22 IF Fact of infringement not
established
(xxiii) – (xxviii)
23 IG Royalty rates claimed by Philips
were unsupported and baseless
(xxix) – (xxxiii)
24 II Submissions of Mr. Pravin Anand 68 – 69
25 IIA Re. Bansals’ knowledge of
Philips’ SEP programme
(i) – (vi)
26 IIB With respect to Philips’ SEP
program
(vii)
27 IIC The suit patent (viii) – (x)
28 IID Essentiality of the suit patent (xi) – (xxiii)
29 IIE Direct infringement proved
through testing
(xxiv) – (xxviii)
30 IIF Chip or technology? (xxix) – (xxxiv)
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31 IIG Re. Royalty rates (xxxv) – (xxxviii)
32 IIH Re. Exhaustion (xxxix) – (xlii)
33 F Analysis 70 – 168
34 I What is the suit patent? 70 – 82
35 II Is the suit patent an SEP? 83 – 98
36 IIA What Philips has to establish 83
37 IIB Is the DVD Forum an SSO? 84
38 IIC Evidence of the standards set by
the DVD Forum
85 – 89
39 IID Equivalence of the suit patent with
US’505 and EP’254
90
40 IIE Evidence of essentiality of
US’505 and EP’254 vis-à-vis the
standards set by the DVD Forum
91 – 98
41 III Infringement 99 – 121
42 IIIA The indirect test 101 – 104
43 IIIB The direct test 105 – 121
44 IV The defence of exhaustion –
Section 107A(b)
122 – 145
45 V The FRAND issue and
adjudication of damages
146 – 169
46 VA No evidence that rates offered
were FRAND
146 – 163
47 VB Royalty rate could not have been
worked out on the entire DVD
Player
164 - 167
48 VC Punitive damages 168
49 G Summarizing our conclusions 169
50 H Conclusion 170 – 171
A. Standard Essential Patents – A Prefatory Note
1
1. Standard Essential Patents are strange and complex creatures.
Infringement litigation, involved SEPs, is delicate and involved. For a
plaintiff, who claims to be the holder of an SEP, to establish
1
“SEPs” hereinafter
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infringement and claim damages from a defendant, he has to first
establish that his patent is an SEP; thereafter, that the defendant’s
product infringes his patent; that he is willing to offer use of the patent
to the defendant on licence at terms which are fair, reasonable and
2
non-discriminatory and that the defendant is not willing to take a
licence on those terms, i.e. that the defendant is an “unwilling
licencee”. It is only thereafter that a Court can compel a defendant to
take a licence at the terms offered by the plaintiff, or at other FRAND
terms as may be fixed by the Court, and injunct the defendant from
using the plaintiff’s SEP in default.
2. Each of these steps is more complex than the other.
3. To demonstrate that his patent is an SEP, a plaintiff has to
establish the existence of a standard, set by a Standard Setting
3
Organization . The SSO must certify the standard to be essential for
operating a particular technology.
4. The categories of standards, and their importance, and the
concept of “essentiality” were thus explained by a Division Bench of
this Court in Intex Technologies (India) Ltd v. Telefonaktiebolaget
4
L.M. Ericsson :
“39. Since Standard Essential Patent is a relatively new species
of patent, it is necessary to define it as well as propound the test of
infringement in such cases and explain the importance of
standards.
2
“FRAND”
3
“SSO” hereinafter
4
2023 SCC OnLine Del 1845 (DB)
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40. A standard in simple terms is a prescribed list of features or
technical specifications in relation to a particular technology. The
purpose of the standard is to ensure that every product
manufactured as per the standard has certain common
design/features in it, so as to ensure compatibility and
interoperability of devices/products.
41. Standards are all around us and come in various shapes and
forms - from the metric system of measurement, the size of
railway tracks, the shape of electrical plugs to complex technical
interoperability standards in the ICT (Information and
Communication Technology) sector such as Wi-Fi, Bluetooth, 3G,
4G, 5G communication standards, PDF software standards etc.
*
43. Further, as mentioned hereinabove, standards allow
interoperability or compatibility between technologies and
products from different manufacturers to work together on one
platform. …
44. There are broadly two categories of standards:
(i) Standards based on source.
(ii) Standards based on access to Intellectual Property
rights or openness in the development process (open and
closed standards).
45. There are different kinds of standards based on source. For
example, standards may be set by market forces, by Governments
or on industry basis.
46. Standards set by market forces, such as one or several
firms working together outside any institutional framework, whose
products or solutions become widely accepted in the market.
These are called de facto standards , example, Microsoft's
Windows Operating System.
47. Many times, companies decide to join forces on an
industry-wide basis to develop new technological solutions
through collaborative or formal standards. The majority and most
important standards are collaborative. Examples include 3G, 4G,
5G communication standards etc.
48. Governmental standards are those adopted by the
government, which require compliance by law. These are also
called de jure standards. Examples include the Bharat Stage (BS)
Standard on vehicle emissions, Telecom Regulatory Authority of
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India (TRAI) notifications issued under Section 36 read with
Section 11(1)(b)(i) & (v) of the Telecom Regulatory Authority of
India Act, 1997 issuing standards with respect to
telecommunications….
49. The International Telecommunications Union (‘ ITU-T ’)
defines an open standard as one which is available to the general
public via a collaborative and consensus-driven-process. Elements
of an open standard include a balanced process not dominated by
any interest group having intellectual property policies requiring
disclosure of essential intellectual property and commitment to
license to any firm wishing to implement the standard on FRAND
terms.
50. A closed standard, on the contrary, is developed by one or
more company(ies) in a closed environment, where access to the
standard is not widely available. They are free to choose whether
they want to license the standard and under what terms.
51. Standard Development Organisations (‘SDOs’) are
voluntary and nonprofit organizations that coordinate the
development of standards. In common parlance, there are all types
of SSOs.
52. In fact SSOs/SDOs are associations/organisations,
normally of international stature, having various stakeholders from
the concerned industry as their members. For example, in the field
of telecommunications, an SSO/SDO may consist of mobile
technology users i.e., phone manufactures (such as Apple,
Samsung, etc), technology developers (such as Nokia, Philips, etc)
and may also include universities/academic institutions, network
operators, government regulatory bodies etc. as their members.
The role of the SSO/SDO is to coordinate and facilitate a standard
setting/development process with the active participation and
involvement of various stakeholders like researchers, companies,
academic institutions, etc.
53. Some of the well-known SDOs are ETSI (Europe); ATIS
(USA); TTA (Korea); TTC (Japan); TSDSI (India); IEEE
(Institute of Electrical and Electronics Engineers); ISO
(International Standards Organization); ITU-T and IEC
(International Electrotechnical Commission) among others.
54. One of the most widely recognized SSOs/SDOs in the
world is ETSI. It defines “essential” in Article 15(6) of its IPR
Policy as under:
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“6. “ESSENTIAL” as applied to IPR means that it is
not possible on technical (but not commercial) grounds,
taking into account normal technical practice and the state
of the art generally available at the time of standardization,
to make, sell, lease, otherwise dispose of, repair, use or
operate EQUIPMENT or METHODS which comply with a
STANDARD without infringing that IPR. For the
avoidance of doubt in exceptional cases where a
STANDARD can only be implemented by technical
solutions, all of which are infringements of IPRs, all such
IPRs shall be considered ESSENTIAL.”
55. The term ‘standard’ is defined in Article 15(11) of the
ETSI Intellectual Property Rights Policy as follows:
“11. “STANDARD” shall mean any standard adopted
by ETSI including options therein or amended versions and
shall include European Standards (ENs), ETSI Standards
(ESs), Common Technical Regulations (CTRs) which are
taken from ENs and including drafts of any of the
foregoing and documents made under the previous
nomenclature, including ETSs, I-ETSs, parts of NETs and
TBRs, the technical specifications of which are available to
all MEMBERS, but not including any standards, or parts
thereof, not made by ETSI
The date on which a STANDARD is considered to be
adopted by ETSI for the purposes of this POLICY shall be
the date on which the technical content of that
STANDARD was available to all MEMBERS.”
Apropos standards, the United State Court of Appeals for the Ninth
5
Circuit states, in Microsoft Corporation v. Motorola Inc , thus:
“When we connect to WiFi in a coffee shop, plug a hairdryer into
an outlet, or place a phone call, we owe thanks to standard-setting
organizations ("SSOs"). … SSOs set technical specifications that
ensure that a variety of products from different manufacturers
operate compatibly. Without standards, there would be no
guarantee that a particular set of headphones, for example, would
work with one's personal music player.
Standardization provides enormous value to both consumers and
manufacturers. It increases competition by lowering barriers to
5
104 US PQ 2D 200
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entry and adds value to manufacturers' products by encouraging
production by other manufacturers of devices compatible with
them. … But because SSO standards often incorporate patented
technology, all manufacturers who implement a standard must
obtain a license to use those standard-essential patents ("SEPs").
The development of standards thereby creates an opportunity for
companies to engage in anti-competitive behavior. Most notably,
once a standard becomes widely adopted, SEP holders obtain
substantial leverage over new product developers, who have little
choice but to incorporate SEP technologies into their products.”
5. Not every institution or organization can aspire to the status of
an SSO.
6. Once the existence of an essential standard, as set by the SSO,
is demonstrated, the plaintiff-patentee would have to demonstrate that
6
his patent complies to the standard. Intex holds, in this context , that
“any product claiming to be compliant with the technology prescribed
under a standard would necessarily incorporate all elements of it,
including the patented part of the standard”. Complete mapping,
between the elements of the standard set by the SSO, and the features
of the suit patent as claimed is, therefore, necessary for the suit patent
to be regarded as an SEP. Intex pithily states this, in para 95, which
observes that “to show that the patent maps on to the standard (A=B),
courts take into consideration “claim charts”, which show that the
claims of a patent are also present in the technical features of a
standard”.
7. SEPs cannot be unconditionally monopolized by a patentee,
like other patents, as they conform to global standards. If
6
In para 56
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monopolization is permitted, the global standards would become the
sole province of one patentee, who can then hold all others to ransom.
To avoid this, SEP holders are required to subscribe to an undertaking
to make their patents available for exploitation by licensees at rates
which are FRAND. Every holder of an SEP has, therefore, to enter
into a contractual commitment with the SSO that it would make
available its SEP to willing licensees at FRAND rates. Failure to do so
would render the patented technology liable to be excluded from the
standard, which would, in turn, result in extinguishing its SEP status
altogether. This is explained, in paras 56 to 59 of Intex thus:
“56. … Accordingly, concerns regarding standards being held to
ransom by an individual patent owner were addressed by
developing the concept of FRAND commitment, which is made by
a patentee by way of a voluntary declaration. Thus, Standard
Essential Patent owner's contractual commitment emanates from
the voluntary declarations (known as FRAND declarations) made
to an SSO/SDO at the time of development of the concerned
standard.
57. If a patentee refuses to provide such voluntary declarations,
the SSOs/SDOs take conscious steps to exclude such technology
from the standard.
58. From the above, it is clear that the voluntary declarations
made by a Standard Essential Patent owner are contractual
commitments and are governed and interpreted as per the
concerned SSO/SDO's Intellectual Property Rights Policy. …
*
59. Accordingly, the SSO's main objective is to ensure that a
patent owner is adequately rewarded at FRAND rates for its
contribution/innovation while ensuring that the latest state of the
art technology is available to the implementers world over
irrespective of the fact that such implementers are not involved in
research and development at all.”
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8. Thus, a plaintiff who seeks to assert his patent as an SEP has
also to demonstrate that it entered into a FRAND agreement with the
SSO. Of course, if the plaintiff proves the existence of documentation
evidencing that the plaintiff’s patent has been certified by the SSO as
an SEP, the existence of a FRAND undertaking by the plaintiff to the
SSO may be presumed.
9. This exercise, when completed, merely establishes that the
plaintiff’s patent is an SEP. The aspect of infringement still remains.
10. Patent law, in India, is statute-driven. The Patents Act, 1970, is
the nodal statute. Strangely, unlike other intellectual property statutes,
the Patents Act, while referring to infringement, its consequences, and
the remedies available against infringement, does not define
“infringement”. The structure of the Patents Act, however, makes it
7
clear that the acts to which Section 48 of the Patents Act refers
amount to “infringement”.
11. Infringement, in patent litigation, is classically required to be
established by comparing the claims in the suit patent with the
product of the defendant – i.e., on the basis of a claim-to-product
8
mapping. The plaintiff is required to map the features of the
7
48. Rights of patentees .—Subject to the other provisions contained in this Act and the conditions
specified in Section 47, a patent granted under this Act shall confer upon the patentee—
( a ) where the subject-matter of the patent is a product, the exclusive right to prevent third
parties, who do not have his consent, from the act of making, using, offering for sale, selling or
importing for those purposes that product in India;
( b ) where the subject-matter of the patent is a process, the exclusive right to prevent third
parties, who do not have his consent, from the act of using that process, and from the act of using,
offering for sale, selling or importing for those purposes the product obtained directly by that
process in India:
8
F. Hoffmann-La Roche Ltd v. Cipla Ltd, 225 (2015) DLT 391 (DB) (paras 78 and 80), hereinafter
“ Roche v. Cipla”
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defendant’s product to the claim in the suit patent to demonstrate that
the defendant’s product incorporates all features of the plaintiff’s suit
9
patent. Rule 3(A)(ix) of the High Court of Delhi Rules Governing
Patent Suits, 2022 specifically requires product-to-claim mapping as
one of the necessary ingredients of a patent infringement suit. In fact,
this Bench has, in its recent decision in Zydus Lifesciences Ltd v.
10
E.R. Squibb & Sons , reversed the decision of a learned Single Judge
of this Court to grant injunction to the plaintiff in that case, on the
ground that there had been no mapping of the suit patent with the
product of the defendant, purportedly because the defendant’s product
was not in the open market. In appeal, the Supreme Court noted that,
in the interregnum, the defendant’s product had become available,
and, therefore, granted the plaintiff (in that case) an opportunity to
map its patent to the defendant’s product and re-approach this Court
for interim relief.
12. In the case of alleged SEP infringement, this Court, in Intex ,
lent judicial approval to an “indirect test” by which, too, infringement
could be established, in the following paragraphs:
“ WHAT IS THE TEST OF INFRINGEMENT IN A STANDARD
ESSENTIAL PATENTMATTER?
*
9
A. Plaint: The Plaint in an infringement action shall, to the extent possible, inter alia, contain a
description of the following:
*
(ix) Precise claims versus product (or process) chart mapping including claim chart mapping
through standards;
10
2026 SCC OnLine SC 483
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93. There is the direct test of infringement which is applied in
all standard patent cases. The other is the indirect method which
involves proving the following steps:
(i) Mapping patentee's patent to the standard to show
that the patent is a Standard Essential Patent.
(ii) Showing that the implementer's device also maps to
the standard.
94. This is akin to the Law of Transitivity, i.e., if A=B and
B=C, then A=C, where
95. To show that the patent maps on to the standard (A=B),
courts take into consideration “claim charts”, which show that the
claims of a patent are also present in the technical features of a
standard.
96. To show that the implementer's device conforms to the
standard (B=C), courts can either consider authentic sources like
test reports which show that the device conforms to the standard.
However, this is not a necessary requirement, as most devices
declare their compliance with a given standard. For instance, all
mobile phones declare that they are 3G/4G/5G compliant.
97. The indirect test for proving Standard Essential Patent
infringement is decades’ old. For instance, the US Court of
11
Appeals for the Federal Circuit in Fujitsu Ltd. v. Netgear Inc . ,
held:
“We hold that a district court may rely on an industry
standard in analysing infringement. If a district court
construes the claims and finds that the reach of the claims
includes any device that practices a standard, then this can
be sufficient for a finding of infringement We agree that
claims should be compared to the accused product to
determine infringement However, if an accused product
11
620 F.32 1321
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operates in accordance with a standard, then comparing
the claims to that standard is the same as comparing the
claims to the accused product .”
(emphasis supplied)
98. This Court is of the opinion that Delhi High Court Patent
Rules and International jurisprudence are unanimous in holding
that the “indirect” method is a sure shot and better method of
proving Standard Essential Patent infringement and essentiality.”
13. Thus, even under the “indirect method”, the plaintiff, as the
proprietor of the suit patent, would have to demonstrate that the suit
patent, as well as the defendant’s product, map onto the standard set
by the SSO, i.e., that the essential features of the standard are present
in the suit patent as well as the defendant’s product.
14. This is an extremely involved exercise, especially as it involves
a standard-to-product comparison in the case of the defendant. It is
always open to the defendant, at this stage, to assert, and demonstrate,
that its product can function without the aid of the product, or
technology, patented in the suit patent. In such an event, the
presumption of “essentiality” of the suit patent would itself stand
defeated, and no case of infringement would be made out. Equally, it
is open to the defendant to question the manner in which the exercise
of mapping the features of the defendant’s product to the standard has
been undertaken, and the legitimacy and propriety thereof.
15. The plaintiff’s travails would not, however, end here. Any
relief, whether injunctive or compensatory, would be available to a
plaintiff against a defendant, in an SEP litigation, only if the plaintiff
can additionally demonstrate that the defendant is an “unwilling
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licensee”; in other words, that the defendant is unwilling to take a
licence, from the plaintiff, to exploit the suit patent, at the rate at
which the plaintiff is willing to grant the licence, which is FRAND .
This, therefore, throws up the next issue before the Court, which is
whether the plaintiff is willing to allow use of its SEP at FRAND
rates. This “FRAND protocol” stands thus explained in the judgment
12
dated 16 July 2015 of the Court of Justice of the European Union in
13
Huawei Technologies Co. Ltd v. ZTE Corp. , as cited, approvingly,
by the Division Bench of this Court in Intex :
“60. Accordingly, the proprietor of an SEP which considers that
that SEP is the subject of an infringement cannot, without
infringing Article 102 TFEU, bring an action for a prohibitory
injunction or for the recall of products against the alleged infringer
without notice or prior consultation with the alleged infringer,
even if the SEP has already been used by the alleged infringer.
61. Prior to such proceedings, it is thus for the proprietor of the
SEP in question, first, to alert the alleged infringer of the
infringement complained about by designating that SEP
and specifying the way in which it has been infringed.
62. As the Advocate General has observed in point 81 of his
Opinion, in view of the large number of SEPs composing a
standard such as that at issue in the main proceedings, it is not
certain that the infringer of one of those SEPs will necessarily be
aware that it is using the teaching of an SEP that is both valid and
essential to a standard.
63. Secondly, after the alleged infringer has expressed its
willingness to conclude a licensing agreement on FRAND terms, it
is for the proprietor of the SEP to present to that alleged infringer
a specific, written offer for a licence on FRAND terms, in
accordance with the undertaking given to the standardisation body,
specifying in particular, the amount of the royalty and the way in
which that royalty is to be calculated.
64. As the Advocate General has observed in point 86 of his
Opinion, where the proprietor of an SEP has given an undertaking
12
“CJEU” hereinafter
13
Case No. C-170/13
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to the standardisation body to grant licences on FRAND terms, it
can be expected that it will make such an offer. Furthermore, in the
absence of a public standard licensing agreement, and where
licensing agreements already concluded with other competitors are
not made public, the proprietor of the SEP is better placed to check
whether its offer complies with the condition of non-
discrimination than is the alleged infringer.
65. By contrast, it is for the alleged infringer diligently to
respond to that offer, in accordance with recognised commercial
practices in the field and in good faith, a point which must be
established on the basis of objective factors and which implies, in
particular, that there are no delaying tactics.
66. Should the alleged infringer not accept the offer made to it,
it may rely on the abusive nature of an action for a prohibitory
injunction or for the recall of products only if it has submitted to
the proprietor of the SEP in question, promptly and in writing, a
specific counter-offer that corresponds to FRAND terms.
67. Furthermore, where the alleged infringer is using the
teachings of the SEP before a licensing agreement has been
concluded, it is for that alleged infringer, from the point at which
its counter-offer is rejected, to provide appropriate security, in
accordance with recognised commercial practices in the field, for
example by providing a bank guarantee or by placing the amounts
necessary on deposit. The calculation of that security must include,
inter alia, the number of the past acts of use of the SEP , and the
alleged infringer must be able to render an account in respect of
those acts of use.
68. In addition, where no agreement is reached on the details
of the FRAND terms following the counter-offer by the alleged
infringer, the parties may, by common agreement, request that the
amount of the royalty be determined by an independent third
party by decision without delay.
69. Lastly, having regard , first, to the fact that a
standardisation body such as that which developed the standard at
issue in the main proceedings does not check whether patents are
valid or essential to the standard in which they are included
during the standardisation procedure, and, secondly, to the right
to effective judicial protection guaranteed by Article 47 of the
Charter, an alleged infringer cannot be criticised either for
challenging, in parallel to the negotiations relating to the grant of
licences, the validity of those patents and/or the essential nature of
those patents to the standard in which they are included and/or
their actual use, or for reserving the right to do so in the future. ”
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(Emphasis in the original)
16. The exercise of demonstrating that the rate at which the
plaintiff is agreeable to license its SEP is FRAND is, again,
Herculean. Intex clearly observes, in para 69, as under:
“A licensor will be considered a willing licensor only if it gives a
FRAND offer and in certain situations provides information
necessary, subject to confidentiality agreement, for a licensee to
evaluate an offer (relevant to ‘ND’ part of FRAND). If the
licensor offers a supra-FRAND offer i.e. exorbitant royalty rates, it
will not be considered a willing licensor.”
Thus, the question of whether the defendant is, or is not, a willing
licensee would arise only if the plaintiff, in the first instance,
demonstrates that it is a willing licensor .
17. The onus to establish that it is a willing licensor is on the
plaintiff and, to prove this, the plaintiff, as Intex holds, would have to
provide information on the basis of which the defendant can evaluate
the offer. We have some reservation, however, with the parenthesized
observation, in para 69 of Intex , to the effect that the disclosure is
only to enable the defendant to evaluate whether the offer is “ND”,
i.e., non-discriminatory. To us, it appears that disclosure of the
necessary information would also be essential to enable the defendant
to satisfy itself that the offer is “fair” and “reasonable”.
18. Even on the aspect of whether the royalty rate proposed is
“non-discriminatory”, there is no authoritative exposition to the effect
that the same royalty rate has to be charged from every licensee.
“Discrimination” is an expression of myriad shades. In the
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constitutional context, the classical principle is that discrimination
exists as much in treating equals as unequals, as in treating unequals
as equals. Even while examining whether the royalty rate offered by
the plaintiff-SEP holder to the allegedly infringing defendant, in a
particular case, is “non discriminatory”, the Court may be required to
enter into an intricate exercise of examining the circumstances in
which different rates are offered to different licensees, and whether
that, by itself, would make the rates discriminatory. In the ultimate
eventuate, it appears that the words “fair”, “reasonable” and “non-
discriminatory” form a kind of combined package, which would
essentially imply the extending, by the plaintiff-SEP holder, of royalty
rates which are commercially fair and non-exploitative in nature.
19. Much of the rancour, in court, between the parties, revolves, in
such cases, around this aspect of disclosure, as the plaintiff is required
to disclose agreements executed with third parties to whom it has
granted licences at the rate which it offers to the defendant. The onus
to prove that the rate is FRAND is squarely on the plaintiff, and it is
open to the defendant to contend otherwise. It has to be remembered
that the rate must not merely be non-discriminatory; i.e., it is not
sufficient for the plaintiff to show that it is granting licences to all at
the same rate; the plaintiff would also have to demonstrate that the
rate is “fair” and “reasonable”.
20. Ideally, this would require the plaintiff to disclose the entire
agreements executed with the third parties in question, so that the
defendant, as also the Court, is in a position to ascertain for itself that
the rate is not influenced by any extraneous or ulterior factors, or by
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any artificial discounts, whether quantity-based or otherwise.
Complete opportunity would have to be granted, to the defendant, to
question the fairness and reasonableness of the rates quoted in the
agreements, even if they are uniform and non-discriminatory. This
exercise, properly undertaken, may take ages.
21. Plaintiffs, almost invariably, are chary to disclose the
commercial specifics of agreements with third parties, for fear of
leaking confidential data, and defendants, in such cases, complain that
the data disclosed is insufficient to even enable it to contest the
fairness and reasonableness of the rates. The law has provided a
14
remedy of sorts by envisaging the setting up of confidentiality clubs
where select representatives of each side alone would be entitled to
see those documents, of the other, over which the other claims
confidentiality. But then again, creation of a confidentiality club may
only dispel, to an extent, misgivings harboured by either party
regarding leakage of its confidential information; it still does not
mean that all requisite information, so as to enable the defendant – or
even the Court – to arrive at an informed decision that the offer of the
plaintiff is FRAND, is provided, even to the members of the
defendant’s confidentiality club.
22. The exercise of determining whether the rate offered by the
plaintiff to the defendant is, or is not, FRAND is, again, no less
formidable. This would involve a comparative evaluation of the
agreements with third parties, so as to convince the Court that the
agreements are at arms’ length, and negotiated on purely commercial
14
As provided in Rule 17 in Chapter VII of the Delhi High Court (Original Side) Rules, 2018, which reads:
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considerations. Again, this would involve disclosure, by the plaintiff,
of details regarding the circumstances in which these agreements
were entered into which, too, more often than not, would be claimed
to be seriously confidential. A mere facial comparison of agreements
may be insufficient to arrive at an informed conclusion that the rates
at which these agreements were negotiated were, in fact, fair,
reasonable and non-discriminatory, so as to subject the defendant, too,
to the said rates. The circumstances in which the rates were
negotiated would also be a relevant consideration. If these
circumstances are not frankly disclosed, then, at least for a Court, it
may be impossible to arrive at a wholly judicious conclusion
regarding the appropriate FRAND rate which should apply.
