Introduction
The Delhi High Court (DHC)’s recent decision in Koninklijke Philips Electronics N.V. vs. Maj (Retd) Sukesh Behl & Anr. [1] 1is another firm reinforcement of India’s growing reputation as a key jurisdiction for Standard Essential Patent (SEP) enforcement. While India has consistently handled SEP litigation with legal sophistication and commercial pragmatism, this ruling reinforces crucial aspects of Fair, Reasonable, and Non-Discriminatory (FRAND) licensing. The judgment brings clarity to SEP royalty determination, the consequences of willful infringement, and the applicability of indirect infringement principles in India.
Facts of the Case
The Suit Patent
The suit revolves around Indian Patent No. 218255, titled “Method of Converting Information Words to a Modulated Signal”. Claims 1-11 and 13 pertain to a method of converting a series of m-bit information words into a modulated signal, where ‘m’ is an integer. Each information word is converted into an n-bit code word, where ‘n’ is greater than ‘m.’ These code words are used to generate a modulated signal, per the rules of conversion to satisfy a pre-determined criterion. This technology is integral to EFM+ coding, an essential feature in modern DVD systems. The EFM+ modulation enables encoding of 8-bit information words into 16-bit code words, thus providing an efficient system of transmitting information. Claim 12 of the Suit Patent, which is central to the controversy at hand, covers the record carrier on which the modulated signal obtained by the method claimed is provided in a track.
This channel modulation technology forms an indispensable component of DVD replication and the scope of claims of the Suit Patent corresponds to the claims in its related US (US5920272 and US5696505C1) and European patents (EP745254B1), which have undergone essentiality analysis in relation to the DVD ROM Standard. Thus, the Suit Patent has been acknowledged as a core component of DVD Standard technology framework, establishing its essentiality within the industry’s technological ecosystem.
The Parties and their Submissions
Koninklijke Philips N.V., the SEP holder and the Plaintiff, filed three different lawsuits in 2012, against several parties, seeking a permanent injunction prohibiting the Defendants from infringing the Suit Patent along with ancillary reliefs of damages, rendition of accounts, delivery up etc. The Plaintiff emphasized that the replication process adopted by the Defendants directly involved Philips’ patented EFM+ encoding and thus constituted a willful and deliberate infringement of the Suit Patent.
The Defendants argued that claims of the Suit Patent essentially entail a process for compression of data applied in the manufacturing of an original DVD, that is distinct from replication process deployed by them, which is purely a mechanical process. Conversely, the Plaintiff asserted that the process of replication of DVDs based on an original licensed burnt DVD, too, falls within the scope of claim 12 of the Suit Patent despite the Defendants admittedly not undertaking the process of burning using EFM+ coding anywhere as part of their replication process.
The Defendants also argued that the EFM+ encoding process, which is one of the steps in their replication process, is outsourced to Moser Baer, a licensed DVD manufacturer, thereby denying that their own activities amount to infringement. Here, it must also be noted that in their written pleadings, the Defendants denied any connection with and argued that they had no obligation to obtain a license from Moser Baer. It was only during oral arguments that the defendants attempted to shift liability onto Moser Baer, arguing that since Moser Baer created the stampers used in replication, they bore no liability.
The Judgement
On Infringement
To determine whether the Defendants infringed the Suit Patent, the court assessed whether the replication process, as carried out by them, implicates the use of the patented technology itself, or whether it merely reproduces the final product that incorporates such technology, thereby shifting the focus to copyright protection. After performing a detailed claim construction for claim 12, the court concluded that the replication process of the Defendants utilizes discs which have the EFM+ modulated signal on it, thus proving infringement.
Further, notwithstanding the absence of foundational pleadings and evidence that Moser Baer produced the stampers under a valid license, the court rejected the defendants’ attempt to evade liability through third-party outsourcing. It held that by commissioning and utilizing stampers embedded with the patented encoding, the Defendants knowingly facilitate the production of infringing DVDs. The court concluded that the defendants exercised control over Moser Baer’s production of stampers, making them liable for indirect infringement under Section 48 of the Indian Patents Act. In arriving at this decision and in the absence of judgments from Indian courts addressing the principle of indirect infringement, DHC referenced key US Federal Circuit rulings, including BMC Resources v. Paymentech, L.P. [2]2 and Akamai Technologies Inc. v. Limelight Networks [3].3
Determination of Damages
To determine the quantum of damages, the court relied on the seminal judgment of the Supreme Court of the United Kingdom in Unwired Planet International Ltd. and Anr. v. Huawei Technologies (UK) Co. Ltd. and Anr. [4],4 which held that FRAND rates serve as the most appropriate basis for calculating damages in SEP infringement cases. This principle has been recognized by, and reaffirmed in the Indian jurisprudence in Xiaomi Technology and Anr. v. Telefonaktiebolaget LM Ericsson (PUBL) and Anr. [5]5 and in Lava International Limited v. Telefonaktiebolaget LM Ericsson [6]6.
