Delhi High Court
Interdigital Vc Holdings Inc & ... vs Xiaomi Corporation & Ors. on 16 December, 2020
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 3rd September, 2020
Pronounced on: 16th December, 2020
+ I.A. 6441/2020 in CS(COMM) 295/2020
INTERDIGITAL TECHNOLOGY
CORPORATION & ORS. .....Plaintiffs
Through Mr. Pravin Anand, Ms. Vaishali
Mittal, Mr. Siddhant Chamola
and Ms. Pallavi Bhatnagar,
Advs.
versus
XIAOMI CORPORATION & ORS. ..... Defendants
Through Mr. Saikrishna Rajagopal, Mr.
Siddharth Chopra, Ms. Sneha
Jain, Ms. Garima Sahney, Ms.
Anu Paarcha, Dr. Victor
Vaibhav Tandon, Mr. Arjun
Gadhoke and Ms. Charu
Grover, Advs.
AND
+ I.A. 6447/2020 in CS(COMM) 296/2020
INTERDIGITAL VC HOLDINGS
INC. & ORS. .....Plaintiffs
Through Mr. Pravin Anand, Ms. Vaishali
Mittal, Mr. Siddhant Chamola
and Ms. Pallavi Bhatnagar,
Advs.
versus
XIAOMI CORPORATION & ORS. ..... Defendants
Through Mr. Saikrishna Rajagopal, Mr.
Siddharth Chopra, Ms. Sneha
Jain, Ms. Garima Sahney, Ms.
Anu Paarcha, Dr. Victor
Signature Not Verified
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Vaibhav Tandon, Mr. Arjun
Gadhoke and Ms. Charu
Grover, Advs.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
% JUDGEMENT
1. Interdigital Technology Corporation has sued Xiaomi
Corporation (hereinafter referred to as "Xiaomi"), alleging
infringement, by Xiaomi, of Indian Patents Nos 262910, 295912,
298719, 313036 and 320182. It is alleged that Xiaomi is, without
obtaining any license from InterDigital, using the technology,
contained in these Standard Essential Patents (SEPs), held by
InterDigital. InterDigital has, therefore, prayed, in its suit, that
Xiaomi be injuncted, permanently, from manufacturing, selling,
assembling, distributing, advertising, exporting, importing or using, in
their devices, technology which infringes these SEPs. In the
alternative, a direction is sought, to Xiaomi, to take a license, from
InterDigital, for usage of its SEPs, on Fair, Reasonable and Non-
Discriminatory (FRAND) terms, to be fixed by this Court.
2. With the suit, InterDigital filed IA 6440/2020 under Order
XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 (CPC)
and IA 6441/2020, under Chapter VII Rule 17 of the Delhi High Court
(Original Side) Rules, 2018 (hereinafter referred to as "the Original
Side Rules"). Arguments, in IA 6440/2020, are presently being heard.
This judgement adjudicates IA 6441/2020 in CS(COMM) 295/2020
and IA 6447/2020 in CS(COMM)296/2020.
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3. Chapter VII Rule 17 of the Original Side Rules reads thus:
"17. Confidentiality Club. - When parties to a
commercial suit wish to rely on
documents/information that are commercially or
otherwise confidential in nature, the Court may
constitute a Confidentiality Club so as to allow limited
access to such documents/information. In doing so,
the Court may set up a structure/protocol, for the
establishment and functioning of such Club, as it may
deem appropriate. An illustrative structure/protocol of
the Confidentiality Club is provided in Annexure F.
The Court may appropriately mould the
structure/protocol of the Club, based upon the facts and
circumstances of each case."
4. The Confidentiality Club regime, admittedly, is standard
protocol, especially while dealing with litigations involving allegation
of patent infringement. Particularly in the case of SEP litigations,
learned counsels for the parties are ad idem that such Confidentiality
Clubs are routinely established by Courts. Learned Counsel, for both
the sides before me, are veterans in intellectual property litigation,
and, rightly therefore, there is no opposition, by Mr. Sai Krishna
Rajagopal, learned Counsel for the defendant, to the setting up of a
Confidentiality Club, per se. Mr. Rajagopal, however, joins serious
issue with Mr. Pravin Anand, learned Counsel for the plaintiff,
regarding the structure of the Confidentiality Club, as sought by him.
I am concerned, in the present case, therefore, not with whether a
Confidentiality Club ought, or ought not, to be set up, but whether the
Confidentiality Club could be set up in the manner sought by
InterDigital.
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5. InterDigital seeks, in its application, setting up of a "two-tier"
Confidentiality Club, comprising an "outer tier" and an "inner tier".
The documents which would be open to the members of the "outer
tier", are denoted, in the application of InterDigital, as "Confidential
Information", whereas the documents, to which members of the "inner
tier" alone would have access, had been denoted as "Legal Eyes Only
(LEO) Confidential Information". The difference between these two
tiers, as visualised and suggested by InterDigital, is that the "outer
tier" documents and material would be accessible to the advocates for
both sides, experts appointed by them, as well as representatives of
both parties, whereas the "inner tier" documents would be accessible
only to the advocates for both sides (who would not be in-house
counsel), and experts appointed by them. In other words, "inner tier"
documents would not be accessible to representatives of the parties,
other than "non-in-house" advocates and the experts appointed by
them. More simply expressed, the parties, as well as their officials
and employees, would have no access to the "inner tier" documents.
This is why, submits Mr. Pravin Anand, these documents have been
designated as meant for "Legal Eyes Only".
6. This, according to Mr. Pravin Anand, is an arrangement, and a
protocol, which is accepted and recognised by Courts, all over the
world, dealing with SEP infringement litigation. Though the
application suggests that the Confidentiality Club could consist of
four advocates, six representatives and two experts on each side, Mr.
Anand has, essentially, left the issue of the number of persons who
would be included in the Confidentiality Club, to the wisdom of the
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Court. The exclusion of representatives of the parties, from having
access to the "inner tier" documents is, however, according to Mr.
Anand, non-negotiable.
7. The only objection of Mr. Rajagopal, to the structure of the
Confidentiality Club, as suggested by InterDigital, is to the exclusion
of the representatives of his client, insofar as access to the "inner tier"
documents are concerned. Mr. Rajagopal submits, simply, that
nobody can be permitted to rely on documents, to which the other
party has no access, and granting access to advocates and experts is no
substitute to granting access to the parties themselves. He presses, in
this context, the hallowed principle that an advocate acts only on the
instructions of his client.
8. At the very outset, I posed two queries to Mr. Pravin Anand.
The first was as to how an advocate could be expected to be
appropriately instructed, if he is unable to share, with his clients, the
material on which the opposite party seeks to rely. The second was as
to how the court could come between the advocate and his client,
insofar as the "inner tier" documents were concerned, and injunct the
advocate from disclosing the documents to his client. Would this not,
I queried, amount to an unwelcome and, in fact, unjustified, incursion,
by the Court, into the sacred space that exists between client and
counsel?
9. I am constrained to confess that, despite all the ingenuity and
skill at his command, Mr. Pravin Anand has not provided me with
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satisfactory answers to these queries. His response, in sum and
substance, may be condensed into two words - "It works." To the
first query, Mr. Anand has really no clear-cut response, except to
submit that such arrangements have been created, in the past, and
have worked. The end, in other words, according to Mr. Anand,
justifies the means; on a more culinary note, the proof of the pudding
is in the eating. Such "two-tier" Confidentiality Clubs having been
created by Courts in the past, and having "worked", without hiccups,
Mr. Anand would exhort this Court not to be unduly concerned with
whether the setting up of such a Confidentiality Club would
compromise full and fair opportunity to both parties.
10. In response to the second query, Mr. Anand submits that no
occasion would arise for the Court to come between client and
counsel as, if this Court were to accede to the prayer, of InterDigital,
for setting up of the "two-tier" Confidentiality Club, it would be for
Xiaomi to instruct its Counsel not to disclose, to it, the "inner tier"
documents. Frankly, the response befuddles me. I am unable to
understand how the Court could insist on Xiaomi contracting, with its
Counsel, to keep documents shown to its Counsel, and on which
InterDigital relies against Xiaomi, undisclosed to Xiaomi itself. If
Xiaomi decides, for some inscrutable reason, to permit its Counsel not
to disclose, to it, material, on which InterDigital relies, that is a
contractual understanding between Xiaomi and its Counsel, with
which the Court is least concerned. To me, it is clear that the Court
cannot, by judicial fiat, impose any such contractual dispensation
between Xiaomi and its counsel.
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11. Mr. Anand did draw my attention to judgements, of courts
located outside the territory of India, where such "two-tier"
Confidentiality Clubs were set up. Beyond providing, to this Court,
information that such Confidentiality Clubs do exist in foreign
regimes, I am unwilling to accord, to decisions passed by Courts
abroad, any greater significance, in a case such as this. The
jurisprudence of natural justice, due opportunity and fair play has, in
this country, its own distinct contour and complexion. The request of
InterDigital has to be gauged and assessed in the backdrop of "fair
play jurisprudence", as it exists in India. The mere fact that courts,
overseas, may have acquiesced to the setting up of such
Confidentiality Clubs cannot, in my view, be of any substantial
significance, in deciding the present application of InterDigital. I rely,
respectfully, in this context, on the following observations, contained
in the judgement of the Division Bench of this Court in M. Sivasamy
v. Vestergaard Frandsen A/S 1 (hereinafter referred to as "Sivasamy v.
Vestergaard"):
"We may state that before the Learned Single Judge, and as
reflected from the impugned order, reference has been made
by the parties to proceedings between the parties in Courts of
U.K., Denmark and France and help sought from such
proceedings for the disposal of the subject application.
However, according to us, with respect to the litigation in
India, the Courts in this country would be guided by the
provisions of the Laws as applicable in this country and the
pleadings in the suit in this court and not by any orders or
decisions of the foreign court, unless, the decision of the
foreign Court becomes final and so that it can operate as res
judicata between the parties and operate in the parameters of
1
2009 (113) DRJ 820 (DB)
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Section 13 and Section 44-A of the Code of Civil Procedure,
1908. No useful purpose will be served in making reference
to various orders of the Courts in the different countries as
one does not know what are the ingredients/requirements of
causes of action of the different laws of those countries and
what were the pleadings of the cases in the foreign courts. In
fact, we do feel that none of the parties can contend or plead
on the basis of orders of the Courts in foreign jurisdiction
(particularly interim orders) as there is no finality(including
by disposal of appeals) with respect to findings in such
orders/judgments, especially in regard to whether the
plaintiffs or the concerned defendants are the owners of the
product or whether the products are same or different and so
on. The orders/judgements in such proceedings having not
achieved finality, according to us are not relevant and cannot
be relied upon by either of the parties, particularly so where
some orders (or portion thereof) are said to be in favour of
one party and some in favour of the other."
