The ongoing case between InterDigital, a US-based technology and licensing company specialising in wireless and video technology, and Chinese smartphone manufacturer Oppo underscores the complexities surrounding Standard Essential Patents (SEPs) and Fair, Reasonable, and Non-Discriminatory (FRAND) licensing terms within the evolving intellectual property (IP) framework in India.
The case sheds light on the intricate interplay of technology, intellectual property law, and commercial interests, as well as the need for clear and consistent regulatory frameworks to ensure that SEPs are licensed fairly and reasonably. Given the critical role of SEPs in driving innovation and growth in the telecommunications industry, it is essential to strike a balance between the protection of intellectual property rights and the promotion of competition and consumer welfare. As such, the case between InterDigital and Oppo highlights the importance of robust and transparent licensing practices that promote the development and dissemination of new technologies while safeguarding the interests of all stakeholders involved.
Background and Allegations
InterDigital possesses a significant portfolio of patents related to cellular communication technologies, including 3G, 4G, and emerging 5G standards. These patents are considered Standard Essential Patents (SEPs), which means they are indispensable for any device seeking to comply with the industry’s agreed-upon technical standards.
In the present case, InterDigital contended that several Oppo smartphone models were infringing upon its SEPs. The lawsuit filed by InterDigital alleged that Oppo had been utilising InterDigital’s patented technologies without securing an appropriate licensing agreement.
Understanding SEPs and FRAND
Standard Essential Patents (SEPs): SEPs are patents covering technologies fundamental to the implementation of an industry standard. Standard Essential Patents (SEPs) enable patent holders to exert significant influence in the market due to the mandatory nature of their technology for compliance, which can have significant implications for market competition and innovation.
FRAND Terms: To prevent the abuse of market dominance of Standard-Essential Patents (SEPs), patent holders are bound by a legal obligation to license their patents on Fair, Reasonable, and Non-Discriminatory (FRAND) terms. However, the interpretation of FRAND terms has been the subject of much debate and litigation, with no commonly accepted definition of “fair and reasonable” royalties. The determination of FRAND royalties is complicated by several factors, including the nature of the patented technology, the value of the patent in relation to the standard, and the commercial implications of the license.
The Delhi High Court’s Role
The Delhi High Court emerged as the primary legal battleground in this dispute. Some of the key rulings by the Court are as follows:
Interim Injunction (2022): The Court issued an interim injunction against Oppo, threatening a potential sales ban on Oppo devices within India if the company failed to enter into a FRAND-compliant licensing agreement with InterDigital.
Royalty Deposit and Penalty (2023): The Court directed Oppo to deposit a sum representing royalties on past sales with the Registrar General. This amount was ordered to be held in an interest-bearing fixed deposit. Additionally, a penalty of ₹500,000 (around USD 6,000) was imposed on Oppo due to attempts to delay the proceedings.
Legal Implications and Considerations
The InterDigital vs. Oppo case offers valuable insights for legal practitioners and technology stakeholders:
Defining FRAND: Courts play a substantial role in interpreting what constitutes “fair and reasonable” licensing terms in SEP disputes. The outcome of this case will contribute to the ongoing determination of FRAND parameters.
Enforcement of IP in India: This case demonstrates India’s willingness to enforce the rights of SEP holders and underscores the country’s developing IP jurisprudence.
Negotiation Leverage: SEP holders possess a certain degree of bargaining power during licensing negotiations. However, their leverage is subject to legal limitations imposed by Fair, Reasonable, and Non-Discriminatory (FRAND) obligations, which aim to prevent SEP owners from engaging in anti-competitive practices.
Ongoing Developments and Impact
The legal dispute between InterDigital and Oppo is presently ongoing, with the potential for further appeals and rulings. The ultimate decision reached by the Court will have significant implications for the negotiation of Standard Essential Patent (SEP) licensing agreements within India and on a global scale, given the interconnectivity of the technology market. As such, it is essential to keep abreast of developments in this case, particularly in view of the potential ramifications for businesses operating in the technology sector.
Authors: Manisha Singh and Saurabh Vaid
First Published By: Lexology here