Introduction
In the evolving landscape of intellectual property law, disputes involving Standard Essential Patents (SEPs) continue to test the balance between innovators who develop critical technologies and companies that implement them in consumer products. A recent judgement from the Delhi High Court in a case involving cellular SEPs has provided important clarity on the use of interim measures known as pro tem security. This order underscores that implementers cannot indefinitely use patented technology without fair compensation while negotiations or court proceedings drag on. The ruling offers practical guidance for both patent holders and technology users in India.
Key Highlights Of The Ruling
- Clarifies the role of pro tem security in SEP disputes
- Emphasizes fair compensation during ongoing litigation
- Balances rights of patent holders and implementers
- Provides guidance for interim relief in intellectual property cases
Factual And Procedural Background
The dispute arose when Malikie Innovations Ltd., which had acquired a significant portfolio of cellular patents originally developed by BlackBerry, approached Xiaomi Corporation and its Indian entities for a license to use patents essential to 4G and 5G mobile technologies. After initial discussions failed to result in an agreement, Malikie filed a commercial suit in the Delhi High Court alleging infringement through the manufacture and sale of mobile devices compliant with these standards.
Alongside the suit, Malikie filed an application seeking a direction for Xiaomi to deposit a pro tem (provisional) security amount. This measure aimed to secure the patent holder’s interests during the long pendency of the case. Xiaomi opposed the application on several grounds, including questions about the ownership of patents, the validity and essentiality of the claimed patents, the fairness of the offered licensing terms, and the overall maintainability of the suit.
Parties And Claims Overview
| Party | Role | Key Position |
|---|---|---|
| Malikie Innovations Ltd. | Patent Holder (Plaintiff) | Alleged infringement of cellular SEPs and sought pro tem security |
| Xiaomi Corporation & Indian Entities | Implementer (Defendant) | Challenged patent ownership, validity, essentiality, and licensing terms |
Core Legal Issues Raised
- Ownership and enforceability of the SEP portfolio
- Validity and essentiality of the asserted patents
- Fairness and reasonableness of licensing terms
- Maintainability of the infringement suit
- Justification for granting pro tem security
Dispute
At the heart of the matter was whether the court could direct an implementer like Xiaomi to deposit security even before a full trial or detailed interim injunction hearing. Malikie argued that Xiaomi’s continued sale of devices using the patented technology without payment amounted to unfair hold-out tactics. Xiaomi, on the other hand, maintained that no such deposit should be ordered without clear proof of infringement and without first determining whether the offered royalty rates were fair, reasonable, and non-discriminatory (FRAND).
Key Issues in Dispute
- Whether a court can order a security deposit before a full trial.
- Allegation of “hold-out” tactics by the implementer.
- Requirement of proof of infringement before financial directions.
- Determination of FRAND royalty rates prior to interim relief.
| Party | Position |
|---|---|
| Malikie Innovations Ltd. | Alleges unpaid use of patented technology and seeks security deposit. |
| Xiaomi | Denies liability without proof of infringement and FRAND determination. |
Concept Of Standard Essential Patents (SEPs)
Standard Essential Patents (SEPs) are patents that cover technologies which have become essential to the implementation of a technical standard adopted by the industry. In the telecommunications sector, examples include the 3G, 4G, and 5G cellular communication standards developed by standard-setting organisations such as the European Telecommunications Standards Institute (ETSI).
A patent is considered “essential” if it is impossible (or commercially unviable) to implement the standard without infringing that patent. For instance, if a mobile phone is to be 4G or 5G compliant, it must necessarily use certain specific technical features covered by the SEPs. In this case, the three Suit Patents (IN 283303, IN 317530, and IN 335982) are asserted by the Plaintiffs (Malikie Innovations Ltd.) as SEPs essential to 3G, 4G, and 5G standards. The plaintiffs claim that Xiaomi’s 4G- and 5G-compliant mobile phones and handsets infringe these patents.
Key Features of SEPs
- Essential for implementing industry-wide standards.
- Common in telecom technologies like 3G, 4G, and 5G.
- Cannot be avoided without compromising compliance.
- Create market power once adopted into standards.
