Ericsson: "SWEDISH MULTINATIONAL GIANT."
- Ericsson is one of the single largest holders of patent for wireless technologies such as Edge, 2G & 3G.
- They manage around 33,000 Patents throughout the world. With 400 Granted Indian patents.
In recent years, Ericsson has sued several technology companies in India and beyond which includes the following:
- 2010: D-Link (USA) Infringing a set of its 802.11 (b) SEPS
- 2012: Samsung (USA) patent infringements in the US
- 2013: Micromax (India) License agreements on SEPS on GSM, EDGE and 3G
- 2014: Intex (India) License agreements on GSM, EDGE, and UMTS/WCDMA
- 2014: Xiaomi (India) SEPS infringements.
Xiaomi: "THE NEW BIGGEST SMART PHONE SELLER."
Founded in 2010, known as China's Apple, as a lean start-up to sell smart phones at cheap prices over the Internet currently have third largest seller of Smartphone trailing Apple and Samsung. Even with the competitors Xiaomi is highly respected, one of the competitors has termed the devotion of Xiaomi supporters as a religion in the form of idolatry.
Since their launch in, July 2014, Xiaomi have sold 1.25 lacs phone of its popular smart phone "MI3" in India.
On December 8th 2014, Hon'ble Delhi high court in an interim order has restrained Xiaomi as well as online e-commerce site Flipkart from selling handsets in India that run on the technology patented by Ericsson. The court has also restrained Xiaomi or its agents from making, assembling, importing or offering for sale its devices which are infringing the mobile phone technology patented by Ericsson 8.
These Patents are well known as SEP patents and are mainly related to 3G, 2G and Edge technology,
What is SEP?
A standard-essential patent is a patent that claims an invention that is essentially used by every standard organization works in current state of art. It is often require that members disclose and grant licenses to their patents and pending patent applications that cover a standard that the organization is developing.
If a standards organization fails to get licenses to all patents that are essential to complying with a standard, owners of the unlicensed patents may demand or sue for royalties from companies that adopt the patented technology.
Determining which patents are essential to a particular standard can be complex
Each mobile company need to use this for survival in competitive market, Therefore, patents used in these portfolio are known as Standard Essential Patents (SEPs).
Ericsson is the patentee of 8 patents which are related to SEP. These patented technologies are common for wire-less communications for data usage (Internet and Wi-Fi) in mobile devices. As per the nature of technology Patentee (Erricson) is committed to give licenses of these technologies to other mobile manufactures, for licensing of this SEP's patentee receives a royalty for the use of technology by other telecommunication device manufacturers.
For the purpose of Licensing this technology to more than one mobile manufactures patentee used to give licenses based on (Reasonable and Non-Discriminatory terms) RAND terms – which are common in western countries.
In India, Court uses to evaluate the SEP patent portfolio for license through FRAND (Fair, Reasonable and Non Discriminatory) terms, which are more flexible and advantageous for Patentee and other mobile manufacturers.
The Hon'ble Delhi High Court passed an order on December 8th, 2014:
- Plaintiff (Ericsson) has filed suit, through C.S.Vaidyanathan and Pratibha Singh, for permanent injunction, restraining infringement of rights in eight registered patents, damages, rendition of accounts.
- Court has instructed custom authorities to ban import of disputed devices by Respondents in India.
- Court has also appointed three inspectors for inspection of premises of Respondent No. 2 (Flipkart.com), who will examine the defendant's premises and submit report to the Hon'ble High court.
On 16th December, 2014 Xiaomi filed an Appeal against the order:
- Xiaomi has filed an appeal against ex-parte injunction by a Single Judge bench on 8th of December, through Senior Counsel Mr. Kapil Sibbal and Mr. Manish Agarwal, for the injunction order granted by court before divisional bench of Delhi High Court.
- Xiaomi is allowed to sell by, Division bench Justice Pradeep Nandrajog, subject to a number of conditions. These conditions stipulated that Xiaomi could only sell devices that carried chips imported from Qualcomm Inc., a licensee of Ericsson and that Xiaomi was to deposit Rs. 100 for every device sold in India or sells till the 5th of January, 2015.
Reasons behind the dispute:
Ericsson has failed to adhere to global standards on providing SEPs at fair prices, and its approach to negotiations has been unreasonable and discriminatory. They seemed to be acting contrary to the FRAND terms by imposing royalties linked with cost of product of user for its patents. The allegations concerning royalty rates make it clear that the practices adopted by the ERICSSON were discriminatory as well as contrary to FRAND terms. The royalty rates being charged by the ERICSSON had no linkage to patented product, contrary to what is expected from a patent owner holding licenses on FRAND terms.