Delhi High Court Explains Scope Of 'Pro Tem' Orders In Patent Infringement Suit Against Mobile Company 'Lava'

The Delhi High Court recently had the occasion to discuss in detail the scope of a pro tem order, while dealing with Europe based audio/video processor Dolby International's suit against alleged patent infringement by Indian mobile phone company Lava.A pro tem order is an extraordinary relief granted by Courts which operate till the time an application for interim injunction is decided by the Court. It requires the implementer of a patented subject to make a security deposit, as prescribed by Court, to balance the rights of Standard Essential Patents (SEPs) holders during litigation.Justice Amit Bansal observed,“Indian courts are empowered to pass a direction for a pro tem deposit, and this power can be exercised under Section 151 of the CPC, without filing a separate application for the same…Pro tem deposits are granted to balance the SEP holders' right to receive value for the use of their technology with the implementor's right to contest the patent. This ensures that the implementor does not unfairly benefit from the use of patented technology during the course of a potentially lengthy litigation.”The bench further clarified that before making an order of pro tem deposit, the Court has to arrive at a prima facie finding of essentiality and validity of the suit patent.To arrive at a prima facie finding with regard to the essentiality and validity of the suit patents, the Court said, it can look at the surrounding factors such as the number of licenses entered into by SEP owners in respect of the portfolio of SEPs relating to the same technology; enforcement of the said SEPs before competent Courts; pro tem orders passed by the courts relation to the said SEPs.To illustrate: Where the conduct and actions of the implementor during the negotiations stage indicates no serious challenge to the essentiality and validity of the suit patents, the Courts may not get into a detailed exploration of merits. However, where it is found that a significant number of competitors and players in the market, including entities that are in a better bargaining position on account of their volumes or market share, are paying royalties for such SEPs, it would be a relevant factor.Similarly, where the Court is of the view that the challenge to essentiality and validity of the SEP is merely an afterthought, it would be a relevant factor in determining the question of prima facie essentiality and validity of the suit patents.“Conduct of the parties during negotiations is one of the key factors to be kept in mind while determining whether a potential licensor and licensee were willing licensors or willing licensees, respectively. An unwilling licensee cannot be permitted to freely sell its devices using the SEPs of the patent owner, without making a pro tem security deposit,” Court held.However, the Court added that no detailed exploration of merits of the case is required, as is required for purposes of grant of an interim injunction.It rejected the application of the four-fold test— (i) essentiality and validity of the suit patents; (ii) fact of utilisation; (iii) such utilisation would amount to infringement; and (iv) royalty rate proposed by the defendant— laid down by a coordinate bench in Nokia Technologies v. Guangdong Oppo (2022).The Court reasoned, “If in every case the Court were to conduct an in-depth examination of issues relating to the essentiality and validity of the suit patents, the whole objective behind a pro tem deposit would be defeated.”The Court also held that while deciding whether a pro tem deposit is to be made or not, the Court has to consider the financial condition of the defendant. "It has to be weighed that in the event the Court comes to a conclusion that the implementor is liable to pay damages in the form of FRAND [Fair, Reasonable And NonDiscriminatory] rate to the patent owner, the said amount can be recovered by the patent owner from the implementor," it said.Appearance: Mr. Chander M. Lall, Sr. Advocate with Mr. Ashutosh Kumar, Ms. Saya Kapur Choudhary, Mr. Devanshu Khanna, Mr. Swarnil Dey, Mr. Harsshita Pothiraj and Ms. Annanya Mehan, Advocates for Dolby; Mr. Jayant Bhushan, Sr. Advocate with Mr. Ashok V. Aggarwal, Mr. Mudit Sharma, Ms. Nandini Sharma, Mr. Parvez A. Khan and Mr. Abhishek Rathi, Advocates for LavaCase title: Dolby International AB & Anr. v. Lava International LimitedCitation: 2025 LiveLaw (Del) 812Case no.: CS(COMM) 350/2024Click here to read judgment

Delhi High Court Explains Scope Of 'Pro Tem' Orders In Patent Infringement Suit Against Mobile Company 'Lava'

Kapil Dhyani

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