I entirely endorse these sentiments.
12. Mr. Sai Krishna Rajagopal, for Xiaomi, submitted that the
present application, as filed, could not succeed for the simple reason
that InterDigital had not disclosed, even to the Court, the documents
which it sought to include in the "inner tier", and those which it
sought to include in the "outer tier".
13. Though the application is silent regarding the nature of
documents, and material, which would be included in the "inner" and
"outer" tiers, InterDigital has, in its rejoinder, disclosed that "Tier 2
will include confidential, comparable patent license agreements on
FRAND terms, as executed by the parties in the suit". I am required
to decide, therefore, whether such "comparable patent license
agreements" could be justifiably included in an "inner tier" of
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confidential documents, to be kept away from the eyes of the
defendant, as well as all its officers and employees
14. Mr. Pravin Anand further submitted that, as this Court is
presently functioning virtually, certain obvious handicaps, in
presenting the documents to the Court, were bound to arise. Even so,
he submitted, should this Court so desire, InterDigital was willing to
provide, either in sealed cover personally to me, or by way of an
encrypted e-mail, the documents in respect of which it sought to plead
"enhanced confidentiality".
15. It is not necessary for me to consider this request of Mr. Pravin
Anand as, in my view, there can be no question of allowing the
request, of InterDigital, for a "two-tier" Confidentiality Club. The
prayer, for keeping certain documents, and information, inaccessible
to Xiaomi and its personnel, and allow access, thereto, only to the
advocates and experts nominated by Xiaomi is, in my view,
completely unacceptable.
16. I proceed, now, to deal with the individual submissions
advanced by Mr. Pravin Anand.
17. Mr. Pravin Anand emphasised, at the outset, that the
Confidentiality Club arrangement was always reciprocal in nature. If,
therefore, InterDigital was seeking the setting up of a "two-tier"
Confidentiality Club, Xiaomi would, equally, be entitled to the benefit
thereof. Mr. Anand submitted that Xiaomi would also desire that
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some of the information, and documents, on which it sought to rely,
be not made accessible to InterDigital or its personnel, and access, to
such documents, be restricted only to the advocates and experts
appointed by InterDigital. He was perfectly agreeable to such an
arrangement.
18. To my mind, this submission is entirely tangential to the issue
at hand. In case the Court finds the request, of InterDigital, for setting
up of a "two-tier" Confidentiality Club, to be acceptable, the benefit
thereof would, naturally, enure to Xiaomi as well. That goes without
saying. The question, therefore, is not whether Xiaomi would also get
the benefit of such an arrangement, but of whether such an
arrangement is, to the mind of the Court, legally palatable or not. This
submission, of Mr. Anand, therefore, cannot assist in resolving this
controversy.
19. Mr. Anand submitted, next, that, in cases such as this, it was an
accepted legal position that it was not necessary that all information
be disclosed to the parties, or their personnel. Reliance was placed, in
this context, on the following passage, from Transformative Learning
Solutions Pvt Ltd. v. Pawajot Kaur Baweja 2, especially on the
italicized words:
"Of late however, in respect of a certain class of suits, it was
felt that documents filed should not be permitted to go in
public domain, as happens on filing in the Court. Provision
has thus been made for keeping such documents in a sealed
cover, for eyes only of a limited number of persons who also
agree/undertake not to divulge contents thereof to others. In
2
AIR 2019 Del 197
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some cases, as in cases of patent infringement or
infringement of copyright in source code of a computer
software, the need for a party to a lis to see the document may
not arise as the opinion with respect thereto is to be given by
the expert only."
(Emphasis supplied)
The words used in the afore-extracted passage, and italicized therein
for emphasis, cannot, by the farthest stretch of imagination, be
regarded as according, by this Court, of its imprimatur to setting up of
a Confidentiality Club, in which certain documents, or details, are
made entirely inaccessible to the opposite party, and its
representatives, barring advocates and the experts. This Court has
merely observed that the need for a party to a lis, to see a particular
document, may not arise, in some cases of patent infringement of
copyright infringement. Whether there is need, for Xiaomi, or its
personnel, to see the documents and data on which InterDigital relies,
is one thing; whether InterDigital can insist on such documents, and
details, being kept away from Xiaomi, and its personnel, and whether
the Court can accord its judicial approval to such insistence, is entirely
another. Significantly, this Court has, in the afore-extracted passage
from Transformative Learning Solution2, being careful in referring
only to the "need" of the representatives of the opposite party seeing
the documents, "arising", without stating, in so many words, that
either party could insist on the establishment of a regime in which
documents and details, on which it relies, could be kept away from the
opposite party, and its personnel. It is well settled that a decision is
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only an authority for what it decides, and not for what may logically
be said to flow therefrom. 3
20. Having said that, the facts, in Transformative Learning
Solutions2, are interesting. The plaintiffs sought an injunction,
against the defendants, from disclosing or using their confidential
information and trade secrets, among other things. The plaintiffs
demurred from disclosing the "confidential information", in the
proceedings before the Court. Ultimately, in exercise of the power
vested by Chapter VII Rule 17 of the Original Side Rules, a
Confidentiality Club, consisting of Defendants 1 and 2 and their
counsel as members, was constituted. The plaintiffs were directed to
supply the confidential information, in a sealed cover, to the counsel
for Defendants 1 and 2. The plaintiffs filed a Review Petition,
seeking review of this order, to the extent that it constituted the
Confidentiality Club. It was contended, by the plaintiffs, that Chapter
VII Rule 17 of the Original Side Rules, read with Annexure F thereto,
did not allow the parties, or their officers and employees, to be
members of the Confidentiality Club, which was restricted to the
advocates for the parties. It was pointed out that the proforma for the
Confidentiality Club, as provided in Annexure F to the Original Side
Rules, did not contemplate inclusion of the parties or their officers or
employees, as members thereof. Reliance was placed on clause (b) in
the said proforma, which reads thus:
3
Union of India v. Dhanwanti Devi, (1996) 6 SCC 44; State of Orissa v. Md. Illiyas, (2006) 1 SCC 275;
Uttaranchal Road Transport Corporation v. Mansaram Nainwal, (2006) 6 SCC 366; Dr. Shah Faesal v.
Union of India, (2020) 4 SCC 1.
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"Each party shall nominate not more than three Advocates,
who are not and have not been in-house lawyers of either
party, and not more than 2 external experts, who shall
constitute the Confidentiality Club. Members of the
Confidentiality Club alone shall be entitled to inspect the
Confidential Documents/Information
Premised on this clause, in the "model Confidentiality Club" protocol
contained in Annexure F to the Original Side Rules, it was submitted
that neither the parties themselves, nor their employees or officers,
could be part of the Confidentiality Club.
21. The Court, during the proceedings on 27th March, 2019,
specifically queried, of the learned Counsel appearing for the
plaintiffs, as to how such an arrangement could sustain, as the
advocate would have to act on the basis of instructions from his client,
which would necessarily require the advocate to disclose, to the client,
the contents or the nature of the documents cited by the opposite
party. In response, the plaintiffs merely placed reliance on the earlier
decision of this Court in Telefonaktiebolaget LM Ericsson (Publ) v.
Xiaomi Technology 4 (referred to, hereinafter, as Ericsson v Xiaomi).
Dealing with the submission, this Court observed, at the outset, thus
(in para 21 of the report):
"A civil lis, governed by the CPC, requires each party thereto
to have notice of the case of other, which is required to be
met and the CPC does not permit any surprises. The trial and
adjudication of a civil lis is regulated by pleadings in
evidence, documentaries or otherwise, beyond pleadings is
not permitted. The documents of each other are required to
be admitted and/or denied and issues on which adjudication is
required to be done, struck. No evidence, even if led, beyond
4
2017 SCC OnLine Del 11069
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pleadings is permitted to be led. Thus, the proceedings
require complete disclosure."
(Emphasis supplied)
22. No civil suit, be it for enforcement of rights relating to
intellectual property, or any other right, can claim innocence to the
rigour and discipline of the CPC and the Specific Relief Act, 1963. In
commercial suits, the provisions of the CPC stand, to some extent,
modified or amended by the Commercial Courts Act, 2015. The
Original Side Rules of this Court have been framed in exercise of the
power conferred by Section 129 of the CPC, which empowers all high
Courts, notwithstanding anything contained in the CPC, to make rules
to regulate its own procedure in the exercise of its original civil
jurisdiction, as it thinks fit. The non obstante clause, with which
Section 129 begins, indicates that the Original Side Rules, framed by
the High Court in exercise of the power conferred by the said
provision would abide, irrespective of anything to the contrary, that
may be found in the CPC. In a sense, therefore, the Original Side
Rules of the High Court would prevail over the procedural
dispensations contained in the CPC, to the extent of any overlap. Rule
17 in Chapter VII of the Original Side Rules, undoubtedly, marks
such a departure from the regime of complete transparency, envisaged
by the CPC. It permits parties to a commercial suit, who wish to rely
on documents or information which are confidential, to request the
Court to constitute a Confidentiality Club, "so as to allow limited
access to such documents/information". The moot question that arises
is whether such "limited access" could be so limited as to deny access
to the opposite party, as well as its employees and officials, and limit
access only to its nominated "ex-house" counsel and experts.
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23. Having noted, as above, the fact that "surprises" were foreign to
the procedural dispensation contained in the CPC, this Court, in
Transformative Learning Solutions2, went on to record the
observations, in para-22 of the report, reproduced in para 19 supra, on
which Mr. Pravin Anand places reliance. What is observed in this
paragraph? Has this Court, in the said paragraph, approved the
Constitution of Confidentiality Clubs, in which one party, as well as
its officials and employees, are kept completely aloof from the
documents and material relied upon by the opposite party in the
proceedings before the Court? No such inference can, in my view, be
drawn, from a reading of para 22 of the decision in Transformative
Learning Solutions2. This Court has, in the said paragraph, merely
observed that, despite the transparency contemplated by the
provisions of the CPC, "in respect of a certain class of suits", it has
been felt that documents filed "should not be permitted to go in public
domain, as happens on filing in the Court". This obviously means that
public access, to the documents filed in the litigation, may not be
allowed, in respect of a certain class of suits. This sentence,
obviously, does not concern access to the documents/material, by the
opposite party. The paragraph goes on to observe that, in such cases,
provision has been made for keeping the documents in a sealed cover,
"for eyes only of a limited number of persons who also
agree/undertake not to divert contents thereof to others". This,
essentially, is the raison d'etre of the Confidentiality Club regime.
