The Delhi High Court, recently, concluded a decade-long litigation between Telefonaktiebolaget LM Ericsson (“Ericsson”) and LAVA International Limited Ltd (“Lava”). The court ruled in favour of Ericsson and directed Lava to pay INR 244 crores (approximately, USD 29.9 million) along with 5% annual interest to Ericsson for infringing upon its EDGE, 2G and 3G Standard Essential Patents (“SEPs”).
Ericsson has one of the largest patent portfolios in the world, which includes SEPs that are used to implement standards, or technical descriptions, set by Standard-Setting Organisations (SSOs). The suit was filed in 2015 when Lava accused Ericsson of not providing patents at reasonable royalty rates. Ericsson claimed that it had requested Lava to enter into negotiations and offered to license its SEPs to Lava on Fair, Reasonable, and Non-Discriminatory (“FRAND”) terms. Ericsson later sued Lava for patent infringement, claiming that Lava refused to negotiate a fair license rate on FRAND terms. Further, Lava ignored Ericsson’s notice and continued manufacturing devices without a license, thereby infringing Ericsson’s patent rights.
Lava filed a counterclaim seeking revocation of Ericsson’s patents for relating to algorithms and/or computer programs. Moreover, Lava argued that Ericsson did not disclose its SEPs fully and fairly and did not provide FRAND licensing terms for its SEPs.
The court ruled that Lava was an unwilling licensee due to its failure to negotiate in good faith with Ericsson. The court also noted Lava’s reluctance to cooperate in the licensing process and its lack of response to the court’s inquiry about royalty rates. The court observed that Ericsson was entitled to compensation based on the loss of royalty fees if Lava had executed a FRAND license agreement at the outset of its business operations.
The court found Lava guilty of infringing Ericsson’s seven patents on 2G, EDGE, and 3G technology, and declared that Lava must compensate Ericsson for the damages incurred, including interest at a rate of 5% per annum from the date of the judgment until the full amount is realized. However, the court also partially upheld Lava’s counterclaim, leading to the revocation of one of Ericsson’s patents related to ‘Linear Predictive Analysis by Synthesis Encoding Method and Encoder’.
Lava International Limited vs. Telefonaktiebolaget LM Ericsson, [CS(COMM) 65/2016, Delhi High Court judgment dated, 28th March 2024]
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