FRAND licensing and SEP infringement: Delhi HC upheld essentiality, rejected exhaustion, and awarded damages on comparable licences.

The Delhi HC held that Ericsson proved ownership of the suit patents and that Lava's counterclaim was not time-barred. Applying Section 3(k) and the patentability tests, the Court invalidated IN 203034 for want of novelty/inventive step, while upholding the remaining seven patents and rejecting insufficiency and misrepresentation challenges. On standard essential patents, Ericsson established essentiality and infringement through claim charts and standard-compliance analysis, and Lava's exhaustion defence failed. The Court found Lava to be an unwilling licensee, accepted comparable licences as the FRAND benchmark, used the end-device price as the royalty base, and awarded damages for the relevant period on a FRAND basis.

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Issues: (i) Whether Ericsson proved ownership of the suit patents and Lava's counterclaim was barred; (ii) whether the suit patents were invalid for being algorithms, lacking novelty or inventive step, insufficiently disclosed, or obtained by misrepresentation; (iii) whether Ericsson established essentiality and infringement of the asserted standard essential patents, including the defence of exhaustion; (iv) whether Lava negotiated in good faith and whether Ericsson's FRAND offers and damages claim were sustainable, including the basis and period of damages.

Issue (i): Whether Ericsson proved ownership of the suit patents and Lava's counterclaim was barred.

Analysis: Ericsson produced patent certificates and register extracts for all eight patents. Lava did not dispute the documents in its admission and denial or in arguments. On the counterclaim, the statutory scheme permits revocation by counterclaim in an infringement suit, and no limitation period bars such a plea.

Conclusion: Ericsson proved ownership of the suit patents, and Lava's counterclaim was not barred.

Issue (ii): Whether the suit patents were invalid for being algorithms, lacking novelty or inventive step, insufficiently disclosed, or obtained by misrepresentation.

Analysis: The Court applied Section 3(k) of the Patents Act, 1970 to hold that mere algorithms, mathematical methods, business methods, or computer programmes per se are not patentable, but that inventions with a further technical effect may still qualify. On novelty and inventive step, the Court assessed the cited prior art and held that one patent failed the statutory tests, while the others withstood the challenge. The sufficiency challenge also failed for the surviving patents, and Lava did not prove deliberate misrepresentation to the Patent Office.

Conclusion: IN 203034 was invalid and liable to revocation, but the remaining seven suit patents were upheld as valid.

Issue (iii): Whether Ericsson established essentiality and infringement of the asserted standard essential patents, including the defence of exhaustion.

Analysis: Ericsson's claim charts mapped the asserted patents to the relevant ETSI standards, and the Court accepted the two-step infringement analysis for SEPs. Lava's devices were found to conform to the relevant standards and optional implementations, while Lava failed to show any workable alternate technology or rebut the test reports. The exhaustion defence also failed because Lava did not prove a valid licensed source or downstream immunity extending to its products.

Conclusion: Ericsson established essentiality and infringement, and Lava's exhaustion defence was rejected.

Issue (iv): Whether Lava negotiated in good faith and whether Ericsson's FRAND offers and damages claim were sustainable, including the basis and period of damages.

Analysis: The Court held that Lava delayed negotiations, did not make a counter-offer, and acted as an unwilling licensee. Comparable licensing agreements were accepted as the proper benchmark for FRAND valuation, the SIPROLAB pool was held irrelevant, and the end-device price rather than the chipset was treated as the correct royalty base. The Court further held that damages could be awarded from the date Ericsson first asserted its rights, and quantified damages by reference to FRAND royalty for the portfolio as adjusted for the partial invalidity of one patent.

Conclusion: Ericsson's FRAND offers were within range, Lava acted in bad faith, and damages were payable on a FRAND basis for the relevant period.

Final Conclusion: The suits were substantially decided in Ericsson's favour, with only one patent revoked on Lava's counterclaim. Ericsson obtained damages, costs, and confirmation of infringement and validity for the remaining seven patents.

Ratio Decidendi: In SEP disputes, a patentee may rely on claim charts and standard compliance to prove essentiality and infringement, damages may be assessed by comparable FRAND licences at the end-product level, and a counterparty that delays negotiation without a counter-offer may be treated as an unwilling licensee.

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