SEPs create a unique situation because technical standards are meant to be widely adopted for interoperability. Once a patent is declared essential and incorporated into the standard, the patent holder gains significant market power. This is why standard-setting bodies require patent holders to make commitments regarding licensing.
Concept Of FRAND
FRAND stands for Fair, Reasonable, and Non-Discriminatory. When a company declares its patents as essential to a standard, it typically undertakes to license those SEPs to any willing implementer (manufacturer) on FRAND terms.
Components of FRAND
- Fair and Reasonable: Refers to royalty rates that reflect the actual technical contribution and value of the patented invention, without exploiting the monopoly created by standardisation.
- Non-Discriminatory: Means the patent holder cannot favour some licensees over others who are similarly situated.
The purpose of FRAND is to balance two competing interests: rewarding innovation by allowing patent holders to earn reasonable returns, and ensuring that standards remain accessible so that the technology can be widely implemented without anti-competitive barriers.
| Objective | Purpose |
|---|---|
| Reward Innovation | Ensure patent holders receive fair returns. |
| Ensure Accessibility | Promote widespread adoption of standards. |
Relevance Of SEPs And FRAND In This Case
This Delhi High Court case is a classic SEP infringement and FRAND licensing dispute. The Plaintiffs (Malikie Innovations Ltd, which acquired a large portfolio from BlackBerry) approached Xiaomi in October 2023 seeking a worldwide FRAND licence for their cellular SEPs. They allege that Xiaomi has been manufacturing, importing, and selling 4G and 5G compliant devices in India without taking a licence, thereby infringing the suit patents.
Plaintiffs’ Claims And Allegations
The plaintiffs filed the suit and an interim application under Section 151 CPC seeking pro tem security (a provisional deposit of royalties) based on their FRAND offers. They argued that Xiaomi was engaging in “hold-out” tactics — delaying negotiations through excessive demands on NDAs, making unreasonably low counteroffers, and continuing to sell infringing products without payment.
- Alleged delay tactics by Xiaomi during negotiations
- Unreasonable counteroffers below FRAND standards
- Continued sale of allegedly infringing products
- Request for interim royalty deposit (pro tem security)
They relied on precedents such as :contentReference[oaicite:0]{index=0}, :contentReference[oaicite:1]{index=1}, and :contentReference[oaicite:2]{index=2} to contend that a willing licensee must provide adequate security during negotiations, especially in jurisdictions like India where litigation takes time.
Defences Raised By Xiaomi
Xiaomi, on the other hand, contested the application by raising several defences typical in SEP cases:
- Non-joinder of BlackBerry (the original patentee)
- Lack of sufficient evidence on validity, essentiality, and infringement
- Absence of third-party comparable licence agreements to prove FRAND rates
- Requirement for a prima facie case before ordering security
Xiaomi also highlighted that they had filed a parallel FRAND rate-setting suit in the Shenzhen Court in China.
Key Issues Considered By The Court
The judgment discusses at length the history of negotiations, the parties’ conduct, the strength of the BlackBerry-derived portfolio, market share data of Xiaomi, and the legal principles governing pro tem security in SEP disputes.
| Issue | Details Considered |
|---|---|
| Negotiation Conduct | Whether parties acted in good faith under FRAND obligations |
| Patent Strength | Assessment of BlackBerry-derived SEP portfolio |
| Market Impact | Xiaomi’s market share and commercial benefit |
| Interim Relief | Justification for pro tem security during litigation |
The filing of the Chinese rate-setting suit was treated as a significant development, potentially amounting to an admission of the need to license the SEPs.
Core Legal Question: FRAND Enforcement
The case revolves around enforcing FRAND obligations in the Indian context: whether Xiaomi has acted as a willing licensee, whether the Plaintiffs have made FRAND offers, and whether interim security is warranted to prevent the SEP holder from suffering irreparable harm during the pendency of the suit, while the implementer continues to benefit from the patented technology.
Balancing Interests In SEP Litigation
- Protection of patent holders’ rights and innovation incentives
- Ensuring fair and non-discriminatory access to standardised technology
- Preventing opportunistic hold-out by implementers
- Avoiding excessive royalty demands by SEP holders
Global Dimension Of SEP Disputes
This dispute highlights the global nature of SEP litigation, where parallel proceedings in India, China, the US, and Europe are common, and courts strive to strike a balance between innovation incentives and fair access to standardised technologies.
