K.K. Bansal & Rajesh Bansal v. Koninklijke Philips Electronics N.V.

High Court of Delhi at New Delhi, Division Bench | Decided: 18 May 2026 RFA(OS)(COMM) No. 17 of 2018 & RFA(OS)(COMM) No. 18 of 2018 Bench: Hon’ble Mr. Justice C. Hari Shankar & Hon’ble Mr. Justice Om Prakash Shukla

Background

A. Standard Essential Patents – Prefatory Note

The Division Bench commenced its judgment with an extensive prefatory note on the law governing Standard Essential Patents, noting at the outset that SEP infringement litigation is delicate and involves a complex multi-step exercise. For a plaintiff claiming to be the holder of an SEP to establish infringement and claim damages, it must first establish that its patent is an SEP, thereafter demonstrate that the defendant’s product infringes the patent, then demonstrate that it is willing to offer a licence at FRAND rates and finally demonstrate that the defendant is an unwilling licensee. The Court observed that each of these steps is more complex than the other.

To demonstrate that a patent is an SEP, the plaintiff must establish the existence of a standard set by a Standard Setting Organisation and show that its patent maps onto that standard such that it is essential for implementing it. Complete mapping between the elements of the standard and the features of the suit patent is necessary. SEP holders are required to enter into FRAND commitments with the SSO and failure to do so renders the patented technology liable to be excluded from the standard altogether. The Court drew on the Division Bench decision of this Court in Intex Technologies (India) Ltd. v. Telefonaktiebolaget L.M. Ericsson and on the Court of Justice of the European Union decision in Huawei Technologies Co. Ltd. v. ZTE Corp. in setting out this framework.

The Court candidly observed at the outset that the exercise of determining FRAND rates is extraordinarily complex, requiring comparative evaluation of agreements with third parties and full disclosure of the commercial terms on which those agreements were entered into and that at least in India it appears frankly impossible for such an exercise to reach its right and legally correct conclusion in most cases. It acknowledged that while the learned Single Judge had attempted in all earnestness to arrive at a workable solution in computing damages, the exercise suffered from several infirmities which could not be sustained in law.

B. Background to the Dispute

Koninklijke Philips Electronics N.V. instituted two suits — CS (Comm) 24/2016 and CS (Comm) 436/2017 — before the Delhi High Court alleging infringement by Rajesh Bansal, the proprietor of Mangalam Technology and K.K. Bansal, the proprietor of Bhagirathi Electronics respectively, of Indian Patent No. IN 184753 owned by Philips for a decoding device for converting a modulated signal to a series of M-bit information words. K.K. Bansal is the father of Rajesh Bansal and Rajesh Bansal was a former employee of Philips. The patent relates to the technology used for DVD Video Playback in DVD Video Players — specifically the channel decoding technology by which data stored on DVDs in the form of modulated signals is decoded during playback. The decoding converts 16-bit code words to 8-bit information words by looking ahead to the next set of code words, with bit positions 1 and 13 being predetermined. The suit patent corresponded to US Patent No. 5696505 and European Patent EP 745254B1, both titled Method of Converting a Series of M-bit Information Words to a Modulated Signal.

Philips claimed the suit patent was a Standard Essential Patent essential for the manufacture and operation of DVD video players and that the Bansals, who manufactured and sold DVD players under the brands SOYER and PASSION through Mangalam and Bhagirathi respectively, had infringed it without obtaining any licence from Philips. Philips claimed to be willing to licence the suit patent on FRAND terms but alleged the Bansals were unwilling licensees. It sought permanent injunction, damages both actual and punitive and royalty at FRAND rates.

The Bansals denied infringement and contended that they sourced the components including the PCBs from authorised dealers — principally from Chinese companies Shuntak (HK) Trading Company and Sheenland Corporation, which supplied MediaTek chips — and were merely assembling DVD players from parts purchased from the market. They invoked the doctrine of international exhaustion of patent rights under Section 107A(b) of the Patents Act, 1970, arguing that once Philips had put the patented device into the market, its patent rights stood exhausted. They also challenged the essentiality of the suit patent and disputed the FRAND nature of the royalty rates claimed by Philips.