Again, the question that arises is, as to how limited, this "limited
number of persons" should be. Para 22 goes on to state that, in some
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cases, as in cases of patent infringement, "the need for a party to a lis
to see the documents may not arise", as the opinion, with respect
thereto, is to be given only by the expert. In my opinion, however, it
would be erroneous, on the part of this Court, to read, into this
observation, anything more than what it says. As this Court has
correctly observed, there may be documents, relied upon by one party,
on which expert opinion is provided, which may not be need to be
seen by the opposite party, as an expert has already opined on the
document. That, however, would be an issue which arises on a
document-to-document basis, based on the document and the contents
of the report of the expert. Whether either of the parties, to a
litigation, needs, or does not need, to see a particular document,
would be a decision which essentially rests with the party itself. Can
InterDigital, simply put, assert that Xiaomi does not need to see a
document on which InterDigital places reliance, to contest the case
initiated by it against Xiaomi? The answer, in my view, has
unexceptionably to be in the negative. It would be stretching the
observation of this Court, in Transformative Learning Solutions2 to
breaking point, if one were to read, into it, judicial affirmation of the
right of a party to a litigation to require the Court to permit him to
withhold, from the opposite party as well as all its officials and
employees, documents and material on which he seeks to rely.
24. Far more reflective of the view of this Court, in my opinion, are
paras 23 and 24 of the decision in Transformative Learning
Solutions2, which reads thus:
"23. However in the present suit to restrain defendants from
using confidential information of plaintiffs and for ancillary
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reliefs, the defendants are permitted to defend the suit inter
alia on the grounds, that the plaintiffs have no copyright in
the customers list and even if the plaintiffs have a copyright,
the defendants have not infringed the same. I may mention
that the suit has been filed as a commercial suit and not as an
ordinary suit. This suit, under Section 2(c) of the Commercial
Courts Act, 2015, can qualify as a commercial suit only if
arising out of intellectual property rights relating to trade
marks, copyright, patent, design etc. and not if arising out of
property rights or a tort. In such a suit, to ask the defendants
to contest the suit without knowing the customers list in which
copyright is claimed and without knowing what they are
sought to be restrained from doing, would not only be unfair
to the defendants but also would be contrary to procedure
prescribed by law. The Advocates of defendants and experts,
even if any possible in such scenario, cannot be expected to
make pleadings, to meet the case of plaintiffs. The non
disclosure to the defendant sought by the plaintiffs, in my
opinion deprives the defendant of opportunity of being heard
and the right to defend the suit.
24. As far as Telefonaktiebolaget LM Ericsson (PUBL)
supra is concerned, the counsel for defendant no. 2 is correct
in his contention that Annexure-F supra is only illustrative
and else there is no absolute bar to a party/litigant being a
member of a Confidentiality Club. This is also clear from
bare language of Rule 17 of Chapter VII supra. Moreover,
here, it is the pleaded case of plaintiffs that defendants are
privy to the customers list of the plaintiffs. In such
circumstances, the reluctance of the plaintiffs is inexplicable
and intended only to have a walkover and obtain an absolute
but vague order/decree of injunction against defendants, to
stop the defendants from competing with the plaintiffs. This is
impermissible in law."
(Emphasis supplied)
These observations are clear and categorical, and the correct position
in law, in my opinion, could not have been better expressed. I express
my complete and respectful concurrence therewith.
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25. In Transformative Learning Solution2, the plaintiff was
seeking to withhold, from the defendant, the list of customers in
respect of which copyright was claimed. This, opined the Court,
effectively resulted in the defendant being kept unaware of what it
was sought to be restrained from doing, which was impermissible.
The position, in the present case, is a trifle more nuanced, but is
effectively equally damaging, insofar as the defendant is concerned.
The plaintiff, InterDigital, in the present case, also seeks an
injunction, against the defendant, from infringing its patents. It is true
that, unlike Transformative Learning Solutions2, the plaintiff does
not seek to withhold, from the defendant, the patents, in respect of
which infringement is alleged, and restraint, in respect whereof, is
sought. Patent infringement, in the case of SEPs has, however, a
unique feature. A holder of an SEP is not entitled, of right, to seek
injunction against infringement of its SEP, merely on making out a
case of such infringement. The patent holder is also required to
establish that it is FRAND compliant. This, essentially, means that
every holder of an SEP is required, in law, to agree to the licensing of
its SEP to willing licensees. "Willing licensees" are those who are
willing to take a license, to exploit the SEP, on payment of royalty, to
the patent holder, on fair, reasonable and non-discriminatory
(FRAND) terms. It is for this reason that, even in the present case, the
plaintiff has not sought an absolute injunction, against the defendant,
from infringing its SEPs. An alternative prayer, for a direction to the
defendant to obtain a license, from the plaintiff, for using its SEPs at
FRAND rates, has also been made. Indeed, as is acknowledged by
Mr. Pravin Anand, such a prayer has necessarily to be made in every
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application seeking injunction against exploitation of an SEP, given
the global ramifications and implications that such exploitation has.
In such a scenario, disputes and differences, regarding the FRAND
rates which may legitimately be charged by the SEP holder, is nearly
inevitable. Such a dispute has, predictably, arisen in the present case,
as it is the plaintiffs' assertion that, though the defendant has agreed to
take a license, for exploitation of the suit SEPs of the plaintiffs, the
rate offered by the defendant is not FRAND. The plaintiffs, therefore,
seek, inter alia, determination of a FRAND rate, as a viable
alternative, for the defendants to avoid an absolute injunction.
26. The mechanics of FRAND rate fixation litigation necessarily
involve reliance, by the patent holder, on the royalty rates at which it
has licensed its SEPs to other licensees. An integral part of the
resolution of the dispute, therefore, is the estimation of whether the
rates at which the plaintiff has licensed its SEPs, to other licensees is,
or is not, FRAND. For this, a holistic appreciation of the license
agreements, between the plaintiff and other licensees, is absolutely
essential. To say that this exercise can be meaningfully undertaken by
limiting access to such agreements and the contents thereof, to the
Court, the plaintiff, and advocates and experts of the defendant,
keeping the defendant, as well as its employees and associates,
entirely "out of the loop" as it were is, in my view, unthinkable. (That
some Courts, in foreign jurisdictions, have so thought, is a different
matter altogether.)
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27. As has already been noted hereinabove, it is these license
agreements, that the plaintiff desires to include in the "inner tier", to
be kept away from the eyes of the defendants, as well as all their
officers and employees. To me, the very suggestion is completely
antithetical to, and destructive of, the most fundamental notions of
natural justice and fair play. It is obvious that, in contesting the
prayer, of the plaintiff, for a direction, to the defendant, to take a
license from the plaintiff at rates similar, or comparable, to those at
which licences have been granted, by the plaintiff, to other licensees,
the defendant would be entitled to contend that such rates are not
FRAND, i.e., that they are not fair, reasonable, or non-discriminatory.
For this, it is obvious that the defendants would have to be made privy
to the license agreements with other licensees. Without knowing the
identity of the licensee, the particulars of the license agreement, or its
covenants, it defeats comprehension as to how the defendants can be
expected to make any submission, regarding whether the rate, at
which such license has been granted, is, or is not, FRAND.
28. I do not deem it necessary to venture into an imaginative
excursion, regarding all exigencies, which may arise, requiring the
defendant to know the covenants of the agreements with other
licensees. One circumstance, however, immediately comes to mind.
FRAND terms are required to be, per definition, "non-
discriminatory". Whether, in extending a particular royalty rate to a
licensee, for exploitation of its SEP, the plaintiff has discriminated,
favourably or otherwise, qua that particular licensee, becomes,
therefore, a relevant consideration, in assessing whether the rate
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extended to the licensee is, or is not, FRAND. Mr. Sai Krishna
Rajagopal has, in fact, pointed out that, in order to assess whether the
royalty rate, at which InterDigital has licensed its SEPs to any third
party, is, or is not, FRAND, it would be necessary for Xiaomi to know
the identity of the licensee, the exact scope of the license granted to
the licensee, the area over which the licenses granted, and all
considerations, on the basis of which the royalty rate has been worked
out in the license. Ex facie, the submission merits acceptance; indeed,
Mr. Pravin Anand did not seriously contest this position. Mr. Anand's
submission, in response, is that knowledge of, and access to, the third-
party license agreements, by "ex-house" advocates, and experts
nominated by Xiaomi, would suffice for this purpose, and disclosure
to Xiaomi, its officers and personnel, is not necessary. The
submission, in my view, is far too presumptive, to merit consideration.
These are matters having huge commercial implications, and
worldwide markets, and to expect a party to meaningfully present its
case, without being shown the "comparable license agreements",
merely allowing its counsel and experts to work out the arguments
without instructions is, in my view, bordering on the preposterous. At
the very least, the first question that would arise would be whether, in
fact, such "license agreements" are "comparable". It is always open
to the defendant to argue that they are not. How is he expected to do
so, without being made aware of the license agreements themselves?
The very concept of "comparison" involves a juxtaposition of the
circumstances applicable to the defendants vis-à-vis the circumstances
in which such other licensee was placed. Who, other than the
defendant, would be best aware of its circumstances, or whether its
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case is comparable to the case of another licensee, on whom the
plaintiff places reliance? How, then, is the defendant expected to
instruct its advocate, regarding whether the agreement, with such
other licensee is, or is not, "comparable"? The damage that would
ensue, to the fundamental principles of natural justice, fair play and
due process, were the defendant to be excluded access from such
allegedly "comparable" license agreements, is serious and irreparable.
Any procedural arrangement, which is fraught with the possibility of
such damage has, in my view, to be unequivocally jettisoned.
29. In this context, the justification, for "Tier 2", as contained in
para-11 of the rejoinder filed by the plaintiff, is revealing. It reads
thus:
"With respect to Tier 2, there is a pressing need to ensure that
internal representatives and other employees of the parties do
not have access to documents which are marked and
designated as LEO Confidential Information (particularly
third-party patent license agreements). This is because such
documents contain sensitive commercial information,
including trade secrets concerning the Plaintiffs and their
licensees, such that disclosure of such information is strictly
restricted in the license agreements. If such information is
placed in the hands of other parties such as the Defendants,
and if it is misused or further disclosed thereafter, it could
cause such grave prejudice to the commercial interests of the
Plaintiffs, as well as the third party entities, who in many
instances are competitors to the Defendants. In the case that
such confidential and sensitive information is disclosed to the
Defendants, or is disclosed to other third parties thereafter,
then it will cause grave prejudice not just to the Plaintiffs, but
their third party licensees as well, since it will be very
difficult for the Plaintiffs to be able to negotiate future licence
agreements with licensees who cannot be assured that the
confidentiality obligations with respect to such negotiations
can be complied with. In such a situation, any order from this
Hon'ble Court passed later cannot reverse the damage."
