Court balances equities without detailed merits examination, emphasizing prima facie validity and essentiality of patents amid ongoing FRAND negotiations
In a significant judgment dated July 1, 2026, the Delhi High Court, presided by Justice Tushar Rao Gedela, directed Shenzhen Transsion Holdings Co. Ltd. and its affiliates to deposit a pro tem security amount in favor of Interdigital Patent Holdings Inc., relating to a dispute over Standard Essential Patents (SEPs) used in mobile telecommunication technologies including 3G, 4G, 5G, and HEVC video coding standards.
The plaintiffs, Interdigital Patent Holdings Inc and its parent company, a Pennsylvania-based NASDAQ-listed research and innovation firm, claimed infringement of their SEP portfolio by Transsion, a Chinese manufacturer of smartphones sold in over 70 countries, including India. Interdigital asserted that despite ongoing negotiations since 2019 and multiple offers and counteroffers on Fair, Reasonable, And Non-Discriminatory (FRAND) licensing terms, Transsion continued unlicensed use of Interdigital’s patents, causing financial harm.
Justice Gedela clarified that the pro tem security deposit is an ad-interim relief under Section 151 of the Code of Civil Procedure, 1908, aimed at balancing equities between SEP holders and implementers during litigation, without requiring a deep dive into the merits, validity, or essentiality as needed for interim injunctions. The court emphasized that the implementer cannot freely sell devices using SEPs without providing reasonable security during the pendency of the suit.
The Court took into account multiple factors for its prima facie finding, including:
- Claim charts mapping the patents to international standards and the defendants’ device specifications;
- Invention disclosures filed before standard development organizations (SDOs) such as ETSI and 3GPP;
- Test reports from independent bodies confirming the defendants’ devices conform to relevant standards;
- Judgments from foreign courts, including the UK High Court and Court of Appeal, upholding validity and essentiality of key patents in Interdigital’s portfolio; and
- The conduct of parties during the long-standing negotiations, noting that Transsion had made several counteroffers but failed to provide any security deposit or disclose sales data to facilitate FRAND licensing.
While the defendants challenged the essentiality and validity of the patents, pointed to adverse decisions from Chinese courts invalidating some patent counterparts, and criticized the lack of third-party license agreements (TPLAs) disclosed by the plaintiffs, the court held that TPLAs are not a prerequisite for directing pro tem security. The judgment highlighted that the absence of such agreements does not bar the Court from ordering a security deposit at this stage.
The Court further noted the intertwined nature of the SEP portfolio, which cannot be dissected patent-by-patent or jurisdiction-by-jurisdiction for the purpose of assessing the quantum of security. Given the wide divergence between the parties’ offers and counteroffers, the court relied on the defendants’ latest counteroffer as a basis and directed a deposit of one-fifth of that amount to be made within eight weeks, either by cash deposit or bank guarantee, in Indian Rupees.
This interim relief does not amount to a final determination of infringement or validity and is without prejudice to the parties’ rights. The judgment underscores the Delhi High Court’s evolving jurisprudence in SEP disputes, reaffirming the balance between encouraging innovation through patent protection and ensuring implementers have a fair opportunity to negotiate licenses on FRAND terms.
The case reflects the growing prominence of SEP litigation in India, especially involving global telecommunications standards and cross-border technology licensing. It also highlights the Court’s recognition of the unique nature of SEP disputes, which require nuanced interim reliefs distinct from ordinary patent injunctions.
Bottom line:-
Standard Essential Patents (SEPs) - Pro tem security deposit in Standard Essential Patent (SEP) cases is an ad-interim relief to balance equities between SEP holders and implementers - It does not require detailed examination of merits as in interim injunctions and can be directed based on prima facie validity and essentiality, surrounding factors, and conduct during negotiations.
Statutory provision(s): Section 151, Code of Civil Procedure, 1908; Section 48, Patents Act, 1970