During the pendency of the suits, the suit patent expired on 12 February 2015, rendering the prayer for injunction infructuous. The Single Judge’s judgment dated 12 July 2018 accordingly dealt only with damages. The Single Judge found the suit patent to be an SEP, found infringement proved, rejected the exhaustion defence and decreed royalty at FRAND rates of USD 3.175 per DVD player up to 27 May 2010 and USD 1.90 per DVD player thereafter till 12 February 2015, together with punitive damages of Rs. 5 lakhs against Rajesh Bansal on the ground that he was a former employee of Philips who had infringed the patent with impunity. The Bansals appealed to the Division Bench.

Issues for Determination

1. Whether the invention forming subject matter of the suit patent was a decoding device residing in a chip or PCB within a DVD player or whether it was a technology or process and what significance this distinction had for the scope of protection available to Philips.
2. Whether Philips had proved that the suit patent was a Standard Essential Patent, specifically whether the existence of a standard set by the DVD Forum as an SSO had been established, whether the suit patent had been shown to map onto that standard and whether the Essentiality Certificates issued by Proskauer Rose LLP and Cohausz & Florack in respect of US’505 and EP’254 constituted credible evidence of essentiality.
3. Whether the Bansals had infringed the suit patent, either by the indirect method of proving that both the suit patent and the defendants’ products mapped onto the DVD standard or by direct product-to-claim mapping of the Bansals’ DVD players against the claims of the suit patent and whether the evidence of PW-2 and the affidavit of Ravi Babu were sufficient to establish infringement.
4. Whether the Bansals were protected from infringement liability by the doctrine of international exhaustion of patent rights under Section 107A(b) of the Patents Act, 1970 as amended in 2003, given that they had purchased the PCBs from Shuntak and Sheenland who supplied MediaTek chips which were also contained in Philips’ own DVD players.
5. Whether the royalty rate awarded by the Single Judge at USD 3.175 up to May 2010 and USD 1.90 thereafter per DVD player was established to be FRAND and whether the damages could be computed on a per DVD player basis when the suit patent claimed only a decoding device which was one component of the DVD player.
6. Whether punitive damages of Rs. 5 lakhs were justified against Rajesh Bansal on the ground that he was a former employee of Philips.