23. At this stage, undoubtedly, the inquisitorial litigative exercise
would end.
24. The entire exercise is so intimidating that it is doubtful whether
any Court can arrive at a precise and accurate determination of
FRAND rates, following all the steps in their proper sequence and
complying with all considerations. At least in our country, it appears,
frankly, impossible for such an exercise to reach its right, and legally
correct, conclusion.
25. As the recital hereinafter would disclose, though the learned
Single Judge has, in the impugned judgment, attempted to arrive at a
FRAND rate, and has computed the damages payable on that basis,
the exercise suffers from several infirmities. No doubt the learned
Single Judge has attempted, in all earnestness, to arrive at a work-
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worthy solution. While we applaud the effort, we cannot, in law,
sustain the conclusion.
26. With that, we come to the lis .
B. The lis
27. These appeals are directed against judgment dated 12 July 2018
passed by a learned single Judge of this Court in CS (Comm)
15 16
24/2016 and CS (Comm) 436/2017 . For the sake of convenience,
we would be referring to Koninklijke Electronics NV, the plaintiff in
both the suits, as “Philips”, Mangalam Technology, the proprietorship
of Rajesh Bansal, as “Mangalam” and Bhagirathi Electronics, the
proprietorship of K K Bansal, the father of Rajesh Bansal, as
“Bhagirathi” and K.K. Bansal and Rajesh Bansal, collectively, as “the
Bansals”.
28. Both the suits allege infringement, by Rajesh Bansal/Mangalam
17
and KK Bansal/Bhagirathi, of Indian Patent IN 184753 ,
undisputedly owned by Philips for “a decoding device for converting
a modulated signal to a serious of M-Bit information words”.
29. According to Phillips, the suit patent corresponds to US Patent
18
5696505 dated 8 February 1995 and European Patent EP
19
745254B1 dated 1 February 1995, each of which is titled “method of
15
Koninklijke Philips Electronics N.V. v. Rajesh Bansal
16
Koninklijke Philips Electronics N.V. v. Bhagirathi Electronics
17
IN’ 753” hereinafter also referred to as “the suit patent”
18
“US’505 hereinafter
19
“EP’ 254” hereinafter
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converting a series of m-bit information words to a modulated signal
method of producing a record carrier, coding device, decoding device,
recording device, reading device, signal, as well as a record carrier”.
30. Philips claimed the suit patent to be an SEP which was
infringed by the DVD players manufactured and sold by the Bansals
through Mangalam and Bhagirathi, without obtaining any license
from Philips. Philips claimed that it was willing to license the suit
patent on FRAND terms but that the Bansals were not willing to
purchase a license at such terms from Philips. Accordingly, Philips,
in the suits, prayed for an injunction against the Bansals from using
the invention claimed in the claim patent, and also claimed damages,
both actual and punitive, for the losses allegedly suffered by Philips
on account of use of the suit patent by the Bansals without obtaining
any license from Philips.
31. A learned Single Judge of this Court has finally adjudicated
both the suits by a common judgment dated 12 July 2018.
32. During the pendency of the suits, the suit patent expired on 12
February 2015. As such, the prayers for injunction were rendered
infructuous. The judgment of the learned Single Judge is, therefore,
restricted to the aspects of damages and costs. The learned Single
Judge has decreed the suit, in favour of Philips and against the
Bansals, by directing the Bansals to pay a royalty to Philips for
utilising the invention claimed in the suit patent without a license, at
the rate of US $ 3.175 up till 7 May 2010 and US$ 1.90 thereafter till
12 February 2015, per video player manufactured/sold, from the date
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of institution of the suits, with interest @ 10 % per annum from the
end of the month for which royalty was due till date of payment. The
learned Single Judge has decreed the suit in the following terms:
“14. Relief: In view of the discussion aforesaid the two suits are
decreed in favour of the plaintiff and against the defendants
holding that the said defendants have been infringing the suit
patent IN-184753 which is an essential standard patent in respect
of DVD video player, however, no injunction can be granted to the
plaintiff for the reason the plaintiffs suit patent expired on 12'^
February, 2015. The plaintiff is also found entitled to a decree for
recovery from Rajesh Bansal and K.K. Bansal of royalty payable
th
at FRAND rates, that is, USD 3.175 upto 7 May, 2010 and
th
thereafter USD 1.90 upto 12 February, 2015 from the date of
institution of the suits with interest @10% p.a. from the end of the
month for which royalty is due till the date of payment per video
player manufactured/sold. A decree of punitive damages to the
tune of ₹ 5 lakhs is also passed in favour of plaintiff and against
Rajesh Bansal. A commission is issued to inquire into the number
of video player manufactured/sold by Rajesh Bansal and K.K.
Bansal respectively. Mr. S.M. Chopra, ADJ (Retd.), the learned
Local Commissioner who recorded the evidence is appointed as
the Local Commissioner to, after hearing parties, allowing them to
lead whatever evidence they want to lead, report on the number of
video players manufactured/sold by Rajesh Bansal and K.K.
Bansal respectively with infringing patent. The plaintiff shall be
entitled to recover the amount so found due and less the amount
deposited in this Court with interest accrued thereon, on filing the
report with the execution petition. The objection if any, to the
report of the Local Commissioner be also filed in execution. The
fee of the learned Local Commissioner is fixed at ₹ 1 lakh to be
borne by the plaintiff.
15. A decree of actual cost incurred by the plaintiff including
lawyer's fee, the amount spent on court fee and the Local
Commissioner's fee is also passed in favour of the plaintiff and
against Rajesh Bansal and K.K. Bansal.”
33. Aggrieved thereby, the Bansals have filed these appeals.
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34. RFA (OS) (Comm) 17/2018 is filed by K K Bansal as the
proprietor of Bhagirathi Electronics and RFA (OS) (Comm) 18/2018
is filed by Rajesh Bansal as proprietor of Mangalam Technology.
35. We have heard Ms. Swathi Sukumar, learned Senior Counsel
for the Bansal and Mr. Pravin Anand, learned Counsel for the
respondent, at length.
C. Issue which arises for consideration
36. Though the dispute, before the learned Single Judge as well as
before us, was restricted to the aspect of damages and costs, the suit
patent having expired during the currency of the suits, the aspect of
infringement continues to remain material as, if there is no
infringement, there can be no damages. The Bansals have chosen to
challenge the impugned judgment not merely on the aspect of
quantification of damages, but also on the aspect of infringement, as
well as on the aspect of whether the suit patent is in fact an SEP.
Broadly stated, the contentions of Bansals, as articulated by Ms.
Swathi Sukumar, are that (i) there is nothing to indicate that the suit
patent is an SEP, (ii) there is no evidence to indicate that there is any
infringement of the suit patent by the Bansals (iii) assuming there is
infringement, Philips cannot sue the Bansals in that regard, in view of
the doctrine of international exhaustion of patent rights and (iv)
without prejudice, even if it were to be assumed that the suits would
lie, there is no basis to sustain the damages as quantified by the
learned Single Judge.
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37. Broadly, therefore, the following issues would arise for
consideration:
(i) Is the suit patent an SEP ?
(ii) Is Philips barred from asserting any rights in the suit
patent, by application of the principle of international
exhaustion of patent rights ?
(iii) Has the suit patent been infringed by the Bansals ?
(iv) Assuming the answers to the earlier three issues to be all
in favour of Philips and against the Bansals, are the damages as
quantified and awarded by the learned Single Judge, sustainable
in law?
D. The impugned judgment
38. It would be profitable, given the complexity of the issue
involved, to summarise, in precis, the judgment under challenge.
I. Nature of the invention forming subject matter of the suit patent
39. The learned Single Judge has first noted the nature of the
invention forming subject matter of the suit patent. With the
20 21
transition from VCDs to DVDs , transcription of the information
20
Video Compact Disc
21
Digital Versatile Disc
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earlier contained on VCDs to DVDs in a manner which would make
the information readable by the DVDs, when played in a DVD player,
became essential. Information was stored on VCDs in the form of
modulated signals. Conversion of the data stored on VCDs to DVDs
first involved a process of channel modulation by which the data was
converted into code words. This coding step was performed directly
before storage of the data on the DVDs and ensured that the data had a
storage friendly structure. The next task, which involved decoding of
this data, so that the data could be read by a DVD player, is the step to
which the invention covered by the suit patent catered.
40. The suit patent claimed a decoding device which converted the
modulated signal, involving 16 bit code words, to 8 bit information
words. The claims in the suit patent read thus:
“1. Decoding device for converting a modulated signal (7) to a
series of m-bit information words (1), the decoding device
comprising means for receiving the modulated signal, means (110)
for converting the signal to a bit string of bits having a first or
second logical value, the bit string containing n-bit code words (4)
which correspond to information signal portions (160), and
converting means (113, 114, 115) for converting the series of code
words to a series of information words, one information word
being assigned to one code word to be converted and in
dependence thereon, characterized in that the device comprises a
first register (112) and a second register (111) for storing bits of
the bit string and in that the converting means (113, 114, 115) are
capable of uniquely establishing an information word among a
plurality of information words represented by an n-bit code word
belonging to a group (G2) of a second type, by converting n bits of
the code word from the first register (112) and p predetermined
bits in a following code word from the second register (111) into a
m-bit information word, in dependence on the logical values
detected for said p bits.
2. Decoding device as claimed in Claim 1, characterized in
that each code word is 16-bit long each information word in 8-bit
long and p is equal to 2.
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3. Decoding device as claimed in Claim 1, characterized in
that the p predetermined bit positions are the first and thirteenth bit
portion past the end of the associated code word.
4. Decoding device as claimed in one of the Claims 1 to 3,
characterized in that the converting means are connected to
detection means (116) for detecting sync words having bit patterns
that cannot be formed by the successive code words in the series,
or by a part of the sync word in combination with an adjacent code
word.
5. Decoding device as claimed in Claim 4, characterized in
that the detection, means (1160 are arranged for detecting 26-bit
sync words corresponding to a bit pattern of
"10010000000000100000000001" or to a bit pattern of
"0001000000000010000000000" where "0" represents a first
logical value and where "1" represents a second logical value.
6. Decoding device as claimed in any of the claim 1 to
characterized in that the converting means are connected to a
reading device for receiving the modulated signal from a record
carrier, comprising read head (150) for producing an analog signal
of the modulated signal, and detection circuit (152) for converting
the analog signal into a binary signal. "
41. A reading of the claims in the suit patent made it clear that all
claims claimed a “decoding device”. Thus, the suit patent dealt
entirely with the process of decoding of the coded information, and
not with the coding of the information. This decoding, as per Claims 2
and 3 in the suit patent, involved conversion of 16-bit code words to
st th
8-bit information words. For this, the 1 and 13 bit positions were
pre-determined and the decoding took place by “looking ahead” to the
next set of code words. The manner in which the learned Single
Judge has explained this process is contained in para 3 of the
impugned judgment, which may be reproduced thus:
“[3. The two suits concern the patent being Indian Patent No.
184753 on Channel (De)coding technology used for DVD Video
Playback function in a DVD Video Player. It is claimed that the
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th
plaintiff is the registered proprietor of IN-184753 dated 13
February, 1995 for ''Decoding Device for converting a Modulated
Signal to a series of M-Bit Information Words ". The invention
concerns 'channel modulation' which involves a coding step that is
performed directly before the storage of the data. This coding
ensures that the data to be stored on the disk has a particularly
suitable structure for storage. The decoding of 16-bit code words to
8-bit information words is performed by "looking ahead" to the
next code words]”
II. Rival contentions before learned Single Judge
42. Philips contended, before the learned Single Judge, that as
22
IN’753 corresponded to US Patent US 5696505 and European
23
Patent EP 745254B1 and as US’505 and EP’254 were recognised as
24
SEPs with Essentiality Certificates having been issued in respect
thereof, IN’753 was also entitled to be treated as an SEP.
43. Philips alleged, before the learned Single Judge, that Bhagirathi
and Mangalam were manufacturing and selling DVD players which
employed decoders for decoding the content stored on the DVDs, and
that the decoding involved the methods described in IN’753, thereby
infringing the suit patent. Indeed, contended Philips, as IN’753 was an
SEP, it was impossible to decode the content stored on the DVD
without employing the technology claimed in the suit patent IN’753.
44. As against this, the Bansals contended, before the learned
Single Judge, that there was no evidence to indicate either that the suit
patent was an SEP or that they were infringing the suit patent.
Besides, contended the Bansals, they were manufacturing and selling
22
“US’505” hereinafter
23
“EP’254” hereinafter
24
“ECs” hereinafter
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DVD players which involved components which were purchased from
authorised dealers such as Sony, SANYO and MediaTek from China
after due payments of taxes and customs duties. Even if these DVD
players were to be treated as incorporating the technology claimed by
Philips in the suit patent, no patent rights could be enforced by Philips
by application of the doctrine of international exhaustion. Once
Philips had sold the devices containing the technology in the open
market, its patent rights then stood exhausted and incapable of
enforcement against anyone who purchased the device from the
market and used them in other equipment.
45. More specifically, the Bansals’ contention, as articulated by Ms
Sukumar before us, is that the technology forming subject matter of
the suit patent was contained in a chip which, in turn, was contained
25
on a printed circuit board which was only one of the many parts of
the DVD. Inasmuch as the PCBs had been sourced by the Bansals
from authorised dealers thereof, no allegation of infringement could
be laid at their door. Indeed, contended the Bansals, Philips, in its own
DVD players, used PCBs manufactured by MediaTek which
purportedly contained the patented technology. The Bansals also
purchased the PCBs from MediaTek and other such authorised dealers
and used them in their DVDs. Philips’ claim to infringement, if at all,
would lie against MediaTek and other manufacturers of PCBs/chips,
and not against DVD player manufactures such as the Bansals who
purchased the chips/PCBs from authorised dealers and merely used
them while manufacturing the DVD players.
25
“PCB” hereinafter
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III. Issues
46. Having set out the rival contentions before her, the learned
Single Judge framed the following issues as arising for consideration:
“(i) Whether the plaintiff No. l is the proprietor of Indian Patent
registered under No. 184753? OPP
(ii) Whether the suit patent of the plaintiff is invalid? OPP
(iii) Whether the defendants have infringed the plaintiffs' Indian
Patent No. 184753? OPP
(iv) Whether the defendants had knowledge of the plaintiffs'
patents in respect of DVDs and the plaintiffs' licensing programs?
OPP
(v) Whether the plaintiffs along with various other members of
the DVD forum are misusing its position with a view to create a
monopoly and earn exorbitant profits by creating patent pools?
OPD
(vi) Whether the suit patent is an essential patent in respect of
DVD player technology? OPP
(vii) Whether the defendant No. l is liable to pay any license fee
to the plaintiffs and if so at what rate? OPD
(viii) Whether the plaintiffs are entitled to a decree of damages
or any other relief? OPP”
47. Two witnesses were cited and examined by each side. Philips
cited Farokh Bhiwandiwala, its authorised attorney, as PW-1 and Ben
Liempd as PW-2. On behalf of the Bansals, S. Chandra Sekaran
testified as DW-1 and Rajesh Bansal himself testified as DW-2.
IV. Observations and Findings
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48. The learned Single Judge thereafter proceed to deal with the
issues seriatim.
IVA. Re. Issue (i) and (ii)
49. These issues were not contested and were, therefore, decided in
favour of Philips and against the Bansals.
IVB. Re. Issue (vi) – Whether the suit patent was an SEP in respect
of DVD player technology.
50. Before the learned Single Judge, Philips contended thus:
(i) An SEP was a patent without the use of which it was not
possible to manufacture, sell or lease equipment or technology
which complied with the standard. In other words, it was not
possible to comply with the standard without infringing the suit
patent which, therefore, indicated that it was essential for
complying with the standard and was, therefore, an SEP.
(ii) Standards are set by an SSO. The standard in respect of
decoding technology was set by the DVD Forum as the SSO.
(iii) The DVD forum, as the SSO, had granted ECs to US’505
and EP’254. The standard set for Read Only DVDs and Video
DVDs read thus:
“DVD Specifications for Read-Only Disc, Part 1,
PHYSICAL SPECIFICATIONS Version 1.0, May 2004
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(“DVD-ROM Standard”)
DVD Specifications for Read-Only Disc, Part 3, VIDEO
SPECIFICATIONS Version 1.1, August 2001 (“DVD-
Video Standard”)”
The ECs granted to the US’505 and EP’254 patents certified
that they were essential to conform with the aforesaid standards.
(iv) The claim in the suit patent corresponded to the claims in
US’505 and EP’254, which was evident from a plain reading
and comparison of the complete specifications of these patents.
That these patents were corresponding was also admitted in
evidence by the affidavit in evidence of DW-1. The onus of
proof thereby shifted to the Bansals to demonstrate that the suit
patent was not an SEP. This burden was not discharged. DW-1,
stated to be an expert, merely deposed that, though US’505 and
EP’254 were essential in US and Europe, they were not
essential in India because (a) there was no Indian standard
corresponding to the suit patent which would be said to be a
standard relating to DVD technology and (b) no such standard
was recognized by any Indian Governmental Authority.
(v) Though PW-2/5 had been de-exhibited, it was still usable
as evidence as the Bansals themselves had cross-examined PW-
2 with respect to PW-2/5.
(vi) PW-2/5 was not merely an internal private document as
asserted by the Bansals. The DVD forum standard had been
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26
adopted by the independent SSO ECMA in April 2001 as
27
ECMA Standard 267 for 120 mm DVD-ROD and, in 2002, by
the International Standard Organization, as ISO/IEC
16448:2002, corresponding to 120 mm DVD-ROD. As both
these standards were available in the public domain, they were
admissible in evidence without proof. In that view of the
matter, Philips contended that the Bansals’ argument that the
ECs of US’505 (PW-2/6 and PW-6A) and of EP’254 (PW-2/7
and PW-2/7A) were not proved in accordance with law was
unmerited. Moreover, the fact that Mangalam obtained a
license, and Bhagirathi applied for a license from Philips, also
indicated that the suit patent was an SEP.
Philips, therefore, contended that Issue (vi) was required to be decided
in favour of Philips by holding that the suit patent was an SEP in
respect of DVD player technology.
51. As against this, the Bansals contended thus:
(i) Standards could not be set by in house or internal
mechanisms and had to be said to be recognized by independent
bodies. The DVD Forum, therefore, it was contended, was
incompetent to set standards as an SSO. Inter alia, for this
purpose, it was submitted that Philips had major control over
the DVD Forum, and was a prominent member of the Forum.
26
European Computer Manufacturers Association
27
“Read-Only Disc”
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(ii) The Bansals further contended that Philips had not
proved the ECMA standard or the standard of any independent
SSO. PW-1, testifying on behalf of the Philips, had admitted
that the standard was set by the DVD Forum, which was a body
largely influenced by Philips itself and could not, therefore, be
treated as independent.
(iii) The only evidence cited by Philips, on the basis of which
it would seek to contend that the invention claimed in the suit
patent conformed to a standard, was PW-2/5, which stood de-
exhibited as it was filed without leave of the court, along with
the affidavit in evidence of PW-2. It could not, therefore, be
relied upon.
(iv) The reference to the ECMO and ISO standards by Philips
went beyond the evidence and could not, therefore, be relied
upon.
(v) Insofar as the ECs issued in respect of the US’505 and
EP’254 patents were concerned, the originals of PW-2/6 and
PW-2/7 were never produced or proved. PW-2/6A and PW-
2/7A were said to be certified copies of PW-2/6 and PW-2/7.
28
Inasmuch as no application as required by Sections 63 to 65
28
63. Secondary evidence .—Secondary evidence means and includes—
(1) certified copies given under the provisions hereinafter contained;
(2) copies made from the original by mechanical processes which in themselves insure the
accuracy of the copy, and copies compared with such copies;
(3) copies made from or compared with the original;
(4) counterparts of documents as against the parties who did not execute them;
(5) oral accounts of the contents of a document given by some person who has himself seen
it.
64. Proof of documents by primary evidence .—Documents must be proved by primary evidence
except in the cases hereinafter mentioned.
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of the Indian Evidence Act, 1872 had been filed to lead
secondary evidence, it was submitted that the certified copies of
PW-2/6 and PW-2/7 could not be relied upon. Secondary
evidence was required to conform to Sections 63 to 65 of the
Evidence Act. The Bansals also submitted that the PWs were
not experts and that PW-2, if at all, was claimed to be an expert
in claim construction, and not in DVD technology.
(vi) As such, there was no witness, whose evidence was cited,
who was competent to prove that the suit patent was an SEP.
52. The learned Single Judge observes and holds as under:
(i) A perusal of the record indicated that PW-2/5 was
initially exhibited along with the affidavit in evidence of PW-2
but was de-exhibited on the Bansals taking an objection that it
65. Cases in which secondary evidence relating to documents may be given .—Secondary evidence
may be given of the existence, condition or contents of a document in the following cases—
( a ) when the original is shown or appears to be in the possession or power—
of the person against whom the document is sought to be proved, or of any person out of
reach of, or not subject to, the process of the Court, or
of any person legally bound to produce it,
and when, after the notice mentioned in Section 66, such person does not produce it;
( b ) when the existence, condition or contents of the original have been proved to be admitted
in writing by the person against whom it is proved or by his representative in interest;
( c ) when the original has been destroyed or lost, or when the party offering evidence of its
contents cannot, for any other reason not arising from his own default or neglect, produce it in
reasonable time;
( d ) when the original is of such a nature as not to be easily movable;
( e ) when the original is a public document within the meaning of Section 74;
( f ) when the original is a document of which a certified copy is permitted by this Act, or by
91 92
any other law in force in [India], to be given in evidence;
( g ) when the originals consist of numerous accounts or other documents which cannot
conveniently be examined in Court, and the fact to be proved is the general result of the whole
collection.
In cases ( a ), ( c ) and ( d ), any secondary evidence of the contents of the document is admissible.
In case ( b ), the written admission is admissible.
In case ( e ) or ( f ), a certified copy of the document, but no other kind of secondary evidence, is admissible.
In case ( g ), evidence may be given as to the general result of the documents by any person who has examined
them, and who is skilled in the examination of such documents.
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was a fresh document, introduced without the leave of the
Court.
(ii) Apropos PW-2/6A and PW-2/7A, as the Bansals did not
take any objection to their exhibition at the time when they
were exhibited, no objection could not be taken at the stage of
arguments regarding the manner in which these documents
were sought to be proved. Further, as these were documents
produced by Philips, who was in possession of the device from
which the documents were proved, no certificate under Section
65B of the Evidence Act was required.
53. The learned Single Judge, thereafter, proceeds to accept
Philip’s contention that the claims in the suit patent corresponded to
Claims 33 to 37 in US’505 and EP’254.
54. We may reproduce, for the sake of convenience, Claims 33 to
37 in US’505 and Claims 33 to 37 in EP’254, thus, in a tabulated
form:
Claim 1 to 6 in the Suit
Patent
Claims 33 to 37 in
US’505
Claims 33 to 37 in
EP’254
“1. Decoding device for
converting a modulated
signal (7) to a series of m-
bit information words (1),
the decoding device
comprising means for
receiving the modulated
signal, means (110) for
converting the signal to a
bit string of bits having a
“33. A decoding device
for converting the
signal as claimed in
claim 25 to a series of
m-bit information
words, the device
comprising means for
converting the signal to
a bit string of bits
having a first or second
“33. Decoding device
for converting the
signal (7) as claimed in
one of the Claims 24 to
31 to a series of m-bit
information words (1),
this device comprising
means (110) for
converting the signal to
a bit string of bits
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first or second logical
value, the bit string
containing n-bit code
words (4) which
correspond to information
signal portions (160), and
converting means (113,
114, 115) for converting
the series of code words to
a series of information
words, one information
word being assigned to
one code word to be
converted and in
dependence thereon,
characterized in that the
device comprises a first
register (112) and a second
register (111) for storing
bits of the bit string and in
that the converting means
(113, 114, 115) are
capable of uniquely
establishing an
information word among a
plurality of information
words represented by an n-
bit code word belonging to
a group (G2) of a second
type, by converting n bits
of the code word from the
first register (112) and p
predetermined bits in a
following code word from
the second register (111)
into a m-bit information
word, in dependence on
the logical values detected
for said p bits.
logical value, which bit
string contains a series
of n-bit code words
which correspond to the
information signal
portions, and
converting means for
converting the series of
code words to the series
of information words,
an information word
being assigned to each
of the code words to be
converted and in
dependence thereon,
wherein the converting
means are arranged for
converting a code word
to an information word
also in dependence on
the logical value of bits
in the bit string which
are located at p
predetermined positions
relative to the code
word.
having a first or second
logical value, this bit
string containing n-bit
code words (4) which
correspond to the
information signal
portions (160) and
which device comprises
converting means (113,
114, 115) for
converting the series of
code words to a series
of information words,
one information word
being assigned to one
code word to be
converted and in
dependence thereon,
characterized in that the
converting means (113,
114, 115) are arranged
for converting the code
word also in
dependence on the
logical values of bits in
the bit string which are
located at p
predetermined position
in a following
codeword for
distinguishing a
respective information
word among a plurality
of information words
represented by a
codeword belonging to
a group (G2) of the
second type.
2. Decoding device as
claimed in Claim 1,
characterized in that each
code word is 16-bit long,
each information word in
8-bit long and p is equal to
2.
34. The decoding
device as claimed in
claim 33, wherein n is
equal to 16, m is equal
to 8, and p is equal to 2.
Important Note: code
word is represented by
‘n’ [n-bit code words
{claim 1}] and
34. Decoding device as
claimed in Claim 33,
characterized in that n
is equal to 16 and m is
equal to 8, and where p
is equal to 2.
