Telefonaktiebolaget Lm ... vs Mergury Elegtronigs & Anr
2017 Latest Caselaw 3666 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                              Decided on: 27.07.2017

+     CS(COMM) 155/2017, CC 56-63/2013, IA. 7690/2016, I.A.
      8278/2016, I.A. 8808/2016, I.A. 9972/2016, I.A. 11332/2016, I.A.
      12393/2016, I.A. 12402/2016, I.A. 12402/2016, I.A. 15482/2016,
      CCP (O) 7/2017
      TELEFONAKTIEBOLAGET LM ERICSSON(PUBL)...........Plaintiff
                  Through: Mr. C.S. Vaidyanathan, Sr. Advocate,
                           Ms. Prathiba Singh, Sr. Adv. with Mr.
                           Chander Lall, Ms. Saya Ghaudhary,
                           Mr. Ashutosh Kumar, Mr. Adithya
                           Sayaraj, Mr. Rupin Bahl, Ms. Sutapa
                           Jana and Mr. Devarishu Khanna,
                           Advocates.

                                   versus

      MERGURY ELEGTRONIGS & ANR                ........Defendants
                  Through: Mr. Gurukrishna Kumar, Sr. Adv.
                           with Mr. Sudhir Nandrajog, Sr. Adv.
                           Mr. Ashok K Agarwal, Advocate
                           along with Mr. Manoratm, Mr.
                           Shubham Agarwal, Mr. Gaurav Vig,
                           and Ms. Pallavi Verma, Advocates for
                           D-2 in-GS(OS) No. 442/2013 and
                           respondent no. 1 in GGF (O) No.
                           71/2015.
                           Mr. P.V. Kapur, Sr. Advocate along
                           with Mr. Ajit Warner, Mr. Sandeep
                           Grover,    Mr.     Aditya       Nayyar,
                           Advocates for R-2 to R-5 in GGP (O)
                           No. 71/2015.




CS(COMM) 155/2017                                                Page 1
       CORAM:
      HON'BLE MS. JUSTICE DEEPA SHARMA

                                 JUDGMENT

I.A. 11556/2016 (modification of the order dated 12.11.2014)

1. Vide this application, the defendant No. 2 has sought modification of

the order dated 12.11.2014 and suspension of the payment of further interim

deposits by the defendant No.2

2. It is submitted that the present suit has been filed by the plaintiff for

permanent injunction against the defendants for restraining them from

infringing the eight Indian "standard essential patents" of the plaintiff and

along with the suit moved an application under Order 39 Rule 1 & 2 of CPC

seeking interim directions.

3. It is submitted that pending consideration of the case, an order was

passed by this Court on 19.03.2013 whereby the parties agreed to negotiate a

FRAND license for a period of one month based on FRAND terms and

entered into an interim arrangement for making interim deposits in this

Court, subject to the final outcome of the negotiations between the parties.

Vide the said order, the defendant no.2 was directed to make interim

deposits in the Court on certain rates. This order was modified by the Court

on 12.11.2014 and as per the agreement of parties to the suit, a revised

CS(COMM) 155/2017 Page 2 schedule of making interim payments directly to the plaintiff was redrawn

and it was done without prejudice of the rights and contentions of the

parties. The case of the applicant/defendant no.2 in the application is that it

had agreed to the modification of the order dated 19.03.2013 on the

condition that the trial in the matter would be completed not later than

31.12.2015. The defendants have been duly complying with the said order

and making payments accordingly to the plaintiff while the plaintiff, on the

other hand continued moving applications for release of the amount

deposited by the defendant no.2 and seeking change in the mode of

furnishing security from surety bond to Bank Guarantee. These applications

of the plaintiff took almost six months and the period which was allocated

by the Court for purpose of recording evidence expired. Even though the

admission/denial was completed by 18.12.2014, the plaintiff took no steps

towards leading its evidence. The defendant no.2 has so far deposited

Rs.173 crores with the plaintiff pursuant to the said order. It is submitted

that the issues in this case were framed on 07.07.2015 and the Local

Commissioner for recording the evidences was appointed. In order to

expedite the disposal of the suit. After getting the copy of this order in

August 2015, the defendant no.2/applicant moved an application to the IA

CS(COMM) 155/2017 Page 3 No.17742/2015 on 25.08.2015 for amendment of the issues. The plaintiff

