Nokia v Oppo and CCI jurisdiction decisions set new benchmarks for SEP jurisprudence

In a pending matter before the Delhi High Court that Nokia instituted against Oppo for SEP infringement (Nokia’s Indian patent numbers 286352, 269929 and 300066), a single judge denied Nokia’s application requesting that Oppo deposit an amount with the court that would represent FRAND royalty rates proportionate to the number of devices sold by Oppo in India (FAO(OS) COMM 321/2022). The court’s decision hinged on the fact that Nokia had clearly and unambiguously established that, given the existing licence between the parties until 2021 and various offers and counter-offers, Oppo had established its willingness to obtain a licence from Nokia.

Aggrieved by the decision, Nokia filed an appeal. The division bench agreed with Nokia and directed Oppo to deposit a pro tem security with the court’s registry within four weeks.

In reaching its decision, the bench noted that in 2018, Oppo had a pre-existing cross-licence agreement with Nokia, which included the suit patents. In the court’s opinion, after the licence agreement ended and the parties underwent a series of offers and counter-offers, the discussions broke down in 2021. After this, Oppo exhibited an unwillingness to negotiate a fresh agreement with Nokia. The bench also observed that Oppo had been paying a royalty for three years before the licence’s expiry without raising any dispute over the essentiality or validity of Nokia’s patents at any stage.

It was also noted that Oppo filed a suit for a FRAND determination in the Chongqing Court of China and agreed to make interim payments to Nokia – a  prima facie admission that Nokia owns SEPs. Additionally, in 11 out of the 13 proceedings filed globally, courts have found infringement by Oppo, which was another factor weighing in favour of Nokia.

On the issue of the pro tem deposit, citing the European Court of Justice’s decision in Huawei v ZTE (case no C-170/13)¸ the court observed that payment of a pro tem security is an implementer’s obligation in the negotiation phase, even when the implementer is a former licensee. The bench, noting court proceeding delays, observed that Oppo has continued to use the technology throughout the tenure of the proceedings, which calls for a pro tem arrangement to ensure that an SEP holder is not remediless until the suit’s final disposal.

The court clarified that, unlike an injunction, a pro tem arrangement does not bar the use of the technology. It balances an implementer's undue advantage over the SEP holder and is within the provisions of India’s Code of Civil Procedure. Finally, while deciding on the deposit amount, the bench held that the last paid number (attributable to India) under the 2018 agreement, which is lower than what Nokia had claimed as FRAND, would balance equities and protect Nokia from irreparable harm.

It is worth noting that the bench clarified that its observations are only for deciding the present appeal and would not prejudice either party in any other proceedings or at the final hearing of the suit.

Interestingly, the underlying suit filed by Nokia in 2021 – wherein it sought an interim injunction against Oppo – has been heard at length, and the judge presiding over this matter has reserved her much-awaited judgment.

On a related note, on 13 July 2023, another division bench of the Delhi High Court ruled that the Competition Commission of India (CCI) lacks jurisdiction to investigate issues related to patent rights exercised by parties and set aside CCI antitrust proceedings against Ericsson and Monsanto. The CCI was investigating Ericsson for allegedly imposing licensing conditions that were not FRAND. Meanwhile, Monsanto allegedly charged excessive royalties and did not make its patents reasonably available. Combined with the present judgment on the pro tem deposit requirement, both decisions will be seen positively by SEP holders and innovators as they set notable benchmarks in the adjudication of patent matters in India.