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In making the above averments, InterDigital seems to have omitted,
from consideration, two essential factors; firstly, that litigation is not a
one-way street and, secondly, that InterDigital has invited Xiaomi into
the arena, and not vice versa. InterDigital has waxed eloquent on the
"irreversible damage" that would result, were confidential data,
contained in the license agreements with third parties, to be disclosed
to Xiaomi. The argument proceeds, however, completely oblivious of
the damage that would result to Xiaomi, were it to be required to
defend the action brought by InterDigital, without being shown such
third-party license agreements.
30. How does the situation pan out? InterDigital is willing to
license their SEPs to Xiaomi at FRAND rates. Xiaomi offers a rate.
InterDigital rejects it as not FRAND. Xiaomi queries, then, as to the
rate which, according to InterDigital, is FRAND. InterDigital claims
that the rates at which it has licensed its SEPs to other third-party
licensees, are FRAND, i.e. that they are fair, reasonable and non-
discriminatory. InterDigital calls upon Xiaomi to agree to such rates,
without Xiaomi being made privy to the license agreements with the
third parties.
31. This, in my view, is completely unreasonable. It is not as
though Xiaomi is unwilling to take licenses from InterDigital.
InterDigital relies on the third-party license agreements for
determination of the rate at which licences should be granted to
Xiaomi. Xiaomi has the option of accepting the rates quoted by
InterDigital, as reflected in the third-party license agreements.
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Equally, Xiaomi has the option of rejecting such rates, should they
feel that they are not FRAND. In such latter eventuality, if
InterDigital seeks to rely on the rates at which licences had been
granted to other parties, the circumstances in which the said licences
were granted have, in my view, necessarily to be made known to
Xiaomi - and not merely to their attorneys and experts, with a
proscription from disclosing the material to Xiaomi, its officers and
employees - in order for Xiaomi to take an informed decision as to
whether such licences are "comparable", the rates at which such
licences had been granted are, in fact, FRAND, and whether a
comparison of such licences, which the rates offered by Xiaomi,
reveals the rates offered by Xiaomi not to be FRAND.
32. While, therefore, not intending, in any manner, to downplay the
argument, of Mr. Pravin Anand, regarding the possible damage that
would ensue, were confidential covenants, contained in the
agreements with third-party licensees to be disclosed to Xiaomi, that,
in my view, cannot be sufficient as a ground to require Xiaomi to
defend the suit, without being made aware of such agreements.
33. I may clarify, even at this juncture that, in penning this
judgement, I am only addressing the prayer, of InterDigital, for
constitution of a two-tier Confidentiality Club, consisting of "inner
tier" and "outer tier" documents. Permitting the constitution of such a
Club would amount to granting blanket permission, to InterDigital, to
keep certain documents away from Xiaomi, its officers and its
employees. In holding that this is not permissible, I do not intend to
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come in the way of any inter se arrangement, between InterDigital and
Xiaomi, regarding such "restricted access", qua any particular
documents or information, or even of the constitution of the
Confidentiality Club consisting of two tiers, as proposed by
InterDigital. If the parties are able to agree, or to arrive at a level
playing field in that regard, this judgement shall not come in the way
of their doing so.
34. Equally, if Xiaomi is agreeable, in respect of any particular
documents or material on which InterDigital chooses to rely, to such
documents or materials being disclosed only to their advocates and
experts, and not to Xiaomi, its officers or employees, this judgement
would not come in the way of such an arrangement. It is also not
inconceivable that some kind of reciprocal understanding is arrived at,
between the parties. This judgement does not intend to deal with such
situations. I am concerned only with the issue of whether such an
arrangement can, against its wishes, be imposed on Xiaomi.
35. At this point, I may also deal with Annexure-F to the Original
Side Rules, on which Mr. Anand placed reliance. As is apparent from
a reading of Rule 17 in Chapter VII of the said Rules, Annexure F is
cited as "an illustrative structure/protocol of the Confidentiality
Club", which may be "appropriately moulded" by the Court, based
upon the facts and circumstances of each case. Annexure F reads
thus:
"ANNEXURE F
CHAPTER VII RULE 17
PROTOCOL OF CONFIDENTIALITY CLUB
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Procedure to be followed in dealing with
confidential documents/ information
Upon hearing of an application, the Court may allow constitution
of a Confidentiality Club in the following manner:-
a) All documents/ information considered as confidential
("Confidential Documents/ Information") by the Court shall be
permitted to be filed in a sealed cover to kept in the safe custody of
Registrar General.
b) Each party shall nominate not more than three Advocates,
who are not and have not been in-house lawyers of either party,
and not more than two external experts, who shall constitute the
Confidentiality Club. Members of the Confidentiality Club alone
shall be entitled to inspect the Confidential Documents/
Information.
c) Members of the Confidentiality Club shall be allowed to
inspect the Confidential Documents/ Information before the
Registrar General, without making copies thereof. After the
inspection, the Confidential Documents/ Information shall be
resealed and kept in the custody of the Registrar General.
d) Members of the Confidentiality Club shall not make copies
of, or disclose, or publish the contents of, the Confidential
Documents/ Information to anyone else in any manner or by any
means, or in any other legal proceedings and shall be bound by the
orders of the Court in this behalf.
e) During recordal of evidence with respect to the
Confidential Documents/ Information, only members of the
Confidentiality Club shall be allowed to remain present.
f) During proceedings of the Court, when the Confidential
Documents/ Information are being looked at or their contents
discussed, only members of the Confidentiality Club shall be
permitted to be present.
g) The Court may in its discretion and in an appropriate case,
permit copies of the Confidential Documents to be given to the
opposite party after redacting confidential information therefrom, if
such redaction be possible and not otherwise.
h) Any evidence by way of affidavit or witness statement
containing confidential information derived from the Confidential
Documents/ Information shall be kept in a sealed cover with the
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Registrar General and would be accessible only to the members of
the Confidentiality Club. However, a party filing such evidence by
way of affidavit shall, if so directed by the Court, give to the
opposite party, a copy of such affidavit after redacting therefrom
the confidential information, if such redaction is possible and not
otherwise.
i) The Confidential Documents/ Information shall not be
available for inspection after disposal of the matter, except to the
Party producing the same.
j) In cases where the Confidentiality Club is constituted or
documents are directed to be kept confidential, the Court may
consider extending the time for filing of pleadings. However, the
same shall be within the overall limits prescribed by the applicable
provisions."
Clause (b) of the "Protocol of Confidentiality Club", as stipulated in
Annexure F, clearly excludes the parties, as well as their officials and
representatives, from the Club. Membership of the Confidentiality
Club, constituted in the manner envisaged by Annexure F is, clearly,
limited to three advocates and not more than two external experts.
Mr. Anand submits, relying on this Annexure, that the parties, and
their officials and representatives, may legitimately be excluded from
the Confidentiality Club constituted by the Court.
36. Para 24 of Transformative Learning Solutions1, to an extent,
answers the submission, by observing that "Annexure F... is only
illustrative and hence there is no absolute bar to a party/litigant being
a member of a Confidentiality Club". That apart, Annexure F is only
in the nature of the suggested protocol for the Confidentiality Club,
and its covenants cannot be treated as declaratory of the statutory
position. Constitution of the Confidentiality Club, in the manner
conceptualised by Annexure F may not be inconceivable, provided the
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parties agree to such constitution. There may be any number of
reasons why one party may agree to the suggestion, of the other, for
the exclusion of its officials and employees from the Confidentiality
Club. As Mr. Anand himself points out, a reciprocal arrangement
may exist or emerge, between the parties. It is not impossible to
visualise a situation in which both parties desire to keep documents,
on which they rely, away from the eyes of the opposite party. In such
a situation, they may well agree, mutually, that the Confidentiality
Club would not include the parties, or their officials and employees,
and would be limited to their advocates and experts. Such a
Confidentiality Club would be in accordance with the protocol
suggested in Annexure F to the Original Side Rules.
37. In the present case, however, Xiaomi is not being as
accommodative. Mr. Anand sought to submit that the arrangement
suggested by him would enure to the benefit of Xiaomi as well, as
Xiaomi could also take advantage of such a Confidentiality Club, in
respect of documents which Xiaomi did not desire to be seen by
InterDigital. That, however, is in the realm of conjecture. If
InterDigital can come to terms with Xiaomi, and they agree, ad idem,
to the constitution of such a Confidentiality Club, in which "inner
tier" documents would remain away from the prying eyes of
InterDigital and Xiaomi, as well as their officers and employees, this
order shall not stand in their way. As of today, however, Xiaomi is
not agreeable to such an arrangement. Xiaomi submits, categorically
and unequivocally, that it cannot concede to documents, on which
InterDigital relies, being kept away from its officers and employees,
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and disclosed only to its advocates and experts. The objection of
Xiaomi, in my view, is legally sound, and merits acceptance.
38. The client-lawyer relationship, in Indian law, has its own
distinct incidents. One may reproduce, to advantage, the following
passages, from the judgement of the Supreme Court in Himalayan
Coop. Group Housing Society v. Balwan Singh 5, which place the
legal position beyond any pale of doubt:
"22. Apart from the above, in our view lawyers are
perceived to be their client's agents. The law of agency may
not strictly apply to the client-lawyer's relationship as lawyers
or agents, lawyers have certain authority and certain duties.
Because lawyers are also fiduciaries, their duties will
sometimes be more demanding than those imposed on other
agents. The authority-agency status affords the lawyers to act
for the client on the subject-matter of the retainer. One of the
most basic principles of the lawyer-client relationship is that
lawyers owe fiduciary duties to their clients. As part of those
duties, lawyers assume all the traditional duties that agents
owe to their principals and, thus, have to respect the client's
autonomy to make decisions at a minimum, as to the
objectives of the representation. Thus, according to generally
accepted notions of professional responsibility, lawyers
should follow the client's instructions rather than substitute
their judgment for that of the client. The law is now well
settled that a lawyer must be specifically authorised to settle
and compromise a claim, that merely on the basis of his
employment he has no implied or ostensible authority to bind
his client to a compromise/settlement. To put it alternatively
that a lawyer by virtue of retention, has the authority to
choose the means for achieving the client's legal goal, while
the client has the right to decide on what the goal will be. If
the decision in question falls within those that clearly belong
to the client, the lawyer's conduct in failing to consult the
client or in making the decision for the client, is more likely
to constitute ineffective assistance of counsel.
