Delhi HC asks Oppo to deposit 23% of India sales for infringing Nokia's patents

Delhi High Courts holds in favour of Nokia

A two-judge bench of the Delhi High Court has ordered mobile phone manufacturer Oppo to deposit 23 percent of its India sales, within four weeks, for using Nokia's technology in its phones without the requisite consent.

The bench arrived at the 23 percent figure after noting that Oppo's sales in India account for around 23 per cent of its global sales.

What is the case about?

Oppo had secured a licence from  Nokia in 2018 for using some of its technology for a period of three years. Oppo had also made advance payments for the use of this technology. The agreement, however, did not cover the use of patents relating to 5G standards. Considering that 5G devices account for 52 percent of Oppo's sales in India, the company would have had to pay a substantially higher amount to Nokia.

Nokia alleged that after the expiry of the 2018 agreement, Oppo had
witnessed an unprecedented increase in the sale of its devices and had sold around 77 million devices in India without paying a single rupee in royalty.

It is Nokia's case that it had offered to discuss the renewal of the agreement, but Oppo had refused to negotiate in good faith. Nokia then initiated a suit in the Delhi High Court for infringement of its patent for 2G, 3G, 4G and 5G devices in India.

Nokia sought a pro-tem (temporary) deposit from Oppo of an amount either based on  the latest counter offer made by Oppo for a global licence during the negotiations or an amount equivalent to the royalty paid under the 2018 agreement.

However, a single judge of the Delhi High Court dismissed the application seeking interim deposit, stating that the court did not have the power to do so without going into the merits of the case. Nokia then appealed against the order before a two-judge bench of the High Court.

Oppo's arguments:

Oppo argued that  a patent holder cannot seek an interim or even a permanent injunction as a matter of right. Oppo also argued that Nokia was seeking interim security in the initial stages of the case,  without substantiating any of its claims.

It is Oppo's contention that Nokia’s demands were not in compliance with the Fair, Reasonable and Non-Discriminatory (FRAND) agreement on fair practice in the use of patents.

Court's conclusion

The court has held that to balance the equities in cases such as this, it has the power to pass an order directing Oppo to make a temporary deposit without going into the merits of the case in detail.

It has further clarified that an order asking a company to make a temporary deposit does not amount to asking the company to stop using the patent. The court noted that if Oppo does not make a temporary deposit, Nokia will suffer an irreparable loss as its patents will be used without the benefit of royalty.

The court also took note of the fact that Nokia had initiated 13 patent infringement proceedings against Oppo globally. Of them 11 had gone in Nokia’s favour. The court set aside the single judge's order and directed Oppo to deposit 23 percent of the proceeds of their India sales.

Nokia was represented by senior advocates, Gourab Banerjee and Pravin Anand, managing partner of law firm Anand and Anand.