Key Holdings of the Court

• First, the Division Bench held that the suit patent was a product patent for a decoding device and not a method or process patent. All six claims in the suit patent commenced with and claimed a decoding device. While the opening description in the complete specifications referred to methods, processes and other items, the Court held that protection under the Patents Act is available only to what is claimed in the claims, as provided by Section 10(4)(c) of the Act. Philips’ own expert witness PW-2, when asked directly, confirmed that the claim of the patent related to a decoding device and not to a technology. Further, the decoding device forming the subject matter of the suit patent resided in the chip or PCB contained in the DVD player, as confirmed by PW-2 who identified the green circuit board — marked AAAA — as containing the patented invention.
• Second, the Court held that the DVD Forum was the SSO which set the standards for DVD players and DVD ROM players. The Bansals could not contest this as they had themselves acknowledged in their written statement that the DVD Forum was the organisation that laid down industry standards for DVD players. The Court further held that the standards document PW-2/5, though de-exhibited on technical grounds, had been cross-examined upon by the Bansals themselves who put leading questions to PW-2 about its contents. Having done so, the Bansals could not seek to contend that PW-2/5 was not in evidence.
• Third, the Court held that Philips had failed to prove that the suit patent was an SEP. The primary evidence of essentiality relied upon by Philips consisted of the Essentiality Certificates issued by Proskauer Rose LLP and Cohausz & Florack certifying that the corresponding US patent US’505 and European patent EP’254 were essential to the DVD standards. The Court found these ECs to be inadmissible as credible evidence for two reasons. First, the ECs did not refer to the manner in which the US and EP patents were mapped onto the standards set by the DVD Forum so as to arrive at the conclusion of essentiality — the methodology was absent. Second, no person from either Proskauer Rose or Cohausz & Florack entered the witness box and no affidavit from any member of either firm was placed on record vouchsafing to the correctness of the ECs. Being in the nature of expert evidence, the ECs were required to be proved in accordance with Section 45 of the Indian Evidence Act, which they were not. The Court further found that no claim charts — showing that the claims in the suit patent mapped onto the technical features of the DVD standard as required by the indirect test approved in Intex — had been produced by Philips. In the absence of any credible evidence of essentiality, the suit patent could not be treated as an SEP.
• Fourth, the Court held that infringement had not been proved by either the indirect or direct method. On the indirect method, since the ECs had no credible evidentiary value, infringement could not be inferred through the chain of reasoning that the suit patent maps onto the standard and the defendant’s product also maps onto the standard. On the direct method, the Court found three fatal evidentiary deficiencies. First, no product-to-claim mapping exercise had been undertaken comparing the Bansals’ DVD players with the claims in the suit patent, which is the classical and primary test of infringement. Second, the affidavit of Ravi Babu, who had conducted infringement analysis, could not be read in evidence as Ravi Babu never entered the witness box. An affidavit cannot be proved by or through a third party — it can be relied upon only if the deponent enters the witness box and subjects himself to cross-examination. Third, PW-2, who claimed to have independently tested the Bansals’ products, never placed on record the logs or any details of the infringement analysis purportedly undertaken by him. Applying Section 114 Illustration (g) of the Indian Evidence Act, the Court drew an adverse inference against Philips from this withholding of the best evidence. Further, the testing conducted by PW-2 was on the entire DVD player and not on the chip or PCB in which the invention resided, compounding the evidentiary deficiency.
• Fifth, the Court upheld the Bansals’ defence of exhaustion of patent rights under Section 107A(b) of the Patents Act, 1970 as amended in 2003. The Court noted that the 2003 amendment to Section 107A(b) materially changed the law by removing the requirement that the product must have been purchased from a person duly authorised by the patentee. Under the amended provision, it is sufficient that the product was purchased from a person duly authorised under the law to produce and sell the product. The evidence established that the Bansals had purchased PCBs from Shuntak and Sheenland who were authorised dealers of MediaTek — a fact confirmed by the letters from Shuntak and Sheenland placed on record and not effectively challenged in cross-examination. DW-2’s assertion that MediaTek was a registered vendor of Philips was not put to challenge in cross-examination and therefore went unrebutted. The Court also noted that Philips’ own DVD players contained the same MediaTek chip as the Bansals’ players, as confirmed by PW-2 himself. Once Philips had released the chips and PCBs containing the patented invention into the open market through MediaTek, its patent rights stood exhausted and could not be enforced against downstream purchasers. The Single Judge’s rejection of this defence on the ground that there was no evidence that MediaTek was a licensee of Philips was held to be erroneous in light of the 2003 amendment to Section 107A(b).
• Sixth, the Court held that the royalty rate determined by the Single Judge was not established to be FRAND. A fundamental requirement for any FRAND determination is the production of comparable licence agreements with third parties so that the Court can arrive at an objective view that the rate offered is fair, reasonable and non-discriminatory. Philips had not produced a single such agreement despite PW-1 acknowledging in cross-examination that he was in possession of such licence agreements. Applying Illustration (g) of Section 114 of the Indian Evidence Act, an adverse inference was drawn against Philips. The pre-suit negotiations and the interim arrangement of 20 September 2010 could not constitute a basis for final adjudication of FRAND royalty. The Court further held that punitive damages could not be awarded on the sole ground that Rajesh Bansal was a former employee of Philips, particularly in light of the overall finding that infringement had not been established.
• Seventh, the Court held that even if royalty were payable, it could not have been computed on a per DVD player basis. The suit patent claimed only the decoding device which resided in the chip or PCB — one component among many in the DVD player. Computing royalty on the entire DVD player would effectively require the Bansals to pay royalty on components in respect of which Philips held no patent. This was impermissible.
• Eighth, the Division Bench quashed and set aside the judgment of the Single Judge dated 12 July 2018 and allowed both appeals with no order as to costs.

Statutory Provisions Involved

Section 48 of the Patents Act, 1970 confers upon a patentee the exclusive right to prevent third parties from making, using, offering for sale, selling or importing a patented product where the subject matter is a product and from using, selling, offering for sale or importing any product obtained directly by a patented process where the subject matter is a process. The Court applied Section 48 to identify the scope of Philips’ exclusivity rights and noted that the Patents Act, unlike other intellectual property statutes, does not define infringement — but Section 48 sets out the acts which constitute infringement by implication. The distinction between clauses (a) and (b) of Section 48 — relating to product patents and process patents respectively — was relevant to the Court’s finding that the suit patent was a product patent for a decoding device.

Section 10(4)(c) of the Patents Act, 1970 requires that every complete specification shall end with a claim or claims defining the scope of the invention for which protection is claimed. The Court relied upon this provision to hold that protection is available only for what is claimed and not for what is described elsewhere in the complete specification. Since all claims in the suit patent claimed a decoding device, Philips could not assert rights over the broader technology on the basis of descriptions elsewhere in the specifications.

