Koninklijke Philips N.V. v. Maj (Retd.) Sukesh Behl & Ors.; G.S. Kohli & Ors.; Surinder Wadhwa & Ors.

Case Name: Koninklijke Philips N.V. v. Maj (Retd.) Sukesh Behl & Ors.; G.S. Kohli & Ors.; Surinder Wadhwa & Ors.
Court: High Court of Delhi, New Delhi
Date: 20th February, 2025
Citation: CS(COMM) 423/2016, CS(COMM) 499/2018, CS(COMM) 519/2018

Introduction

Parties Involved

• Plaintiff: Koninklijke Philips N.V., a multinational technology company specializing in electronics and intellectual property rights.
• Defendants: Various DVD replication companies, including Maj (Retd.) Sukesh Behl & Anr., G.S. Kohli & Ors., and Surinder Wadhwa & Ors. Accused of infringing Philips’ patent No. 218255 related to DVD technology.

Nature of the Case

Type: Civil lawsuit concerning patent infringement.

• Philips filed a case against the   Defendants for using its patented technology without obtaining a license, which violated the Indian Patents Act.
• The case involved identifying the validity of Philips’ patent, assessing financial damages, and establishing personal liability for wilful infringement.

Procedural History

• 2016-2018: Philips filed lawsuits (CS(COMM) 423/2016, CS(COMM) 499/2018, and CS(COMM) 519/2018) in the Delhi High Court.
• Defendants challenged the patent’s validity, arguing Philips failed to disclose essential details during filing.
• Litigation was dragged over many years due to procedural objections and the Defendants’ refusal to provide financial data and delayed responses for the counter-filing.

Judgement: February 20, 2025, The Delhi High Court ruled in Philips’ favour, awarding monetary damages, confirming patent validity, and holding some Defendants personally liable for wilful infringement.

Key Facts

• Plaintiff: Koninklijke Philips N.V., a multinational electronics company.
• Defendants: DVD replication companies (Pearl Engineering, Siddharth Optical, Powercube Infotech) accused of patent infringement.
• Philips owns Indian Patent No. 218255, essential for DVD replication technology.
• Defendants manufactured patented DVD replications without licensing, violating Philips’ intellectual property rights.
• Litigation began between 2016-2018, though infringement started in 2012.

Legal Issues

Primary Issue: Main Issues in the Case

1. Can Philips own the patent of DVD technology (Patent No. 218255)?
2. Is the patent valid, or should it be withdrawn based on the Defendants’ arguments?
3. Did the Defendants copy Philips’ patented technology illegally?
4. Should the court stop the Defendants from using Philips’ patent (permanent injunction)?
5. Has Philips committed patent fraud, as the Defendants claim?
6. Should the patent be canceled if fraud is proven?
7. Is Philips entitled to damages (financial compensation)?

Secondary  Issues :

• Are all legal rules followed by Phillips when filing the case?
• Can DVD technology be patented?
• Did the Defendants knowingly infringe Philips’ patent rights?
• Do the Defendants owe Philips a royalty fee, and if so, how much?

Arguments:

 Plaintiff’s Arguments:

• Philips owns Indian Patent No. 218255, which covered essential DVD replication technology.
• The patent was lawfully granted and has been upheld in multiple jurisdictions, proving its legitimacy and existence.
• Defendants’ claims of non-disclosure and fraud were baseless, as the plaintiff complied with legal filing requirements.
• Defendants wilfully and knowingly used Philips’ patented technology without obtaining a license, violating the Indian Patents Act.
• Despite repeated reminders about corrections in the licensing process, Defendants refused to secure licenses and continued unauthorized production.
• Their failure to pay royalties led to financial losses for Philips.
• The patent reserved is one of nine essential patents required for DVD replication.
• An independent expert confirmed the necessity of it, reinforcing its role in industry standards.
• Global standards (DVD Forum) recognize Philips’ technology, proving its relevance.
• Philips operates a fair, non-discriminatory licensing system, offering options for manufacturers.
• Details of licensing were publicly available, but Defendants ignored multiple opportunities to acquire.
• Other companies successfully licensed the technology, showing that usage was easy.
• Defendants intentionally withheld financial records, obstructing court proceedings.
• They changed their defenses at several stages, trying to mislead the court, which led to prolonged litigation.
• Their delay allowed them to continue infringing until the patent expired.

