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IN THE HIGH COURT OF DELHI AT NEW DELHI
FAO(OS) 522/2014
XIAOMI TECHNOLOGY AND ANR
..... Appellants
Represented by: Mr.Kapil Sibal, Sr.Advocate and Mr.Chetan Sharma,
Sr.Advocate instructed by Mr.Ajit Warrier, Mr.Nitin Masilamani,
Mr.Aashish Gupta, Ms.Shreya Munoth and Mr.Adit Pujari, Advocates
versus
TELEFONAKTIEBOLAGET LM ERICSSON (PUBL) AND ANR
..... Respondents
Represented by: Mr.Rajiv Nayar, Sr.Advocate and Mrs.Pratibha M.Singh,
Sr.Advocates instructed by Mrs.Saya Choudhary Kapur, Mr.Ashutosh Kumar,
Mr.B.Prashant Kumar and Mr.Saurav Anand, Advocates for respondent No.1
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MR. JUSTICE R.K.GAUBA
O R D E R
16.12.2014
Caveat 1112/2014
Respondent No.1 - the caveator appears through counsel as above and
hence the caveat is discharged.
CM No.20650/2014, CM No.20652/2014, CM No.20651/2014 and CM No.20649/2014
Allowed subject to just exceptions.
FAO(OS) 522/2014
1. The first respondent is the plaintiff in the suit. The appellants
are defendants No.1 and 2. The second respondent is defendant No.3 in
the suit.
2. Parties agree that respondent No.2 would be a proforma party and
thus the appeal would be heard for disposal without issuing notice to
respondent No.2.
3. Counsel for respondent No.1 waives notice.
4. We have heard learned counsel for the parties. We make it clear
that the arguments have been restricted to enable the Court to receive
such facts which may be relevant for the purposes of passing a pro tem
interim order (as distinct from an ad-interim order which has to be
passed after hearing the parties on merits in view of the respective
pleadings and keeping in view the principles relating to the grant of an
interim injunction). The reason for the pro tem order being passing is
the sweeping ex-parte ad-interim injunction order passed by the learned
single Judge against the appellants on December 8, 2014 which has
throttled the business of the appellants. Needless to state it is for
the learned Single Judge to first decide the controversy between the
parties keeping in view the pleadings concerning plaintiff?s claim for
grant of an injunction pending determination of the issues in the suit.
5. The bedrock stone of the suit filed by the first respondent, is
patent(s) No.IN2033034, IN203036, IN234157, IN203686, IN213723, IN229632,
IN240471 and IN241747. The plaintiff alleges that the appellants are
infringing the patent(s). The averments concerning alleged infringement
analysis are to be found in paragraph 29 onwards till paragraph 36 of the
plaint.
6. The grievance in the appeal is one of suppression of material
facts. As per the appellants the chip containing the technology of the
patentee i.e. the plaintiff is being sourced by the appellants from a
company called ?Qualcomm Incorporated?. The appellants rely upon a
communication sent by e-mail to said company querying whether the said
company has a right to, in turn permit the appellants, from using the
chip manufactured by the said company as a licensee of the plaintiff.
The e-mail dated December 14, 2014 has been placed before us at page 191
and 192 of the appeal paper book. The response thereto is at page 193 of
the appeal paper book. The reply of Qualcomm, at page 193 would evince
that as per Qualcomm it has a licence under an agreement with the
patentee : Ericsson to use its technology for which it has a patent. As
per Qualcomm, the 3G standards are CDMA standards or applications under
the agreement and accordingly, any implementation of 3G technology by
Xiaomi in devices which implement a Qualcomm chipset is a licensed
implementation and does not infringe at least Ericsson?s 3G related
patents.
7. The respondent No.1 would rely upon an e-mail dated December 16,
2014 received by it from Qualcomm informing as under :
?As you may be aware of Ericsson has taken legal action in India against
a company called Xiaomi Technology Co., Ltd (?Xiaomi?). The suit
involves products of Xiaomi incorporating both chipsets of Qualcomm as
well as chipsets of third parties (Mediatek). 8 patents have been
asserted against Xiaomi relating to e.g. EDGE, AMR for GSM, AMR for
WCDMA, WCDMA etc.
I has come to our knowledge that a legal representative of Qualcomm has
confirmed in writing to Xiaomi that the Agreement ?covers the 8 patents
asserted by Ericsson in the suit against Xiaomi?. See e-mail
confirmation by John Scott of December 14th. Apart from considering the
confidentiality obligations of Qualcomm in respect of the terms and
conditions, the statement made is incorrect and misrepresenting the facts
of the agreement in between our companies and could potentially harm
Ericsson irreparably.