Section 107A(b) of the Patents Act, 1970 provides that importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product shall not be considered as an infringement of patent rights. The Court extensively examined the 2003 amendment to this provision, which removed the earlier requirement that the sale must be from a person duly authorised by the patentee and replaced it with the requirement only that the seller be duly authorised under the law. This amendment was held to be pivotal to the exhaustion defence in the present case, since the Bansals had purchased PCBs from Shuntak and Sheenland who were authorised dealers of MediaTek under the law and it was no longer necessary to show that MediaTek itself was a licensee of Philips.

Section 45 of the Indian Evidence Act, 1872 makes the opinion of experts on points of science admissible as relevant facts. The Court applied this provision to the Essentiality Certificates issued by Proskauer Rose and Cohausz & Florack, holding that as they constituted expert evidence they were required to be proved by the experts themselves entering the witness box and subjecting themselves to cross-examination. Since neither firm sent any witness and the certificates did not disclose the methodology behind the essentiality conclusions, they could not be accepted as credible evidence.

Section 114 Illustration (g) of the Indian Evidence Act, 1872 permits the court to presume that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it. The Court applied this provision on two distinct occasions — first against Philips for its failure to produce the logs of PW-2’s infringement testing despite acknowledging their existence and second against Philips for its failure to produce any of the licence agreements with third parties despite PW-1 acknowledging he was in possession of them.

Reasoning of the Court

The Division Bench’s analysis proceeded sequentially through four major areas — the nature of the suit patent, its status as an SEP, the question of infringement and the exhaustion defence — before addressing the FRAND and damages issues.

On the nature of the suit patent, the Court’s reasoning was grounded in the fundamental principle that a patent’s protection is coextensive with its claims and nothing more. The opening passages of the complete specification had created confusion by referring to methods and processes, but the Court applied Section 10(4)(c) to cut through this confusion cleanly. Claims define the scope of protection. All six claims claimed a device. Philips’ own expert confirmed this. The device resided in the chip or PCB. These were clear and consistent findings from the evidence itself and the Single Judge’s reliance on the decoding device being an integral part of the DVD player to justify computing royalty on the entire DVD player was held to be a non-sequitur — the integral nature of the component did not expand the scope of the patent beyond what was claimed.

On essentiality, the Court’s reasoning identified two distinct evidentiary failures. The first was the failure to prove the Essentiality Certificates through their authors. The Court drew on well-established Supreme Court authority on the proof of expert evidence under Section 45 of the Evidence Act — specifically the judgments in Jai Lal and Ramesh Chandra Agrawal — to hold that expert opinions are not self-proving and must be supported by examination of the expert in court. The second was the absence of claim charts mapping the suit patent onto the DVD standard as required by the indirect test. The Court observed that Intex in para 95 clearly required claim charts to demonstrate that the claims of a patent are also present in the technical features of a standard. No such exercise had been undertaken. These two failures were individually and collectively sufficient to deny the suit patent the status of an SEP.

On infringement, the Court returned to first principles. The classical test of infringement is product-to-claim mapping. This exercise had simply not been done. The Court then examined whether the evidence of PW-2 could fill this gap and found it could not for three reasons — the affidavit of Ravi Babu whose work PW-2 adopted was inadmissible as Ravi Babu never testified; PW-2’s own testing logs were never produced despite being admittedly available; and the testing was in any case conducted on the DVD player as a whole rather than on the chip or PCB where the invention resided. The Court applied the principle that a party cannot withhold the best evidence available and then rely on secondary or oral evidence of its contents.

On exhaustion, the Court’s reasoning was anchored in the text and legislative history of the amended Section 107A(b). The 2003 amendment, by substituting authorized under the law for authorized by the patentee, effected a fundamental change in the scope of the exhaustion defence. The Court held that this change was deliberate and its effect was to introduce a principle of international exhaustion under which once a patented product is sold in the market by a person authorised under the law — as MediaTek and its dealers indisputably were — the patent holder cannot enforce rights against downstream purchasers. The Court reinforced this reasoning by reference to the US decisions in Adams v. Burke, Quanta Computer and Impression Products, which collectively articulate the exhaustion doctrine as extinguishing patent rights upon the first authorized sale of the patented article.