The court upheld Philips’ FRAND royalty structure of USD 0.03 per DVD, emphasizing that the rates were reasonable and consistent with international standards.
Compensatory Damages
The court assessed damages based on the number of DVDs replicated by each defendant and calculated the damages as follows:
| Defendant | DVDs Manufactured (Estimated) | FRAND Rate | Total Royalty (USD) | Converted to INR (₹83/USD) |
| Pearl Engineering | 2,50,00,000 | $0.03 | $750,000 | 6,22,50,000 |
| Siddharth Optical | 65,00,000 | $0.03 | $195,000 | 1,61,85,000 |
| Powercube Infotech | 4,99,30,000 | $0.03 | $1,497,900 | 12,43,25,700 |
Aggravated Damages for Willful Infringement
Further, the evidence demonstrated that Philips made diligent and repeated efforts to offer the Defendants a license under FRAND terms. However, the Defendants, despite having been notified of the Suit Patent’s essentiality and their obligation to obtain a license, neither secured a license nor discontinued their replication activities. The court noted that this reflects a textbook example of willful infringement.
Moreover, throughout the proceedings, the Defendants withheld sales data related to DVD production and failed to produce documents that would reveal the full scale of their infringing activities.
Given this conduct, the court held that Defendants’ actions warrant aggravated damages, at an additional ₹1 crore (120,482 USD at the exchange rate of ₹83/USD) which shall be recoverable jointly and severally by Defendants in each of the three suits.
Award of Interest
Furthermore, the court noted that had the Defendants obtained a license in accordance with FRAND terms, the Plaintiff would have received timely compensation, instead of having to pursue litigation for over a decade. Therefore, the court deemed it appropriate and necessary to award interest at the rate of 12% per annum on the total damages awarded, calculated from the date of filing of the suits, until the date of actual payment.
Finally, the court awarded the full litigation costs in favor of the Plaintiff and against the Defendants.
Our Analysis
Precedent for Indirect Infringement
This judgment is the first in India to address indirect infringement in the context of SEPs. The court’s analysis is groundbreaking in that it establishes that outsourcing critical steps does not break the chain of infringement liability. DHC has set a precedent by holding that a defendant’s control over the production process remains actionable even if certain operations are subcontracted.
Punitive Damages for Willful Infringement
While Indian courts have traditionally focused on compensatory damages based on FRAND royalty calculations, in this case, the court additionally awarded punitive damages of an ₹1 crore (120,482 USD) per suit for willful infringement. Jurisdictions like US and Europe have increasingly endorsed such measures when infringement is found to be deliberate, and this judgment positions India firmly within that evolving framework.
Reinforcing India as a Robust Forum for SEP Litigation
This decision reaffirms India’s status as a sophisticated forum for SEP enforcement. The court’s method for determining royalty rates, anchored on internationally recognized FRAND benchmarks, is consistent with seminal cases. This alignment with global best practices enhances the predictability and fairness of licensing negotiations and litigation outcomes. The judgment signals that Indian courts are capable of complex economic assessments and are not hesitant to impose significant penalties on implementers who evade their licensing obligations.
The 13-Year Delay in Justice
A notable irony in this case is that it took 13 long years for the litigation to reach a conclusion—by which time the Suit Patent had expired. This prolonged process highlights the challenges inherent in patent disputes, particularly in fast-evolving technological sectors. Although the final judgment reinforces key enforcement principles, the delayed resolution raises concerns about the timely administration of justice and its impact on the commercial relevance of the adjudicated patent.
Conclusion
In summary, this judgment not only pioneers the treatment of indirect infringement in India’s SEP landscape but also sets a stern precedent against willful infringement through punitive damages. While it highlights India’s alignment with international standards in SEP litigation, it also serves as a reminder of the critical need for timely dispute resolution in a rapidly changing technological environment.
References
[6] 2024 SCC OnLine Del 2497