A Division Bench of Justices C.
Hari Shankar and Om Prakash Shukla set aside a 2018 single-judge decree that had directed two small DVD player makers to pay FRAND royalty to Philips for alleged infringement of a Standard Essential Patent covering DVD decoding technology. In a 150-page judgment, the Court held that Philips failed to prove the essentiality of the patent (IN-184753) and failed to establish infringement based on admissible evidence, and further held that the Bansals' acquisition of the patented components from market-authorised dealers constituted exhaustion of Philips' patent rights under Section 107A(b) of the Patents Act, 1970.
Legal Background
A standard essential patent (SEP) covers technology that a product must use to comply with a technical standard, and holders usually commit to license it on fair, reasonable and non-discriminatory (FRAND) terms. To succeed in an infringement claim, a SEP holder generally has to show that the patent's claims are essential to the standard and that the defendant's product is within them. On exhaustion, Section 107A(b) of the Patents Act, 1970 provides that importation of a patented product from a person duly authorised to produce and sell or distribute it is not infringement. The judgment itself should be consulted for the reasoning and its limits.