Delhi High Court Sets Aside Royalty Order Against DVD Makers Over Philips' DVD Decoding Patent

The Delhi High Court has set aside a 2018 decree that had directed two DVD player makers to pay royalty to Dutch electronics company Koninklijke Philips Electronics NV for alleged infringement of its DVD decoding technology patent while also quashing punitive damages awarded against one of them.

A Division Bench of Justice C. Hari Shankar and Justice Om Prakash Shukla allowed appeals by K.K. Bansal of Bhagirathi Electronics and his son Rajesh Bansal of Mangalam Technology, holding that Philips had failed to establish infringement.

“There is, therefore, in the present case, no evidence of infringement, either direct or indirect. The plea of Philips that the Bansal firm infringed the suit patent has, therefore, to fail,” the bench held.

Philips had sued the Bansals for infringement of Indian Patent IN-184753, relating to a decoding device used in DVD players, which it claimed was a Standard Essential Patent essential to the DVD Forum's technical standards.

The suit patent expired on February 12, 2015 during the pendency of proceedings, leaving only the issue of damages.

Rejecting Philips' claim that the patent was standard-essential, the bench noted that the evidentiary record was insufficient.

"No claim charts, mapping the claims in US'505, EP'254 or the suit patent, onto the technical features of the standards set by the DVD Forum, were forthcoming either, as required by para 95 of Intex” the court observed.

The court held that to establish a patent as an SEP, a plaintiff must demonstrate through claim charts that the claims of the suit patent correspond to the technical features of the standard set by the standard-setting organisation.

Philips had relied on essentiality certificates from Proskauer Rose and Cohausz & Florack to show that its US and European counterpart patents were essential to the DVD Forum standards. The Division Bench rejected this evidence, noting that no representative from either firm was examined as a witness, no affidavit was filed by either firm, and the certificates themselves did not explain how the patents mapped onto the standards.

On infringement, the court found that Philips' witness, who claimed to have independently tested the Bansals' DVD players against the suit patent, did not produce the logs or details of the infringement analysis. Since the suit patent resided in a chip or PCB inside the DVD player, the testing could not be independently verified or effectively challenged by the Bansals without the underlying analysis being on record.

On patent exhaustion, the Bansals argued that the PCBs containing the relevant chips had been sourced through commercial channels linked to MediaTek.

Philips' own witness acknowledged in cross-examination that DVD players of Onida, Weston, Videocon, Philips and the Bansals carried the same MediaTek chip which Philips alleged embodied the patented technology, and that Philips was aware MediaTek was commercially selling such chips.

The Single Judge had rejected the exhaustion plea on the ground that MediaTek was not shown to be a Philips licensee.

The Division Bench disagreed. “By operation of the principle of international exhaustion of patent rights, Philips cannot enforce the patent against the Bansals,” the court held.

The bench also set aside the punitive damages award against Rajesh Bansal, which had been based solely on his prior employment with Philips.

“We are unable to understand how, on this sole ground, punitive damages could be awarded against the Bansals. That apart, in view of our findings earlier in this judgment, there can be no question of awarding any damages to Philips in the present suit.,” the court observed.

Holding that the Single Judge's decree could not be sustained, the court allowed the appeals with no order as to costs.

For KK Bansal: Senior Advocate Swathi Sukumar with Advocates S. Santanam Swaminadhan, Naveen Nagarjuna, Ritik Raghuwanshi, Kartik Malhotra, Anindit Mandal and Shreya Mansi James