seized this opportunity to delay the settlement of the issues by filing

frivolous contempt petition against a third party who was not even a party to

the suit and thereby diverting the attention of the Court towards the

contempt petition. The issues could finally settled by the Court on

08.02.2016 which was much after the time period fixed by the Court vide

the impugned order. It is submitted that the defendants have agreed to make

interim payments to the plaintiff only because the trial had to be completed

within the time period granted by the Court, but the plaintiff was consuming

the said time in moving applications for release of deposits and contempt

petitions. It is submitted that vide order dated 08.02.2016, the Court had

given nine months time to the plaintiff to complete recording of evidence

but even on expiry of seven months, the plaintiff has not examined a single

witness. In the application, defendant no.2/applicant has also reproduced in a

tabular form, the dates and the manner in which the plaintiff had proceeded

in the case.

The said tabular form is reproduced here under:-

08.02.2016 Order for filing Evidence by way of Affidavits of Plaintiff witness passed. LC Appointed. Direction issued to complete recording of evidence within 9 months.

30.03.2016 List of witnesses filed by the Plaintiff.

CS(COMM) 155/2017                                                       Page 4
 04.04.2016     List of witnesses filed by the Defendant no. 2
16.05.2016     Plaintiff sought time from the Ld. Local Commissioner to

seek instructions for filing the affidavits of its witnesses. 22.06.2016 Application for constitution of Confidentiality Club filed by the Plaintiff.

15.07.2016 Application for fixing case management hearing filed by the Plaintiff.

25.07.2016 Application for foreclosure of Plaintiff's right to lead evidence filed by the Defendant no. 2.

26.07.2016 Evidence by way of affidavits of two Plaintiff witnesses filed which were not dependent on constitution of confidentiality club.

4. The defendant no. 2/applicant has also contended that it had already

moved an application being I.A. No. 8808/16 seeking foreclosure of the

right of the plaintiff to lead evidence in view of the dilatory tactics of the

plaintiff. On these contentions, it is submitted that the order dated

12.11.2014 be modified and the applicant be exempted from making any

payment to the plaintiff. It is further argued that even otherwise, the

plaintiff had no prima facie case in its favour. The payments made to the

plaintiff in various suits filed by the plaintiff are also given in the tabular

form in the application. The applicant had also contended in its application

that an earlier application I.A.No.10933/2015 for seeking modification of

order dated 12.11.2014 was filed in view of the fact that the Division Bench

of this Court in another case in FAO (OS) 138/2015 had passed an order

CS(COMM) 155/2017 Page 5 against the plaintiff. The said application, however, was dismissed vide

order dated 07.07.2015. Applicant's application IA No. 17741/2015 for

review of the order dated 07.07.2015 was also dismissed vide order dated

17.09.2015. An appeal FAO(OS)555/2015 for setting aside the order dated

07.07.2015 and discontinuation of payment of interim deposits till the

disposal of FAO was preferred which is pending disposal. It is submitted

that the scope of pending appeal FA(OS) No.555/2015 is distinct from the

scope of present application. In the appeal, the defendant no.2/applicant had

sought suspension of the payment of interim deposits only till the disposal of

FAO while in the present application, it is seeking suspension of payment of

interim deposits till final disposal of the suit. On these contentions, it is

prayed that impugned order of the Court be modified and the defendant No.2

be exempted from making such payments.

5. The application is contested by the plaintiff. It is submitted that the

impugned order is a consent order and, therefore, no modification in the

order can be made without the consent of the other party. It is further

submitted that the defendant no. 2 is intentionally delaying the disposal of

the matter and moving applications after the applications and has not

allowed the case to move further. It is submitted that the present application

CS(COMM) 155/2017 Page 6 is liable to be dismissed because earlier also the defendants have filed a

similar application on different grounds and the said application was

rejected and the FAO is pending.

6. I have heard the arguments and perused the relevant record.

7. The sole ground on which the applicant/defendant no.2 has sought

modification of order is that the plaintiff had delayed in recording its

evidence and failed to complete the trial by 31.12.2015 as directed by the

Court in the impugned order and that the applicant had agreed to the

payments mentioned in the impugned order only for the reason that the trial

would be completed by that date but since the plaintiff had delayed the

completion of the trial by adopting the delaying tactic, the order need

modification and he should be exempted from making any payment .