Reasoning And Analysis Of The Judge
Court explained that pro tem security is not the same as a full injunction that stops sales. Instead, it acts as a temporary financial safeguard to maintain balance between the parties while the main case proceeds.
- Pro tem security does not stop sales.
- It ensures financial balance during litigation.
- It protects both parties until final adjudication.
The judge noted that SEP disputes often involve complex technical and commercial issues that take considerable time to resolve. During this period, the implementer continues to benefit from the technology while the patent owner remains unpaid, creating an unfair advantage.
Prima Facie Findings And Use Of Technology
The Court found prima facie evidence that the patents were essential and that Xiaomi’s devices used them, based on publicly available declarations and product specifications.
| Key Aspect | Court Observation |
|---|---|
| Patent Essentiality | Established through public declarations |
| Use Of Technology | Confirmed via product specifications |
| Negotiation Conduct | Offers and counteroffers exchanged |
| Legal Action | Rate-setting case filed in China |
The court observed that prolonged negotiations, the exchange of offers and counteroffers, and Xiaomi’s own filing of a rate-setting case in China indicated recognition of the need for a licence.
He emphasised that once an implementer knows about the patents and uses the technology, it has an obligation to act as a willing licensee, which includes providing appropriate security.
Reliance On Judicial Precedents
The judge drew support from several important precedents. He referred to the principles laid down in Huawei Technologies Co. Ltd v. ZTE Corp. [2015] Bus LR 1261 regarding good faith negotiations in SEP cases.
- Good faith negotiation is mandatory in SEP disputes.
- Parties must engage constructively in licensing discussions.
He also relied on Indian rulings such as Nokia Technologies OY v. Guangdong OPPO Mobile Telecommunications Corp. Ltd & Ors (Neutral Citation: 2023:DHC:4465-DB), where the Division Bench clarified that pro tem orders have a lower threshold than regular interim injunctions and serve to prevent injustice during the interregnum.
Other cases like Dolby International AB & Anr v Lava International Limited 2025:DHC:5426 were cited to highlight the court’s equitable powers under Section 151 of the Code of Civil Procedure to pass such orders without a detailed merits examination at this stage.
Scope And Limits Of Pro Tem Relief
The court rejected the argument that full proof of every aspect (including the exact FRAND rate) was required before ordering security.
- Full determination of FRAND rate is not required at this stage.
- Relief is granted to maintain status quo.
- Protection of patent holder’s rights is prioritized.
He clarified that pro tem relief is meant to preserve the status quo and protect the patent holder’s rights without finally deciding the case.
At the same time, he made it clear that the order does not amount to a final finding on infringement or the exact royalty rates.
Final Decision of the Court and Point of Law Settled
Court Directions and Security Deposit
The Court disposed of the application by directing Xiaomi to deposit a substantial security amount with the Registrar General of the Delhi High Court within six weeks, either in cash (as a fixed deposit) or through a bank guarantee. It was further clarified that failure to comply could lead to further remedies, including a possible injunction. Importantly, the order emphasised that this was only a provisional measure and would not prejudice the final outcome of the suit.
Legal Principle Settled in SEP-FRAND Cases
This judgement settles an important point of law: in SEP infringement cases involving FRAND licensing, Indian courts have the discretion to order pro tem security at an early stage based on a prima facie view of essentiality and use.
- Prevents undue delay tactics by defendants
- Ensures patent owners are not left remediless during lengthy proceedings
- Maintains balance by allowing full adjudication at a later stage
Case Details and Citation
| Particulars | Details |
|---|---|
| Case Title | Malikie Innovations Ltd & Anr. Vs Xiaomi Corporation & Ors. |
| Date of Order | 30 April 2026 |
| Case Number | CS(COMM) 734/2025 |
| Neutral Citation | 2026:DHC:3674 |
| Name of Court | High Court of Delhi |
| Name of the Honourable Judge | Justice Tejas Karia |
Disclaimer: Readers are advised not to treat this as substitute for legal advise as it may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
