Philips wins big in SEP damages award as Delhi High Court finally ends 13-year battle

On 20 February 2025 the Delhi High Court concluded a long-running legal saga, passing a common judgment in Koninklijke Philips v Sukesh Behl and Ors. The three interconnected suits concerned the infringement of Philips’ patent 218255, which was crucial to EFM+ coding in DVD systems and integral to the standardisation of DVD production.

Case background

Pearl Engineering – owned by Sukesh Behl – had obtained a licence from Philips in 2005 but later claimed that it was signed under duress. Despite repeated notices, Pearl defaulted on its obligations between 2005 and 2010 by failing to submit sales reports and pay royalties. Philips terminated the licence in 2010, but Pearl continued to manufacture DVDs and thus infringed Philips’ rights. Other defendants were also found to have similarly defaulted.

The defendants argued that there was no infringement, since the EFM+ encoding was outsourced to third parties. They also filed counterclaims challenging the patent’s validity, claiming:

• non-disclosure of counterpart foreign applications under Section 8 of the Patents Act;
• lack of novelty due to prior art;
• non-patentability of the subject matter under Section 3; and
• insufficiency in disclosure. 

They contended that Philips delayed filing the suit until 2012 despite having been aware of the infringement since 2005.

The Delhi High Court’s decision

The court found no deliberate suppression under Section 8 and attributed errors to the prosecuting agent. It held that the patent was valid, rejecting the defendants’ prior art and patentability arguments. The court further ruled that the defendants had failed to prove that the patent was not essential to DVD technology, affirming its status as an SEP.

In evaluating infringement, patent claims 1 to 11 were found to pertain to a method of modulation, coding or compression (namely, EFM+ coding), while claim 12 covered the tangible storage medium holding such modulated signals. Therefore, any storage medium containing signals encoded via EFM+ would infringe the SEP. To assess whether the defendants’ replication process did in fact use the patented technology, the court referred to the division bench’s judgment in Intex Technologies v Telefonaktiebolaget LM Ericsson, which discussed the test of indirect infringement (2023). Applying this same test, the court held that the defendants’ DVD replication processes used the patented technology and that outsourcing production did not absolve the defendants of liability. 

Calculation of damages

Although Philips’ patent lapsed in 2015 – rendering an injunction moot – the court proceeded to assess damages. It considered:

• the nature of the invention;
• Philips’ standard royalty rates;
• the scale and duration of infringement;
• the defendants’ unwillingness to negotiate; and
• the financial impact on Philips. 

As established by the UK Supreme Court in Unwired Planet (2020) and the Delhi High Court in Xiaomi v Ericsson (2014), the court concluded that FRAND rates serve as the most appropriate basis for calculating damages in SEP infringement cases. 

Damages were thus calculated based on Philips’ standard royalty rate for the suit patent, which was US$0.03 per unit. Philips’ evidence supported this rate. The court also found the defendants to be unwilling licensees that were acting in bad faith. Their prolonged infringement prompted the court to award interest at 12% per annum on the total damages calculated from the suit’s filing date until payment, along with aggravated damages.

The court thus issued the following instructions:

• Pearl Engineering and Sukesh Behl to pay US$750,000 + 12% interest.
• Siddharth Optical to pay US$195,000 + 12% interest.
• Powercube Infotech to pay US$1.5 million + 12% interest. 

In addition, all three parties were liable to pay aggravated damages of US$115,804. The court also granted full litigation costs to Philips, acknowledging its ordeal due to the defendants’ delaying tactics and the extension of the litigation until the patent had lapsed.

Though the delay in adjudication has attracted criticism (the litigation having outlived both the patent and the DVD industry), this judgment is detailed and well reasoned. It aligns with recent SEP decisions from Indian courts and serves as a cautionary tale for unwilling licensees.