Philips loses 21-year-old patent case over video CDs in Delhi High Court

Multinational digital tech company Philips recently lost a two-decade legal battle before the Delhi High Court, in which it had accused an Indian company of patent infringement in the manufacture and sale of Video Compact Discs (VCD) [Koninklijke Philips NV v. M Bathla & Anr].

On October 13, Justice Mini Pushkarna held that Philips had failed to prove that its patent in 'Digital Transmission System' had been infringed by the Delhi-based shop in its replication and sale of Video CDs.

The Court found that the process adopted by Philips to compare its patented process with that of the Indian shop's (defendants') CD products was fundamentally flawed.

It noted that the patent held by Philips concerned three elements – a transmitter, a receiver, and a transmission medium. However, the Court found that Philips had failed to identify the presence of all these essential features of the suit patent in the defendants’ products.

“The plaintiff has failed to show that each aspect of the defendants’ product is covered by the features of the Claim of suit patent. Rather, the plaintiff has straightaway compared the product of the defendants, i.e., the VCD with the end result which is achieved in the suit patent,” the Court stated.  

It further found that the defendants had only replicated the Video CDs. It held that such replication from Master CDs would not amount to patent infringement. The Court added that Philips had also not examined whether there was patent infringement involved in a third party’s manufacture of the Master CDs.

“It is apparent that the plaintiff (Philips) has been unable to precisely map its Claims to the product of the defendants, as mandated by the ‘High Court of Delhi Rules Governing Patent Suits, 2022.’ … the plaintiff has compared the product of the defendants with selected portions/ elements of its Claims pertaining to only the end result, i.e., compressed data, in order to submit that the VCDs being manufactured and sold by the defendants use the compression technique disclosed in the said patent. This approach is totally fallacious … It is also to be noted that the defendants did not manufacture the VCDs, but only replicated the same by use of the replication machinery acquired from Singulus. As such, the process of replication does not involve any transmission or compression mechanism," the Court said.

The Court concluded that Philips had failed to prove that its patent had been infringed by the defendants.

“It is apparent that though the plaintiff has shown that the data packed on the VCD, i.e., the end result, is 'substantially similar', however, it has not been able to show that the said data was packed in a 'substantially similar' way, i.e., as per the system claimed in the suit patent. Thus, the factum of infringement by the defendants has not been established by the plaintiff, in any manner,” the Court stated. 

Koninklijke Philips NV, a Dutch MNC dealing in digital tech products, had approached the High Court in 2004 with its patent infringement suit against Delhi-based BCI Optical Disc Ltd.

Philips told the Court that it had created a ‘pool of patents’ with other companies on various technologies, including those pertaining to Video CDs. It claimed to have the right to license and sublicense the same. It has also issued licenses to various Indian companies to use such technology.

On finding that BCI Optical was also engaged in selling such CDs, Philips reached out to the defendants, told them to take a licence for the same, and sought royalty payments for the use of patented technology.

Although Philips and the defendants exchanged several correspondences on the issue, the defendants (the Indian shop/ its representatives) eventually stopped responding, prompting Philips to sue them for patent infringement.

Notably, the patent in focus had expired in 2010, while the suit was pending before the High Court. The Court, however, was left to decide whether Philips was entitled to any damages for past patent infringement by the defendants.

Among other arguments, Philips claimed that it held a Standard Essential Patent (SEP) which was violated by the defendants even in the replication of Video CDs.

The Court rejected this contention.  Among other grounds, the Court pointed out that Philips failed to provide a standard essentiality report prepared by an independent expert.

“The plaintiff has failed in this regard and has proceeded to rely only on its own claim mapping, which does not establish that the system claimed in the suit patent maps with the ISO/IEC 11172-3 standard. Thus, the plaintiff has failed to fulfil the basic requirement of establishing infringement of an SEP, in the absence of construction of the suit patent as per the claims and proper claim mapping," it concluded.

The Court also rejected a claim that the defendants' earlier letters/ correspondence with Philips regarding royalty payments amounted to an admission that the defendants were using technology patented by Philips.

The Court pointed out that Philips held several patents, and that the letters did not talk about any one patent. It accepted the defendants’ stance that they had entered into these negotiations without any prejudice to their rights.

It proceeded to dismiss Philips' suit on merits.

Advocates Pravin Anand, Prachi Agarwal, Elisha Sinha and Kumar Abhishek appeared for Philips.

Senior Advocate Swathi Sukumar with advocates Naveen Nagarjuna, Ritik Raghuwanshi, Rishubh Agarwal, Kartik Malhotra, Santanam Swaminadhan, Rishika Agarwal and Pratibha Singh appeared for the defendants.

[Read judgment]