5
(2015) 7 SCC 373
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23. The Bar Council of India Rules, 1975 (for short "the
BCI Rules"), in Part VI Chapter II provide for the "Standards
of Professional Conduct and Etiquette" to be observed by all
the advocates under the Advocates Act, 1961 (for short "the
1961 Act"). In the Preamble to Chapter II, the BCI Rules
provide as follows:
"An advocate shall, at all times, comport himself in a
manner befitting his status as an officer of the Court, a
privileged member of the community, and a
gentleman, bearing in mind that what may be lawful
and moral for a person who is not a member of the
Bar, or for a member of the Bar in his non-professional
capacity may still be improper for an
advocate. Without prejudice to the generality of the
foregoing obligation, an advocate shall fearlessly
uphold the interests of his client and in his conduct
conform to the rules hereinafter mentioned both in
letter and in spirit. The rules hereinafter mentioned
contain canons of conduct and etiquette adopted as
general guides; yet the specific mention thereof shall
not be construed as a denial of the existence of others
equally imperative though not specifically mentioned."
(Emphasis supplied)
24. The Preamble makes it imperative that an advocate has
to conduct himself and his duties in an extremely responsible
manner. They must bear in mind that what may be
appropriate and lawful for a person who is not a member of
the Bar, or for a member of the Bar in his non-professional
capacity, may be improper for an advocate in his professional
capacity.
25. Section II of the said Chapter II provides for duties of
an advocate towards his client. Rules 15 and 19 of the BCI
Rules, have relevance to the subject-matter and therefore,
they are extracted below:
"15. It shall be the duty of an advocate fearlessly to
uphold the interests of his client by all fair and
honourable means without regard to any unpleasant
consequences to himself or any other. He shall defend
a person accused of a crime regardless of his personal
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opinion as to the guilt of the accused, bearing in mind
that his loyalty is to the law which requires that no
man should be convicted without adequate evidence.
***
19. An advocate shall not act on the instructions of
any person other than his client or his authorised
agent."
26. While Rule 15 mandates that the advocate must uphold
the interest of his clients by fair and honourable means
without regard to any unpleasant consequences to himself or
any other. Rule 19 prescribes that an advocate shall only act
on the instructions of his client or his authorised agent.
Further, the BCI Rules in Chapter I of the said Section II
provide that the Senior Advocates in the matter of their
practice of the profession of law mentioned in Section 30 of
the 1961 Act would be subject to certain restrictions. One of
such restrictions contained in clause (cc) reads as under:
"(cc) A Senior Advocate shall, however, be free to
make concessions or give undertaking in the course of
arguments on behalf of his clients on instructions from
the junior advocate."
27. Further, the "Code of Ethics" prescribed by the Bar
Council of India, in recognition of the evolution in
professional and ethical standards within the legal
community, provides for certain rules which contain canons
of conduct and etiquette which ought to serve as general
guide to the practice and profession. Chapter III of the said
Code provides for an "Advocate's duty to the client". Rule 26
thereunder mandates that an "advocate shall not make any
compromise or concession without the proper and specific
instructions of his/her client". It is pertinent to notice that an
advocate under the Code expressly includes a group of
advocates and a law firm whose partner or associate acts for
the client.
28. Therefore, the BCI Rules make it necessary that
despite the specific legal stream of practice, seniority at the
Bar or designation of an advocate as a Senior Advocate, the
ethical duty and the professional standards insofar as making
concessions before the Court remain the same. It is expected
of the lawyers to obtain necessary instructions from the
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clients or the authorised agent before making any
concession/statement before the court for and on behalf of the
client.
*****
30. The Privy Council in Sourendra Nath
Mitra v. Tarubala Dasi [(1929-30) 57 IA 133 : (1930) 31 LW
803 : AIR 1930 PC 158], has made the following two
observations which hold relevance to the present discussion:
(IA pp. 140-41)
"Two observations may be added. First, the implied
authority of counsel is not an appendage of office, a
dignity added by the courts to the status of barrister or
advocate at law. It is implied in the interests of the
client, to give the fullest beneficial effect to his
employment of the advocate. Secondly, the implied
authority can always be countermanded by the express
directions of the client. No advocate has actual
authority to settle a case against the express
instructions of his client. If he considers such express
instructions contrary to the interests of his client, his
remedy is to return his brief."
(See: Jamilabai Abdul Kadar v. Shankarlal Gulabchand,
(1975) 2 SCC 609 and Svenska Handelsbanken v. Indian
Charge Chrome Ltd, (1994) 2 SCC 155)
31. Therefore, it is the solemn duty of an advocate not to
transgress the authority conferred on him by the client. It is
always better to seek appropriate instructions from the client
or his authorised agent before making any concession which
may, directly or remotely, affect the rightful legal right of the
client. The advocate represents the client before the court and
conducts proceedings on behalf of the client. He is the only
link between the court and the client. Therefore his
responsibility is onerous. He is expected to follow the
instructions of his client rather than substitute his judgment."
(Italics in original; underscoring supplied)
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39. The duty of advocates to act, at all times, under instructions
from their clients, was also iterated by the Supreme Court in An
Advocate v. B. B. Haradara 6 and Om Prakash v. Suresh Kumar 7.
40. In my view, SEP infringement litigation cannot be treated as a
category sui generis, to which the principles enunciated in these
decisions, as well as the Bar Council of India Rules, would not apply.
41. I proceed to examine, now, chronologically, the other decisions
of this Court on which Mr. Pravin Anand sought to place reliance.
42. MVF 3 APS v. M. Sivasamy 8 was the judgement of a learned
Single Judge of this Court, passed by way of implementation of the
directions contained in the judgement, of the Division Bench of this
Court in Sivasamy v Vestergaard1. These decisions cannot be said to
be of much assistance, in resolving the controversy before me.
Sivasamy v Vestergaard1 involved a challenge to an order, of a
learned Single Judge of this Court, directing discovery and production
of documents, under Rules 12 and 14 of Order XI of the CPC. The
Division Bench went, in great detail, into the said provisions and,
ultimately, set aside the order of the learned Single Judge and
remanded the matter to the learned Single Judge to devise a
procedure, to ensure that information, documents, etc., of which
production was sought by the plaintiff, and which pertained to the
products of the defendants, could be kept confidential so as to avoid
1989 (1) ARC 72 (SC)
2020 SCC OnLine SC 100
193 (2012) DLT 352 : 2012 (52) PTC 552 (Del)
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prejudice to the defendants. In essence, therefore, the Division Bench
remanded the matter to the learned Single Judge to constitute a
Confidentiality Club. Before the learned Single Judge, there was no
dispute, relating to the constitution of the Confidentiality Club.
Indeed, a reading of the decision does not even disclose the
membership of the said Club. The learned Single Judge only
proceeded to work out the mechanics, by which the Confidentiality
Club would operate. This decision, therefore, is of no assistance, to
the case at hand. Neither of these decisions addresses the issue of
whether the membership of the Confidentiality Club would be
restricted to the advocates and experts, appointed by the parties,
though there is a passing reference to the constitution of such
Confidentiality Clubs in the UK. These judgements do not indicate
that the stand, which Mr. Sai Krishna Rajagopal has adopted in the
present case, was taken by any of the learned Counsel, or that the
merits of such a stand was deliberated upon.
43. In Sanofi Winthorp Industrie v. Kirti B. Maheshwari 9, a short
order of a learned Single Judge of this Court, a Confidentiality Club
was set up, in terms of para 4 of the application before the learned
Single Judge. The constitution of the Confidentiality Club, as set out
in para 4 of the application is not, however, apparent from the order,
clearly because there was no dispute, between the parties, regarding
the constitution of the Confidentiality Club. This Court merely
allowed the parties to set up the Confidentiality Club, as indicated in
para 4 of the application before it, and directed each of the parties to
Order dated 7th August, 2014, of the learned Single Judge in CS (OS) 2265/2014
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suggest the names of three advocates, who would be entitled to see the
documents, which were in sealed cover. The advocates who were
permitted to be privy to the documents were also directed to abide by
the conditions contained in paras 4(ii) and (iii) of the application
before the learned Single Judge. Interestingly, the order reveals that
the learned Counsel for the defendants agreed to the constitution of
such a Confidentiality Club, subject to the defendants being also
entitled to the same arrangement. The plaintiffs did not object. As
such, it is clear that this order was passed by consent between the
parties, without any contest regarding the nature of the constitution of
the Confidentiality Club. No principle of law is enunciated in the
order which cannot, therefore, assist Mr. Pravin Anand.
44. In Telefonaktiebolaget LM Ericsson (Publ) v. Lava
International Ltd 10, the plaintiff Ericsson filed an application, seeking
constitution of a Confidentiality Club. The dispute, in that case, was
substantially similar to that in the present. Ericsson sought an
injunction against infringement of various SEPs held by it or, in the
alternative, for a direction to the defendant Lava International Ltd
(hereinafter referred to as "Lava") to take a license, from Ericsson, at
the rates offered by Ericsson which, according to it, were FRAND.
Ericsson sought to rely on various licensing agreements with third
parties, but contended that they contained, apart from the licensing
rates, business sensitive information which was confidential in nature.
While contesting the claim of Ericsson on merits, Lava also opposed
the constitution of the Confidentiality Club in the terms proposed by
2016 SCC OnLine Del 1354
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Ericsson, stating that the said terms were onerous, and impeded the
defendant from being able to fairly present its case. Apart from a bald
submission to this effect, the judgement of the learned Single Judge
does not disclose any detailed arguments having been advanced by
Lava, or any contention, to the effect that exclusion of the parties, and
their officials and employees, from the Confidentiality Club, would
not be justified, given the fact that advocates have always to act on the
instructions of their clients. No reference, to the judgements to this
effect, to which allusion has already been made hereinabove is, either,
to be found in the judgement. The learned Single Judge ultimately,
constituted the Confidentiality Club, in the manner proposed by
Ericsson, "after having gone through the earlier arguments and nature
of the present case and circumstances in hand". This decision, too,
therefore, does not really address any submissions similar to those
advanced by Mr. Rajagopal before me.
45. More significantly, this order was, apparently, carried in appeal
to the Supreme Court by way of SLP (C) 7595/2016, which was
disposed of in the following terms:
"At the time of hearing of the petition, it has been submitted
by the learned senior counsel appearing for the respondent-
plaintiff that the respondent is willing, upon being directed by
the Court, to give copies of the documents to the petitioner-
defendant by redacting the confidential information including
the name of the parties. However, the rates will not be
redacted.