Important Note: code
word is represented by
‘n’ [n-bit code words
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information word is
represented by ‘m’[m-
bit code words {claim
1}]
{claim 1}] and
information word is
represented by ‘m’[m-
bit code words {claim
1}]
3. Decoding device as
claimed in Claim 1,
characterized in that the p
predetermined bit
positions are the first and
thirteenth bit portion past
the end of the associated
code word.
35. The decoding
device as claimed in
claim 34, wherein the p
predetermined bit
positions are the first
and thirteenth bit
position past the end of
the code word.
35. Decoding device as
claimed in Claim 34,
characterized in that the
p predetermined bit
positions are the first
and thirteenth bit
position past the end of
the associated code
word.
4. Decoding device as
claimed in one of the
Claims 1 to 3,
characterized in that the
converting means are
connected to detection
means (116) for detecting
sync words having bit
patterns that cannot be
formed by the successive
code words in the series,
or by a part of the sync
word in combination with
an adjacent code word.
36. The decoding
device as claimed in
claim 33, further
comprising detection
means for detecting
sync words having bit
patterns that cannot be
formed by the
successive code words
in the series, or by a
part of the sync word in
combination with an
adjacent code word.
36. Decoding device as
claimed in one of the
Claims 33 to 35,
characterized in that the
device comprises
detection means (116)
for detecting sync
words having bit
patterns that cannot be
formed by the
successive code words
in the series, or by a
part of the sync word in
combination with an
adjacent code word.
5. Decoding device as
claimed in Claim 4,
characterized in that the
detection means (1160 are
arranged for detecting 26-
bit sync words
corresponding to a bit
pattern of
“10010000000000100000
000001” or to a bit pattern
of
“00010000000000100000
00000” where “0”
represents a first logical
value and where “1”
represents a second logical
value.
37. The decoding
device as claimed in
Claim 36, wherein the
detection means are
arranged for detecting
26-bit sync words
corresponding to a bit
pattern of
“100100000000010000
0000001” or to a bit
pattern of
“000100000000001000
00000001”, where “0”
represents a first logical
value and where “1”
represents a second
logical value.”
37. Decoding device as
claimed in Claim 36,
characterized in that the
detection means (116)
are arranged for
detecting 26-bit sync
words corresponding to
a bit pattern of
“100100000000001000
00000001” or to a bit
pattern of
“000100000000001000
00000001”, where “0”
represents a first logical
value and where “1”
represents a second
logical value.”
6. Decoding device as
claimed in any of the
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claim 1 to 5 characterized
in that the converting
means are connected to a
reading device for
receiving the modulated
signal from a record
carrier, comprising read
head (150) for producing
an analog signal of the
modulated signal, and
detection circuit (152) for
converting the analog
signal into a binary
signal.”
55. The learned Single Judge further proceeds to reason thus:
(i) PW-2, in his evidence in chief, stated that he had
examined the claims in US’505 and EP’254 vis-à-vis the claims
in the suit patent and had concluded that the scope of the claims
was the same. These questions and the answers thereby, as
tendered by the PW-2, read thus:
“Q.181 The claims of the EP and the US patent are not the
same as the claims in the Indian patent?
Ans. The scope of the relevant decoding device claims
are the same.
Q.182 I put it to you that the optical device is not a part of
the US and EP patent claims?
Ans. That is not correct. Because Claim 38 of the EP
patent contains a device for reading from a disc which
device is optical.
Q.183 There is no corresponding claim in the Indian patent
which corresponds to the EP claim 38?
Ans. That is correct. Because it is subject of other
divisional patents.
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Q.184 In this suit Philips relies on only one patent i.e.
IN184753?
Ans. That is correct.”
(ii) DW-1, in his examination in chief, also acknowledged
that claims 32 to 38 in EP’254 were included in the suit patent.
The relevant deposition to this effect read thus:
“vi. Claim 32 is for a record carrier on. which the signal as
claimed in any of the earlier claims 24 to 31 is recorded in
which the information pattern represents, the signal portions
about its logical values and properties.
vii. Claims 33. to 37 deal with the decoding device for
converting the signal as claimed in claim 24 to 31.
viii. Claim 38 is for a reading device for reading the record
carrier on, which the information is recorded in an
information pattern and also comprising a decoding, device
as claimed in 33 to 37 for converting the binary reading
signal to. a m-bit information words.”
(iii) There was no challenge to the validity of the suit patent
29
under Section 3(k) of the Patents Act.
(iv) The ECs issued by the SSO in respect of US’505 and
EP’254, i.e., PW-2/6A and PW-2/7A clearly certified that
US’505 and EP’254 were essential for the DVD ROM and
DVD Video Playback functionalities. Claim 33 of EP’254
related to “Decoder converting n-bit information words to m-bit
information words; there is one plurality of code words of a
first type each uniquely defining an information word; the
29
3. What are not inventions .—The following are not inventions within the meaning of this Act,—
*
( k ) a mathematical or business method or a computer program per se or algorithms;
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second type code words are defining different information
words; the aim is to suppress DC signal components”. The EC
issued in respect of EP’254 certified that Claim 33 of EP’254
was an SEP.
(v) This claim was identical to the claim in the suit patent.
(vi) The Bansals’ objections to the reading of PW-2/6A and
PW-2/7A in evidence, as they were not signed, ought to have
been taken at the time when they were exhibited in evidence
and could not be permitted to be taken at the final stage of
arguments. No objection to the manner of proof of PW-2/6A
and PW-2/7A had been taken at that stage.
(vii) PW-2/7A was not a computer-generated document, but
30
was signed. It did not, therefore, required a Section 65B
certificate.
(viii) Even if, therefore, PW-2/5, which set out the standards
issued by the DVD forum as the SSO, was de-exhibited and,
therefore, treated as not proved, and even if Philips had not
been able to prove the ECMA/ISO standards, the ECs and the
essentiality reports issued in respect of US’505 and EP’254
were sufficient to prove that the suit patent was an SEP.
30
65-B. Admissibility of electronic records .—
(1) Notwithstanding anything contained in this Act, any information contained in an
electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic
media produced by a computer (hereinafter referred to as the computer output) shall be deemed to
be also a document, if the conditions mentioned in this section are satisfied in relation to the
information and computer in question and shall be admissible in any proceedings, without further
proof or production of the original, as evidence of any contents of the original or of any fact stated
therein of which direct evidence would be admissible.
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No evidence to the contrary had been led by the Bansals.
56. Based on the above reasoning, the learned Single Judge decides
Issue (vi) against the Bansals and in favour of Philips and holds the
suit patent to be an SEP.
IVC. Re. Issue (iii) – Whether the Bansals infringed the suit patent?
57. Philips contended, before the learned Single Judge, that, as the
suit patent was an SEP, which was essential for reading the encoded
data on DVDs, the Bansals, who were manufacturing DVD players
which read the DVDs, had necessarily to be infringing the suit patent.
Apart from this, it was contended that Philips had successfully proved
the aspect of infringement independently via the evidence of PW-2.
58. In response, the Bansals submitted as under:
(i) There was no claim-to-product mapping, which was
essential for a case of patent infringement to be made out.
(ii) Philips had not conducted any analysis or construction of
the claims in the suit patent.
(iii) The claims in the suit patent were restricted to a decoding
device.
(iv) Philips had admitted that the invention forming subject
matter of the suit patent was embodied in a chip.
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(v) No evidence had been led to prove infringement, by the
Bansals, of the suit patent.
(vi) An affidavit of one Ravi Babu had been filed.
He, however, never appeared as a witness in the witness box.
(vii) The evidence of PW-2 did not establish infringement, by
the Bansals, of the suit patent.
(viii) Besides, PW-2 was not a credible witness and he had not
independently analysed the product.
(ix) Philips had not been able to prove, therefore, that, taking
into account the prevalent technical practices and the state of
the art, it was not possible to manufacture a DVD player
without using the invention forming subject matter of the suit
patent.
(x) In any case, Philips was not entitled to any order against
the Bansals, applying the principles of international exhaustion,
as it had put its product in the market, and the Bansals had
purchased the product through authorized dealers. Reliance
was placed, for this purpose, on the decisions in Impression
31
Products v. Lexmark International , Quanta Computer. v. LG
32 33
Electronics, Inc. and U.S. v. Univis Lens Co. . The Bansals
31
2017 SCC OnLine US SC 9
32
553 U.S. 617 (2008)
33
316 U.S. 241 (1942)
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purchased the parts of the DVD players manufactured and sold
by them, including the chip, from legitimate sources, and were
merely assembling the DVD players from the parts so sourced.
The chips themselves were purchased principally from
MediaTek, who was an authorized distributor. In fact, the
MediaTek chip was also embedded in Philip’s own DVD. In
these circumstances, the use of the MediaTek chip by the
Bansals in their DVDs could not be treated as infringing the suit
patents.
59. Dealing with the rival submissions advanced before her, the
learned Single Judge has observed and held as under:
(i) The claim in the suit patent was only for a decoding
device, not for the entire DVD player or other functions.
(ii) However, the decoding device was an integral part of the
DVD player. In the absence of the decoding device, the
embedded information in the form of codes could not be
transmitted or received.
(iii) Philips had also independently proved the factum of
infringement through
(a) the evidence of PW-2 and
(b) cross-examination of the DWs.
(iv) The DVD players manufactured by the Bansals had been
purchased by Philips (the fact of purchase was also proved) and
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evaluated by PW-2. PW-2, in his evidence, deposed that, on
such evaluation, he had ascertained that the DVD players were
using EFM+ de-modulation techniques and were, thereby,
infringing the suit patent.
(v) The principles of claim construction in patent matters
stood settled by the judgment of the Division Bench of this
Court in Roche v. Cipla . That decision, in turn, refers to the
34
judgment in Herbert Markman v. Westview , which sets out
the two steps involved in infringement analysis, thus:
“(a) First step is to determine the meaning and scope of
the patent claims asserted to be infringed.
(b) Second step is to compare the properly construed
claim with the device accused of infringing.”
(vi) PW-2, in his deposition, stated that he had independently
examined the Bansals’ DVD players using the special tests to
determine the use of the EFM+ de-modulation technique.
On performing the said tests, it was ascertained that the
Bansals’ DVD players were in fact using the said technique
and, thereby, infringing the suit patent. The DVD players of the
Bansals were themselves exhibited as PW-2/A and PW-2/9.
(vii) PW-2 further deposed as under:
(a) Technical analysis of the channel bit data revealed
that the Bansals’ DVD players were manufactured using
34
517 US 370
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the EFM+ demodulation technique disclosed in the
complete specification of the suit patent and were also
employing decoding devices to decode the content stored
in the DVD using EFM+ modulation. Thus, the process
of manufacture of the DVD players of the Bansals
infringed the suit patent.
(b) Analysis of the grabbed channel bit data further
demonstrated the infringement of the suit patent when the
values at bit positions 1 and 13 were modified. The
EFM+ demodulation technique claimed in the suit patent
worked by looking ahead to the next set of code words
with each set of code words commencing and terminating
at bit positions 1 and 13. When bit positions 1 and 13
were not changed, the DVD players of the Bansals played
the reference DVD properly, which indicated that they
were in fact employing decoded EFM+ encoded data
using the patented technology. However, where the code
words at bit positions 1 and 13 were modified, “the look
ahead” feature failed as a result of which the DVD
players of Bansals failed to correctly play that portion of
the channel bit data.
(c) This indicated that the DVD player manufactured
by the appellant employed the look ahead mechanism
disclosed and claimed in the suit patent. Had they not
used the said mechanism, they would have been able to
play the DVD without any problems even where the bit
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values at bit positions 1 and 13 of the next set of code
words was modified.
(viii) From the cross-examination of PW-2, the following
questions and answers were relevant:
“Q.64 From the sketches (figures 8 to 17) annexed to the
specification, please point out which is the integrated
circuit or chip which you referred to in answer to Q. 16
yesterday?
Ans. The figures 8 to 17 you referred to are schematic
block diagrams and not a representation of any chip. So I
cannot out point out to you a chip in these figures.
*
Q. 68 Please tell us what are figures 1 to 4?
Ans. Figures 1 to 4 represent one of the embodiments of
the invention, which are not completely practiced in a DVD
player.
*
Q. 71 Does Philips manufacture the integrated circuits or
chips
by itself?
Ans. I do not know.
Q72 (the witness is being shown a brand new Philips
DVD player serial No.FJlA1103093103 manufactured by
Philips Electronics India Limited, Kolkata, bearing a
manufacturing date of January, 2011). (the DVD player is
not in a sealed pack. The DVD player is unscrewed in front
of the witness to show the inside of the same).
Which according to you is the part of the Philips DVD
player which contains the invention which is patented in the
suit patent?
Ans. I am not an expert in design of DVD player layouts
and printed circuit boards inside thereof So, I could only
guess and I guess this part here (the witness points out to
the green circuit board which has been marked AAAA on
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the instrument, for the purpose of identification).
Q73 In the portion marked AAAA, the chip in the
middle has a name Mediatek?
Ans. That is correct.
*
Q.84 Do you know if Philips has taken any action against
Mediatek Taiwan, which is the manufacturer of the printed
circuit boards?
Ans. I do not know, but I can make a guess. Philips for
the DVD technology only licenses the end product in the
value chain, in this case being a full functional DVD player.
That means a DVD player which is able to reproduce the
content of a DVD disc which is inserted.
Q.85 If I understand you correctly, you mean to say the
manufacturing of the printed circuit board which may
contain the patented technology, is not infringement, but
using the said board on a DVD player for commercial sale
of the same constitutes infringement, according to you?
Ans. I say using the board on the DVD player for
commercial sale constitutes infringement. I have not
enough information to make a judgment about the first part
of your question.
*
Q.88 I show you a brand new Philips DVD player. Serial
No.FJAl103094201 in a sealed carton (Exh.PW2/D9). (The
carton is opened and the DVD player is unscrewed to show
to the witness what is inside in the player). Is it correct that
the portion marked "BBBB", contains the patented
invention?
Ans. If it is the same player as was marked yesterday
"AAAA' I repeat my answer to the question No. 73.
Q.89 Can you please highlight in this DVD player
(Exh.PW2/D9), the portion which contains the patented
invention?
Ans. This printed circuit board (marked "BBBB") contains
the patented invention according to claim 1 of the patent in
suit. However, this printed circuit board on its own cannot
work without auxiliary components such as the optical
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drive next to it.
Q. 90 Are the auxiliary components such as optical drive
apart of the suit patent.
Ans. The invention cannot work without these
components.
Q.91 I put it to you that the suit patent does not claim
auxiliary components such as optical drive and no
monopoly in respect of the same has been granted in favour
of Philips in India?
Ans. That is not correct and I can show you why. I want to
by referring to claim 1. (The witness has referred to
Exh.PW2/4 from the Court record). Claim 1reads
“decoding device for converting a modulated signal to a
series of m-bit information words, the decoding device
comprising means for receiving the modulated signal.” The
last six words are also partly contained in the optical disc
drive. It is impossible for the decoder to work without this
optical disc drive and convert the modulated signal to a
series of m-bit information words.
Q.92 Are you qualified to interpret patent claims?
Ans. Yes I am.”
(ix) The above evidence of PW-2 clarified the following:
(a) The suit patent comprised of hardware, not
software.
(b) The entire cross-examination of PW-2 by the
Bansals revolved around the premise that the suit patent
was embodied in a chip. Bansals, however, in his answer
to question 72, clarified that the invention claimed in the
suit patent was not contained merely in the chip but in the
PCB of which the chip was a part.
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(c) The Philips DVD player with which PW-2 was
confronted during cross-examination was not sealed and
could not, therefore, be relied upon.
(x) The learned Single Judge thereafter addressed the aspect
of international exhaustion. It is necessary to reproduce, in this
context, the following paragraphs from the impugned judgment:
“10.10 Claim of the defendants was that it was purchasing
the chip from Shuntak (HK) trading Company and
Sheenland Corporation which were the authorized venders
vide documents Ex.DW-2/8 collectively however, the
defendants failed to discharge the onus that both Shuntak
and Sheen land were the licensees of the plaintiff and thus
the plea of the defendants that there is no infringement by
virtue of doctrine of exhaustion needs to be rejected. DW-2
in his evidence admitted that both Shuntak and Sheen land
were suppliers of critical DVD components and that they
are associated with mainland China and that Shuntak and
Sheen land are registered party of MediaTek, however, no
evidence was led to prove this fact. It would be further
appropriate to note the distinction between the licensee and
a vendor. Section 2(1) (f) of the Patents Act defines the
term 'exclusive license' to mean a license from a patentee
which confers on the licensee, and persons authorized by
him to the exclusion of all other persons any right in respect
of patented invention. The defendants have led no evidence
to prove that Shuntak and Sheenland were the licensees of
the patentee from whom they claim to have purchased the
products. Defendants have further taken the plea that they
had purchased the products from authorized licensees. The
onus to prove that the defendants purchased the products
from authorized licensees was on the defendants which they
failed to discharge. In the written statement in CS(COMM)
436/2017 plea was taken that defendant was taking the
products from licensees like SONY, SANYO etc. and the
documents in this relation were collectively filed as
Ex.DW-2/8 which were letters purportedly from Sheenland
and Shuntak. These documents are unsigned. The entire
plea of the defendant is that it was using the MediaTek
chips, however it has neither been proved that the
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MediaTek was a licensee of the plaintiff and that the
hardware sold to defendants by MediaTek was pursuant to
a license. The plaintiff has nowhere claimed that MediaTek
is a licensee of plaintiff. In the absence of any admission of
the plaintiff the onus was on the defendants to prove that it
was using the plaintiffs licensed products.
10.11. Defendants having failed to prove that the articles
purchased by them were sold by the plaintiff or its
licensees, the defence based on the doctrine of exhaustion
needs to be rejected as the defendants have failed to prove
that the product using the suit patent was sold to the
defendants by the plaintiff or its licensee, onus to prove
which fact was on the defendants.”
(xi) The Bansals had contended that they were purchasing
chips from Shuntak (HK) Trading Company and Sheenland
Corporation, who were authorised vendors of Philips’ invention
covered by the suit patent. However, the Bansals did not
discharge the onus to show that Shuntak and Sheenland were
Philips’ licensees. As such, the plea of exhaustion could not
sustain.
(xii) DW-2, deposing on behalf of the Bansals, testified in
cross examination that Shuntak and Sheenland were registered
parties of MediaTek. However, no documentary evidence was
led, to prove this fact.
(xiii) Following the above reasoning, the learned Single Judge
has extracted the following paragraphs from the judgment of
the Supreme Court of the US in Impression Products thus:
“The Patent Act grants patentees the "right to exclude
others from making, using, offering for sale, or selling
[their] invention[s]." 35 U S. C. §154(a). For over 160
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years, the doctrine of patent exhaustion has imposed a limit
35
on that right to exclude. See Bloomer v. McQuewan . The
limit functions automatically: When a patentee chooses to
sell an item, that product "is no longer within the limits of
the monopoly" and instead becomes the "private, individual
property" of the purchaser, with the rights and benefits that
come along with ownership. A patentee is free to set the
price and negotiate contracts with purchasers, but may not,
"by virtue of his patent, control the use or disposition of the
product after ownership passes to the purchaser. United
36
States v. Univis Lens Co. . The sale "terminates all patent
rights to that item." Quanta Computer, Inc. V. LG
37
Electronics, Inc . . This well-established exhaustion rule
marks the point where patent rights yield to the common
law principle against restraints on alienation. The Patent
Act "promote[s] the progress of science and the useful arts
by granting to [inventors] a limited monopoly" that allows
them to "secure the financial rewards" for their inventions.
But once a patentee sells an item, it has "enjoyed all the
rights secured by that limited monopoly. Keeler v.
38
Standard Folding Bed Co. . Because "the purpose of the
patent law is fulfilled . . . when the patentee has received
his reward for the use of his invention, " that law furnishes
"no basis for restraining the use and enjoyment of the thing
sold. Univis”
60. The learned Single Judge proceeds, in conclusion with respect
to issue(iii), to hold that the above reasoning established with the
DVD players manufactured and sold by Bansals, if sold without a
license from Philips, infringed the suit patent. She holds that PW-2
had explained the claim in the suit patent and had compared the claim
with the DVD players manufactured by the Bansals to arrive at a
conclusion that infringement had taken place.
61. The learned Single Judge, therefore, decides issue (iii) in favour
of Philips and against the Bansals.
35
14 How. 539 (1853)
36
316 U. S. 241, 250 (1942)
37
553 U. S. 617, 625 (2008)
38
157 U S 659, 661 (1895)
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IVD. Re. Issue (v) – Whether Philips with other members of the
DVD forum were misusing their position to create a monopoly and
earn exorbitant profits by creating patent pools?
62. Learned Single Judge holds that this issue is beyond the scope
of the present suit. It has, therefore, been left unanswered.
IVE. Re. Issue (vii) – Whether the Bansals were bound to pay license
fee to Philips and if so at what rate? and Issue (viii) – whether the
Philips was entitled to damages or any other relief?
63. The learned Single Judge decide these issues in the following
manner:
(i) Whereas a licensee base royalty to the SEP holder at
FRAND rate, and infringer is required to pay damages at
standard rate.
(ii) Philips, however, contended that it was claiming
damages only at FRAND rate. For this purpose, Philips relied
on the deposition of PW1, to the following effect:
(a) Royalty rates payable for the license in respect of
the DVD player upto May 2010 were USD 4.58 at
standard rate and USD 3.175 at compliant rate and, after
28 May 2010, were USD 2.50 at standard rate and USD
1.90 at compliant rate,
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(b) Before this Court, the Bansals had agreed, on 20
September 2010, to deposit royalty at the rate of ₹45 per
sale of DVD player,
(c) Philips was, however, claiming both actual and
punitive damages,
(d) For actual damages, Philips was basing its claim at
the standard rate of royalty charged by it to other entities
for the DVD video functionality of USD 2.50 per DVD
player. As per the sales of DVD players effected by the
Bansals, applying the aforesaid rate and applying an
exchange rate of ₹45 per USD, the royalty payable by the
Bansals to Philips for the period December 2008 to
December 2013 was approximately ₹2.7 Crores. Reliance
was placed, for this purpose, on the Exh.DW2/PR.
(iii) The Bansals contended, however, that
(a) Philips’ claim was not based on FRAND
principles,
(b) Philips had led no evidence with respect to royalty
determination, and
(c) no evidence was led by Philips with respect to
negotiation or fixation of rates, as all licenses were
bundled together.
(iv) Philips contended, per contra, that Philips was required to
charge licence fee not just on the value of the invention forming
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subject matter of the suit patent but based on the sales of the
DVD player as a whole.
(v) The learned Single Judge holds that, indubitably, the
claim in the suit patent was restricted to the decoding device.
However, the decoding device was an integral part of the DVD
player without which the DVD player could not function. Since
the creation of a patent pool and abuse of dominant position
was outside the scope of the suit, Philips claim to royalty based
on the entire patent pool in the DVD player could not be said to
be unreasonable.
(vi) Philips had, by its letter dated 24 January 2006
(Exh.PW1/7A), provided an option to the Bansals either to take
a joint licence over all the patents in the DVD player or a
“Philips only” licence.
(vii) Ex. PW-1/17 was an application by K.K. Bansal for
obtaining the DVD video player licence from Philips.
(viii) PW-1 had, in cross examination, provided the royalty
rates applicable to DVD players in India on the date of filing
the suit as well as on the date of the cross examination.
(ix) The Bansals’ main challenge was that the royalty rates
claimed by Philips were not FRAND. Philips had, vide Ex. PW-
1/7A, granted the Bansals the option either to take a joint
licence or the “Philips only” licence. Despite infringing Philips
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SEP, the Philips was only seeking royalty at FRAND rates of
US$ 3.175 upto 27 May 2010 and US$ 1.90 thereafter, for the
“Philips only” option. This was not, therefore, a case in which
Philips was pooling the patents of all other patentees, used in
the DVD video player, with the SEP.
(x) The sales figures of Bhagirathi and Manglam for the
period from July 2008 to July 2009 was known.
(xi) Moreover, the evidence of DW-2 indicated that the
Bansals had not given their correct sales figures to the Court.
Q. 137 to 147 and the answers by DW-2 thereto have been
reproduced by the learned Single Judge.
(xii) The learned Single Judge thereafter relies on the
judgment of the United States Court of Appeals for the Federal
Circuit in Commonwealth Scientific and Industrial Research
39
Organisation v. CISCO Systems Inc. as laying down the
principles to aid courts in determining whether an export’s
apportionment model is reliable. Philips claimed that the
Bansals had agreed to pay licence fee of ₹ 45 per DVD player
as noted in the order dated 20 September 2010 passed by this
Court. The Bansals contended, however, that the said order was
merely putting in place an interim arrangement which was
without prejudice to their rights and contentions and that,
therefore, the offer therein could not be said to be an amount
fixed between the parties as the royalty rate. However, the
39
Fed. Cir. Dec.3 (2015)
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decision in CISCO Systems ruled that the damages model,
taking into account the parties’ informal negotiations with
respect to the end product, was a generally accepted principle
for ascertaining the royalty. Further, reasonable royalties for
SEPs were not only FRAND but also took into account
incremental benefit derived from the invention. Considering
that Philips was seeking royalty at FRAND terms and that too,
on the basis of the Philips only option, and keeping in mind the
fact that no evidence had been led by the Bansals to rebut
Philips’ evidence, despite the onus in that regard being on the
Bansals, the learned Single Judge holds that Bhagirathi and
Manglam were required to pay royalty to Philips at the rate of
US$ 3.175 from the date of the institution of the suit till 27 May
2010 and at the rate of US$ 1.90 from 28 May 2010 till 12
February 2015.
(xiii) On the aspect of punitive damages, the learned Single
Judge holds that, as Rajesh Bansal was a former employee of
Philips and infringed the suit patent with impunity, he was
liable to pay punitive damages of ₹ 5 lakhs.
