Xiaomi’s 4 Month Juggernaut Comes to a Grinding Halt in India

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Ericsson, one of the largest holders of SEPs (Standard Essential Patents) for mobile communications, has successfully secured yet another ex parte injunction in a patent infringement suit involving GSM/GPRS/EDGE/WCDMA technology. The defendant this time is Xiaomi, an electronics company, often touted as China’s answer to Apple, Inc.

Ericsson has in the past filed similar suits against Chinese companies- Gionee, Kingtech before Delhi High Court and achieved favourable orders. In this case, Ericsson argued that while it had, in the past, tried to convince Xiaomi to obtain a license, the Chinese company has been egregious enough to go ahead and launch its products in India without heeding to Ericsson’s proposal for license. The Delhi High Court, therefore, appears to be sufficiently satisfied that the Defendant could be deemed as “unwilling licensee”.

The Delhi High Court Order (in CS (OS) 3775/2014), pronounced by Hon’ble Justice G.P Mittal, restrained Xiaomi from manufacturing, importing or selling all such products that incorporate any technology patented by Ericsson. Further all such products that have been hitherto sold by the Defendant Company in India have to be duly reported to the Court along with the revenue that accrued from the sales. What’s more, the Central Board of Excise and Customs has been directed to keep an eye on Xiaomi’s imports and prevent it from importing products that are infringing Ericsson’s granted patents in India. In addition, the Customs Authorities are required to intimate Ericsson whenever any consignment is imported by Xiaomi and in case Ericsson objects to such import, the objections are to be decided in consonance with Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. At this stage, it is important to review the judicial position as adopted by the Courts in the US, Europe and Japan with regard to issuance of injunctive relief in cases involving infringement of SEPs. In the U.S., issues related to the issuance of injunctive relief in cases involving SEPs, came in highlight when Samsung filed a complaint with the International Trade Commission (ITC) against Apple alleging that importation of certain smartphones and tablets infringed Samsung’s SEPs. Having implication on anti-competition laws, the relief sought by Samsung attracted an inquiry by the Department of Justice (DOJ). In January 2013, the DOJ and the U.S. Patent & Trademark Office (USPTO), issued a joint policy statement advising the ITC to refrain from awarding injunctive relief in cases involving infringement of SEPs on the grounds that such relief would be anti competitive and against the public interest. This position was further affirmed by the US District Court in Apple, Inc. v Motorola, Inc., where the Court by applying well established eBay Principles*, denied Motorola’s claim for an injunction in respect SEP including on the grounds of public interest. The U.S. Court of Appeals for the Federal Circuit later affirmed the decision of the US District Court. However, the court noted that the mere fact that the case involved infringement of an SEP does not preclude the patentee from asserting its right to an injunction. Chief Judge Randall Rader and Judge Sharon Prost, in dissent, also agreed that there was no rule against an injunction in cases involving infringement of SEPs. The court also considered that license negotiation conduct of the partied and held that ‘‘an injunction may be justified where an infringer unilaterally refuses a FRAND royalty or unreasonably delays negotiations.’’

The court, however, observed that it did ‘‘not mean that an alleged infringer’s refusal to accept any license o­ffer necessarily justifies issuing an injunction.’’

In our next weekly mailers we will be discussing the current position in the Europe and Japan on the injunctive relief in cases alleging infringement of SEPS.

* In the U.S., injunctions for patent infringement are awarded by courts on a discretionary basis in accordance with the principles laid down by the U.S. Supreme Court in eBay Inc. v Merc Exchange,(referred to as the ‘‘eBay Principles’’) which provides that a court may issue an injunction if the plainti­ff has demonstrated that;

(a) it has suffered an irreparable injury;

(b) the remedies of monetary damages are inadequate to compensate for the injury;

(c) the balance of hardships warrants, injunctive remedy; and

(d) injunction would not disserve the public interest.

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