In view of the above statement made by respondent, the
learned senior counsel appearing for the petitioner seeks
permission to withdraw this petition.
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In pursuance of the above statement, the respondent is
directed to abide by the above statement at the time of trial.
The documents shall be given by the respondent in the course
of the day to the present petitioner. Cross-examination shall
proceed further on Monday, the 4th April, 2016 in the High
Court.
The special leave petition is, accordingly, disposed of as
withdrawn."
The matter regarding constitution of the Confidentiality Club was,
therefore, ultimately compromised, in these proceedings, with
Ericsson agreeing to provide copies of the confidential license
agreements to Lava, after redacting confidential information
therefrom, and Lava acceding to the proposal. No such offer has been
made by InterDigital in the present case. This decision cannot,
therefore, assist in resolving the controversy before me. Nor, in view
of the order passed by the Supreme Court, can it be said that the
Supreme Court approved the constitution of the Confidentiality Club,
as effected by the learned Single Judge. In fact, once the protocol of
the Confidentiality Club, as set up by the learned Single Judge, stood
modified by the Supreme Court, the precedential value of the
judgement of the learned Single Judge obviously stands eroded.
46. Dolby International AB v. GDN Enterprises Private Limited 11,
though a short order, undoubtedly supports the case set up by Mr.
Pravin Anand. The plaintiff Dolby International (hereinafter referred
to as "Dolby") claimed confidentiality in respect of the licensing rates,
Order dated 4th August, 2017, by a learned Single Judge in IA 6911/2017 in CS (Comm)
1425/2016
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vis-à-vis third parties. The defendant opposed the request, stating
that, in order for the defendant to be able to marshal an effective
defence, it was required to be disclosed the name of the licensee, the
date of the patent license agreement and the license of the patented
product as well as the licensing rate. For this purpose, the defendant
sought the inclusion of one of its representatives in the Confidentiality
Club, other than lawyers and experts. Relying on, inter alia, the
earlier order of this Court in MVF 3 APS8, the learned Single Judge
held that a consistent view had been taken, by this Court, allowing
only lawyers and external experts as members of the Confidentiality
Club. He further observed that the reasons for such an arrangement
were already set out in the earlier decisions of this Court, and did not
require recapitulation. Further observing that "no other Indian
decision contrary to the decision in MVF 3 APS8 and Roche Products
(India) Pvt Ltd v. Drugs Controller General of India 12 had been
cited before him, the learned Single Judge held that "the nature of
litigation" in the case before him was "such that access to confidential
documents in question by a representative of contesting defendants is
not warranted". I would briefly advert to this decision, and its effect
on the view that I propose to take in this application, later in the
course of this judgement.
47. Ericsson v. Xiaomi4, too, saw the establishment of a
Confidentiality Club along the lines advocated by Mr. Pravin Anand,
in that the parties, as well as their officials and representatives, were
excluded therefrom. The judgements cited by Mr. Anand before me
2016 SCC OnLine Del 2358
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were also cited before the learned Single Judge in the said case. As
against this, Mr. Rajagopal, who appeared for the defendant in the
said case as well, relied on Himalayan Coop. Group Housing
Society5 to contend that, as lawyers act on the instructions of their
clients, they would not be in a position to obtain such instructions, qua
the allegedly similarly placed licensees, if the license agreements were
not disclosed to their clients. The learned Single Judge, however, did
not return any finding on the said submission, but chose to constitute
the Confidentiality Club excluding the defendant, as well as its
officers and employees, on the ground that similar Confidentiality
Clubs stood constituted in earlier judgements of this Court, to which
reference has already been made hereinabove. Additionally, the
learned Single Judge relied on Section 103(3) of the Patents Act
which, with greatest respect to the learned Single Judge, may not
apply as the provision pertains to cases where the disclosure of a
document, regarding any invention, or the evidence of the test or trial
thereof, is prejudicial to public interest in the opinion of the Central
Government. In such circumstances, Section 103(3) permits
disclosure of the documents regarding the invention, or the evidence
of the test of trial thereof, confidentially to the advocate of the other
party, or to a mutually agreed independent expert.
48. There is, however, no gainsaying the fact that a specific
submission had been advanced, by the defendant Xiaomi, before the
learned Single Judge in Ericsson v. Xiaomi4, and, impliedly, stood
rejected. It is, however, equally apparent that the judgement of the
learned Single Judge does not return any specific findings on the
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applicability, or otherwise, of the decision in Himalayan Coop.
Group Housing Society5.
49. The most recent decision, of this Court, on which Mr. Pravin
Anand placed reliance, was the judgement of a learned Single Judge
in Genentech Inc. v. Drugs Controller General of India 13. The third
defendant in this case (whose identity is not immediately apparent
from the judgement) sought to file certain documents in a sealed
cover. In the said application, a learned Single Judge of this Court
passed an order on 12th February, 2020, appointing an advocate as a
Local Commissioner, before whom the documents would be inspected
by two advocates and an expert, from the side of the plaintiffs, in the
presence of two advocates from the side of the defendants. A
subsequent application was filed, by the third defendant, submitting
that the plaintiffs had appointed an in-house expert, which was not
acceptable. The third defendant sought to contend that permitting
inspection of the confidential documents by an in-house expert of the
opposite side would defeat the very purpose of the constitution of
Confidentiality Clubs, which was to ensure that sanctity and
confidentiality of commercially sensitive information, filed by a party,
was maintained. Reliance was placed, by the third defendant, on
Rule 17 in Chapter VII of the Original Side Rules read with the
protocol envisaged in Annexure F thereto. It was sought to be pointed
out that Annexure F to the Original Side Rules contemplated
inclusion, in the Confidentiality Club, only of an external expert.
Reliance was also placed on Section 103(3) of the Patents Act, as well
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as the judgements of this Court in Ericsson v. Lava10, Ericsson v.
Xiaomi4 and Dolby International11.
50. The learned Single Judge, however, rejected the submission of
the third defendant, for preventing access, to the confidential
information, by any internal expert of the plaintiff. It was noted, by
the learned Single Judge, that, in the order dated 12th February, 2020,
this Court had not specified that the expert, of the plaintiffs, had to be
an "internal expert". Interestingly, the learned Single Judge also
agreed, with the submission of learned Senior Counsel for the
plaintiffs before him, that "even if inspection is carried out by external
expert, still he has to divulge the information acquired from the
documents to enable the plaintiff carry out the amendments to
establish its claim in the suit". "Otherwise", it was observed,
"inspection shall lose its relevance, if the outcome of the same is not
utilised purposefully by the party, which sought the inspection".
Reliance was also placed, by the learned Single Judge, on paras 21 to
23 of the judgement in Transformative Learning Solutions2 which, at
the cost of repetition, may be reproduced thus:
"21. A civil lis, governed by the CPC, requires each party
thereto to have notice of the case of other, which is required
to be met and the CPC does not permit any surprises. The trial
and adjudication of a civil lis is regulated by pleadings and
evidence, documentaries or otherwise, beyond pleadings is
not permitted. The documents of each other are required to be
admitted and/or denied and issues on which adjudication is
required to be done, struck. No evidence, even if led, beyond
pleadings is permitted to be led. Thus, the proceedings require
complete disclosure.
22. Of late however, in respect of a certain class of suits, it
was felt that documents filed should not be permitted to go in
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public domain, as happens on filing in the Court. Provision
has thus been made for keeping such documents in a sealed
cover, for eyes only of a limited number of persons who also
agree/undertake not to divulge contents thereof to others. In
some cases, as in cases of patent infringement or infringement
of copyright in source code of a computer software, the need
for a party to a lis to see the document may not arise as the
opinion with respect thereto is to be given by the expert only.
23. However in the present suit to restrain defendants from
using confidential information of plaintiffs and for ancillary
reliefs, the defendants are permitted to defend the suit inter
alia on the grounds, that the plaintiffs have no copyright in
the customers list and even if the plaintiffs have a copyright,
the defendants have not infringed the same. I may mention
that the suit has been filed as a commercial suit and not as an
ordinary suit. This suit, under Section 2(c) of the Commercial
Courts Act, 2015, can qualify as a commercial suit only if
arising out of intellectual property rights relating to trade
marks, copyright, patent, design etc. and not if arising out of
property rights or a tort. In such a suit, to ask the defendants
to contest the suit without knowing the customers list in
which copyright is claimed and without knowing what they
are sought to be restrained from doing, would not only be
unfair to the defendants but also would be contrary to
procedure prescribed by law. The Advocates of defendants
and experts, even if any possible in such scenario, cannot be
expected to make pleadings, to meet the case of plaintiffs.
The non disclosure to the defendant sought by the plaintiffs,
in my opinion deprives the defendant of opportunity of being
heard and the right to defend the suit."
51. To borrow the phrase used by the learned Single Judge in
Genentech13, allowing advocates, or experts, access to the "inner tier"
documents and material would lose its relevance, if, before opining on
whether the rates, at which licenses had been granted to third parties,
could also be applied to Xiaomi, they are not allowed to confabulate
with Xiaomi, or disclose the particulars and details of such third-party
license agreements with the officers of Xiaomi. In my view, it would
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be totally presumptuous to assume that, without any discussion with
the officials of Xiaomi, regarding the third-party license agreements
and the covenants thereof, the advocates and experts of Xiaomi could
make submissions regarding whether the rates, at which licenses were
granted in such agreements were, or were not, FRAND, and whether
such rates would be acceptable to Xiaomi.
52. I had, at the very commencement of the hearing, queried, of Mr.
Pravin Anand, as to how his request for exclusion of Xiaomi, and its
officials and employees, from access to the "inner tier" documents,
even while allowing such access to the advocates of Xiaomi, could co-
exist with the requirement, in law, for an advocate to act only on
instructions of his client, for which purpose the client would
necessarily be required access to the documents shown to the
advocate, or at least disclosure of the contents of such documents.
Mr. Pravin Anand responded that this precise issue had been
considered by several courts in India and abroad, and that, after
considering the issue, Confidentiality Clubs, excluding officials and
representatives of the opposite party, had in fact been constituted. A
perusal of the decisions, of this Court, on which Mr. Pravin Anand
relies, and to which reference has been made hereinabove, fails to
bear out this submission of Mr. Pravin Anand. The only judgement,
in which such a pointed issue was raised by the defendants is Ericsson
v. Xiaomi4, which does not really address the issue.