IVF. Conclusion
64. Following the above discussion, the learned Single Judge
concludes the impugned judgment thus:
“14. Relief: In view of the discussion aforesaid the two suits are
decreed in favour of the plaintiff and against the defendants
holding that the said defendants have been infringing the suit
patent IN-184753 which is an essential standard patent in respect
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of DVD video player, however, no injunction can be granted to the
plaintiff for the reason the plaintiff’s suit patent expired on 12th
February, 2015. The plaintiff is also found entitled to a decree for
recovery from Rajesh Bansal and K.K. Bansal of royalty payable
at FRAND rates, that is, USD 3.175 upto 7th May, 2010 and
thereafter USD 1.90 upto 12th February, 2015 from the date of
institution of the suits with interest @10% p.a. from the end of the
month for which royalty is due till the date of payment per video
player manufactured/sold. A decree of punitive damages to the
tune of ₹5 lakhs is also passed in favour of plaintiff and against
Rajesh Bansal. A commission is issued to inquire into the number
of video player manufactured/sold by Rajesh Bansal and K.K.
Bansal respectively. Mr. S.M. Chopra, ADJ (Retd.), the learned
Local Commissioner who recorded the evidence is appointed as
the Local Commissioner to, after hearing parties, allowing them to
lead whatever evidence they want to lead, report on the number of
video players manufactured/sold by Rajesh Bansal and K.K.
Bansal respectively with infringing patent. The plaintiff shall be
entitled to recover the amount so found due and less the amount
deposited in this Court with interest accrued thereon, on filing the
report with the execution petition. The objection if any, to the
report of the Local Commissioner be also filed in execution. The
fee of the learned Local Commissioner is fixed at ₹1 lakh to be
borne by the plaintiff.”
65. Aggrieved by the aforesaid decision, the Bansals are in appeal
before us.
E. Rival contentions
I. Submissions of Ms. Swathi Sukumar on behalf of the appellants
(the Bansals)
66. Ms. Sukumar advanced the following submissions:
IA. The suit patent resided in a chip – Suit patent is a product
patent, whereas US’505 and EP’254 are method patents
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(i) The entire finding of infringement was unsustainable as
there had been no claim-to-product mapping as was required by
paras 109 to 111 of the judgment in Roche v. Cipla .
(ii) The plaint was contradictory in terms. The suit patent
was granted for a device. However, infringement was claimed
of the entire DVD technology used in the device. Reliance was
placed, for this purpose, on para 10 of the plaint which read
thus:
“10. The present suit concerns one of such essential
patents, Indian Patent No. 184753 on Channel (De)coding
technology used for DVD Video Playback function in a
DVD Video Player. While the present action is based on
this patent, the Plaintiff craves leave of this Hon'ble Court
to permit amendment of the pleadings to incorporate any
additional patents of the Plaintiff that the Defendants
impugned product might be infringing, if discovered at a
later stage. The details of the Indian Patent No.184753 are
as follows:
Patent application
number:
1578/CAL/98
Patent Title: “Decoding device for converting a
modulated signal to a series of m-bit
information words”
Patent number: 184753
nd
2 September 1998;
Date of filing in
India:
th
Parent application filed on 13
February 1995
th
Date of grant: 20 April 2001
Applicant: Koninklijke Philips Electronics N.V.
Other details: No pre-grant opposition
No post grant opposition
No pending rectification
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Licensees: As indicated in paragraph 13 below
th
US5696505 dated 8 February 1995
–
Corresponding
US patents:
“Method of converting a series of m-
bit information words to a modulated
signal, method of producing a record
carrier, coding device, decoding
device, recording device, reading
device, signal, as well as a record
carrier”
st
EP745254B1 dated 1 February
1995 – “Method of converting a
series of m-bit information words to
a modulated signal, method of
producing a record carrier, coding
device, decoding device, recording
device, reading device, signal, as
well as a record carrier”
Corresponding EP
patent:
(iii) The invention covered by the suit patent was not
apparent even from the complete specifications thereof.
(iv) However, PW2, in his answers to Q. 15 to 16, 72 to 73,
89 and 175 posed to him in cross examination, admitted that the
suit patent resided in a chip and was for a decoding device, not
for decoding technology. The aforesaid questions and the
responses of PW2 thereto read thus:
“Q. 15 The conversion of a modulated signal to a series of
m-bit information words is done by using a software. Is
that correct?
Ans. No it is done by hardware.
Q. 16 Please tell us what is the type of hardware?
Ans. It is an integrated circuit, also called chip.
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Q. 72 (the witness is being shown brand new Philips DVC
player, serial No. FJ1A1103093103 manufactured by
Philips Electronics India Limited, Kolkata, bearing a
manufacturing date of January, 2011). (the DVD player is
not in a sealed pack. The DVD player is unscrewed in
front of the witness to show the inside of the same).
Which according to you is the part of the Philips DVD
player which contains the invention which is patented in
the suit patent?
Ans. I am not an expert in design of DVD player layouts
and printed circuit boards inside thereof. So, I could only
guess and I guess this part here (the witness points out to
the green circuit board which has been marked “AAAA”
on the instrument, for the purpose of identification.)
Q.73 In the portion marked AAAA, the chip in the
middle has a name MediaTek?
Ans. That is correct.
*
Q. 89 Can you please highlight in this DVD player (Ex.
PW-2/D-9), the portion which contains the patented
invention?
Ans. This printed circuit board (marked “BBBB”)
contains the patented invention according to claim 1 of the
patent in suit. However this printed circuit board on its own
cannot work without auxiliary components such as the
optical drive next to it.
*
Q. 175 According to you the patent relates to a decoding
technology and not a component or a device. Is that
correct?
Ans. The claim of the patent relates to a decoding device.
So it is not correct.”
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PW-2, therefore, admitted that the invention forming subject
matter of the suit patent was a chip, which was manufactured
by MediaTek.
(v) The suit patent was, therefore, for one component of the
DVD player, which is referred to as the “device”. As against
this, US’ 505 and EP’ 254 were method patents.
IB. Patent exhaustion – Section 107A(b) defence
(vi) Admittedly, the Bansals were purchasing the decoding
device from MediaTek, who was a licensed dealer/seller and
were only assembling DVDs in which one of the components
was the decoding device. Reliance was placed on paragraph 23
of the written statement filed by the defendant which read thus:
“ NON-INFRINGEMENT :
23. It is most respectfully submitted that the Answering
Defendant is not infringing the Plaintiffs patent (#184753)
in as much as the various components of the DVD player
are being sourced by the Answering Defendant from
various entities that are authorized licensees of the Plaintiff
like Sony, Sanyo, etc. It is of importance to note that the
Answering Defendant does not manufacture a DVD player;
it merely assembles the various components and parts
procured by it from authorized licensees into the end
product i.e. a DVD player. Thus, in the light of the same
the present action instituted by the Plaintiff is not
maintainable. Copies of various invoices of purchases
being made by the Answering Defendant's sister concern
(Bhagirathi Electronics) from Sony, Sanyo are already on
record.”
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(vii) The legal and legitimate import, by the Bansals, of the
chips manufactured by Medial Tek completely exhausted the
patent rights of Philips in the decoding device. The DVD
players manufactured by Philips also contained the MediaTek
chip. For this purpose, the Bansals relied on the following:
(a) Paras 15 and 16 of the affidavit in evidence of
Rajesh Bansal, testifying as DW-2, acknowledged that
Philips was also sourcing PCBs from MediaTek.
(b) The letters from Sheen land and Shuntak, exhibited
as DW-2/8 colly, confirmed that (i) the chips supplied to
the Bansals were MediaTek chips and (ii) MediaTek was
a registered vendor of Philips.
(c) Customs documents and invoices, whereunder the
chips have been purchased by the Bansals from
MediaTek and imported into India, were also exhibited
collectively as DW-2/5A, DW-2/7 and DW-2/7A.
(viii) In fact, all the DVD players produced before the Court
for its perusal contained MediaTek chips. The sales of the
MediaTek chips to the Bansals were authorised under the laws
of the country from which the products were imported and,
therefore, resulted in exhaustion of Philips’ rights in the suit
40
patent, applying Section 107A(b) of the Patents Act.
40
107-A. Certain acts not to be considered as infringement .—For the purposes of this Act,—
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(ix) The onus to show that the import was not from licensed
vendors and not was covered by Section 107A(b) of the Patents
Act was, therefore, on Philips. Philips had not discharged this
onus. No evidence have been produced by Philips to indicate
that MediaTek was not its licensed dealer.
(x) In fact, both the PWs deliberately refused to answer
questions about the relationship between Philips and MediaTek.
DW2 Rajesh Bansal, however, admitted in his cross
examination that the MediaTek chip was found in the Philips
DVD players and the players of their licensees.
(xi) DW2 was never cross examined on his assertion that he
had purchased chips from MediaTek. Reference was invited, in
this context, to questions 71 to 76 and 84 to 85 addressed to
PW2 and questions 168 to 171 addressed to DW2 which may
be extracted as under:
Cross-examination of PW-2 Johannes P.J.G. Van Liempd
“Q. 71 Does Philips manufacture the integrated circuits or
chips by itself?
Ans. I do not know.
Q. 72 (the witness is being shown brand new Philips DVC
player, serial No. FJ1A1103093103 manufactured by
Philips Electronics India Limited, Kolkata, bearing a
manufacturing date of January, 2011). (the DVD player is
( b ) importation of patented products by any person from a person who is
duly authorised under the law to produce and sell or distribute the product,
shall not be considered as an infringement of patent rights.
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not in a sealed pack. The DVD player is unscrewed in
front of the witness to show the inside of the same).
Which according to you is the part of the Philips DVD
player which contains the invention which is patented in
the suit patent?
Ans. I am not an expert in design of DVD player layouts
and printed circuit boards inside thereof. So, I could only
guess and I guess this part here(the witness points out to
the green circuit board which has been marked “AAAA”
on the instrument, for the purpose of identification.)
Q.73 In the portion marked AAAA, the chip in the
middle has a name MediaTek?
Ans. That is correct.
Q.74 Does MediaTek manufacture the printed circuit
boards of Philips?
Ans. I do not know.
Q. 75 do know that MediaTek is a licensed manufacturer
of Philips of these printed circuit boards?
Ans. I do not know.
Q. 76 I am showing you the DVD players branded Onida
Atom, Weston DVD 2060, LG and Videocon D2H Satellite
DVD (these have been unscrewed) and please look at the
printed circuit boards in these players. All these players
contain the MT1389QE chip, which is also used in the
Philips DVD player shown to you earlier. Is it correct.
(The DVD players are not in a sealed pack. The DVD
players are unscrewed in front of the witness to show the
inside of the same.)
Ans. The Philips player has MT1389QE chip, the LD
player has MT 1389DE chip, Videocon player has
MT1389DE chip, Onida player has MT1389DE chip and
Weston player has MT1389DE chip.
NOTE: The Philips DVD player is marked as Ex. PW2/D1,
the Onida as Ed. PW2/D2, Weston DVD Player as Ex.
PW2/D3, LG DVD player as Ex. PW2/D4 and Videocon
DVD player as Ex. PW2/D5.
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*
Q. 84 Do you know if Philips has taken any action against
MediaTek, Taiwan, which is the manufacturer of the
printed circuit boards?
Ans. I do not know, but I can make a guess. Philips for
the DVD technology only licenses the end product in the
value chain, in this case being of full functional DVD
player. That means a DVD player which is able to
reproduce the content of a DVD disc which is inserted.
Q. 85 if I understand you correctly, you mean to say the
manufacturing of the printed circuit board which may
contain the patented technology, is not infringement, but
using the said board on a DVD player for commercial sale
of the same constitutes infringement, according to you?
Ans. I say using the board on the DVD player for
commercial sale constitutes infringement. I have not
enough information to make a judgement about the first
part of your question.”
Cross-examination of DW-2 Rajesh Bansal
“Q. 168 Is it correct that MediaTek, Taiwan does not
manufacture DVD players?
Ans. I am not aware.
Q. 169 have you received any patent search from
MediaTek?
Ans. I do not remember.
Q. 170 Have you received any legal indemnity from
MediaTek?
Ans. I do not remember.
Q. 171 is it correct that Shuntak and Sheenland
Corporation are not manufacturing DVD players?
Ans. Both Shuntak and Sheeland Corporation are
suppliers of critical DVD components and I’m not sure if
they are also manufacturing DVD players.”
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For this purpose, the Bansals relied on paragraphs 15 and 16 of
the judgment of the Supreme Court in Muddasani Venkata
41
Narsaiah v. Muddasani Sarojana and paragraphs 13 and 14
42
of the State of UP v. Nahar Singh .
(xii) The purchase of the chips from MediaTek, therefore,
constituted a complete defence for the Bansals, in terms of
Section 107A(b) of the Patents Act.
(xiii) Philips had, in its plaint, concealed its relationship with
MediaTek.
IC. Royalty could not have been worked out on per DVD video
player basis
(xiv) Though the entire suit had proceeded with respect to
Philips’ allegation that the Bansals had infringed the decoding
device which formed subject matter of the suit patent, royalty
was worked out, in the impugned judgment, per DVD video
player. This was itself illegal.
ID. Philips had failed to prove the existence of a standard or
essentiality of the suit patent
(xv) PW 2/5 was an internal document of Philips and could
not, therefore, be regarded as a standard.
(xvi) The ECs and Essentiality Reports of the US’ 505 (Ex PW
41
(2016) 12 SCC 288
42
(1998) 3 SCC 561
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2/6A) and EP’ 254 (Ex. PW 2/7A) were unaccompanied by any
technical analysis. Neither report dealt with the suit patent, the
standards pleaded in the plaint or in the replication filed by
Philips. They could not, therefore, constitute the basis to
determine the essentiality of the suit patent.
43
(xvii) Moreover, the Essentiality Reports were in the nature of
expert evidence. They could be accepted only in terms of
44
Section 45 of the Indian Evidence Act, 1872. Reliance was
placed for this purpose on paras 17 to 19 of State of Himachal
45
Pradesh v. Jai Lal , and para 17 of Ramesh Chandra Agrawal
46
v. Regency Hospital . The auditors and authors of the ERs
were never examined. The technical analysis behind the ERs
was never produced. Moreover, PW2 in his response to
Question 108 in his cross-examination, admitted that he did not
recognize the signatures on the ERs.
(xviii) Ergo, the existence of an SSO and the existence of a
standard had not been proved as required by para 61 of Intex .
(xix) Intex also clarified that a licensor of an SEP was required
to enter into a contractual FRAND commitment with the SSO.
No such evidence was on record.
43
“ERs” hereinafter
44
45. Opinions of experts .—When the Court has to form an opinion upon a point of foreign law, or of
science, or art, or as to identity of handwriting or finger impressions, the opinions upon that point of persons
specially skilled in such foreign law, science or art, or in questions as to identity of handwriting or finger
impressions] are relevant facts.
Such persons are called experts.
45
( 1999) 7 SCC 280
46
( 2009) 9 SCC 709
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IE. Claims in the suit patent not mapped to the standard
(xx) Irrespective of the status of US’ 505 and EP’ 254, there
was no standard recognized by any SSO in India by any
instrument having the force of law.
(xxi) The suit patent was, therefore, not mapped to any legally
binding standard. Reliance was placed for this purpose on para
95 of Intex which ruled that for a patent to be considered as
part of a standard it had to be proved by way of claim charts
indicating that the claims in the patent were present in the
technical features of the standard. This exercise had not been
undertaken by Philips in respect of any patent – neither the suit
patent, nor the US’ 505 nor the EP’ 254 patent.
(xxii) Moreover, a comparison of the inventions forming
subject of US’505 and EP’ 254 clearly indicated that they were
different and distinct from the invention forming subject matter
of the suit patent. Reliance was placed for this purpose on the
following tabular statement:
US Claim 33
A decoding device
for converting the
signal as claimed in
claim 25 to a series
of m-bit information
words, the device
comprising means
for converting the
signal to a bit string
EP Claim 33
Decoding device for
converting the signal
(7) as claimed in one
of the Claims 24 to 31
to a series of m-bit
information words (1).
this device comprising
means (110) for
converting the signal
Suit Patent Claim 1
Decoding device for
converting a
modulated signal (7)
to a series of mbit
information words (1).
the decoding device
comprising means for
receiving the
modulated signal,
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of bits having a first
or second logical
value, which bit
string contains a
series of n-bit code
words which
correspond to the
information signal
portions, and
converting means
for converting the
series of code words
to the series of
information words,
an information word
being assigned to
each of the code
words to be
converted and in
dependence thereon.
Wherein the
converting means
are arranged for
converting a code
word to an
information word
also in dependence
on the logical values
of bits in the bit
string which are
located at p
predetermined
positions relative to
the code word.
to a bit string of bits
having a first or
second logical value,
this bit string
containing n bit code
words (4) which
correspond to the
information signal
portions (160) and
which device
comprises converting
means (113, 114, 115)
for converting the
series of code words to
a series of information
words, one
information word
being assigned to one
code word to be
converted and in
dependence thereon.
characterized in that
the converting means
(113, 114, 115) are
arranged for
converting the code
word also in
dependence on the
logical values of bits
in the bit string which
are located at p
predetermined
positions in a
following codeword
for distinguishing a
respective information
word among a
plurality of
information words
represented by a
codeword belonging to
a group (G2) of the
second type.
means (110) for
converting the signal
to a bit string of bits
having a first or
second logical value.
the bit string
containing n bit code
words (4) which
correspond to
information signal
portions (160), and
converting means
(113, 114, 115) for
converting the series
of code words to a
series as of
information words,
one information word
being assigned to one
code word to be
converted and in
dependence' thereon.
characterized in that
the device comprises
a first resister (112)
and a second resister
(111) for storing bits
of the bit string and
in that the converting
means (113, 114, 115)
are capable of
uniquely establishing
an information word
among 3 plurality of
information words
represented by an n-
bit code word
belonging to a group
(G2) of a second type,
by converting n bits
the code word from
the register (112) and
p predetermined bits
in a following code
word from the second
register (111) into a n-
bit information word,
in dependence on the
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logical values detected
for said p bits.
pg 107. @ pg 138
(PDF pg 141).
Volume I.
Exhibits CC
Pg 139 @ pg 152-153
(PDF pg 155-156).
Volume I. Exhibits CC
pg 1 @ pg 28 (PDF
pg31). Volume I.
Exhibits CC)
IF. Fact of infringement not established
(xxiii) Philips had not proved the fact of infringement by the
indirect method.
(xxiv) Philips had also not provided any independent evidence
of infringement.
(xxv) The reliance on the affidavit of Ravi Babu was irrelevant
as Ravi Babu never entered the witness box.
(xxvi) PW 2 deposed with respect to the nature of the
invention in the suit patent, on the basis of the analysis
undertaken by Ravi Babu and his own infringement analysis.
Reference was invited to para 15 of the affidavit in evidence of
PW 2 which read thus:
“15. I have independently examined the Defendants'
products using tests devised specifically for the purpose of
determining the presence of EFM + demodulation
technique. I confirm that the Defendants' DVD Video
Players use the EFM + demodulation technique. Therefore,
the Defendants' products infringe Indian Patent No.184753.
I state that my findings on the study of the Defendants'
products correspond fully, with those set out in Mr. Ravi
Babu's affidavit. In summary:
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a. A technical analyses of the channel bit data
gives foolproof evidence and confirms that the
DVD Video Players being manufactured and sold
by the Defendants use the EFM+ demodulation
technique disclosed in the said patent and employ
decoding devices to decode content stored on a
DVD Disc using the EFM modulation, hence
amounting to violation of the Plaintiff's exclusive
rights.
b. Analysis of grabbed channel bit data clearly
establishes whether EFM+ coding has been used on
any disc. The next code words, which are used to
correctly decode the data stored on the DVD disc to
provide the accurate information on the basis of
look ahead, are modified by changing the values at
bit positions 1 and 13.
c. The DVD Video Players play the entire
DVD disc used as reference and decodes the EFM+
encoded data stored on the DVD disc without any
problems i.e. the audio and video quality is good.
This establishes that the DVD-Video Players
contain an EFM+ decoding mechanism, which uses
the bit values 1 and 13 of the next code word for
decoding the current code word of the second type
into the correct data symbol.
d. The DVD Video Players fail to correctly
play that portion of channel bit data, wherein the
next code words have been modified. This change
in the next code words does not allow look ahead of
EFM+ decoding mechanism to work. The failure to
correctly play the channel bit data with modified
next code words is due to the fact that the DVD,
Video Players does use look ahead mechanism as
disclosed and claimed in Indian Patent No. 184753.
Had the DVD Video Players not been using EFM+
decoding as suggested by the decoding device of
Plaintiff's Patent No. 184753, the DVD Video
Players would have been able to play the entire
DVD disc with modified channel bit data without
any problems.
The Defendants DVD Video Players under the brands
SOYER and PASSION are filed and exhibited as Ex.PW-
2/8 and Ex.PW-2/9 respectively.”
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(xxvii) Moreover, the following paras 12 to 17 of the
affidavit in evidence of PW2 indicated that the infringement
analysis had been carried out with respect to the technique and
with respect to the device:
“12. I state that decoding of modulated signals is
referred to as Channel demodulation and is performed prior
to the output of data such as video or audio. Indian Patent
No. 184753 relates to a decoding device in a DVD Video
Player which reads and converts a modulated signal
representing ‘n-bit’ code words to ‘m-bit’ information
words or data words (bytes). The decoding of 16-bit code
words to 8-bit information words is performed by “looking
ahead” to the logical value of ‘p-predetermined bits’ of the
next code word.
13. I state that DVD disc are played on the DVD Video
Players specifically meant for decoding the content stored
according to Patent No. 184753. Therefore, any person or
entity indulging in manufacturing, selling, offering for sale
or even stocking infringing DVD Video Players would
infringe the exclusive rights of the Plaintiff.
14. I state that when the Plaintiff was informed about
the sale of DVD Video Players including decoder devices
by the Defendants a technical expert in the employment of
Philips Electronics India Limited carried out a technical
analysis. The results of the technical analysis are set out in
the affidavit of Mr Ravi Babu dated May 22, 2009 file that
pages 122-180 in CS (OS) 1034 of 2009 and that pages 71-
129 in CS (OS) 1082 of 2009 along with the respective
Plaints.
15. I have independently examined the Defendants
products using test devised specifically for the purpose of
determining the presence of EFM+ demodulation
technique. I confirm that the Defendants DVD Video
Players use the EFM+ demodulation technique. Therefore,
the Defendants’ products infringe Indian Patent No.
184753. I state that my findings on the study of the
Defendants’ products correspond fully with those set out in
Mr Ravi Babu’s affidavit. In summary:
a. A technical analysis of the channel bit data
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gives foolproof evidence and confirms that the
DVD Video Players being manufactured and sold
by the Defendants used the EFM+ demodulation
technique disclosed in the said patent and employ
decoding devices to decode content load on a DVD
Disc using the EFM+ modulation, hence amounting
to violation of the Plaintiff’s exclusive rights.
b. Analysis of grabbed channel bit data clearly
establishes whether EFM+ coding has been used on
any disc. The next code words, which are used to
correctly decode the data stored on the DVD disc to
provide the accurate information on the basis of
look ahead are modified by changing the values at
bit positions 1 and 13.
c. The DVD Video Players play the entire
DVD disc used as reference and decodes the EFM+
encoded data stored on the DVD disc without any
problems i.e. the audio and video quality is good.
This establishes that the DVD Video Players
contain an EFM+ decoding mechanism, which uses
the deep values 1 and 13 of the next code word for
nd
decoding the current code word of the 2 type into
the correct data symbol.
d. The DVD Video Players fail to correctly
play that portion of channel bit data, wherein the
next code words had been modified. This change in
the next code words does not allow ‘look ahead’ of
EFM+ decoding mechanism to work. The failure to
correctly play the channel bit data with modified
next code words is due to the fact that the DVD
Video Players does use ‘look ahead’ mechanism as
disclosed and claimed in Indian patent No. 184753.
Had the DVD Video Players not been using EFM+
decoding as suggested by the decoding device of
Plaintiff’s Patent No. 184753, the DVD Video
Players would have been able to play the entire
DVD disc with modified channel bit data without
any problems.
The Defendants DVD Video Players under the brands
SOYER and PASSION are filed and exhibited as Ex.PW-
2/8 and Ex.PW-2/9 respectively.”
16. The fact that the Defendants’ DVD Video Players
employ Decoders specifically meant for decoding the
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stored content according to Indian Patent No. 184753 is
evidence that the Defendants use the EFM+ Demodulation
disclosed in the Indian Patent No. 184753.
17. I state that based on physical testing of the product
and my analysis it is conclusively proved that the
impugned products and Defendants infringes upon the
Plaintiff’s patent and Defendants are blatantly infringing
the Plaintiff’s Patent rights. I am advised to state that the
actions of the Defendants are illegal, unauthorized and am
advised to state the Defendants are liable to be restrained
by order of permanent injunction of this Hon’ble Court.”
(xxviii) The evidence of PW2 lacked credibility for the
following reasons:
(a) PW2 was the IP counsel for Philips and an
employee of Philips for 25 years. This was admitted in
para 1 of the affidavit in evidence of PW2.
(b) There was no evidence regarding the analysis by
PW2 with respect to infringement. Reliance was placed
on questions 12 to 13 addressed to PW2 in cross-
examination and his response thereto, which read thus:
“Q. 12 Please come to para 15 of your affidavit.
Have you filed any test results on record of the
alleged tests mentioned by you in para 15?
Ans. No I have not filed. However, I do have the
log of the test.
Q. 13 Where and when did you conduct these
tests?
Ans. I conducted these tests in Eindhoven, in The
Netherlands in early November, 2010.”