8. From the previous orders of this Court, it is apparent that this Court

had disposed of the application IA No.3825/2013 under Order 39 Rule 1 and

2 of Civil Procedure Code of the plaintiff and IA No.4694/2013 under Order

39 Rule 4 of Civil Procedure Code of the defendant vide the impugned order

dated 12.11.2014. There is no dispute that the order dated 12.11.2014 is the

consent order to which both the parties agreed. The said order is reproduced

as under:-

CS(COMM) 155/2017 Page 7 "I.A. 3825/2013 (STAY) & I.A. 4694/2013 (O 39 R 4 = By D-2)

1. Subsequent to the last order dated, 14.10.2014, the parties have appeared and made submissions. Ericsson, as per the directions of the court and upon being asked by the court has produced 26 license agreements. Micromax has asked for agreements/offers by Ericsson with other Indian parties. After hearing submissions and perusing the rates which were contained therein, the court directs as follows:

2. The Defendants shall pending trial of the suit, pay the following rates of royalty directly to the Plaintiff for sales made in India from the date of filing of suit till 12.11.2015:

i. For phones/ devices capable of GSM - 0.8% of net selling price;

ii. For phones/ devices capable of GPRS + GSM - 0.8% of net selling price;

iii. For phones/devices capable of EDGE + GPRS + GSM - 1% of net selling price;

iv. WCDMA/ HSPA phones/devices, calling tablets - 1% of the net selling price.

3. The Defendants shall pending trial in the suit, pay the following rates of royalty directly to the Plaintiff for sales made in India from 13.11.2015 to 12.11.2016:

i. For phones/ devices capable of GSM - 0.8% of net selling price;

ii. For phones/ devices capable of GPRS + GSM - 0.8% of net selling price;

iii. For phones/devices capable of EDGE + GPRS + GSM - 1.1% of net selling price;

iv. WCDMA/ HSPA phones/devices, calling tablets - 1.1% of the net selling price."

CS(COMM) 155/2017 Page 8

4. The Defendants shall pending final trial in the suit, pay the following rates of royalty directly to the Plaintiff for sales made in India for the period from 13.11.2016 to 12.11.2020:

i. For phones/ devices capable of GSM - 0.8% of net selling price;

ii. For phones/ devices capable of GPRS + GSM - 1% of net selling price;

iii. For phones/devices capable of EDGE + GPRS + GSM - 1.3% of net selling price;

iv. WCDMA/ HSPA phones/devices, calling tablets - 1.3% of the net selling price.

(The Net Selling Price means with respect to each company product sold by the company or any of its affiliates the Selling Price charged by the company or its affiliate for such company product unless such sale has not been made on arms length basis in which case the net selling price will be the selling price which the seller would realize from an unrelated buyer in an arms length sale of an equivalent product in an equivalent quantity and at the equivalent time and place as such sale. Selling Price shall mean the selling price charged by the company for the company product in the form in which it is sold whether or not assembled and without excluding therefrom any components or sub-assemblies thereof (gross price) less 3% representing a deduction which shall cover usual trade discounts actually allowed to unrelated buyers on a regular basis, actual packing costs actual costs of insurance and transportation etc.,)

5. Micromax has submitted that it has negligible operations outside India and agrees to negotiate the FRAND global rates if and when it expands internationally.

6. Both the parties agree that for the period prior to the filing of the suit, the payments, if any, by the defendant shall be as per the judgment of the court post-trial of the suit.

7. Insofar as the deposits already made by Micromax in the court, the rates specified above shall be applied from the date of filing of the suit till the present date, for all sales made by Micromax in India. Upon

CS(COMM) 155/2017 Page 9 applying the said rates, the computation of the amounts shall be submitted jointly by the parties. Upon receipt thereof, payments shall be made to Ericsson directly by way of demand draft drawn by the Registrar, Delhi high Court, subject to Ericsson furnishing a surety bond for the exact amount in favor of Micromax, to the satisfaction of the Registrar. The banking details shall be submitted to the Registrar by counsel for Ericsson. The remaining amount shall be released to Micromax.