53. Certain ancillary submissions, also advanced by Mr. Pravin
Anand, may be dealt with, as under:
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(i) Mr. Pravin Anand pointed out that the contracts, between
the plaintiffs and the third-party licensees, contained
confidentiality clauses, which did not allow the plaintiffs to
disclose the contents of the agreements to third parties. That, to
my mind, is irrelevant. No confidentiality clause, which may
be contained in third-party license agreements, entered into
between the plaintiffs and third-party licensees, can justify
denial of fair opportunity, to the defendants, to meet the case set
up by the plaintiffs. Fair opportunity, to the defendants, in my
view, cannot be said to be granted, if the defendants are not
allowed access to the third-party license agreements, which
constitute the very basis for the allegedly FRAND rate
proposed by the plaintiffs. The business interests of
InterDigital, howsoever legitimate, cannot prevail over the
paramount consideration of grant of fair opportunity, and
natural justice, to Xiaomi, to meet the case set up by
InterDigital. The choice, between these two competing
considerations, in my view, is Hobsonian in nature.
(ii) Mr. Pravin Anand further invited my attention to para 35
of the rejoinder, filed by the plaintiffs to the reply, of the
defendants, to the present application. It reads thus:
"It is evident that the present proceedings are of a
highly technical nature and high-level of expert
involvement is inevitable. Since the matter in question
in the present proceedings is of so esoterically
technical in nature, the Defendants would necessarily
require technical and professional experts and may not
be able to form an opinion on their own but would be
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bound to act merely upon advice on the technical and
professional experts. Since the aid of the technical and
professional experts is inevitable, the Hon'ble Court
will be justified in directing disclosure of confidential
information only to external lawyers and expert of the
Defendants with the exclusion of the Defendants in-
house counsel and employees to secure the rights of
the Plaintiffs and its third-party licensees. Further, it is
reiterated that the Plaintiffs are contractually obligated
not to disclose to any entity, the third-party license
agreements, and/or the contents thereof, unless they
are ordered by this Hon'ble Court. The Defendant's
contention that the Plaintiffs must place on record such
agreements, without protective orders of this Hon'ble
Court is an invitation to the Plaintiffs to willingly
breach their confidentiality obligations for such
agreements. The Plaintiffs cannot be compelled to
make such disclosures in the absence of protective
orders of this Hon'ble Court. Such a contention of the
Defendants is clearly mala fide and should be
dismissed."
The submissions contained in the afore-extracted para from the
rejoinder of the plaintiffs, in my opinion, are inherently
unacceptable for a variety of reasons, viz.
(a) It is totally presumptuous, on the part of the
plaintiffs, to assert that the defendants "may not be able
to form an opinion on the road but would be bound to act
merely upon advice of the technical and professional
experts". The word "merely", in my view, has been
deliberately added in this proposition, so as to justify the
request, of InterDigital, for excluding officials and
employees of Xiaomi from the "inner tier"
Confidentiality Club. No educated litigant, in today's
day and age, prefers to remain in an ivory tower, unaware
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of the facts of the case, leaving his fortune entirely in the
hands of his advocates and/or experts. Especially in a
litigation as complex as this, involving fixation of
FRAND rates and determination of the issue of whether
Xiaomi is, or is not, infringing the SEPs of InterDigital, it
is a prime necessity that the officials of Xiaomi, who are
conversant with its activities, and who can take a
decision on the rate at which Xiaomi can take a license,
for exploitation of the SEPs, from InterDigital, are kept
abreast of all aspects of the case set up by InterDigital, a
prime element of which would be the allegedly
"comparable" license agreements, on the basis of which
FRAND rates are proposed by InterDigital.
(b) In the very next sentence, it is averred that, "since
the aid of the technical and professional experts is
inevitable, the Hon'ble Court will be justified in directing
disclosure of confidential information only to external
lawyers and expert of the defendants which the exclusion
of the defendants in-house counsel and employees". The
very fact that Xiaomi would only, at best, be obtaining
the "aid" of the technical and professional experts, is
itself a reason to include, in the Confidentiality Club, the
officials of Xiaomi. "Aid" can be extended only to
someone who is aware of the facts, including all
particulars of the stand adopted by the opposite party.
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(c) The assertion that, by requiring InterDigital to
place on record the third-party license agreements,
InterDigital is being invited to "willingly breach their
confidentiality obligations for such agreements" is
completely tangential to the issue at hand. Nobody is
inviting InterDigital to breach any of its obligations, with
its third-party licensees. If, however, in its litigation with
Xiaomi, InterDigital intends to rely on third-party license
agreements, so as to be able to fix, with Xiaomi, a
FRAND rate of its choice, that cannot be done by
keeping away, from Xiaomi, the third-party license
agreements, on which InterDigital seeks to rely to justify
such FRAND rate. As such, the further assertion, in para
35 of its rejoinder, that the plaintiff, i.e. InterDigital,
cannot be compelled to make disclosures in the absence
of protective orders of this Court, is also tangential to the
issue at hand.
In fact, I am constrained to observe that, in making its
submissions, both written as well as orally during the course of
arguments, InterDigital seems to be oblivious of the necessity
of justice being done to Xiaomi, as much as to InterDigital.
The business interests of InterDigital cannot be placed on a
higher pedestal than those of Xiaomi. The financial
implications of an unreasonable FRAND rate are huge. It
would be completely unreasonable, therefore, to thrust, on
Xiaomi, a FRAND rate, in the exercise of fixation of which
neither Xiaomi, nor any of its officials or personnel, have been
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allowed to participate. The complete iniquity of the
arrangement is underscored by the insistence, of InterDigital,
that the advocates, to be included in the "inner tier"
Confidentiality Club, should not be "in-house" counsel. In
other words, the prayer of InterDigital is for Xiaomi to be
completely dissociated, as it were, from the exercise of FRAND
rate fixation, relying entirely on strangers and their subjective
opinions, even if such strangers are professionally engaged by
Xiaomi for the purpose. InterDigital, on the other hand, would
have the advantage of all its in-house legal personnel being
privy to the third-party license agreements, as the agreements
are being relied upon by InterDigital itself. Such a position is,
to my thinking, completely unacceptable in law.
(iii) Mr. Pravin Anand also sought to contend that this "two-
tiered" Confidentiality Club management was needed only as a
regime, in place during the consideration of InterDigital's
prayer for interim injunction, and that this regime could be
modified later. That, in my view, would be seeking to bolt the
stables after the horses have fled. Once an interlocutory
injunction is obtained, without grant of due opportunity to the
defendants, it is a matter of common knowledge that, in such
litigations, the damage, to the defendants, is permanent and
irreversible.
54. Mr. Sai Krishna Rajagopal submits - and I agree - that it is
essential for the officials of Xiaomi to be able to peruse the covenants
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of the third-party license agreements for two reasons; firstly, to
examine whether the royalty rates offered by InterDigital to the third-
party licensees were actually FRAND and, secondly, to assess
whether the case of Xiaomi was similar to that of any of the licensees
in the said license agreements. The exercise involved in this
assessment, Mr. Rajagopal submits, justifiably, is entirely factual in
nature, involving elements which are within the peculiar knowledge of
Xiaomi. An external expert, submits Mr. Rajagopal, would have no
intimate knowledge of the activities of Xiaomi. While it may,
conceivably, be possible for an external expert to opine whether the
conduct of InterDigital, vis-à-vis the licensees in other license
agreements, is FRAND or not, working out of a FRAND rate,
between InterDigital and Xiaomi, would require the peculiar business
realities of Xiaomi to be borne in mind. The submission, in my view,
merits acceptance.
55. I am also in agreement with the submission, of Mr. Rajagopal,
that even a bare assessment of similarity, of the case of Xiaomi with
that of the third-party licensee, would involve comparison of Xiaomi
with the said licensee, the scope of the license, the area over which the
licenses granted and examination of all considerations on the basis of
which the royalty rate, in the said license, has been worked out. It is
apparent, ex facie, that the determination of the issue of whether
Xiaomi should be required, by judicial fiat, to take a license from
InterDigital, for exploitation of its SEPs, on payment of royalty at the
rate suggested by InterDigital, involves myriad complex factors,
which hardly need enumeration. An assessment of these factors, only
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by "strangers", i.e. advocates who are not in-house counsel and
external experts, without allowing the officials of Xiaomi access to
the license agreements, wherein the rates proposed by InterDigital
have been offered to the licensees, in my view, would be impossible
or, at the very least, grossly unfair.
56. In this context, I also agree with the submission, of Mr.
Rajagopal, that acceptance of the arrangement proposed by Mr. Pravin
Anand would result in an unequal balance, as the officials and
personnel of InterDigital would have full access to the third-party
license agreements, and would be aware of the contents thereof,
whereas none of the officials and personnel of Xiaomi would be
privileged to gain such access. It is no answer, in my opinion, to
contend - as Mr. Pravin Anand would seek to urge - that Xiaomi is
also entitled to the same privilege. The plaint has been brought by
InterDigital. InterDigital is the SEP holder. InterDigital is required,
by law, to allow exploitation of SEPs by Xiaomi, by granting a license
to Xiaomi at FRAND rates. The rate offered by Xiaomi is
unacceptable to InterDigital. InterDigital, instead, is requiring Xiaomi
to agree to take a license, from InterDigital, at the rate at which it
offers the SEPs to other licensees. Third-party license agreements
would, therefore, obviously be produced by InterDigital, rather than
by Xiaomi, in support of its case. As such, the occasion for Xiaomi to
request for any such "two-tier" Confidentiality Club, ex hypothesi,
does not arise. Even if it did, it would be for InterDigital to arrive at
an agreement, with Xiaomi, for the establishment of a "two-tier"
Confidentiality Club, excluding officers and personnel of the parties
from access to the "inner tier" confidential documents. This Court
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cannot trust such an arrangement upon Xiaomi, without its consent, in
the absence of any clear right having been established, by InterDigital,
for the imposition, on Xiaomi, of such an arrangement.
57. It was not once, but several times, during the course of hearing
of this application, that the thought came to me - What if Xiaomi is
unwilling - as it is, in the present case - for the third-party license
agreements, on which InterDigital relies, to be shown only to its
advocates and experts, and not to its own officials or personnel?
What if Xiaomi says that it is not willing to contract, with its counsel,
to keep undisclosed, from Xiaomi, the documents which have been
shown to him? Mr. Pravin Anand submits that, if Xiaomi is unwilling
for such an arrangement, the Court could legitimately draw an adverse
inference against, treating it as an "unwilling licensee". In other
words, Mr. Pravin Anand submits that, having involved Xiaomi in a
litigative exercise, by filing the present suit against it, InterDigital can
insist on Xiaomi prosecuting the suit, and defending itself against
InterDigital, without being shown the documents on which
InterDigital proposes to rely. The insistence, by Xiaomi, on access to
the documents on which InterDigital proposes to rely, so as to be able
to defend the case set up by InterDigital, according to Mr. Pravin
Anand, would justify an adverse inference against Xiaomi. The
submission, in my view, deserves to be summarily rejected. It flies in
the face of the most elementary canons of natural justice and fair play.