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(c) PW2 had in para 14 of his affidavit in evidence
clearly stated that he had read the affidavit of Ravi Babu.
As such, the opinion of PW2 was not independent but
influenced by the opinion of Ravi Babu who himself had
never entered the witness box.
IG. The royalty rates claimed by Philips were unsupported and
baseless
(xxix) Not a single comparative license agreement of
Philips with any third party had been produced in evidence, so
that it could be asserted that the royalty rate claimed by Philips
was FRAND. PW1 had, in cross examination, stated that he
was in possession of the licenses. However, they were never
produced. Reliance was placed for this purpose on Questions
152 to 154 of the cross-examination of PW1 and his response
thereto, which read thus:
“Q. 152 Have you signed the Dixon agreement on
behalf of the Plaintiff?
Ans. The licence agreement either signed by the CEO of
our IP&S group or the person authorized to sign. I am not
the signatory for any licence agreements.
Q. 153 Are the licence agreements maintained under your
supervision or control?
Ans. The original licence agreements are maintained by
the Plaintiff at their headquarters in the Netherlands. I do
have a copy of the same.
Q. 154 Can you file a copy of the licence agreement of the
Dixon Technologies?
Ans I can do so”
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(xxx) In the absence of any finding of third party
licences of Philips, there was no proof that the royalty rate
claimed by Philips was FRAND.
(xxxi) Philips had not disclosed the royalty charged by it
for the invention forming subject matter of the suit patent. The
learned Single Judge relied on Philips’ offer to the Bansals of
the ‘Philips only’ licence, which included the entire pool of
patents in the DVD, as was apparent from Ex. PW1/7A.
(xxxii) The learned Single Judge has erroneously held the
Bansals liable to pay royalty on the entire DVD player.
(xxxiii) The imposition of punitive damages on the ground
of knowledge, by Rajesh Bansal, of the invention forming
subject matter of the suit patent, was also unjustified. Rajesh
Bansal had, in paras 3, 19 and 17 of his affidavit in evidence
tendered as DW2, clearly stated that he had no technical
knowledge of Philips patents. He was not cross-examined with
respect to his assertion.
67. For all these reasons, Ms. Sukumar submits that the impugned
judgment is erroneous on facts and in law and is liable to be set aside.
II. Submissions of Mr. Pravin Anand
68. Responding to Ms. Sukumar, Mr. Anand submits as under:
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IIA. Re: Bansal’s knowledge about Philips’ SEP Programme
(i) Mr. Rajesh Bansal was an employee of Philips for 5
years. He, therefore, had specific knowledge of Philips’ SEP
licencing programmes.
(ii) Philips had addressed several letters to the Bansals since
2006 with respect to its SEP licencing programme and the
licences which the Bansals were required to secure from
Phillips.
(iii) K.K. Bansal had in fact applied for a licence for Philips’
patent covering the DVD technology.
(iv) Rajesh Bansal, testifying as DW2, had admitted, in cross-
examination, that K K Bansal had initiated an agreement with
Philips to seek licences for Philips suit patents.
47
(v) M/s. Creative International Technology , which was
owned by Mukesh Bansal, the brother of Rajesh Bansal, was a
licencee of Philips.
(vi) Rajesh Bansal, K.K. Bansal and Mukesh Bansal were
48
directors in M/s. Fenda Auto Pvt. Ltd. , which was also
involved in the business of manufacture and sale of DVD
47
“Creative” hereinafter
48
“Fenda” hereinafter
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players.
IIB. With respect to Phililps SEP programme
(vii) Philips was offering two categories of licence
agreements, one for the ‘Philips Only’ licence, which was for
Philips’ SEPs and the second as a joint version covering the
SEPs of Philips, Sony, Pioneer and LG. Philips had executed
approximately 270 DVD player licenses across the world.
IIC. The suit patent
(viii) The suit patent pertained to channel modulation and
channel demodulation technology employed in DVD video
players. Demodulation involved decoding of modulated signals
before the output was provided in the form of audio or video by
the DVD player. The suit patent was for the decoding device in
the DVD player. Decoding was classically effected by
converting modulated signals of m-bit code words into n-bit
information words. The decoding device forming subject of the
suit patent, converted 16-bit code words into 8-bit information
words, by looking ahead to the logical value of p-premeditated
bits of the next code word. Claim 3 in the suit patent envisaged
‘p’ as being at the first and thirteen position beyond the end of
the relevant code words.
(ix) The suit patent, therefore, envisaged a decoding
technology used by the DVD, by which 8-bit code words were
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directly converted into 16-bit information words. This was
classically referred as the EFM+ technology.
(x) US’505 and EP’254 were patents corresponding to the
suit patent.
IID. Essentiality of the suit patent
(xi) Paras 3 to 10 of the written statement filed by the Bansals
recognized that the DVD Forum was an SSO which set the
DVD standards. The written statement also admitted
equivalence of the suit patent with US’505 and EP’254. For this
purpose, reliance was placed on
(a) para 12 of the preliminary submissions in the
written statement, and
(b) paras 8, 11 and 12 of the reply on merits in the
written statement.
These paragraphs, from the written statement of the Bansals
before the learned Single Judge, read thus:
Para 5
“5. It is most respectfully submitted that in case of
DVD players the organization/standardization body (an
entity whose primary activities are developing,
coordinating, promulgating, revising, amending, reissuing,
interpreting, or otherwise maintaining standards that
address the interests of a wide base of users outside the
standards development organization) that lays down the
industry standard is the DVD FORUM. The DVD Forum is
an international organization that comprises of hardware,
software, media and content companies that use and
develop the DVD and HD DVD formats. It was initially
known as the DVD Consortium when it was founded in
1995. The DVD Forum is responsible for the official DVD
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format specification.”
Para 12 of Preliminary Submissions
12. It is most respectfully submitted that whether a
patent is an essential patent as per a set industry standard is
required to be determined by an independent patent
evaluator. It is of importance to note that the Plaintiff has
filed on record essentiality reports by third parties in
respect of its US patent (5696505) and EP patent
(745254B1) which are the corresponding US and European
patent application in respect of the Plaintiff's patent
(#184753) in relation to which the present infringement suit
has been filed. However, it is pertinent to state herein that
the said essentiality reports fail to provide detailed
evaluation and discussion on the basis of which the
aforesaid patents were determined to be essential patents.
As a result, no reliance is liable to be placed on the same by
this Hon'ble Court.
Paras 8, 11 and 12 of Reply on Merits
“8. … However, it is of importance to note that the
essentiality reports that have been filed by the Plaintiff fail
to provide detailed evaluation and discussion of the basis
of which the corresponding US patent (5696505) and EP
patent (745254B1) to its Indian patent (#184753) were
determined to be essential patents.
*
11. The contents of para 11 are wrong, false, incorrect
and are thus denied. It is vehemently denied that the
Plaintiff's patent (#184753) is an essential patent. It is most
respectfully submitted that the Plaintiff be put to strict
proof of the same. It is further submitted that essentiality
reports that have been filed by the Plaintiff in order to
establish that the US patent (5696505) and EP patent
(74525481) which are the corresponding US and European
patent in respect of the Plaintiff's impugned patent
(#184753) in relation to which the present infringement suit
has been filed are essential patents fail to provide detailed
evaluation and discussion on the basis of which the
aforesaid patents were determined to be essential patents.
Thus, no reliance is liable to be placed on the said
essentiality reports by this Hon'ble Court.
12. The contents of para 12 are denied. It is most
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respectfully submitted that as the Answering Defendant is
not technically capable of countering/challenging/verifying
the various statements/contentions being made by the
Plaintiff in respect of its patent, it is humbly requested that
this Hon'ble Court may appoint a scientific advisor in order
to affirm the contentions raised by the Plaintiff inasmuch as
according to the Plaintiff no one is entitled to make a dvd
player without seeking a license from it.”
Additionally, Mr. Anand places reliance on paras 5(II)(h) and
5(III)(j) from the affidavit-in-evidence of DW-1:
“h. Now from the above guidelines and procedures In
USPTO, In the corresponding US patent. (US 5696505) It Is
noticeable that all the claims given therein could have been
allowed by the USPTO using the above guidelines and
Supreme Court decisions, Further, despite the fact that only
claims 33, to 38 have been included in the Indian patent
application, it is evident that the same is nothing but a
software patent disguised as a device patent.
j. Now from the above guidelines and procedures in EPO,
In the corresponding EP patent (EP 0745254 B1). It is
noticeable that all the claims given therein could have been
allowed by the EPO using the above guidelines and EBA
decisions. Out of all the aforesaid claims only claims 33 to 38
have been included in the Indian patent application, however,
they continue to relate to software/computer program per se.”
(xii) PW2, in para 7 of his affidavit in evidence as well as in
his responses to questions 6, 7, 147 to 149, 170, 181, and 99 in
cross-examination, acknowledged that US’505 and EP’254
corresponded to the suit patent:
Para 7 of affidavit-in-evidence of PW-2
“I state that the Plaintiff’s Indian Patent No. 184753 has
corresponding US and European patents in a patent
package that have been analysed for essentiality with
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respect to DVD specification for Read Only Disc Part 3
(DVD Video Standard and DVD Specification for Read-
Only Disc, Part I (DVD ROM standard). The DVD Video
Standard is annexed and exhibited as EX.PW-2/5. The
print outs of the essentiality reports pronouncing said US
and European patents included in the patent packages as
th
essential are filed at pages 476-489 vide index dated 27
May 2009 in CS (OS) No.1082 of 2009 and are exhibited
as Ex.PW-2/6 and Ex. PW-2/7. I state that from thee
reports it is evident that amongst other patents, the
Plaintiff’s Indian Patent No.184753 is an essential patent.”
From cross-examination of PW-2
“Q. 6 Which were the patents which were evaluated?
Ans. The European counterpart in the US counterpart of
the Indian patent.
Q. 7 Have you examined if the claims of the European
counterpart and the US counterpart and the Indian patent
are the same?
Ans. I have examined the claims in the European
counterpart, US counterpart and Indian counterpart and I
have concluded that the scope of the relevant claims is the
same.
*
Q. 147 If I understand you correctly, all discs which have
to be called as DVDs have to be made according to the
DVD specifications set by the DVD Forum and any player
which can play the said DVD disc have to necessarily pay
royalty to Philips. Is that correct?
Ans. Yes.
Q. 148 Your answer to Q. 147 is based on the essentiality
certificate which you rely upon. Is that correct?
Ans. It is based on the essentiality of the patent.
Q. 149 The essentiality of the patent has been determined
in the essentiality certificate relied upon by you. Is that
correct?
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Ans. Yes.
*
Q. 170 The essentiality reports are different for the US and
for Europe. Is that correct?
Ans. No, in the sense that they both state that the patent
is essential for DVD player.
*
Q. 181 The claims of the EP and the US patent are not the
same as the claims in the Indian patent?
Ans. The scope of the relevant decoding device claims
are the same.
*
Q. 99 Indian Suit patent was never given for evaluation to
any evaluator by Philips. Is that correct?
Ans. That is correct. However, the scope of the claims of
the Indian patent is the same as the scope of the European
and the US counterparts.”
(xiii) The learned Single had, therefore, correctly compared the
suit patent with US’505 and EP’254 and held that they were
equally essential. Reliance was placed on para 9.9 of the
impugned judgment, which read thus:
“9.9. On comparison of the three claims it is evident that
the claim in IN184753 are same as claims 33 to 37 of EP-
745254B1 and US 5696505. PW-2 stated that having
examined the claims in US counter-part and the Indian
counter-part he concludes that the scope of the relevant
claims is the same. PW-2 in response to question No.181 to
184 put in cross-examination clarified that the decoding
part of the European essential patent corresponded to the
Indian suit patent though the European patent had both the
coding and decoding claims. In cross-examination PW-2
was confronted with a patent application No.163/CAL/95
and not to the claims in the European patent and the Indian
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suit patent. Evidence of PW-2 is further supplanted by the
defendant’s witness DW-1 who in his evidence by way of
affidavit admitted that out of the claims in EP-0745254B1
claims 32 to 38 have been included in the Indian patent
application, however also stated that they continue to relate
to software/ computer programme per-se. But as noted
above there is no challenge to the validity of the suit patent
under Section 3 (k) of the Patents Act.”
(xiv) Besides, the Bansals admitted that they were selling
DVD players with the ‘DVD’ logo. This was enough to prove
conformity of the technology used by the appellant with the
DVD standard and ipso facto proved infringement as the suit
patent was an SEP. Reliance was placed for this purpose on
paras 93 and 96 of Intex .
(xv) Intex , in para 99 and 103 also held that infringement of a
single SEP was sufficient to establish liability for royalty on the
entire product.
(xvi) The suit patent was representative of the Philips DVD
player SEPs. For this purpose, reliance was placed on the prayer
in the plaint as well as PW-1/10 and PW-1/11.
(xvii) The DVD standard was confronted to PW-1 by the
Bansals. It was thereby entered in evidence. It could not be said
that, therefore, it had not been duly exhibited and could not be
relied upon. Reliance was placed on Questions 30 to 32 of the
cross examination of PW1, which read thus:
“Q. 30 Do you know if PW-2 is reposing on “essential
patents”, DVD Forum, industry specifications, etc., with
respect to which you have stated hereinabove that he would
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be deposing?
Ans. I’m not aware of the contents of the affidavit of
PW-2, but since all the elements referred above relate to a
technical area, it is my presumption that those would be
addressed by PW-2.
Q. 31 Are you aware of any manufacturer across the
world whose patent has been declared as an essential patent
and who is not a member of DVD Forum/6C/4C?
Ans. I am not aware of the same.
Q. 32 Would it be correct to say that majority of the
patents which are declared as essential patents belong to
manufacturers who are part of DVD Forum/6C/4C?
Ans. I have no knowledge of the same.”
(xviii) The same standard had been adopted by the ECMA
Technical Committee as ECMA Standard 267 and was freely
available online.
(xix) The ECMA standard 267 had been adopted by the
International Standards Organization as ISO IEC 16448, which
was also freely accessible online.
(xx) Ex. PW2/6A and Ex. PW2/7A proved that US’ 505 and
EP’254 were essential to the DVD standard.
(xxi) The ERs have been prepared by independent experts who
were patent evaluators. For this purpose, reliance was placed on
Questions 22 to 24 and 44 of the cross-examination of PW2 and
the answers thereto, which read thus:
“Q. 22 Does “Proskauer Rose LLP” do any intellectual
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property work for Philips apart from evaluating patents?
Ans. No.
Q. 23 Does “Proskauer Rose LLP” do any intellectual
property work for any other member of the DVD Forum?
Ans. I do not know.
Q. 24 Does “Cohausz and Florack” do any intellectual
property work for Philips or for any other member of the
DVD Forum?
Ans. Not for Philips and do not know about the other
members.
*
Q. 44 Which are DVD specification relies upon in the
present case against the Defendants?
Ans. The DVD specifications are continuously expanded
and improved. The latest specifications always contain all
subject matter of earlier specifications. Therefore, we
normally rely upon the latest version including all previous
versions.”
(xxii) PW2 tendered the certified copies of the ERs. The
Bansals did not, at that stage, take any objection with respect to
the mode of proof in the examination in chief of PW2.
(xxiii) Thus, the onus to prove that the suit patent was essential
to the DVD standard had been discharged by Philips. The onus
to prove to the contrary had not been discharged by the Bansals.
IIE. The direct infringement proved through testing
(xxiv) Ravi Babu, in his report, testified that the Bansals DVD
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players employed the patented EFM+ decoding techniques.
(xxv) Besides, PW2 independently replicated the tests by
modifying the bits of the next code words at positions one and
thirteen, which resulted in the DVD player becoming incapable
of functioning properly. This indicated that the technology
employed in the Bansals DVD players was the technology
patented by the suit patent. Reliance is placed on paras 14 to 17
of the affidavit in evidence of PW-2, which read thus:
“14. I state that when the Plaintiff was informed about
the sale of DVD Video Players including decoder devices
by the Defendants a technical expert in the employment of
Philips Electronics India Ltd carried out a technical
analysis. The results of the technical analysis are set out in
the affidavit of Mr Ravi Babu dated May 22, 2009 file their
pages 122-190 in CS (OS) 1034 of 2009 and at pages 71-
129 in CS (OS) 1082 of 2009 along with the respective
Plaints.
15. I have independently examined the Defendants
products using test the purpose of determining the presence
of EFM+ demodulation technique. I confirm that the
Defendants DVD Video Players use the EFM+
demodulation technique. Therefore, the
Defendants’products infringe Indian Patent No. 184753. I
state that my findings on the study of the Defendants’
products correspond fully with those set out in Mr Ravi
Babu’s affidavit. In summary:
a. A technical analysis of the channel bit data
gives foolproof evidence and confirms that the
DVD Video Players being manufactured and sold
by the Defendants used the EFM+ and employ
decoding devices to decode content load on a DVD
Disc using the EFM+ modulation, hence amounting
to violation of the Plaintiff’s exclusive rights.
b. Analysis of grabbed channel bit data clearly
establishes whether EFM+ coding has been used on
any disc. The next code words, which are used to
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correctly decode the data stored on the DVD disc to
provide the accurate information on the basis of
look ahead are modified by changing the values at
bit positions 1 and 13.
c. The DVD Video Players play the entire
DVD disc used as reference and decodes the EFM+
encoded data stored on the DVD disc without any
problems i.e. the audio and video quality is good.
This establishes that the DVD Video Players
contain an EFM+ decoding mechanism, which uses
the deep values 1 and 13 of the next code word for
nd
decoding the current code word of the 2 type into
the correct data symbol.
d. The DVD Video Players failed to correctly
play that portion of channel bit data, wherein the
next code words had been modified. This change in
the next code words does not allow ‘look ahead’ of
EFM+ decoding mechanism to work. The failure to
correctly play the channel bit data with modified
next code words is due to the fact that the DVD
Video Players does use ‘look ahead’ mechanism as
disclosed and claimed in Indian patent No. 184753.
Had the DVD Video Players not been using EFM+
decoding as suggested by the decoding device of
Plaintiff’s Patent No. 184753, the DVD Video
Players would have been able to play the entire
DVD disc with modified channel bit data without
any problems.
The Defendants’ DVD Video Players under the brands
SOYER and PASSION are filed and exhibited as Ex. PW-
2/8 and Ex. PW-2/9 respectively.
16. The fact that the Defendants’ DVD Video Players
employ Decoders specifically meant for decoding the
stored content according to Indian Patent No. 1 8 4 7 5 3 is
evidence that the Defendants used the EFM+
Demodulation disclosed in the Indian Patent No. 184753.
17. I state that based on physical testing of the product
and my analysis it is conclusively proved that the
impugned products of the Defendants infringes upon the
Plaintiff’s patent and Defendants are blatantly infringing
their Plaintiff’s patent rights. I am advised to state that the
actions of the Defendants are illegal, unauthorised and am
advised to state their Defendants are liable to be restrained
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by order of permanent injunction of this Hon’ble Court.”
(xxvi) PW2 also confirmed that he was in possession of
detailed logs of the test conducted by him, in questions 12 to
14, 43, 124 and 133 to 136 of his cross-examination:
“Q. 12 Please come to power 15 of your affidavit. Have
you filed any test results on record alleged tests
mentioned by you in para 15?
Ans. No. I have not filed. However, I do have the log
of the test.
Q. 13 Where and when did you conduct these tests?
Ans. I conducted these tests in Eindhoven, in The
Netherlands in early November, 2010.
Q. 14 Did you conduct these tests for the PASSION brand
and the SOYER brand DVD Players?
Ans. I conducted these tests on the very 2 players which
had been brought today in these proceedings (and returned
in the manner indicated above).
*
Q. 43 When you conducted the tests on the PASSION and
SOYER branded DVD players, which of the DVD
specifications did you apply?
Ans. I did not apply any DVD specifications because I
just determined infringement of the claims of the Indian
suit patent.
*
Q. 124 According to you, therefore, merely by playing a
DVD disc on a DVD player, you determine infringement
by implication. Is that correct?
Ans. Yes. But we use specially designed test discs
according to the DVD ROM specifications which
determine infringement without leaving any doubt. We do
not use any DVD ROM disc.
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*
Q. 133 Have you seen the affidavit given by Mr. Ravi
Babu?
Ans. Yes. I have seen it.
Q. 134 Is he still working with Philips?
Ans. As far as I know, yes.
Q. 135 Were you provided with a copy of Mr Ravi Babu’s
affidavit and the annexures thereto before filing your
affidavit?
Ans. Yes.
Q. 136 The PASSION DVD Player and SOYER DVD
player which you claim to have tested, are these the same
players which Mr Ravi Babu had tested?
Ans. Yes.”
The Bansals did not challenge the said logs. Ravi Babu’s report
was also brought and introduced into evidence by PW2 during
cross-examination, in his response to questions 133, 136, 137,
140, 163, 83, 92, 93, 95, 103 and 104, which read thus
(omitting those questions which have already been reproduced
earlier):
“Q. 137 Please look up para 18 of the affidavit of Mr Ravi
Babu from the Court record, portion marked “A” to “A”. I
put it to you that Mr Ravi Babu has admitted that DVD
Standards are issued by companies Philips, Hitachi, etc.
Ans. He says here “in order to achieve this, a set
specifications has been issued by the Companies Philips,
Hitachi and many more.
*
Q. 140 Did you use the same test discs which Mr Ravi
Babu has used?
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Ans. I used test discs burnt from the same images.
*
Q. 163 Please look at Mr Ravi Babu’s affidavit and tell us
as to which are the paragraphs relating to your field of
expertise?
Ans. I would say paras 10, 11, 12, 13, 14, 15, 16, 17, 18,
19 and 21.
*
Q. 83 Were you aware of analysis done by Mr Ravi Babu
before you conducted the analysis of the defendants
product?
Ans. Yes.
*
Q. 92 Was your analysis different on any point of the
analysis carried out Mr Ravi Babu?
Ans. No. It was not different.
Q. 93 Was your analysis based on the actual product of
the defendants?
Ans. My analysis was based on the very 2 DVD players
which were tested by Mr Ravi Babu and which are now
exhibited on record as Ex. PW2/D8 and PW2/D9.
*
Q. 95 Those had already been opened and de-sealed and
analysed before you analysed them?
Ans. They had already been analysed by Mr Ravi Babu.
*
Q. 103 Have you prepared the analysis of the defendants
product in writing?
Ans. I have not prepared and taken it with me, but I do
have a laboratory log confirming the infringement of the
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DVD players.
Q. 104 You have not filed your analysis report in this case.
Ans. I have only filed affidavit stating that I have done
the analysis that confirms the results of Mr Ravi Babu.
(xxvii) The Bansals had led no evidence to rebut the testing by
Philips.
(xxviii) The Bansals had also failed to demonstrate that their
DVDs could function without implementing the decoded
mechanism patented in the suit patent.
IIF. Chip or technology?
(xxix) The Bansal’s contention that the invention in the suit
patent resided merely in the chip supplied by the MediaTek had
been rightly rejected by the learned Single Judge. The suit
patent claims covered the entire decoded device, which
involved multiple components including the receiver, registers,
converting means and supporting circuitry, not merely the chip.
The learned Single had correctly held in para 13.3 of the
impugned judgment that the decoding device was integral to the
functioning of the DVD player.
(xxx) In the written statement, the Bansals had stated that they
were sourcing the chip from Sony and SANYO. This stand was
departed from, at the stage of final arguments, during which
they shifted their stance and stated that they were sourcing the
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chip from MediaTek.
(xxxi) No licencing agreements or indemnities or statements
from MediaTek had been placed on record. The letters from
Sheenland and Shuntak were merely an afterthought. Moreover,
these letters had not been proved in evidence and did not
indicate that MediaTek was a licensed distributor of Philips.
(xxxii) The presence of Mediatek components in Philips
DVD player did not absolve the Bansals of their obligation to
take a licence at the finished product level.
(xxxiii) The presence of the MediaTek chip in the Philips
DVD player was even otherwise irrelevant as Philips did not
manufacture the DVD players but had licenced the manufacture
49
to M/s. Dixon Technologies India (Pvt) Ltd . Dixon was
paying royalty to Philips on each finished DVD player sold by
it. Thus, Philips’ own branded DVD players were also licensed.
Reliance was placed on Question 146 of the cross-examination
of PW1, in which it was specifically so stated:
“Q. 146 In India who manufactures the DVD players
sold under the Brand name Philips?
Ans. Dixon Technologies India Ltd is the manufacturer.”
(xxxiv) Even otherwise, the suit patent did not reside
merely in the chip, but in the entire PCB. The PCB, for its part,
could not work without auxiliary components, such as the
49
“Dixon” hereinafter
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optical drive and other hardware. Reliance was invited in this
context to question 89 to 92 of the cross-examination of PW2
and questions 185 and 186 of the cross-examination of PW1:
Q. 89 to 92 of cross-examination of PW-2
“Q. 89 Can you please highlight in this DVD player (Ex.
PW2/D9), the portion which contains the patented
invention?
Ans. This printed circuit board (marked “BBBB”)
contains the patented invention according to claim 1 of the
patent in suit. However, this printed circuit board on its
own cannot work without auxiliary components such as the
optical drive next to it.
Q. 90 Are the auxiliary components such as optical drive a
part of the suit patent?
Ans. The invention cannot work without these
components.
Q. 91 I put it to you that the suit patent does not claim
auxiliary components such as optical drive and no
monopoly in respect of the same has been granted in favour
of Philips in India?
Ans. That is not correct and I can show you why. I want
to buy referring to claim 1. (The witness has referred to Ex.
PW2/4 from the Court record). Claim one reads “decoding
device for converting a modulated signal to a series of m-
bit information words, the decoding device comprising
means for receiving the modulated signal”. The last 6
words are also partly contained in the optical disk drive. It
is impossible for the decoder to work without this optical
disk drive and convert the modulated signal to a series of
m-bit information words.