8. The Defendants shall continue to make payments to Ericsson as per the rates specified above on a quarterly basis for sales made after the date of this order. The defendant shall continue to give intimation to the plaintiff of the arrival of the consignments at customs and seek NOC of the Plaintiff. Post inspection, the Plaintiff will forthwith inform the Customs that it has no objection to the release of the consignment so that the consignment could immediately be handed over to the Defendants. In respect of royalty payments made by Micromax after the passing of this order, Ericsson undertakes to furnish surety bonds in favor of Micromax for the amounts received on quarterly basis with advance copies to Micromax.

9. It is made clear that the above order is purely an interim arrangement and is not a determination of the FRAND rates for the Ericsson portfolio. The defendant shall not rely upon the above rates before the competition authorities or any other forums as it is not final in nature.

10. The trial of the suit is expedited. It is directed that the trial in any event will be completed not later than 31st December, 2015. Final arguments will commence immediately thereafter. The parties have no objection to the aforesaid arrangement and shall remain bound the same.

11. I.A. 3825/2013 and I.A. 4694/2013 stand disposed of."

9. The impugned order does not in any way show that the

applicant/defendant No.2 had given any conditional consent, showing that

its consent was valid if the trial of the case be finished by 31.12.2015. The

CS(COMM) 155/2017 Page 10 impugned order does not show that the applicant/defendant No.2 reserved

any right to withdraw its consent on failure of the plaintiff to complete its

evidence within stipulated timeframe. The contention and argument of the

applicant/defendant No.2 that he had consented to the said order on the

premise that the trial of the case be concluded by 31.12.2015 finds no

support from the impugned order.

10. Admittedly the applicant/defendant No.2 had vide its earlier

application IA No.10933/2015 sought modification of impugned order

which was dismissed and the appeal is pending. It, therefore, is clear that the

issue of modification of the impugned order is pending in appeal before the

Division Bench in FAO (OS) 555/2015. The same relief has been sought by

the applicant/defendant No.2 in the present application. In view of the fact

that the matter is sub judice, this application itself is not maintainable. The

argument of the learned counsel that in the appeal bearing FAO (OS)

No.555/2015, he had sought the suspension of interim deposits, till the

disposal of appeal is contrary to the record. The prayer clause of the earlier

application IA No.10933/2015 as reproduced:-

"a) To modify the Order dated November 12, 2014 so as to direct suspension of payment of any further interim deposits by the Defendant No. 2 to the Plaintiff under Paragraph 8 of the Order of November 12, 2014

CS(COMM) 155/2017 Page 11 pending the final outcome in the Intex Appeal proceedings on the issue of interim injunction" (emphasis supplied) This clearly shows that the applicant/defendant No.2 sought the

modification of impugned order vide this application. In the present

application also, it has sought the modification of the impugned order. The

argument that in the appeal it had sought the modification of the order till

the disposal of that appeal while in the present application, it had sought the

modification of the impugned order till the disposal of the suit has no merit

for the reason that if in the appeal, the order is modified and the applicant is

granted the relief, the order apparently shall remain binding on the parties

till the disposal of the suit. The application is liable to be dismissed on this

Court as well.

11. The applicant/defendant No.2 has also sought the modification of the

impugned order on the ground that the plaintiff is responsible for the delay

and it has deposited a sum of Rs. 173 crores with the plaintiff. Admittedly,

the defendant No.2 applicant had already moved an application being IA No.

8808/2016 for closing the plaintiff's evidence on the ground of dilatory

tactics allegedly adopted by the plaintiff and the same is pending disposal.

Hence, the issue relating to the consequences of alleged delay by the

plaintiff shall be dealt by this Court under IA No. 8808/2016.

CS(COMM) 155/2017 Page 12 I find no merit in the application and the same is dismissed.

CS(COMM) 155/2017, CC 56-63/2013, IA. 7690/2016, I.A. 8278/2016, I.A. 8808/2016, I.A. 9972/2016, I.A. 11332/2016, I.A. 12393/2016, I.A. 12402/2016, I.A. 12402/2016, I.A. 15482/2016, CCP (O) 7/2017

List before the Roster Bench on 02.08.2017.

                                                         DEEPA SHARMA
                                                            (JUDGE)

JULY 27, 2017
ss




CS(COMM) 155/2017                                                     Page 13