Please, by immediate return e-mail, withdraw the statement made. Absent
such withdrawal, Ericsson will be forced to consider its relevant options
under the Agreement, as well as any other legal rights it may have as a
consequence.?
8. The narrative of the abovenoted facts would evince that the dispute
between the parties concerning the issue of suppression would not warrant
any analysis of the infringement data relied upon in the plaint. The
limited area of this dispute would be : Whether the use of the chipset
sourced by the appellants from Qualcomm would be in terms of the license
agreement which Qualcomm has from the patentee i.e. Ericsson. This issue
would simply relate to interpreting the agreement between Ericsson and
Qualcomm and perhaps the agreement under which the appellants is sourcing
the chipsets from Qualcomm.
9. At this stage a word of caution with respect to the intent and
purport of the present order needs to be penned.
10. Since we have indicated to the parties that we would be working out
a pro tem measure and simultaneously requesting the learned single Judge
to decide appellants? application for vacation of the ex-parte ad-interim
injunction, concerning suppression of material facts, any other issue
relating to the right of the patentee, which would require a prima facie
view to be taken with respect to the data analysis of the technology used
by the appellants vis-?-vis the technology in which patent rights are
claimed by the respondent, would have to wait hearing at a later stage
for the purpose of deciding the application seeking an interim measure.
11. Thus, our present order would be restricted only to such devices
which the appellants import as are fitted with the chipset manufactured
by Qualcomm and no other chipset. To said extent i.e. on the terms of
the present order as hereinafter recorded, the impugned order passed by
the learned Single Judge would be superseded.
12. We are passing the pro tem order keeping in view the fact that
treating the averments in the plaint to be true, the adverse effect upon
the first respondent would be the finances which would otherwise flow to
the coffers of the first respondent if ultimately it is found that the
appellants is infringing the patent of the first respondent. The measure
of the infringement would be the amount which the appellants would then
have to pay to the first respondent as per policy of the first respondent
while granting licenses. It is trite that the measure of damages for
infringement of a patent would be the revenue loss to the patentee which
it would have got by way of royalty while granting the license.
13. Striking a balance between the right of the appellants, which even
as per the plaint, is concededly in business in India since July, 2014,
we dispose of the appeal directing that as a pro tem measure the
appellants would be permitted to import and sell the devices containing
chipsets sold to it by Qualcomm upon the following terms:
(1) The pro tem measure would be restricted to import and sale of
devices in which Qualcomm chipsets are used.
(2) By January 5, 2015, ?100 per device imported would be deposited in the name of the Registrar General of this Court by the appellants, which
would be kept in a fixed deposit by the Registrar General; term of the
deposit being three months.
(3) Affidavit would be filed by January 5, 2015 disclosing the import
of devices in India containing chipset of Qualcomm pursuant to the
present order.
(4) Particulars of invoices of purchase of chipsets from Qualcomm shall
be disclosed in the affidavit.
(5) Imports made in the month of January, 2015 would likewise be
disclosed by way of an affidavit and ?100/- per device deposited in the
name of the Registrar General of this Court by February 03, 2015.
14. Upon the appellants filing an application before the learned single
Judge under Order 39 Rule 4 of the Code of Civil Procedure, the learned
Single Judge would at the first instance consider arguments concerning
suppression of relevant facts as alleged by the appellants against the
first respondent, and should the appellants raise other issues, the
decision thereon for purposes of an interim order would be severed. The
application shall be filed by December 20, 2014 and the reply thereto
shall be filed by January 03, 2015. The rejoinder would be filed before
the next date of hearing before the learned Single Judge which is
February 05, 2015, on which date the application shall be listed before
Court and the date fixed before the learned Joint Registrar shall be
cancelled.
15. Nothing said by us in appeal, in relation to the facts or ?100/-
required to be deposited per sale of device imported would not be treated
as an expression of merits of the claims of the parties or the
quantification of the royalty by the Division Bench. Such facts which we
have noted above are necessary to form the backdrop for the pro tem
measure we have directed.
16. The appeal is disposed of in terms above without any order as to
costs.
17. Dasti under signature of the Court Master to counsel for the
parties.
CM No.20720/2014 (stay)
Since the appeal has been disposed of by passing a pro tem order,
the instant application which seeks stay of the operation of the impugned
order is disposed of as infructuous.
PRADEEP NANDRAJOG, J
R.K.GAUBA, J
DECEMBER 16, 2014
vld
FAO(OS) 522/2014 Page 1 of 7
$ 4
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