Q. 92 Are you qualified to interpret patent claims?
Ans. Yes I am.”
Q. 185-186 from cross-examination of PW-1
“Q. 185 I put it to you that the products of the
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Defendant are non infringing as the components for the
defendant’s products are procured from manufacturers like
Sony, Sanyo etc.’
Ans. Not correct, as the patent relates to a technology and
is not on a component.
Q. 186 What do you mean when you say that the patent
relates to a technology?
Ans. In general terms, the patent relates to a technology
of decoding a data from a DVD disc using decoding device
in a DVD Player. More details on the technology can be
explained by PW2.”
IIG. Re: the Royalty rates
(xxxv) The Bansals’ submission that Philips had not proved the
royalty rates claimed by it was unsustainable. Philips had never
avoided providing justification for their royalty rates. PW1, as
Philips’ witness, had categorically expressed his willingness to
produce the licence agreements, if so directed. However, the
Bansals never sought their product. Reliance is placed on
Questions 153 and 154 of the cross-examination of PW1:
“Q. 153 Are the license agreements maintained
under your supervision or control?
Ans. The original license agreements are maintained by
the Plaintiff at their headquarters in the Netherlands. I do
have a copy of the same.
Q. 154 Can you find a copy of the license agreement of the
Dixon Technologies?
Ans. I can do so.”
Having failed to avail of the opportunity to have the third party
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licence agreement produced during trial, the Bansals could not
now seek to claim lack of evidence.
(xxxvi) Philips had consistently disclosed, through
correspondences with the Bansals, the royalty rates charged from
other licencees. These disclosures were also provided by PW1
during cross-examination. Reliance is placed on questions 149,
150, 153 and 154 of the cross-examination of PW1. Questions
153 and 154 stand reproduced supra , and Questions 149 and 150,
with the answers thereto, read thus:
“Q. 149 How much is the license fee charged for
Weston Branded DVD Players?
Ans. The royalty rate is same to all licensees including
Dixon Technologies and the rates mentioned by me in
earlier questions apply in their case also.
Q. 150 Have you signed the License Agreement for Weston
Branded DVD Players and if so, please tell us what is the
exact royalty charged per DVD player in the last financial
year?
Ans. As mentioned above the license is signed by the
Manufacturers and not for a particular brand. An OEM
manufacturer signs a license and manufacture several
brand. The royalty charged per Weston Branded DVD
Players from Dixon up to 27 May 2010 would be at US $ 3
point 1 7 5 as maximum or could a little less depending
th
upon the features in a DVD Player. After 27 May the
royalty charged for Dixon Branded DVD Players is US $
1.90.”
(xxxvii) PW1 had also justified the royalty rates in his
response to Question 58 of cross-examination during his
deposition, explaining that the rates were reasonable and non-
discriminatory, reflecting both technical value of the invention
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and industry practice, thus:
“Q. 58 What according to you royalty rate applicable to
DVD Players in India, as on the date of filing of the suit
and as on today?
Ans. The royalty rates includes a one-time lump-sum fee
of USB 10,000 of which US D5000 is adjustable towards
past quantities and the running royalty rates are as follows:
Period Standard Rate
Compliant Rate
(in USD)
(in USD)
Upto 27.05.2010 4.58 3.175
From 28.05.2010 2.50 1.90”
(xxxviii) The testimony of PW1 further confirmed that the
same royalty rates were uniformly offered to all licencees.
Reliance was placed on the response of PW1 to Question 150
during cross-examination. This was fully consistent with
FRAND obligations and international licensing practices for
SEPs.
IIH. Re. Exhaustion
(xxxix) The Bansals’ reliance on the principle of patent
exhaustion is misconceived for the following reasons:
(a) In their written statements, the Bansals claimed
that their DVD players were sourced from Sony and
SANYO. They never pleaded that their products
incorporated chip sets manufactured by MediaTek. The
MediaTek defence surfaced only belatedly, in affidavit in
evidence and in final arguments after the close of Philips’
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cross-examination. It is settled that parties cannot travel
beyond their pleadings and set up an entirely new case at
the stage of arguments. Reliance has been placed on
paras 76 to 78 and 85.6 of Union of India v. Ibrahim
50
Uddin , and paras 13 to 15 and 17 of Bachhaj Nahar v.
51
Nilima Mandal .
(xl) DW2, in his response to Questions 169 to 174, post
during cross-examination, admitted that there was no indemnity
from MediaTek protecting the Bansals:
“Q. 169 Have you received any patent search from
MediaTek?
Ans. I do not remember.
Q. 170 Have you received any legal indemnity from
MediaTek
Ans. I do not remember.
Q. 171 Is it correct that Shuntak and Sheenland
Corporation are not manufacturing DVD players?
Ans. Both Shuntak and Sheenland Corporation are
suppliers of critical DVD components and I’m not sure if
there are also manufacturing DVD players.
Q. 172 Did they provide you with patent searches?
Ans. They did confirm that all the critical parts
associated with DVD players hold all legal rights
associated to Mainland China and also Shuntak is a
registered partner of MediaTek.
Q. 173 Please answer question 172?
Ans. I do not remember if they have provided documents
50
( 2012) 8 SCC 148
51
(2008) 17 SCC 491
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related to patent searches but all necessary documents have
been shared with us.
Q. 174 The documents that they provided were all shown to
your lawyer. Am I right?
Ans. I am not sure.”
Moreover, no document from MediaTek was ever filed or
exhibited and no witness from MediaTek entered the witness
box.
(xli) The letters from Sheenland and Shuntak were dated
March 2012, much after Philips’ evidence had closed. Neither
letter established that MediaTek was licenced by Philips. The
authors of the letters had also not entered the witness box.
(xlii) The exhaustion defence also misconceived the scope of
the patent. As confirmed by PW-2 in cross-examination, the
invention resided not only in the chip set but in the decoding
device as a whole which form part of the DVD player. The
respondents had always licensed at the end product level as per
DVD player sold. This was consistent with international
jurisprudence including the decision in Lava International
52
Limited v. Telefonaktiebolaget LM Ericsson .
69. Mr. Anand, therefore, submits that the impugned judgment is
unexceptionable on facts and in law and deserves to be accepted.
F. Analysis
52
2024 SCC OnLine Del 2497
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I. What is the suit patent?
70. Ms. Sukumar submits that the suit patent is vague, in that the
nature and identity of the subject invention is not clear from the
claims read with the complete specifications. We agree with her.
71. The claims in the suit patent stand extracted in para 39 supra .
There are six claims. Claim 1 claims a decoding device for converting
a modulated signal to a series of m-bit information words. The Claim
goes on to set out the characteristics and features of the decoding
device. It states that the decoding device comprises
(i) means for receiving the modulated signal,
(ii) means for converting the signal to a bit string of
st nd
bits, having a 1 or 2 logical value, the bit string
containing n-bit codewords which correspond to
information signal portions and
(iii) converting means for converting the series of
codewords to a series of information words.
The claim goes on to state that the device comprises of two registers
for storing bits in the bit string.
72. Claims 2 to 6 are dependent claims. Claims 2 and 3 claim the
decoding device as claimed in Claim 1 and explains the characteristics
thereof. Claim 4 claims the decoding device as claimed in Claims 1 to
3, Claim 5 claims the decoding device as claimed in Claim 4 and
Claim 6 claims the decoding device as claimed in the preceding
claims.
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73. Clearly, therefore, all the claims are for a “device”.
74. Unfortunately, the suit patent does not identify the
characteristics or features of the “device”. Additional confusion is
created by the opening descriptions in the Complete Specifications of
the suit patent, which read thus:
“Method of converting a series of m-bit information words to a
modulated signal, method of producing a record carrier, coding
device, decoding device, recording device, reading device, signal,
as well as a record carrier.
The invention relates to a decoding device for converting a
modulated signal to a series of m-bit information words.
also
The invention relates to a method of converting a series of
m-bit Information words to a modulated signal, with m being an
integer, in which method an n-bit code word is delivered for each
received information word, with n being an integer exceeding m,
and the delivered code words are converted to the modulated
signal, and in which the series of information words is converted to
a series of code words according to rules of conversion so that the
corresponding modulated signal satisfies a predetermined criterion.
The invention further relates to a method of producing a
record carrier on which a signal is recorded obtained according to
said method.
The invention further relates to a coding device for
performing the method as claimed, this device comprising an m-to-
n bit converter for converting the m-bit information words to n-bit
code words, and means for converting the n-bit code words to a
modulated signal.
The invention further relates to a recording device in which
a coding device of this type is used.
The invention further relates to a signal.
The invention further relates to a record carrier on which
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the signal is recorded.
The invention further relates to a decoding device for
converting the signal to a series of m-bit information words, this
device comprising converting means for converting the signal to a
bit string of bits having a first or second logical value, this bit
string containing n-bit code words which correspond to the
information signal portions, and this device comprising converting
means for converting the series of code words to the series of
information words, while a codeword-dependent Information word
is assigned to each of the code words to be converted.
Finally, the invention relates to a reading device in which a
decoding device of this type is used.”
Thus, while the claims in the suit patent only claim a “device”, the
opening description in the complete specifications starts by stating
that the suit patent is claiming a “method of converting a series of m-
bit information words to a modulated signal, method of producing a
record career, scoring device, decoding device, recording device,
reading device, signal, as well as a record carrier”. This appears to be
directly contrary to the wordings of the claims, as well as the very title
of the suit patent, which is “Decoding device for converting a
modulated signal to a series of m-bit information words”.
75. The bibliographic details provided in para 10 of the plaint in the
suit also contain the same description. Further, in para 16 of the plaint,
it is pleaded as under:
“16. Indian Patent No. 184753 relates to a decoding device in a
DVD Video Player which converts a modulated signal representing
n-bit codewords to m-bit information words or data words (bytes).
The decoding of 16-bit code words to 8-bit information words is
performed by “looking ahead” the next code word.”
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Thus, the plaint is clear in its assertion that the invention forming
subject matter of the suit patent is a decoding device in a DVD Video
Player.
76. PW-2, cited as an expert witness by Philips, when questioned,
in cross-examination, as to whether the suit patent related to decoding
technology or to a component or device, answered thus:
“Q. 175 According to you the patent relates to a decoding
technology and not a component or a device. Is that correct?
Ans. The claim of the patent relates to a decoding device. So it is
not correct.”
Thus, Philips’ own witness has testified that the claim in the suit
patent was not for decoding technology but for a component or
device.
77. In para 11 of the written submissions tendered by him, Mr
Pravin Anand has asserted that “the suit patent pertains to “channel
modulation” and “channel demodulation” technology employed in
DVD Video Players”. This submission does not, therefore, appear to
be correct, as Philips own witness has clarified that the suit patent
does not claim any technology but claims only a device. The suit
patent is, clearly, a product patent, not a method or process patent.
78. Though the description of the suit patent as contained in the
complete specifications also employs the expression “method”, the
complete specifications cannot travel beyond the claims in the suit
patent. Section 10 of the Patents Act sets out the contents of the
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complete specifications in any application for registration of a patent.
53
Section 10(4)(c) postulates that every complete specification “shall
end with a claim or claims defining the scope of the invention for
which protection is claimed ”. Protection under the Patents Act is,
therefore, available only to what is claimed in the claims with which
the complete specifications conclude. Even if, therefore, elsewhere in
the complete specifications, it is stated that the patent relates to a
method, so far as the claims in the suit patent claim only a device, it
is only the device forming subject matter of the claims which is
entitled to protection under the Patents Act.
79. This distinction is important. Though the Patents Act, owing to
what can only be a legislative lacuna, does not define “infringement”,
Section 48, without using the word, sets out what infringement
constitutes, by identifying the rights available to a patentee. Clauses
(a) and (b) of Section 48 identifies the rights of a patentee where the
subject matter of the patent is a product, and where the subject matter
of the patent is a process, separately. As such, the Patents Act
envisages infringement of a process patent differently from
infringement of a product patent.
54
80. In the case of product patents, Section 48(b) confers, on the
patentee, the exclusive rights to prevent any third-party, without his
53
(4) Every complete specification shall—
*
(c) end with a claim or claims defining the scope of the invention for which protection is
claimed.
54
48. Rights of patentees. - Subject to the other provisions contained in this Act and the conditions
specified in section 47, a patent granted under this Act shall confer upon the patentee—
*
(b) where the subject matter of the patent is a process, the exclusive right to prevent third
parties, who do not have his consent, from the act of using that process, and from the act of using,
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consent, from making, using, selling or importing the product
forming subject matter of the patent. Unfortunately, as has already
observed earlier, the suit patent does not, either in the claims or in the
complete specifications accompanying the claims, identify the
location of the device of which protection is claimed.
81. Clarity on the subject has, however, been provided by Philips’
own witnesses during the course of trial in the present suit. In his
answers to Questions 15 and 16, PW2, whose evidence was led as an
expert, deposed that the process of conversion of a modulated signal
to a series of m-bit information words, which is what the device
forming subject matter of the suit patent claims to achieve, is done
using a chip, which is an integrated circuit. On being shown an
unscrewed DVD players, PW2 has identified the PCB, inside the
DVD player, as containing the device forming subject matter of the
suit patent. Later, in response to Q. 175, PW2 has clarified that the
suit patent relates to a decoding device and not to the technology
employed therein.
82. The position that results is that the device forming subject
matter of the claim in the suit patent resides in the chip, or in the
PCB, which is contained in the DVD Video Player. Any item or
circuitry outside the PCB is, therefore, equally, outside the suit
patent.
II. Is the suit patent an SEP?
offering for sale, selling or importing for those purposes the product obtained directly by that
process in India.
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IIA. What Philips has to establish
83. In order to demonstrate that the suit patent is an SEP, Philips
would first have to establish the existence of a standard, set by an
SSO and would, thereafter, had to demonstrate that the suit patent
maps onto the said standard, i.e., that the suit patent is essential for
implementing the standard.
IIB. Is the DVD Forum an SSO?
84. Mr. Pravin Anand submits that, in paras 3 to 10 and para 12 of
the preliminary submissions in the written statement filed by the
Bansals in the suit, it is recognised that the DVD Forum is an SSO
which sets the standards for DVD ROM and DVD Video Players.
This submission is correct. In para 5 of the written statement, it is
averred thus:
“5. It is most respectfully submitted that in case of DVD
players the organisation/standardisation body (an entity whose
primary activities are developing, coordinating, promulgating,
revising, amending, reissuing, interpreting, or otherwise
maintaining standards that address the interests of a white base of
users outside the standards development organisation) that lays
down the industry standard is the DVD FORUM. The DVD Forum
is an international organisation that comprises of hardware,
software, media and content companies that use and developed the
DVD and HD DVD formats.”
The Bansals cannot, therefore, be heard to question the credibility of
the DVD Forum as the SSO which sets standards for DVD Players,
and for their operation.
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IIC. Evidence of the standards set by the DVD Forum
85. What, then, is the standard set by the DVD Forum in respect of
DVD Players, vis-à-vis which the essentiality of the suit patent would
have to be gauged?
86. Philips has not chosen to place, on record, the document by
which the DVD Forum has specified the applicable standard. The
document filed by Philips, towards this end, was annexed to the
affidavit-in-evidence dated 19 November 2010 filed by PW-2, in
which it was accorded Exhibit No. Ex PW-2/5. Para 7 of the affidavit-
in-evidence of PW-2 read as under:
“7. I state that the Plaintiff’s Indian Patent No. 184753 has
corresponding US and European patents in a patent package that
have been analysed for essentiality with respect to DVD
specification for Read-Only Disc, Part 3 (DVD Video Standard)
and DVD Specification for Read-Only Disc, Part 1 (DVD ROM
standard). The DVD Video Standard is annexed and exhibited as
Ex. PW-2/5.”
Thereafter, on 8 August 2011, it was de-exhibited, on an objection
being raised by the Bansals to the effect that it was a new document,
exhibited without leave of the Court. The relevant part of the evidence
recorded on 8 August 2011, read thus:
“Ex. PW-2/5 referred to in the affidavit is the DVD Video
Standard (the learned counsel for the Defendants objects to the
exhibition of this document on the ground that this is a fresh
document and only has been sought from the Court to file lists
alongwith this affidavit).
Accordingly, the document numbered in the affidavit as PW-2/5 is
not exhibited.”
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Three days thereafter, on 11 August 2011, however, the Bansals
cross-examined PW-2 with respect to the very same document. The
following questions were asked, and answers elicited:
“Q. 28 Please refer to para 7 of your affidavit. Ex. PW2/5 is
created by whom?
Ans. The DVD specifications for Read Only Disc are made by
DVD Forum.
*
Q.30 The document Ex. PW2/5 is not proprietary to Philips. Is
that correct?
Ans. That is correct as far as I know.
Q.31 Who owns the copyright in this document Ex. PW2/5?
Ans. I do not know, however I could get the DVD Forum in
particular the FLLC, i.e. Format Logo Licensing Company, which
is part of the DVD Forum.
Q. 32 This document Ex. PW2/5 at page 76 declares 10
companies as copyright holders. Is that correct?
Ans. That is correct.
Q.33 This document Ex. PW2/5 contains figures, drawings and
tables. Is that correct?
Ans. That is correct.
Q. 34 These figures, drawings and tables are used to manufacture
DVD players. Is that correct?
Ans. No. That is not correct. They are used to manufacture DVD
Read Only Discs which comply with the DVD Read Only
Specifications and every DVD player which is able to reproduce
such discs should also implement measures which comply with
parts of the standards.”
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87. We are in agreement with Mr Pravin Anand that, having cross-
examined PW2 with respect to PW2/5, which included putting leading
questions, the Bansals cannot seek to contend, now, that PW2/5
cannot be seen in evidence.
88. The answers to Q. 33 and 34, as put to PW2 during cross-
examination on 11 August 2011, testify to the fact that every DVD
player which is able to reproduce DVD discs have to implement
measures which comply with parts of the standards. Thereby, in cross-
examination, the Bansals elicited evidence from PW-2, vouchsafing to
the standards stipulated in Ex PW-2/5.
89. We, therefore, are unable to accept the contention of Ms
Sukumar that there was no evidence of any standards set by the SSO
in the present case.
IID. Equivalence of the suit patent with US’505 and EP’254
90. The equivalence of the suit patent with US’505 and EP’254
stands admitted by the Bansals, in para 12 of the preliminary
submissions and paras 8, 11 and 12 of the reply on merits in the
written statement filed by the Bansals before the learned Single Judge,
extracted earlier in this judgment. This aspect cannot, therefore, be
sought to be contested by the Bansals in the present appeal. We do not
deem it necessary, therefore, to enter it to any detailed comparison of
the claims in the suit patent with those in US’505 or EP’254.
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IIE. Evidence of essentiality of US’505 and EP’254 vis-à-vis the
standards set by the DVD Forum
91. Mr. Pravin Anand has placed reliance on the ECs of Proskauer
Rose LLP and Cohausz & Florack, exhibited as Ex PW-2/6 and Ex P-
2/7, with their certified copies exhibited as Ex PW-2/6A and Ex PW-
2/7A. Though Ms. Sukumar sought to advance an objection on the
certified copies being tendered in evidence without any application for
leading secondary evidence, Mr. Anand responds that, at the time
when they were introduced in evidence by PW-2 and exhibited, no
objection was taken by the Bansals and that, therefore, an objection on
the ground that they are certified copies ought not to be permitted to
be raised now. We are inclined to agree with Mr. Anand.
92. At the same time, no person, either from Proskauer Rose LLP
or from Cohausz & Florack, entered the witness box. At the highest,
these certificates are entitled to be treated as expert evidence, as they
have not been tendered either by any governmental or statutory
authority or any other authority who is conferred with power in that
regard. Mr Anand submits that Proskauer Rose LLP and Cohausz &
Florack are “independent expert patent evaluators”. If that is so, the
certificates issued by them would have to be proved in accordance
with Section 45 of the Evidence Act.
93. The reliance, by Ms. Sukumar, on the judgments of the
Supreme Court in Jai Lal and Ramesh Chandra Agrawal are, to our
mind, well taken. Jai Lal , in paras 17 to 19, rules as under:
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“17. Section 45 of the Evidence Act which makes opinion of
experts admissible lays down that when the court has to form an
opinion upon a point of foreign law, or of science, or art, or as to
identity of handwriting or finger impressions, the opinions upon
that point of persons specially skilled in such foreign law, science
or art, or in questions as to identity of handwriting, or finger
impressions are relevant facts. Therefore, in order to bring the
evidence of a witness as that of an expert it has to be shown that he
has made a special study of the subject or acquired a special
experience therein or in other words that he is skilled and has
adequate knowledge of the subject.
18. An expert is not a witness of fact. His evidence is really of
an advisory character. The duty of an expert witness is to furnish
the Judge with the necessary scientific criteria for testing the
accuracy of the conclusions so as to enable the Judge to form his
independent judgment by the application of this criteria to the facts
proved by the evidence of the case. The scientific opinion
evidence, if intelligible, convincing and tested becomes a factor
and often an important factor for consideration along with the
other evidence of the case. The credibility of such a witness
depends on the reasons stated in support of his conclusions and the
data and material furnished which form the basis of his
conclusions.
19. The report submitted by an expert does not go in evidence
automatically. He is to be examined as a witness in court and has
to face cross-examination . This Court in the case of Hazi
55
Mohammad Ekramul Haq v. State of W.B. concurred with the
finding of the High Court in not placing any reliance upon the
evidence of an expert witness on the ground that his evidence was
merely an opinion unsupported by any reasons.”
(Emphasis supplied)
Ramesh Chandra Agrawal followed Jai Lal and also referred, in this
context, to the judgment in Malay Kumar Ganguly v. Dr Sukumar
56
Mukherjee .
94. As per Philips’ own stand, taken in para 26 of the written
submissions filed before us, the ECs were “prepared by independent
55
AIR 1959 SC 488
56
(2009) 9 SCC 221
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expert patent evaluators”. Being in the nature of expert evidence,
therefore, the ECs would not come into evidence automatically, unless
the manner in which the opinions were arrived at is forthcoming, and
the authors of the opinions are available for cross-examination.
95. Neither of these requirements is satisfied in the case of the ECs
issued by Proskauer Rose and Cohausz & Florack. In the first place,
the ECs do not refer to the manner in which the US and EP patents
were mapped onto the standards set by the DVD Forum, so as to
arrive at a conclusion that they were essential in order to operate the
standards. Secondly, no one, from either of these firms, was cited as a
witness, and there is not even an affidavit from anyone from either of
the firms, vouchsafing to the correctness or credibility of the ECs.
Applying the law laid down in Jai Lal , Ramesh Chandra Agarwal
and Malay Kumar Ganguly , therefore, no reliance could have been
placed on the ECs, even though they were exhibited as Ex PW-6/PW-
6A and PW-7/PW-7A respectively.
96. Mr. Anand has referred to Q. 22 to 24 and Q. 44 posed to PW-2
in cross-examination. For ready reference, these questions, and the
responses thereto, may be reproduced, once again, as under:
“Q. 22 Does “Proskauer Rose LLP” do any intellectual property
work for Philips apart from evaluating patents?
Ans. No.
Q. 23 Does “Proskauer Rose LLP” do any intellectual property
work for any other member of the DVD Forum?
Ans. I do not know.
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Q. 24 Does “Cohausz and Florack” do any intellectual property
work for Philips or for any other member of the DVD Forum?
Ans. Not for Philips and do not know about the other members.
*
Q. 44 Which are DVD specification which the plaintiff relies
upon in the present case against the Defendants?
Ans. The DVD specifications are continuously expanded and
improved. The latest specifications always contain all subject
matter of earlier specifications. Therefore, we normally rely upon
the latest version including all previous versions.”
There is nothing, in these questions, or the answers thereto, as could
lead credibility to the ECs/ERs issued by Proskauer Rose and Cohausz
& Florack. While we make it clear that we do not intend to run down
the expertise of these firms, we are constrained to hold that the ECs
have not been proved in any manner known to law.
97. Intex , in para 95, observes that, “to show that the patent maps
on to the standard, courts take into consideration “claim charts”,
which show that the claims of the patent are also present in the
technical features of a standard. No such claim charts, or any other
attempt to establish that the claims in the suit patent – or, for that
matter, even in US’505 or EP’254 – mapped onto the DVD standards
set by the DVD Forum, has been undertaken in the present case.
98. We are unable, therefore, to agree with Mr. Anand in his
submission that Philips had discharged the onus, on it, to demonstrate
that the suit patent was an SEP, and that the onus thereby shifted to
the Bansals to demonstrate otherwise. To our mind, there is no
credible evidence on the basis of which it could be said that, even
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assuming the existence of the DVD Standards cited by Proskauer
Rose in its EC dated 21 April 2006, the claims in the suit patent were
essential to implement that standard. In the absence of any credible
evidence of essentiality, the suit patent cannot aspire to the status of
an SEP.
III. Infringement
99. Assuming that Philips has succeeded in establishing that the
suit patent is an SEP, it is next required to be examined whether a case
of infringement of the suit patent by the Bansals is made out.
100. Mr. Anand submits that Philips has succeeded in proving
infringement, by the Bansals, of the suit patent, both applying the
direct as well as the indirect test.
IIIA. The indirect test
101. Apropos the indirect test, Mr. Anand’s submission is that, as the
suit patent is an SEP, and the Bansals are manufacturing and selling
DVD players which employ decoders to decode the content stored on
the DVDs, it keeps of follows that the method employed by the
Bansals is that which is patented in the suit patent.
102. As we have already noted, there has been no attempt to map the
suit patent onto the standard allegedly set by the DVD Forum.