On FRAND and damages, the Court’s reasoning identified the fundamental gap in Philips’ evidence — the complete absence of any comparable licence agreements with third parties. The Court observed that without such agreements, neither the defendant nor the Court can assess whether the rate offered is fair, reasonable and non-discriminatory. The observation in the impugned judgment that informal pre-suit negotiations could constitute the basis for a final FRAND determination was specifically disapproved — at most, such negotiations could support an interim arrangement, not a final adjudication. The Court applied Illustration (g) of Section 114 of the Evidence Act to draw an adverse inference from Philips’ deliberate withholding of agreements that PW-1 acknowledged he possessed.

Doctrinal Significance

The K.K. Bansal v. Philips judgment is one of the most important Indian decisions on Standard Essential Patent law and the doctrine of patent exhaustion and its significance extends across multiple doctrinal domains.

Its most significant contribution is the authoritative exposition of the evidentiary requirements for proving SEP status in Indian courts. The Court’s holding that Essentiality Certificates constitute expert evidence within the meaning of Section 45 of the Indian Evidence Act and must be proved through examination of their authors is a critical clarification that will shape how SEP holders structure their evidence in future litigation. The additional requirement — drawn from Intex — that claim charts mapping the patent onto the standard must be produced provides concrete guidance on what a minimum adequate evidentiary record for SEP status looks like. Together these holdings set a demanding but principled evidentiary standard for SEP litigation.

The judgment’s treatment of Section 107A(b) of the Patents Act, 1970 as amended in 2003 is also doctrinally important. The Court’s analysis of the significance of the shift from authorized by the patentee to authorized under the law constitutes the first detailed exposition of the 2003 amendment and its effect in establishing a regime of international exhaustion under Indian patent law. This is a finding of considerable commercial significance for the electronics and technology industries where global supply chains routinely involve multiple tiers of authorized distributors and vendors.

The judgment is also significant for its clear articulation of the FRAND proof obligation. The holding that a plaintiff SEP holder claiming royalty or damages must produce comparable licence agreements with third parties — and cannot rely on informal pre-suit negotiations or assertions by its own witnesses as the basis for a FRAND determination — provides important guidance on the disclosure obligations that attach to SEP holders in Indian litigation. The Court’s observation that the entire exercise of FRAND determination may be frankly impossible in its present form is a candid acknowledgment of the structural challenges in SEP litigation that calls for attention from both courts and legislators.

Finally, the judgment provides a clear and authoritative statement on claim construction in product patent cases. The holding that protection is available only for what is claimed in the claims, that the complete specification cannot travel beyond the claims and that royalty and damages must be tied to the specific device claimed rather than to the product as a whole in which it is incorporated, reaffirms the principle that patent monopoly cannot be used to extract royalties for technology that the patentee does not hold.

Frequently Asked Questions:

1. What was the outcome of K.K. Bansal v. Koninklijke Philips Electronics N.V.?
   The Delhi High Court Division Bench allowed both appeals, quashed the Single Judge’s decree awarding damages and royalty to Philips, and held that Philips had failed to establish that its DVD patent was a Standard Essential Patent, that infringement had not been proved, and that the defendants’ exhaustion defence under Section 107A(b) succeeded.
2. What evidence is required to prove that a patent is a Standard Essential Patent in India?
   Following this judgment and the Intex decision, an SEP holder must produce Essentiality Certificates proved through the oral testimony of their authors, and claim charts demonstrating that the claims of the patent map onto the specific technical features of the relevant standard set by the Standard Setting Organisation.
3. What did the 2003 amendment to Section 107A(b) of the Patents Act change?
   The amendment replaced the requirement that imported products be purchased from a person authorised by the patentee with the requirement only that the seller be authorised under the law, effectively establishing a regime of international exhaustion under which downstream purchasers from lawfully authorised dealers are protected from infringement liability.
4. Why were the Essentiality Certificates in this case rejected as evidence?
   The Court held that Essentiality Certificates constitute expert evidence under Section 45 of the Indian Evidence Act, 1872 and must be proved by their authors testifying in court. Since no representative of the certifying firms entered the witness box and the certificates disclosed no methodology, they could not be treated as credible evidence.
5. How must FRAND royalty be proved in Indian patent litigation?
   The Court held that a SEP holder must produce comparable licence agreements with third parties to enable the court to assess whether the claimed rate is fair, reasonable and non-discriminatory — informal pre-suit negotiations or assertions by the SEP holder’s own witnesses are insufficient for a final FRAND determination.

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