In a significant ruling delivered in February 2025, the Delhi High Court reinforced the enforcement of Standard Essential Patents (SEPs) in India, delivering a victory to Philips Koninklijke Philips N.V. (Philips) in its long-standing legal battle against three Indian digital versatile disc (DVD) manufacturers. The case, titled Koninklijke Philips Electronics N.V. v Maj (Retd) Sukesh Behl & Anr, centered around Philips’ patented Eight-to-Fourteen Modulation Plus (EFM+) technology, an innovation crucial to the production of DVDs with minimal error rates and maximum storage capacity.
The case, which dates back to 2012, saw Philips accuse the defendants—Pearl Engineering Company, Powercube Infotech, and Siddharth Optical Disc Private Ltd—of using its EFM+ technology in their DVD production processes without obtaining a proper license. The technology, part of the DVD standard, plays a pivotal role in ensuring compatibility across devices by encoding data in a way that maximizes storage while minimizing data corruption. Philips sought a permanent injunction to halt further infringement and sought compensatory damages for the losses caused by the defendants’ actions.
The Legal Battle: Defendants’ Claims and Philips’ Counterarguments
The defendants countered the accusations of patent infringement, arguing that their DVD production methods did not use the patented EFM+ technology.
Non-compliance with Section 8: They argued that Philips had failed to disclose necessary information regarding foreign filings of the patent.
False Suggestions: The defendants claimed that the patent was granted due to false representations or suggestions made during the filing process.
Patent Eligibility: They contested the patent’s eligibility, claiming that it covered a method of performing mental acts (Section 3(m)) or a computer program per se (Section 3(k)), both of which are excluded from patentability under the Act.
Lack of Novelty and Inventive Step: The defendants further contended that the technology lacked novelty and inventive step, referencing a prior patent owned by Sony.
Insufficient Description: They also argued that the patent lacked a clear and sufficient description to allow replication by a skilled person in the field.
It asserted that any omission in the disclosure of foreign filings was unintentional and based on the available data within their records. Regarding the patent’s subject matter, Philips argued that the EFM+ technology involved a technical process that required hardware components, such as circuits and buses, and could not be performed mentally or abstractly. Therefore, it should not be classified under the excluded categories of Section 3(m) or Section 3(k).
The company further defended its technology, emphasizing that the EFM+ system was a novel invention in the field of digital storage, contributing to substantial technical advancements. Philips argued that the invention was not a mere software-based process but incorporated hardware elements that led to significant improvements in DVD manufacturing and storage capacity.
The Court’s Ruling: Affirming the SEP and Infringement
The Delhi High Court, in its judgment, sided with Philips, affirming the patent’s status as a Standard Essential Patent (SEP). It ruled that the defendants had indeed infringed upon Philips’ patent by utilizing the patented EFM+ technology in their DVD production without obtaining the necessary license.
The Court took a meticulous approach to the issue of FRAND (Fair, Reasonable, and Non-Discriminatory) licensing, emphasizing the global significance of SEPs in ensuring consistent and interoperable standards across industries. Despite the patent having expired during the course of the litigation, the Court highlighted that the defendants’ continued use of the patented technology without engaging in fair licensing negotiations violated the obligations under FRAND terms. As a result, the Court ruled in favor of awarding damages to Philips, emphasizing that the infringement had caused significant harm to the company.
Award of Damages: A Detailed Breakdown
The Court awarded Philips significant damages based on the established FRAND royalty rate for the patented technology. Philips had set a standard royalty rate of $0.03 per DVD. The defendants, however, had failed to disclose their actual sales figures, forcing the Court to estimate the number of DVDs that were manufactured using the EFM+ technology. The estimated sales figures for the defendants were as follows:
Pearl Engineering: Approximately 250 million DVDs.
Siddharth Optical: Around 65 million DVDs.
Powercube Infotech: Close to 499.3 million DVDs.
Using these estimates, the Court calculated the damages and converted the total sum into Indian Rupees at the current exchange rate of INR 83 per USD. The Court also took into account the time value of money during the prolonged litigation period, awarding interest at 12% per annum from the date the lawsuit was filed until the date of actual payment.
Furthermore, aggravated damages were imposed on the defendants due to their willful infringement and deliberate nondisclosure of sales records. This penalty was designed to reflect the defendants’ procedural misconduct and failure to comply with the legal requirements.
Breakdown of Financial Penalties
Pearl Engineering: Ordered to pay INR 6.22 crores (approx. USD 8,70,000) in royalty damages, plus INR 1 crore in aggravated damages, with interest accruing at 12% per annum from July 24, 2012 to February 25, 2025.
Siddharth Optical: Liable for approximately INR 1.61 crore in royalty damages and INR 1 crore in aggravated damages (approx. USD 3,14,458), with interest from May 28, 2012 to February 25, 2025.
Powercube Infotech: Faced the largest financial penalty, totaling INR 12.43 crore in royalty damages, plus INR 1 crore in aggravated damages (approx. USD 1,61,807), with interest from September 4, 2012 to February 20, 2025.
In addition to the damages, the Court mandated that the defendants cover the full costs of the litigation, citing the delay tactics used by the defendants that led to the prolonged legal proceedings.
A Landmark Judgment for SEP Enforcement
This ruling marks a critical milestone for the enforcement of Standard Essential Patents in India. It not only underscores the importance of adhering to FRAND terms but also sets a precedent for how similar cases might be handled in the future. The judgment highlights India’s increasing commitment to respecting and enforcing international patent licensing standards, especially in the realm of technology that has global implications for industry standards.
The case also demonstrates the growing importance of intellectual property rights (IPR) in India’s expanding technological and digital landscape. As the country continues to be an emerging hub for innovation and manufacturing, decisions like this reinforce the need for robust protections for innovators and patent holders.
In conclusion, this case reinforces the legal protections for SEPs in India, signaling to global markets that India is serious about enforcing patent rights and ensuring fair, non-discriminatory licensing in critical industries like electronics and telecommunications.