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103. Mr. Anand relies, however, on the ECs issued by Proskauer
Rose and Cohausz & Florack in respect of the US’505 and EP’254
patents, to submit that, as these patents are equivalent to the suit
patent, the essentiality attributed to the US and EP patents vis-à-vis
the standards set by the DVD Forum would ipso facto also apply and
extend to the suit patent.
104. In view of our finding that the ECs issued by Proskauer Rose
and Cohausz & Florack cannot be regarded as having credible
evidentiary value, we are unable to accept Mr Anand’s submission
that infringement, by the Bansals, of the suit patent, has been proved
applying the indirect test.
IIIB. The direct test
105. We now proceed to consider whether infringement has been
proved directly.
106. Paras 74 to 76 of Roche v Cipla thus exposit the “direct test” of
infringement:
“74. X-ray diffraction is certainly not an accurate method to
ascertain product patent infringement in the present case as the
issue is not and indeed cannot be whether Roche and Cipla's
products are identical but whether Cipla's product is covered in the
claims of Roche's patent. Although this appears to us to be a fairly
elementary issue in appreciation of the nature of evidence in
product patent infringement cases, neither counsel have relied on
any jurisprudence to demonstrate what ought to be the correct test
of infringement of a product patent.
75. While this issue was indeed framed by the Division Bench
of the Gujarat High Court in Hind Mosaic and Cement
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57
Works v. Shree Shahjanand Trading Corporation in the
following words:“ an infringement analysis involves comparison of
each and every limitation of the claim with the allegedly infringing
device. The analysis cannot be performed by comparing the
product manufactured by the patentee with the allegedly infringing
product, ” the decision does not expressly address this question.
Since no other judgement has been brought to our attention which
sets this issue right, we feel it is important for us to underscore it
here.
76. It is an incorrect analysis of product patent infringement in
a case like the present, to use methodologies like X-Ray diffraction
to ascertain whether the competing products are identical in nature.
The correct test of infringement in this case is to map Cipla
product against the Roche's patent claims, which we find has not
been done by the learned Single Judge, and this is the third
infirmity on this aspect of the dispute.”
Thus, the classical test for determining infringement, in the case of
patents, is mapping of the defendant’s product onto the suit patent.
107. We have already noted, towards the commencement of this
judgment, that, in Zydus Lifesciences , this Court has recently held,
albeit while dealing with an appeal against an order passed under
Order XXXIX of the CPC in the context of an infringement challenge
in respect of a pharmaceutical patent, that, in the absence of any
mapping which had taken place, of the defendant’s product with the
plaintiff’s suit patent, no prima facie case of infringement could be
said to have been made out. This order was carried to the Supreme
Court in appeal. The Supreme Court, in its order, did not disturb the
observations of this Court and, rather, on finding that the defendant’s
product was in the market and that, therefore, a product-to-claim
mapping exercise could be undertaken, granted the appellant (before
it) the liberty to undertake such an exercise and re-approach this Court
57
(2008) 37 PTC 128 (Guj)
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for interim relief. In a manner of speaking, therefore, the Supreme
Court has also acknowledged the primacy of product-to-claim
mapping as a definite test to establish infringement in the case of
patents.
108. That exercise, clearly, has not been undertaken here.
109. To sustain his contention of direct infringement having been
proved in the present case, Mr Anand places reliance on the affidavit
dated 22 May 2009 of Ravi Babu and on the evidence of PW2.
110. Ravi Babu never entered the witness box. His affidavit,
therefore, cannot be read in evidence, as it has not been proved by
him, as the deponent of the affidavit. Ravi Babu not having testified or
deposed, in examination-in-chief, to the correctness of the assertions
in the affidavit, the affidavit is of no evidentiary value. Para 36 of
58
Ayaaubkhan Noorkhan Pathan v. State of Maharashtra exposits
the legal position, in this regard, thus:
“36 . Therefore, affidavits in the light of the aforesaid discussion
are not considered to be evidence, within the meaning of Section 3
of the Evidence Act. However, in a case where the deponent is
available for cross-examination, and opportunity is given to the
other side to cross-examine him, the same can be relied upon. Such
view, stands fully affirmed particularly, in view of the amended
provisions of Order 18 Rules 4 and 5 CPC. In certain other
circumstances, in order to avoid technicalities of procedure, the
legislature, or a court/tribunal, can even lay down a procedure to
meet the requirement of compliance with the principles of natural
justice, and thus, the case will be examined in the light of those
statutory rules, etc. as framed by the aforementioned authorities . ”
58
(2013) 4 SCC 465
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Ergo, Ravi Babu not having been produced as a witness, his affidavit
cannot be relied upon.
111. Mr. Anand then contends that he is not relying solely on the
affidavit of Mr. Ravi Babu but that PW2 had independently tested the
Bansals’ product vis-à-vis the suit patent and arrived at a finding that
the former infringed the latter. He relies, in this context, on paras 14 to
17 of the affidavit-in-evidence of PW2, and his responses to Q. 12 to
14, 43, 124 and 133 to 136 during cross-examination.
112. We have, therefore, examined this aspect of the matter as well.
113. Para 14 of the affidavit-in-evidence of PW2 merely states that
Ravi Babu was a technical expert and that the results of his technical
analysis were contained in his affidavit. It says nothing more. This is
merely amounting to stating that the affidavit of Ravi Babu had been
placed on record. It does not state anything about the credibility or
correctness of the affidavit, or the contents thereof.
114. Even otherwise, an affidavit can be proved only by the
deponent of the affidavit, unless it is impossible to produce him in
evidence for any reason. No third party can vouchsafe the contents of
the affidavit of another, when such other person, who has deposed to
the affidavit, is competent and capable of entering the witness box.
115. In so far as Mr Anand’s contention that PW2 had independently
tested the suit patent and arrived at a conclusion of infringement, is
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concerned, PW2 never placed, on record, the logs, or the details
regarding the manner in which infringement analysis had been
undertaken by him. It is no answer to contend that once PW2 testified
that he was in possession of the logs relating to the infringement
analysis purportedly undertaken by him, it was for the Bansals to
require him to produce the logs or details of the infringement analysis.
The onus, in this regard, was squarely on Philips.
116. The submission of Mr. Anand is not acceptable as being
opposed to two fundamental principles of evidence; firstly, that oral
evidence cannot be led of the contents of a document and, secondly,
that it is not open to a party to withhold the best evidence available
and rely on secondary evidence thereof.
59
117. In Roop Kumar v. Mohan Thedani , the Supreme Court held,
in para 17, thus:
“17. It is likewise a general and most inflexible rule that
wherever written instruments are appointed, either by the
requirement of law, or by the contract of the parties, to be the
repositories and memorials of truth, any other evidence is excluded
from being used either as a substitute for such instruments, or to
contradict or alter them. This is a matter both of principle and
policy. It is of principle because such instruments are in their own
nature and origin, entitled to a much higher degree of credit than
parol evidence.”
118. Apropos the requirement of citing the best evidence available,
60
which flows from Section 114 of the Evidence Act, and the
59
(2003) 6 SCC 595
60
114. Court may presume existence of certain facts. ––
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possibility of drawing an adverse inference if such best evidence is
61
withheld, para 5 of Gopak Krishnaji Ketkar v. Mohamed Haji Latif
holds thus:
“5. … Even if the burden of proof does not lie on a party the
Court may draw an adverse inference if he withholds important
documents in his possession which can throw light on the facts at
issue. It is not, in our opinion, a sound practice for those desiring to
rely upon a certain state of facts to withhold from the Court the
best evidence which is in their possession which could throw light
upon the issues in controversy and to rely upon the abstract
doctrine of onus of proof. In Murugesam Pillai v. Manickavasaka
62
Pandara Lord Shaw observed as follows:
“A practice has grown up in Indian procedure of those in
possession of important documents or information lying by,
trusting to the abstract doctrine of the onus of proof, and
failing, accordingly, to furnish to the Courts the best
material for its decision. With regard to third parties, this
may be right enough — they have no responsibility for the
conduct of the suit; but with regard to the parties to the suit
it is, in Their Lordships' opinion, an inversion of sound
practice for those desiring to rely upon a certain state of
facts to withhold from the Court the written evidence in
their possession which would throw light upon the
proposition.”
The Court may presume the existence of any fact which it thinks likely to have happened, regard
being had to the common course of natural events, human conduct and public and private business,
in their relation to the facts of the particular case.
The Court may presume ––
(a) that a man who is in possession of stolen goods soon, after the theft is either the
thief or has received the goods knowing them to be stolen, unless he can account for his
possession;
(b) that an accomplice is unworthy of credit, unless he is corroborated in material
particulars;
(c) that a bill of exchange, accepted or endorsed, was accepted or endorsed for
good consideration;
(d) that a thing or state of things which has been shown to be in existence within a
period shorter than that within which such things or states of things usually cease to exist,
is still in existence;
(e) that judicial and official acts have been regularly performed;
(f) that the common course of business has been followed in particular cases;
(g) that evidence which could be and is not produced would, if produced, be
unfavourable to the person who withholds it;
(h) that if a man refuses to answer a question which he is not compelled to answer
by law, the answer, if given, would be unfavourable to him;
(i) that when a document creating an obligation is in the hands of the obligor, the
obligation has been discharged.
61
AIR 1968 SC 1413
62
44 IA 98 , at p 103
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This passage was cited with approval by this Court in a recent
63
decision Biltu Ram v. Jainandan Prasad . In that case, reliance
was placed on behalf of the defendants upon the following passage
from the decision of the Judicial Committee in Bilas
64
Kunwar v. Desraj Ranjit Singh :
“But it is open to a litigant to refrain from producing any
documents that he considers irrelevant; if the other litigant
is dissatisfied it is for him to apply for an affidavit of
documents and he can obtain inspection and production of
all that appears to him in such affidavit to be relevant and
proper. If he fails so to do, neither he nor the Court at his
suggestion is entitled to draw any inference as to the
contents of any such documents.”
But Shah, J., speaking for the Court, stated:
“The observations of the Judicial Committee do not support
the proposition that unless a party is called upon expressly
to make an affidavit of documents and inspection and
production of documents is demanded, the Court cannot
raise an adverse inference against a party withholding
evidence in his possession. Such a rule is inconsistent with
Illustration (g) of Section 114 of the Evidence Act, and also
an impressive body of authority.”
119. No tangible reason was adduced, by Philips, or by PW-2, for
not producing the details of the infringement analysis purportedly
undertaken by him, on the basis of which he arrived at the conclusion
that the Bansal’s product infringed the suit patent. In such a
circumstance, we see no reason why the case should not attract
65
Illustration (g) below Section 114 of the Evidence Act.
63
Civil Appeal No. 941 of 1965 decided on April 15, 1968
64
42 IA 202
65
The Court may presume—
(g) that evidence which could be and is not produced would, if produced, be unfavourable to
the person who withholds it;
But the Court shall also have regard to such facts as the following, in considering whether such
maxims do or do not apply to the particular case before it—
as to illustration (g) —a man refuses to produce a document which would bear on a contract of
small importance on which he is sued, but which might also injure the feelings and reputation of his family;
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120. This is all the more so as, in his evidence, PW2 has
acknowledged that the testing undertaken by him was on the entire
DVD player of the Bansals, and not on the chip, or the PCB, per se ,
despite the acknowledged position that the invention forming subject
matter of the suit patent resided in the chip, or the PCB. To what
extent the testing, if any, undertaken by PW2 on the DVD player of
the Bansals would make out a case of infringement of the suit patent,
which resided solely in the chip, or PCB, could have been asserted
only if the logs and details relating to the infringement analysis were
tendered in evidence, and the Bansals provided an opportunity to test
their veracity and correctness by cross-examination if necessary.
121. There is, therefore, in the present case, no evidence of
infringement, either direct or indirect. The plea of Philips that the
Bansal firm infringed the suit patent has, therefore, to fail.
IV. The defence of exhaustion – Section 107A(b)
122. Clause (b) of Section 107A of the Patents Act expressly
excludes, from the ambit of “infringement of patent rights”,
importation of patented products by a person from a person who is
duly authorised under the law to produce and sell or distribute the
product.
123. The cross-examination of PW-2 established that the suit patent
was contained in the chip, or the PCB. This is clear from the answers
of PW-2 to Q. 15, 16, 71 to 76, 89, 175 and 84 to 85, already
reproduced earlier. In fact, the learned Single Judge has also held as
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much in para 10.9 of the impugned judgment, in which he notes that
“PW2 in answer to question No. 72 clarifies that it was a circuit board
which also had a chip inside and that it was not a chip alone”, in
which the suit patent was embodied.
124. It is necessary to note, here, that PW-2, in response to Q. 88 and
89 put to him and cross-examination, merely stated that the invention
forming subject matter of the suit patent could not work without the
auxiliary components in the DVD player. Further, in response to a
suggestion in Q. 91, PW2 stated that the Optical Disk Drive was
included in the words “means for receiving modulated signal”
contained in Claim 1 in the suit patent.
125. These attempts, constituting a strained effort to escape the fact
that the suit patent was contained merely in the chip or PCB, cannot
be of any serious significance. Even if it were to be assumed that the
invention forming subject matter of the suit patent could not work
without the auxiliary components contained in the DVD player, that
would not ipso facto render such auxiliary components part of the suit
patent. There are clear and categorical admissions, in the cross-
examination of PW2, to the effect that the suit patent resides in the
chip, or the PCB.
126. Further, the statement that the Optical Disk Drive was included
in the words “means for receiving modulated signal” in Claim 1 in the
suit patent was also not acceptable, being contrary to the admission
that the suit patent resided in the chip/PCB. It is not in dispute that the
Optical Disk Drive is a component distinct and different from the
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chip/PCB. This deposition is also contrary to the finding contained in
para 10.9 of the impugned judgment, predicated on the answer, by
PW2, to Q. 72 put to him, that the suit patent resided in the chip/PCB.
127. The Bansals specifically submitted that they had purchased the
PCBs from MediaTek, through its distributors Shuntak and Sheen
Land. Letters from Shuntak and Sheen Land were also filed by the
Bansals and exhibited as Ex DW-2/8. These letters read thus:
Letter dated 4 March 2012 from Sheen Land
“SHEEN LAND CORPORATION (HK) LIMITED
4.3.2012
CLARIFICATION
This is to state and clarify that Sheenland Corporation located at
Hong Kong have sold MPEG cards, Front Panel, Remote , Power
Board for DVD players to Bhagirathi Electronics and Mangalam
Technology both located in India. MPEG cards and other DVD
parts provided by us are purchased from authorized vendors and
are in complete compliance of various provisions pertaining to IPR
Law.
To:
Bhagirathi Electronics
E-47, HARIDWAR INDUSTRIAL AREA
HARIDWAR , UTTRAKHAND
To,
Manglam Technology
Plot No.78 , Sector 7
Sidcul Haridwar
Uttrakhand”
Letter dated 12 March 2012 from Shuntak
“SHUNTAK (HK) TRADING COMPANY
XIXIANG TOWN, BAOAN, SHENZHEN, CHINA
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12 March, 2012
To,
Manglam Technology
Plot No. 78, Sector 7
Sidcul Haridwar
Uttrakhand
TO WHOMSOEVER IT MAY CONCERN
We, Shuntak (HK) Trading Company, having our registered office
at Hong Kong are in the business of Manufacturing DVD MPEG
card for the past 10 years. We have been manufacturing and selling
MPEG cards to various dealers, distributors, retailers etc including
Mangalam Technology and Bhagirathi Electronics since 2008. The
MediaTek Chip which is contained in the aforesaid MPEG Cards
are purchased by us from MediaTek and its authorized
distributors/Agents directly after making due payment to them.
Thus, we ensure to all our customers that no infringement will be
caused by any party by buying, purchasing, selling, offering for
sale etc the said product (MPEG Card) as they are purchased from
MediaTek which is a registered vendor of Philips.
Ming Hua Zheng
(Director)
For Shuntak (HK) Trading Company”
128. Apropos the above letters from Shuntak and Sheen Land, the
affidavit-in-evidence of Rajesh Bansal, testifying as DW-2, stated, in
paras 14 and 15, thus:
“14. The MediaTek chips as detailed in Chart A are available as
off the shelf products and are readily purchased by consumers in
the market. We place our order is related to MediaTek
chips/printed circuit board containing MediaTek chips, with 2
Chinese firms trading under the name and style of Shuntak (HK)
Trading Company & Sheenland Corporation and import them and
use the same for assembling the DVD player. Copies of invoices
evidencing the purchase of such chips are already on record in CS
(OS) No. 1034/2009 and are being marked as Exhibit DW 2/7
(colly). Further, additional invoices are also being annexed and
marked here with as exhibit DW 2/7A (colly).
15. Despite the fact that the MediaTek chips are used by most
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of the companies for manufacturing/assembling/producing DVD
players Philips has not chosen to take any action against anyone
else including MediaTek. My suppliers have informed me that the
printed circuit boards which they have manufactured with the
MediaTek chips are perfectly legal as the other registered vendors
of MediaTek which in turn is a registered vendors of Philips
original letters as received by Shuntak (HK) Trading Company and
Sheen land Corporation are being annexed and marked here with
as Exhibit DW 2/8 (colly).”
129. It was thus specifically asserted by Rajesh Bansal, as DW-2, in
his affidavit-in-evidence, that (i) the Bansals had purchased the
MediaTek chips from Shuntak and Sheen Land and used them in the
DVD players, (ii) Shuntak and Sheen Land were registered vendors of
MediaTek and (iii) MediaTek was a registered vendor of Philips.
130. DW2 was, however, not cross-examined on these assertions by
Philips. They, therefore, went unrebutted.
131. Muddasani Venkata Narsaiah , cited by Ms. Sukumar, clearly
sets out the legal position which obtains when assertions made on
affidavit are not tested during cross-examination:
“15. Moreover, there was no effective cross-examination made
on the plaintiff's witnesses with respect to factum of execution of
sale deed, PW 1 and PW 2 have not been cross-examined as to
factum of execution of sale deed. The cross-examination is a
matter of substance not of procedure one is required to put one's
own version in cross-examination of opponent . The effect of non-
cross-examination is that the statement of witness has not been
disputed. The effect of not cross-examining the witnesses has been
66
considered by this Court in Bhoju Mandal v. Debnath Bhagat .
This Court repelled a submission on the ground that the same was
not put either to the witnesses or suggested before the courts
below. Party is required to put his version to the witness. If no
such questions are put the Court would presume that the witness
66
AIR 1963 SC 1906
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account has been accepted as held in Chuni Lal Dwarka
67
Nath v. Hartford Fire Insurance Co. Ltd. .
68
16. In Maroti Bansi Teli v. Radhabai , it has been laid down
that the matters sworn to by one party in the pleadings not
challenged either in pleadings or cross-examination by other party
must be accepted as fully established . The High Court of Calcutta
69
in A.E.G. Carapiet v. A.Y. Derderian has laid down that the
party is obliged to put his case in cross-examination of witnesses
of opposite party. The rule of putting one's version in cross-
examination is one of essential justice and not merely technical
one. A Division Bench of the Nagpur High Court in Kuwarlal
70
Amritlal v. Rekhlal Koduram has laid down that when attestation
is not specifically challenged and witness is not cross-examined
regarding details of attestation, it is sufficient for him to say that
the document was attested. If the other side wants to challenge that
statement, it is their duty, quite apart from raising it in the
pleadings, to cross-examine the witness along those lines. A
Division Bench of the Patna High Court in Karnidan
71
Sarda v. Sailaja Kanta Mitra has laid down that it cannot be too
strongly emphasised that the system of administration of justice
allows of cross-examination of opposite party's witnesses for the
purpose of testing their evidence, and it must be assumed that
when the witnesses were not tested in that way, their evidence is to
be ordinarily accepted . In the aforesaid circumstances, the High
Court has gravely erred in law in reversing the findings of the first
appellate court as to the factum of execution of the sale deed in
favour of the plaintiff.”
(Emphasis supplied)
132. The following classic dictum of Lord Herschell, L.C., in
72
Browne v. Dunn was, in this context, approvingly quoted by the
Supreme Court in Nahar Singh :
“I cannot help saying, that it seems to me to be absolutely essential
to the proper conduct of a cause, where it is intended to suggest
that a witness is not speaking the truth on a particular point, to
direct his attention to the fact by some questions put in cross-
examination showing that that imputation is intended to be made,
67
AIR 1958 P&H 440
68
AIR 1945 Nag 60
69
AIR 1961 Cal 359
70
AIR 1950 Nag 83
71
AIR 1940 Pat 683
72
(1893) 6 R 67
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and not to take his evidence and pass it by as a matter altogether
unchallenged, and then, when it is impossible for him to explain, as
perhaps he might have been able to do if such questions had been
put to him, the circumstances which, it is suggested, indicate that
the story he tells ought not to be believed, to argue that he is a
witness unworthy of credit. My Lords, I have always understood
that if you intend to impeach a witness, you are bound, whilst he is
in the box, to give an opportunity of making any explanation which
is open to him; and, as it seems to me, that is not only a rule of
professional practice in the conduct of a case, but it is essential to
fair play and fair dealing with witnesses.”
133. In so far as the purchase of the PCBs from Shuntak and Sheen
Land were concerned, the only questions asked were the following:
“Q. 171 Is it correct that Shuntak and Sheen land
Corporation are not manufacturing DVD players?
Ans. Both Shuntak and Sheen land Corporation are suppliers of
critical DVD components and I am not sure if they are also
manufacturing DVD players.
Q. 172 Did they provide you with patent searches?
Ans. They did confirm that all the critical parts associated with
DVD players hold all legal rights associated to Mainland China
and also Shuntak is a registered partner of MediaTek.”
Thus, far from eroding the value of the assertions, by DW2, in his
affidavit-in-evidence, that (i) the PCBs had been purchased from
Shuntak and Sheen Land, (ii) Shuntak and Sheen Land were the
authorised dealers of MediaTek and (iii) MediaTek was an authorised
dealer of the PCBs of Philips, Philips elicited, in cross-examination,
positive evidence to the effect that all legal rights associated in
Mainland China with DVD players was held by Shuntak and Sheen
Land and that Shuntak was a registered partner of MediaTek.
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134. The learned Single Judge has rejected the plea of exhaustion of
the patent rights of Philips in the suit patent, as the Bansals had
purchased the PCBs/chip from dealers of Philips, on the ground that
there was nothing to indicate that the dealers were authorised
licensees of Philips. Mr. Anand has also advanced the same
submission before us.
135. This submission cannot sustain, for the simple reason that
Section 107A(b) was amended, by the Patents (Amendment) Act,
2002, with effect from 20 May 2003, to do away with the requirement
of the dealer, from whom the patented product was purchased, being
duly authorised by the patentee to sell or distribute the product.
Section 107A(b) read, before and after amendment, thus:
Before amendment
“107A. Certain acts not to be considered as infringement - For
the purposes of this Act, –
(b) importation of patented products by any person
from a person who is duly authorised by the patentee to
produce and sell or distribute the product,
shall not be considered as an infringement of patent rights.”
After amendment
“107A. Certain acts not to be considered as infringement - For
the purposes of this Act, –
(b) importation of patented products by any person
from a person who is duly authorised under the law to
produce and sell or distribute the product,
shall not be considered as an infringement of patent rights.”
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It is not required, therefore, after the amendment of Section 107A(b)
of the Patents Act in 2003, that the importation must be from a person
who is duly authorised by the patentee to produce and sell or
distribute the patented product. The person, from whom the goods are
purchased and imported must only be duly authorised under the law to
produce and sell the product. It is nobody’s case that Shuntak and
Sheenland were not authorised under the law to purchase or sell the
MediaTek PCBs.
136. Ms. Sukumar is therefore correct in her submission that there
was complete exhaustion of the patent rights of Philips in the suit
patent, once the product containing the suit patent, i.e., the chips and
PCBs, had been placed in the market by it.
137. The plea of exhaustion of patent rights also stands supported by
the decisions in Impression Products , Quanta Computer and Univis
Lens Co. , on which Ms. Sukumar placed reliance. The applicable
legal principle is clearly set out in the following passage from
Impression Products , which has been extracted in the impugned
judgment as well:
“The Patent Act grants patentees the “right to exclude others from
making, using, offering for sale, or selling [their] invention[s].” 35
U. S. C. §154(a). For over 160 years, the doctrine of patent
exhaustion has imposed a limit on that right to exclude.
73
See Bloomer v. McQuewan . The limit functions automatically:
When a patentee chooses to sell an item, that product “is no longer
within the limits of the monopoly” and instead becomes the
“private, individual property” of the purchaser, with the rights
and benefits that come along with ownership . A patentee is free to
73
14 How. 539 (1853)
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set the price and negotiate contracts with purchasers, but may not,
“by virtue of his patent, control the use or disposition” of the
product after ownership passes to the purchaser. United
States v. Univis Lens Co. The sale “terminates all patent rights to
that item.” Quanta Computer, Inc. v. LG Electronics, Inc . This
well-established exhaustion rule marks the point where patent
rights yield to the common law principle against restraints on
alienation. The Patent Act “promote[s] the progress of science and
the useful arts by granting to [inventors] a limited monopoly” that
allows them to “secure the financial rewards” for their
inventions. Univis . But once a patentee sells an item, it has
“enjoyed all the rights secured” by that limited
74
monopoly. Keeler v. Standard Folding Bed Co. . Because “the
purpose of the patent law is fulfilled … when the patentee has
received his reward for the use of his invention,” that law furnishes
“no basis for restraining the use and enjoyment of the thing sold.”
Univis ”.”
