Delhi High Court rules on Vringo-ZTE patent infringement litigation

In a judgment of August 5 2014 a single judge of the Delhi High Court vacated an earlier ex parte interim injunction restraining Chinese telecoms major ZTE Corporation and its Indian subsidiaries from infringing Indian Patent 200572, owned by Vringo Infrastructure Inc. The patent in question was granted for an invention titled “A method and a device for making a handover decision in a mobile communication system”. On August 13 2014 the Division Bench of the Delhi High Court issued an order refusing to interfere with the judgment.

An Indian court granting an interim injunction is required to assess a case on the basis of three issues:

• whether a prima facie case exists in favour of the plaintiff;
• whether the balance of convenience is in favour of the plaintiff; and
• whether the plaintiff will suffer irreparable injury if no interim injunction is granted.

In this case, the single judge of the Delhi High Court ruled against Vringo on all three counts.

Prima facie case
On the issue of prima facie infringement of Vringo’s patent, the judge noted that even at the interim stage, it is necessary to rely on expert witness testimony to assess complex issues such as patent infringement, which a court is not competent to judge by itself. Vringo filed an expert witness affidavit in this case, but the judge refused to consider it because, in his opinion, Vringo’s expert did not meet the criteria for a 'scientific adviser' as laid down in Section 115 of the Patents Act 1970, read with Rule 103 of the Patent Rules 2003. Specifically, the court noted that Vringo’s expert witness, who had studied business administration, did not have the educational qualifications required by the Patents Act to qualify as a scientific adviser. Apart from educational qualifications, Indian patent law also allows persons with 15 years of practical or research experience to be considered as scientific advisers, and Vringo’s expert claimed to have worked with different technologies in the telecoms field for  45 years.However, in the court’s opinion, Vringo’s expert failed to demonstrate such experience in his affidavit adequately. Thus, the court held that since Vringo’s expert did not qualify as a scientific adviser under Indian law, he could not be considered an 'expert' under the Evidence Act. As a result, the court declined to consider the expert witness’s affidavit, thus robbing Vringo of an opportunity to demonstrate a prima facie case of patent infringement.

On appeal, the Division Bench of the Delhi High Court, while declining to interfere with the order of the trial judge, observed that:

“it is accepted and recognised that a person could be an expert in an area of specialised knowledge by experience and he or she need not hold a degree in the field of specialised knowledge. A person can also become an expert by virtue of one’s avocation or occupation.”      

Balance of convenience
On the issue of balance of convenience, the single judge ruled in favour of ZTE on the grounds of laches or delay in initiating a lawsuit, coupled with the fact that Vringo had not demonstrated in its pleadings that it was working the patent in India. The laches issues arose from the fact that the previous owner of the patent, Nokia Telecommunications, was aware of ZTE’s alleged infringement of the patent as far back as 2006, but had declined to sue ZTE. Given the long delay in initiating an infringement action and the fact that ZTE had been using the technology for so long without any hindrance, the court held that the balance of convenience would be in favour of ZTE.

The second limb of this analysis was on a technical point, regarding the format of pleadings. In the plaint Vringo had been silent on the commercial use of the patent and ZTE tried to use this fact to argue that Vringo would not be inconvenienced since it was not even working the patent. Vringo had attempted to defend this assertion of the grounds that it had licensees which were using the patent, and had disclosed details of the commercial working of the patent in the replication, which was filed in response to the defendant's written statement.  

The court accepted ZTE’s argument and refused to consider Vringo’s rebuttal. On the issue of the licensees working the patent, the court ruled that since none of the licensees had complained about ZTE’s use of the patent, they had not been inconvenienced. On the issue of pleadings, the court held that only the grounds in the plaint and the written statement would be considered to be part of the pleadings, thus excluding the replication. On appeal, the Division Bench observed that the replication filed by the plaintiff, with the court's permission, should have been considered as part of the pleading and the defendant had a right to respond to it.

Irreparable loss
On the final ground of irreparable loss, the court again ruled in favour of ZTE. While observing that the Patent Act does not mandate injunctions in patent infringement cases, since Section 48 allows only for the grant of monetary damages, the court ordered that Customs provide Vringo with information of ZTE’s imports and that Vringo be allowed to maintain an inventory of ZTE’s imports. Such information would allow Vringo to calculate the damages during the trial and thus would not cause Vringo irreparable injury. 

Comment
The Delhi High Court's judgment is important not only for its observations regarding expert witnesses, pleadings and the conditions necessary for grant of an interim injunction, but also because of the trial scheme proposed by the judge. The court ordered the creation of a panel of three scientists to examine the technologies claimed by Vringo and the technology practised by ZTE, and to submit a report on the point. However, the judgment was unclear as to the scope of this report.