I need say no more.
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58. As I observed towards the commencement of this judgement, I
have refrained from alluding to the various judicial authorities, from
other countries, on which Mr. Pravin Anand relied. For the sake of
the record, it may be noted that Mr. Pravin Anand cited, apart from
the judgements of this Court, noted hereinabove, the judgement of the
High Court of England and Wales in Mitsubishi Electronic
Corporation v. Sun Cupid Technology HK Ltd 14, the District Court
for the Eastern District of Texas in Blue Spike, LLC v. Huawei
Technologies Co. Ltd 15, the Chancery Division of the High Court in
Unwired Planet International Ltd v. Huawei Technologies Co.
Ltd 16, the judgement of the Court of Appeal, on appeal from the said
decision, in Unwired Planet International Ltd v. Huawei
Technologies Co. Ltd 17, the judgement of the California District
Court in TCL Communication Technology Holdings Ltd v.
Telefonaktiebolaget LM Ericsson 18 and the judgement of the
Chancery Division of the High Court of UK in IPCom GMBH & Co.
v. HTC Europe Co. Ltd 19. Without adverting to each of these
decisions, a reading thereof would reveal that no serious dispute,
regarding exclusion of the officials from the Confidentiality Club, was
agitated in any of these cases. Besides, as I have already opined
hereinabove, I had to decide the present application on the basis of
whether the request of InterDigital is compatible with the peculiar
dynamics of the lawyer-client relationship, as they exist in this
Judgement dated 22nd July, 2020 in Claim No HP-2019-000014
Judgement dated 1st September, 2015 in Civil Action No 6:13-CV-679-RWS
(2017) EWHC 3083 (Pat)
(2018) EWCA Civ 2344
Judgement dated 8th December, 2015 in Case No. 8:14-CV-00341-JVS-AN
(2013) EWHC 52 (Pat)
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country. This relationship is crystallised in both statute and precedent,
and is sacred and inviolable. In my view, there can be no question of
this Court lending its approval to any arrangement in which the third-
party license agreements , constituting the very basis of the case set up
by InterDigital against Xiaomi, remain undisclosed to Xiaomi, as well
as its officials and personnel, and are shown only to advocates (who
are not in-house counsel) and experts. Any such arrangement would
violate the provisions of the Bar Council Rules as well as the law laid
down in various decisions including, inter alia, Himalayan Coop.
Group Housing Society5.
59. I debated, in my mind, as to whether I should refer the present
matter to the Hon'ble Chief Justice for constituting a Division Bench,
as Confidentiality Clubs, excluding officials and personnel of the
opposite party, have, in fact, been established by this Court on earlier
occasions. A perusal of the decisions, which have set up such
Confidentiality Clubs, however, reveal that, except for Dolby
International11 and Ericsson v. Xiaomi4, the proposal to exclude
officials and personnel from such Confidentiality Clubs was not
opposed in any case. In all but these two cases, therefore, the issues
raised by Mr. Sai Krishna Rajagopal in the present case, and which
have impressed the mind of this Court, have passed sub silentio.
These decisions cannot, therefore, be regarded as valuable precedents,
to decide the issue in controversy before me. 20
For the proposition that a decision is not an authority for an argument which passes sub silentio,
having neither been raised not considered in the said decision, one may refer to Arnit Das v. State
of Bihar, (2000) 5 SCC 488 .
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60. Dolby International11 merely recorded the submission, of
learned counsel for the defendants, that their right to a fair defence
would be prejudiced, if the confidential information was not disclosed
to them. No contention, regarding such an arrangement being
violative of the legal regime, regarding lawyer-client relationship, as it
exists in India, was raised in the said case. Such a contention was
raised in Ericsson v. Xiaomi4, and the judgement in Himalayan Coop.
Group Housing Society5 was also cited in support. The learned
Single Judge in that case did not, however, return any finding
regarding the applicability of the said decision, but proceeded to set
up the Confidentiality Club, excluding officials and personnel of
Xiaomi, on the ground that similar confidential clubs had been set up
earlier.
61. Himalayan Coop. Group Housing Society5 has neither been
distinguished by any larger bench, or even by any coordinate bench,
in facts analogous to those before me. The judgement binds me,
under Article 141 of the Constitution of India. It is clearly held, by
the Supreme Court, in the said decision, that a counsel has to act on
instructions from the client, and not at his own sweet will. It is also
pointed out, by the Supreme Court, in the said decision, that the Bar
Council of India Rules specifically codifies this requirement.
Accepting the proposal, of InterDigital, to constitute a Confidentiality
Club, excluding the officials and personnel of Xiaomi therefrom,
insofar as the "inner tier" documents are concerned, in my view,
would violate this legal regime. For the reasons set out in detail
hereinabove, any such arrangement would also be grossly unfair to
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Xiaomi, and would certainly prejudice Xiaomi, in defending the case
set up by InterDigital. It is presumptuous to assume that Xiaomi
would be able to answer the case set up, by InterDigital, regarding
fixation of a FRAND royalty rate, at which InterDigital could license
the usage of its SEPs to Xiaomi, without being provided access to the
third-party license agreements, containing the rates proposed by
Xiaomi. Even if this were hypothetically possible, I cannot adjudicate
this application on that premise.
62. As the judgement in Himalayan Coop. Group Housing
Society5, and the permissibility of excluding officials and personnel of
either party from the Confidentiality Club, in the light of the said
decision and the Bar Council of India Rules, has not been examined or
analysed in any earlier decision to which my notice has been invited, I
am of the opinion that the matter need not be referred to a larger
bench.
63. There is substance in Mr. Pravin Anand's submission that
InterDigital cannot, very well, disclose details, in third-party license
agreements which, as agreed between InterDigital and such third
parties, are required to remain confidential. At the same time,
InterDigital cannot, in my view, rely on such material against Xiaomi,
holding the material back from the representatives of Xiaomi on the
plea of confidentiality. InterDigital is, therefore, at liberty to redact,
from the documents being treated as confidential, any such detail
which, according to it, cannot be disclosed to any third party,
including the representatives of Xiaomi. InterDigital cannot,
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however, be permitted, in such an event, to rely on such redacted
material. The interests of natural justice and fair play also require that
Xiaomi be allowed to plead, in such an event, that the redacted details
had been unfairly or unjustifiably redacted, and that their disclosure is
necessary in order to enable Xiaomi to put up a substantial defence.
In such an eventuality, it would be for the court to take a decision on
the competing claims, regarding such redacted material. No pre-
emptive direction, in that regard, can possibly be issued.
Conclusion
64. The prayer, of InterDigital, for setting up of a "two-tier"
confidentiality club, with "inner tier" documents being shown only to
advocates (who are not in-house counsel) and external experts
nominated by Xiaomi is, therefore, rejected.
65. Instead, a single tier Confidentiality club is constituted, in the
following terms:
(i) Each party shall nominate four advocates, six
representatives and two experts, who would constitute the
confidentiality club.
(ii) The members of the confidentiality club alone shall be
entitled to inspect the confidential information. In the case of
the advocates and experts, such inspection would be to the
extent such inspection is required in order to perform their
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professional duties in relation to the present proceedings on
behalf of the party by whom they are engaged.
(iii) The documents, regarded as "confidential information"
would be filed in sealed cover, to be retained with the Registrar
General of this Court under seal and in safe custody.
(iv) The members of the confidentiality club shall be entitled
to inspect the confidential information before the learned
Registrar General and, after the inspection is over, the
documents and information shall be resealed and returned to the
learned Registrar General. The members of the confidentiality
club shall also be entitled to electronically transmit and receive
copies of the confidential information so long as adequate
safeguards are in place to ensure that such transmission shall
only be available to members of the confidentiality club.
(v) The members of the confidentiality club shall be bound
by confidentiality orders passed by this Court and will not be
allowed to make copies, disclose or publish the contents of the
confidential information or documents anywhere else or to any
individuals who are not privy to the confidential information,
including in other legal proceedings or oral and written
communications to the press, etc.
(vi) During the recording of evidence and other proceedings
of this Court with respect to the confidential information, or
when the confidential information is being looked at, only
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members of the confidentiality club shall be allowed to remain
present. Such proceedings will be conducted in camera.
(vii) Any evidence, by way of affidavit or witness statement,
containing confidential information shall also be kept in a
sealed cover reflecting the confidential and designation, with
the learned Registrar General, and would be accessible only to
the members of the confidentiality club.
(viii) Neither party would be permitted to rely on any material
which is not disclosed to the nominated representatives (as
opposed to advocates and experts) of the opposite party.
Should either party feel that any details, contained in any
document, cannot be shown to the nominated representatives of
the opposite party, it is at liberty to redact such details or
particulars from the document(s) in question. Needless to say,
the party that redacts any particular is, in any document or
evidence, shall not be permitted to rely on such a redacted
particulars. It shall, however, be open to the opposite party to
plead that disclosure of such redacted material is necessary for
its defence. In such a case, the court would decide, on a
document-to-document basis, whether redacting of the
"confidential" details, in the document, should, or should not,
be allowed. This, in my view, is the maximum extent to which
the plea, of InterDigital, for keeping away, from the
representatives of Xiaomi, "confidential" details and
documents, can be accommodated.
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(ix) The confidential documents/information shall not be
available for inspection after disposal of the matter, except to
the parties producing the same.
66. This Court has constituted the aforesaid Confidentiality Club
keeping in mind the objection, of Xiaomi, to a "two-tier"
Confidentiality Club, as sought by InterDigital. Should, however,
Xiaomi be agreeable to constitution of the Confidentiality Club in the
manner suggested by InterDigital, this order would not stand in the
way of any such agreement and, in such an event, the Confidentiality
Club would be established in the manner agreed upon, between the
parties. In such event, it would be open to either party to move this
Court for appropriate orders.
67. It is clarified that all observations in this judgement are
intended only for the purpose of disposing of the application, of
InterDigital, for constitution of a Confidentiality Club. They should
not be treated as an expression of opinion, even tentative, on the
aspects discussed in this order, for any other purpose, and in respect of
any other application or the main suit itself.
68. The application stands disposed of accordingly.
C. HARI SHANKAR, J.
DECEMBER 16, 2020
HJ
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