138. The very first legal exposition of the doctrine of exhaustion of
patent rights as a result of sale of the patented product is, in fact, to
75
be found in Adams v. Burke , rendered by the US Supreme Court in
1873. The principle was explained, with admirable lucidity, thus:
“4. But, in the essential nature of things, when the patentee, or
the person having his rights, sells a machine or instrument whose
sole value is in its use, he receives the consideration for its use and
he parts with the right to restrict that use. The article, in the
language of the court, passes without the limit of the
76
monopoly . That is to say, the patentee or his assignee having in
the act of sale received all the royalty or consideration which he
claims for the use of his invention in that particular machine or
instrument, it is open to the use of the purchaser without further
restriction on account of the monopoly of the patentees.”
139. Quanta Computer , rendered by a Bench of as many as nine
Hon’ble Judges of the US Supreme Court, addressed, specifically, the
issue of “whether patent exhaustion applies to the sale of components
of a patented system that must be combined with additional
74
157 US 659 (1895), 661
75
84 US (17 Wall) 453 (1873)
76
Bloomer v. McQuevan
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component in order to practice the patented methods”. Among the
contentions advanced before the Supreme Court was the contention
that the doctrine of exhaustion would not apply where the sale was not
by a licensed authorised agent. The Supreme Court, speaking through
Clarence Thomas J, disagreed. Interestingly, the Supreme Court
relied, among others, on its earlier judgment in Motion Picture
77
Patents Co. v. Universal Film Mfg. Co. , which, inter alia , held that
“the scope of the grant which may be made to an inventor in a patent,
pursuant to the patent statute, must be limited to the invention
described in the claims of his patent ”. The following passages, from
the decision in Quanta Computer , lay down the legal principles
exposited therein:
“ The longstanding doctrine of patent exhaustion provides that the
initial authorized sale of a patented item terminates all patent
rights to that item . This Court first applied the doctrine in 19th-
century cases addressing patent extensions on the Woodworth
planing machine. Purchasers of licenses to sell and use the
machine for the duration of the original patent term sought to
continue using the licenses through the extended term. The Court
held that the extension of the patent term did not affect the rights
already secured by purchasers who bought the item for use “in the
ordinary pursuits of life.” Bloomer v. McQuewan (“[W]hen the
machine passes to the hands of the purchaser, it is no longer within
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the limits of the monopoly”); Bloomer v. Millinger .
In Adams v. Burke , the Court affirmed the dismissal of a patent
holder's suit alleging that a licensee had violated postsale
restrictions on where patented coffin lids could be used. “[W]here
a person ha[s] purchased a patented machine of the patentee or his
assignee,” the Court held, “this purchase carrie[s] with it the right
to the use of that machine so long as it [is] capable of use.” Id. , at
455.
Although the Court permitted postsale restrictions on the use of a
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patented article in Henry v. A.B. Dick Co. , that decision was
short lived. In 1913, the Court refused to apply A.B. Dick to
77
243 US 502, 518 (1917)
78
1 Wall. 340, 351 (1864)
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224 U. S. 1 (1912)
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uphold price-fixing provisions in a patent license. See Bauer &
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Cie v. O'Donnell . Shortly thereafter, in Motion Picture Patents
Co. v. Universal Film Mfg. Co. , the Court explicitly
overruled A.B. Dick . In that case, a patent holder attempted to limit
purchasers' use of its film projectors to show only film made under
a patent held by the same company. The Court noted the
“increasing frequency” with which patent holders were using A.B.
Dick -style licenses to limit the use of their products and thereby
using the patents to secure market control of related, unpatented
items. 243 U. S., at 509, 516–517. Observing that “the primary
purpose of our patent laws is not the creation of private fortunes
for the owners of patents but is ‘to promote the progress of science
and useful arts,’” id. , at 511 (quoting U. S. Const., Art. I, § 8, cl.
8), the Court held that “the scope of the grant which may be made
to an inventor in a patent, pursuant to the [patent] statute, must be
limited to the invention described in the claims of his patent,” 243
U. S., at 511 . Accordingly, it reiterated the rule that “the right to
vend is exhausted by a single, unconditional sale, the article sold
being thereby carried outside the monopoly of the patent law and
rendered free of every restriction which the vendor may attempt to
put upon it.” Id. , at 516.
This Court most recently discussed patent exhaustion in Univis , on
which the District Court relied. Univis Lens Company, the holder
of patents on eyeglass lenses, licensed a purchaser to manufacture
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lens blanks by fusing together different lens segments to create
bi-and trifocal lenses and to sell them to other Univis licensees at
agreed-upon rates. Wholesalers were licensed to grind the blanks
into the patented finished lenses, which they would then sell to
Univis-licensed prescription retailers for resale at a fixed rate.
Finishing retailers, after grinding the blanks into patented lenses,
would sell the finished lenses to consumers at the same fixed rate.
The United States sued Univis under the Sherman Act, 15 U. S. C.
§§ 1, 3, 15, alleging unlawful restraints on trade. Univis asserted
its patent monopoly rights as a defense to the antitrust suit. The
Court granted certiorari to determine whether Univis' patent
monopoly survived the sale of the lens blanks by the licensed
manufacturer and therefore shielded Univis' pricing scheme from
the Sherman Act.
The Court assumed that the Univis patents containing claims for
finished lenses were practiced in part by the wholesalers and
finishing retailers who ground the blanks into lenses, and held that
the sale of the lens blanks exhausted the patents on the finished
lenses. Univis , 316 U. S., at 248–249 . The Court explained that the
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229 U. S. 1, 14–17 (1913)
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Lens blanks are “rough opaque pieces of glass of suitable size, design and composition for use, when
ground and polished, as multifocal lenses in eyeglasses.” Univis, 316 U. S., at 244.
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lens blanks
“embodi[ed] essential features of the patented device and
[were] without utility until … ground and polished as the
finished lens of the patent.” Id. , at 249. The Court noted
that destined the article to be finished by the purchaser in
conformity to the patent, he has sold his invention so far as
it is or may be embodied in that particular article.” Id. , at
250–251.
In sum, the Court concluded that the traditional bar on patent
restrictions following the sale of an item applies when the item
sufficiently embodies the patent'even if it does not completely
practice the patent'such that its only and intended use is to be
finished under the terms of the patent.”
140. The import and purchase documents, whereunder the Bansals
purchased and imported the PCBs from Shuntak and Sheen Land
stand exhibited, in the suit, as Ex. DW-2/5A, DW-2/7 (colly) and
DW-2/7A (colly). Their veracity has not been questioned by Mr.
Anand.
141. Applying Section 107A(b) of the Patents Act, read with the
decisions cited supra , it is clear that the rights to exclusivity, if any,
which vested in Philips as the proprietor of the suit patent, stood
exhausted, and incapable of any further enforcement, once Philips
sold the patented device in the market. No further exclusivity could be
claimed against a purchaser of the product for consideration from the
market, especially when, as in the present case, the purchase is from
an authorised dealer.
142. Our conclusion is reinforced by the fact that, even in Philips’
own DVD players, which were unscrewed and presented to PW2, it
was acknowledged by PW2, in his response to Q. 76 during cross-
examination, that the Philips player also contained the MT1389QE
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chip. In fact, all the DVD players which were shown to PW2,
manufactured by Onida, Weston, Videocon, Philips and the Bansals,
were all carrying the MediaTek chip which, again as per the testimony
of PW2 in cross-examination, contained the invention forming subject
matter of the suit patent.
143. Clearly, therefore, Philips had openly released the chips and
PCBs containing the patented invention in the open market and
MediaTek was, to the knowledge of Philips, selling the PCBs for
consideration.
144. The learned Single Judge has discarded the plea of patent right
exhaustion, advanced before her, on the ground that there was nothing
to indicate that MediaTek was a licensee of Philips. This decision,
with respect, is contrary to Section 107A(b), as amended, which does
not require the seller, from whom the patented product is purchased,
to be an authorised distributor of the patentee.
145. We, therefore, are of the opinion that, by operation of the
principle of international exhaustion of patent rights, Philips cannot
enforce the patent against the Bansals.
V. The FRAND issue and adjudication of damages
VA. No evidence that rates offered were FRAND
146. As we have already noted earlier in this judgment, no right can
enure in favour of an SEP holder, either for injunction or for royalty
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or damages, unless there is evidence to indicate (i) that the SEP holder
is willing to license the SEP at FRAND rates and (ii) that the
defendant is unwilling to take a license at the said rates. It is
imperative, for a plaintiff seeking injunction or damages in the
capacity of an SEP holder, to demonstrate that he is willing to license
the SEP at FRAND rates. The question of whether the defendant is, or
is not, an unwilling licensee, would arise only if the plaintiff
demonstrates, positively, that he is a willing licensor. The paragraphs
from Huawei Technologies , which have approvingly been cited by
the coordinate Division Bench of this Court in Intex , place the legal
position beyond any pale of controversy. It is clearly held, in Huawei
Technologies , that, before any tenable claim to injunction or damages,
(i) the proprietor of the SEP has to alert the alleged infringer of the
infringement of the SEP, and the manner in which the infringement is
taken place, (ii) the proprietor of the SEP has, thereafter, to extend a
specific and written offer to the alleged infringer, to licence the SEP at
a licence rate which is FRAND, (iii) the alleged infringer has,
thereafter, to respond to the offer and (iv) the Plaintiff would have to
demonstrate that the alleged infringer is unwilling to accept the offer
of a license at FRAND terms and is, therefore, an “unwilling
licensee”.
147. Para 69 of Intex , which we have already reproduced in para 16
supra , specifically envisages providing of information by the SEP
holder to the proposed licensee, on the basis of which the licensee is
in a position to evaluate whether the offer of the SEP holder is, or is
not, FRAND. The providing of this information is imperative as, in its
absence, it would be impossible to ascertain whether the offer held out
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by the SEP holder is FRAND.
148. We may note, at this juncture, the following view, expressed by
the coordinate bench in Intex :
“70. Similarly, an implementer has no right of silence or
inaction at this stage. It is not correct to suggest that without access
to other agreements executed by the Patentee no counter-offers can
be made. Normally, an implementer can take recourse to its own
license agreements executed with other Standard Essential Patent
proprietors/licensors, to determine an appropriate FRAND rate that
it would be willing to pay or to determine if the rate offered by an
Standard Essential Patent proprietor is FRAND or not. This is
evident from the judgment of the Dutch Court of Appeal in
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Koninklijke Philips N.V. v. Wiko SAS wherein it has been held
as under:-
"4.37. Wiko pointed out that it does not have the licence
agreements that Philips concluded with other parties for the
same patent portfolio, so that Wiko is unable to
demonstrate that Philips' proposal is not FRAND. Even
apart from the fact that according to the above findings,
Wiko failed on several points to substantiate its arguments
and furnish evidence of its arguments and its defence
should already fail on this basis, this point of view does not
hold, Wiko concluded licence agreements for UMTS and
LTE portfolios with Qualcomm, Huawei and Nokia. By
providing insight into the fees and stipulations agreed upon
with those parties in relation to (the value of) the SEPs held
by those parties, Wiko could have substantiated (a
suspicion of) the alleged fact that Philips' offer was not
FRAND and the alleged fact that its own counter-offer was
FRAND; however, Wiko failed to do this. Under those
circumstances, the Court of Appeal does not see any reason
to reverse the burden of proof or to assume an increased
duty to contend facts and circumstances for Philips, as
Wiko argued."
(Emphasis supplied)
71. The above decision has been affirmed by the Dutch
Supreme Court and has attained finality. Thus, it is not true that the
implementer, who is often a large commercial entity itself having a
global business presence, enters into any kind of negotiation with a
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Case Number 200.219.487/01 decided on 2 July 2019, hereinafter “ Philips v. Wiko ”
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Patentee 'blindly'.”
149. Though it might, facially, appear that, in the above passages,
the coordinate bench in Intex has adopted a view which is different
from that expressed by us in para 150 supra , that is not really the case.
These observations have been returned by the coordinate Bench in the
context of the issue of the right of the implementer to remain silent
when a purportedly FRAND offer is extended to it by the SEP holder.
The coordinate Bench has, relying on the judgment of the Dutch Court
of Appeal in Philips v. Wiko , observed that, where the implementer
has entered into agreements with other SEP holders, it can assess the
FRAND, or non-FRAND, nature of the offer extended by the SEP
holder by comparing other agreements executed by it.
150. That principle may not apply, unless it is the case of the
plaintiff-SEP holder that the defendant/alleged infringer had executed
agreements with other SEP holders for the same patent portfolio. No
such plea has been advanced, in this case, by Philips.
151. That apart, these are considerations which would be relevant
while examining whether the implementer is justified in not
responding to the offer held out by the SEP holder. If matters are not
settled at that stage, and travel to the Court, there is no way in which
the Court can arrive at a conclusion that the license rate offered by the
plaintiff-SEP holder is FRAND, unless the Court has, before it,
agreements executed by the plaintiff-SEP holder with other agencies
for the same patent/patent portfolio. In such a situation, an intricate
exercise of arriving at an objective conclusion regarding the FRAND,
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or non-FRAND nature of the rate at which the plaintiff-SEP holder is
willing to license its patent, would have to be undertaken. Due and
full opportunity would have to be extended to the defendant to contest
the assertion, by the plaintiff-SEP holder that the rate at which it is
willing to license its SEP is FRAND. Exposure to other agreements
executed by the plaintiff-SEP holder with “willing” licensees is, in
such a case, necessary. If the plaintiff pleads confidentiality, and the
Court finds merit in the plea, a confidentiality club can be set up so as
to ensure that the process remains fair and transparent, even while
ensuring confidentiality of confidential data.
152. In the present case, however, Philips has not deigned to place,
on record, even a single agreement executed by it, licensing the
invention covered by the suit patent, to any other licensee, so that the
Court would arrive at a conclusion that the royalty rate extended by
Philips to the Bansals is in fact FRAND.
153. The learned Single Judge has, we are constrained to say with
the greatest respect, arrived at the finding that the rate of US $3.175
upto 27 May 2010 and US $1.90 thereafter is FRAND, without a
scintilla of material to support the finding. The impugned judgment
refers to communications between Philips and the Bansals, but there is
nothing on record, on the basis of which the learned Single Judge or,
for that matter, we, would arrive at a conclusion that the rates at which
Philips offered to license the suit patent to the Bansals was FRAND.
154. Reference has been made to the rate offered by the Bansals
before this Court on 20 September 2010. Ms. Sukumar is, however,
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correct in her submission that the offer extended on the said date was
merely interim, and expressly without prejudice to the rights and
contentions of the Bansals in the present litigation. It cannot,
therefore, be of relevance in arriving at conclusion as to whether the
royalty rates extended by Philips were FRAND.
155. Of even more significance, in this context, are the answers
provided by PW2 in response to Q. 153 and 154 during cross-
examination:
“Q. 153 Are the license agreements maintained under your
supervision or control?
Ans. The original license agreements are maintained by the
Plaintiff at their headquarters in the Netherlands. I do have a copy
of the same.
Q. 154 Can you file a copy of the license agreement of the Dixon
Technologies?
Ans. I can do so.”
Despite thus admittedly being in possession of the license agreements
executed with third parties, Philips never chose to place any such
license agreement on record. Once again, applying Section 114 of the
Evidence Act, it would be permissible to draw an adverse inference
against Philips, to the effect that the license agreements, if produced,
would not substantiate Philips’ assertion that the royalty rate offered
by it was FRAND. At the cost of repetition, it has to be remembered
that the rate has not merely to be non-discriminatory, but has to be
“fair, reasonable and non-discriminatory”. Philips having itself chosen
to withhold, from the evidence, the license agreements executed by it
with third parties, we are of the considered opinion that the learned
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Single Judge was not justified in arriving at the conclusion that the
rates offered by Philips were FRAND.
156. In para 13.10 of the impugned judgment, the learned Single
Judge has, citing the judgment of the US Court of Appeals for the
Federal Circuit in Commonwealth Scientific and Industrial Research
Organisation , provided the following justification, for accepting the
rates at which negotiations took place, pre-suit, as the acceptable
FRAND rates of royalty:
“56. Plaintiff has claimed that the defendants have already
agreed to pay license fee of ₹ 45 per DVD player as noted in the
th th
order dated 20 September, 2010. Order dated 20 September,
2010 was an interim arrangement between the parties without
prejudice to their rights and contentions, hence any amount noted
therein cannot be said to be an amount fixed based in the evidence
led by the parties. In view of the principles noted above
in Commonwealth Scientific and Industrial Research
Organization (supra) employing the damages model taking into
account parties' informal negotiations with respect to the end
product is a generally accepted principle of ascertaining the
royalty. Further reasonable royalties for standard essential patents
are not only in terms of FRAND but also the incremental benefit
derived from the invention. Considering that the plaintiff is seeking
royalty at FRAND terms and that too at the PHILIPS ONLY option
and no evidence has been led by the defendants to rebut the
evidence of the plaintiff despite the onus of Issue No.(vii) being on
the defendants, it is held that Manglam and Bhagirathi are required
to pay royalty to the plaintiff @USD 3.175 from the date of
th th
institution of the suits till 27 May, 2010 and from 28 May, 2010
th
@USD 1.90 till 12 February, 2015.”
157. We are unable to sustain the view expressed by the learned
Single Judge in the above-extracted paragraph from the impugned
judgment for various reasons.
158. Firstly, informal negotiations between parties can, to our mind,
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never constitute the basis for a final adjudication of the rates of
royalty payable by a defendant to a plaintiff who claims to be an SEP
holder, to exploit the patent. At the highest, they might constitute a
basis to place an interim pro tem arrangement in place, as was done by
the coordinate Bench in Intex . A final adjudication of royalty and,
therefore, of damages, would have to be based on an objective
assessment of agreements executed by the plaintiff-SEP holder with
other licensees, resulting in an objective view that the rate offered to
the defendant is fair, reasonable and non-discriminatory.
159. Secondly, the observation that reasonable royalties for SEP are
not only FRAND but also a factor in the incremental benefit derived
from the invention, is unsupported by any material. Even otherwise,
there is no objective assessment of the “incremental benefit” which
the Bansals have derived by use of the invention forming subject
matter of the suit patent.
160. Thirdly, there is equally no basis for the finding that the royalty
rates claimed by Philips from the Bansals were FRAND. This, in fact,
is an assumption, by the learned Single Judge, which, with deepest
respect, is not based on any material on record.
161. Fourthly, the observation that no evidence had been led by the
Bansals to rebut the evidence of Philips, is also unsustainable, as in
fact, no evidence was led by Philips to support its assertion that the
royalty rates extended to the Bansals were FRAND.
162. There was, therefore, before the learned Single Judge, no basis
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on which it could be held that the royalty rates proposed by Philips
were FRAND.
163. The situation is no better in appeal.
VB. Royalty rate could not have been worked out on the entire DVD
Player
164. We are also in agreement with Ms. Sukumar that, the suit patent
having claimed only a device, Philips could not have its claim, either
to infringement order to royalty and damages, on the basis of the
royalty charged for the entire DVD player. The reasoning of the
learned Single Judge, in this regard, is to be found in para 13.3 of the
impugned judgment, which reads as under:
“13.3 It is the claim of the plaintiff that the plaintiff is not
required to charge license fee only on the value of the suit patent
but based on the sale of the DVD player as a whole. Indubitably
the claim in the suit patent IN-184753 is restricted to the decoding
device, however, the same is an integral part of the DVD player
without which decoding device, the DVD player cannot function.
This Court has already held that the issue of patent pool amounting
to abuse of dominant position cannot be decided in the present suit.
Thus claim of the plaintiff to the entire patent pool in the DVD
player cannot be said to be unreasonable.”
165. With respect, we are unable to sustain this reasoning either. The
learned Single Judge acknowledges, in para 13.3, that the claim in the
suit patent is restricted to the decoding device. With that, to our mind,
the lines stood clearly drawn. There is no question of Philips having
been entitled to any royalty, for any item, other than, or in excess of,
the decoding device. It is not even Philips’ case that every component
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of the DVD player was patented in its favour. Effectively, therefore, if
the damages payable to Philips, or even the royalty payable to Philips,
is to be computed on per DVD player basis, it would amount to
Philips obtaining royalty for items in respect of which it holds no
patent.
166. Philips’ contention is that it was always offering royalty on per
DVD player basis. That is a commercial decision which, while it may
be open to Philips to take, cannot constitute the basis of determination
of payable royalty in a litigation premised on a specific patent,
claiming a specific device. The observation of the learned Single
Judge that the decoding device was an integral part of the DVD
player, without which the DVD player could not function cannot, to
our mind, justify computation of the FRAND rate of royalty on the
basis of the entire DVD player. The final reliance, by the learned
Single Judge, on her earlier decision that the issue of patent pool and
abuse of dominant position by Philips, though framed as an issue in
the suit, could not be decided therein, to our mind, is completely
extraneous to the question of the device on which Philips could, in the
present litigation, claim royalty.
167. Philips’ claim to royalty would have, therefore, to fail, as (i) the
suit patent was not for the entire DVD player, or all components
therein, but for the PCB, or chip, contained in the DVD player, and
(ii) no royalty rate, charged by Philips for licensing use of the PCB or
chip per se was forthcoming.
VC. Punitive damages
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168. The impugned judgment also awards punitive damages of ₹ 5
lakhs on the ground that Rajesh Bansal was an employee of Philips.
We are unable to understand how, on this sole ground, punitive
damages could be awarded against the Bansals. That apart, in view of
our findings earlier in this judgment, there can be no question of
awarding any damages to Philips in the present suit.
G. Summarizing our conclusions:
169. We may itemize the reasons for our conclusions thus, for ease
of reference:
(i) The subject matter of the suit patent is a decoding device
contained in a DVD player.
(ii) The evidence of PW2 itself confirmed that the invention
was contained in a chip, or PCB, and was a decoding device,
and not the technology employed therein.
(iii) Protection, under Section 10(4)(c) of the Patents Act, is
available only for the invention contained in the claim/claims.
(iv) The DVD Forum was the SSO which set the standards in
this regard.
(v) The Bansals’ contention that Philips had not been able to
demonstrate the existence of the standards set by the DVD
Forum, was not acceptable.
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(vi) The Bansals had also, in their written statement,
acknowledged the equivalence of the suit patent with US’505
and EP’254.
(vii) However, the ECs of Proskauer Rose and Cohausz &
Florack, who were the “independent expert patent evaluators”
and who certified that US’505 and EP’254 were essential to the
standards fixed by the DVD Forum were not reliable in
evidence, as
(a) the ECs did not refer to the manner in which the
US and EP patents were mapped onto the standards set
by the DVD Forum, and
(b) no one, from either of these firms, was cited as a
witness, and there was not even affidavit, from either of
the firms, or any member thereof, vouchsafing to the
correctness and credibility of the ECs.
(viii) No claim charts, mapping the claims in US’505, EP’254
or the suit patent, onto the technical features of the standards set
by the DVD Forum, were forthcoming either, as required by
para 95 of Intex.
(ix) Philips has been unable, therefore, to prove that the suit
patent was an SEP.
(x) In view of the rejection of the ECs of Proskauer Rose and
Cohausz & Florack as having credible value as evidence of the
fact that the suit patent was an SEP, it could not be said that the
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allegation of infringement, by the Bansals, of the suit patent,
had been proved by way of indirect evidence.
(xi) Nor has Philips established the allegation of infringement
of the suit patent by the Bansals by way of direct evidence, as
(a) no product-to-claim mapping exercise, of the
Bansals’ product vis-à-vis the claims in the suit patent,
has been undertaken,
(b) Ravi Babu, whose affidavit is being relied upon,
never entered the witness box, and
(c) PW-2, who claimed to have independently tested
the Bansals’ product vis-à-vis the claims in the suit
patent, never placed, on record, the logs or any other
details of the infringement analysis purportedly
undertaken by him.
(xii) Philips has, therefore, failed to prove, either by direct or
by indirect evidence, that the Bansals infringed the suit patent.
(xiii) Philips right to exclusivity, in the suit patent, also stands
extinguished by application of the doctrine of patent right
exhaustion, in terms of Section 107A(b) of the Patents Act, as
the evidence during trial established that
(a) the Bansals had purchased the PCBs from Shuntak
and Sheen Land,
(b) Shuntak and Sheen Land were authorized dealers
of MediaTek, and
(c) Media Tek was an authorized dealer of the PCBs
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containing the invention forming subject matter of the
suit patent.
The requirement of the dealer, from whom the implementer
purchased the patented product, being authorized by the
patentee to sell the product, moreover, no longer survived after
the amendment of Section 107A(b) in 2003.
(xiv) The finding of the learned Single Judge, that the royalty
rate offered by Philips was FRAND, is not supported by any
evidence whatsoever. Not a single agreement, with any third
party, has been placed on record, even though PW-2 deposed
that he was in possession of such licences/agreements. We are
unable to accept the finding, of the learned Single Judge, that
the FRAND rate of royalty could be determined, at the stage of
final adjudication of the suit, on the basis of the rates quoted in
pre-suit negotiations.
(xv) The suit patent being for a device, which resided in a
chip/PCB, which in turn was one of several parts in a DVD
player, the FRAND royalty rate, and consequently the damages
payable by the Bansals to Philips could not have been worked
out on the basis of the entire DVD player, or on per DVD
player basis.
(xvi) No punitive damages could, either, have been imposed,
in the facts of the case.
H. Conclusion
Signature Not Verified
Digitally Signed By:AJIT
KUMAR
Signing Date:18.05.2026
12:30:00
RFA(OS)(COMM) 17/2018 and another connected matter Page 149 of 150
170. Resultantly, the impugned judgment dated 12 July 2018 is
quashed and set aside.
171. These appeals are, accordingly, allowed with no orders as to
costs.
C. HARI SHANKAR, J.
OM PRAKASH SHUKLA, J.
MAY 18, 2026
dsn/AR/yg/aky
Signature Not Verified
Digitally Signed By:AJIT
KUMAR
Signing Date:18.05.2026
12:30:00
RFA(OS)(COMM) 17/2018 and another connected matter Page 150 of 150