Defendants’ Arguments:

• Defendants claimed their replication was legal, with proper copyright documentation.
•  Argued Philips filed lawsuits were meant to harm the reputation and disturb and destroy the operations.
• Defendants denied violation of the patent, calling the lawsuit an extortion attempt.
• Argued Philips waited too long to sue, knowing about the activities since 2005-2007.
• Philips’ patent should not be applied to DVD replication, and industry standards do not need it.
•  Questioned the credibility of the One-Red LLC website, which was not working, Philips’ licensing company.
• Pearl Engineering and Siddharth Optical argued Philips coerced them into signing VCD licensing agreements under threats of filing civil and criminal suits against them.
•  Defendants asserted Philips’ VCD patent expired, making it free for public use.
• Non-compliance with Section 8 by the plaintiff, claimed Philips concealed details of foreign patent applications, violating India’s Patents Act.

Court’s Analysis and Legal Reasoning

Legal Reasoning for the judgment:

The court based its ruling on three key aspects:

• The authenticity and validity of the patent – The court found that Philips did legally obtain the patent and complied with disclosure obligations, against the allegations of fraud.
• Defendants’ wilful infringements – The Defendants deliberately replicated DVDs without getting a license, proving intent.
• Procedural Misconduct by defendant – The court ruled that the defendant intentionally withheld financial records, creating obstructions in proceedings.

Relevant Law Applied:

The court relied on the following statutes from the Indian Patents Act, 1970:

• Section 8: Requires full disclosure of foreign patent applications.
• Section 64(1)(m): A patent can be revoked if information is deliberately concealed.
• Section 3(k): Prohibits patents on computer programs per se (which the Defendants cited to challenge Philips’ patent).
• Section 111: Limits damages for innocent infringers, which the court did NOT apply since Defendants intentionally infringed the patent.

Court’s Interpretation of the Law:

• On Patent Validity: The court ruled that Philips’ patent was essential for DVD technology, as it was not just a computer program, dismissing claims of fraudulent filing.
• On Wilful Infringement: Since Defendants ignored repeated requests for licensing, their infringement was deliberate, which led to damages.
• On Software Patentability: The court found Philips’ patent covered a technical process, not just a digital program, making it patentable under Section 3(k).
• On Compensation: Due to procedural misconduct, the court awarded aggravated damages, ensuring fair restitution for Philips.

Trial Proceedings

Trial & Witnesses:

• The trial commenced after issues were framed.
• Both sides presented witnesses, including licensing and intellectual property experts.

Document Requests & Legal Challenges:

• Defendants took records from the Patent Offices (approved in 2014 and 2015).
• Philips requested business records from Pearl Engineering, which were granted, but Pearl challenged the order unsuccessfully.

Case Developments:

• Philips applied to combine hearings due to overlapping issues, which led to joint proceedings.
• Scientific advisors were requested by the Phillips, but didn’t press the request in the final arguments.
• Philips asked to disclose financial statements by the defendants to ensure sufficient assets for potential damages (pending decision).

Trial Conclusion & Final Arguments:

• The trial was ended on 3rd September, 2016.
• Final arguments concluded on 28th May, 2024

Decision:

Ruling:

• Dismissed allegations of fraud and confirmed Philips as complied with legal disclosure rules.
•  Defendants violated licensing terms intentionally, warranting damages.
• Defendants failed to disclose financial records, leading to huge damages

Outcome:

• Royalty & Aggravated Damages:
• Pearl Engineering: INR 7.22 crore
• Siddharth Optical: INR 2.61 crore
• Powercube Infotech: INR 13.43 crore
• Litigation Costs Assigned: Due to the Defendants’ procedural misconduct.
• Currency Exchange Rate & Interest: INR 83/USD and 12% annual interest until full payment.
• Patent remains valid and enforceable, as Philips’ licensing rights were confirmed.

Concurring/Dissenting Opinions:

• The judgment was largely one-sided, with the court agreeing that Philips had legally acquired and disclosed patent details, and the Defendants wilfully infringed upon its rights.
•  None recorded— no judicial disagreements over patent validity, infringement findings, or damages exist.

Significance of the Case

Impact on Law:

•  The case reaffirmed that failure to disclose the foreign patent applications under Section 8 does not automatically lead to patent revocation, unless the omission was intentionally and materially misleading.
• The court reinforcement of strong penalties for patent infringement, ensuring infringers do not avoid liability by withholding records of finance or using procedural delays.
• The court ruled that patents relating to technical processes that involve hardware interaction do not come under Section 3(k)’s exclusion for computer programs per se, which made future patent disputes more predictable.

Important Precedents Set:

• Patent Standard Revocation Under Section 64(1)(m): The ruling clarified that clerical errors do not justify revocation until intent is proven.
• Personal Liability in the cases of Patent Infringement: The judgment gave strength to the principle that directors can be held personally liable if they actively control or authorize infringement, setting a precedent for the corporate veil in future IP disputes.
• Adverse outcomes for the Non-Disclosure: The court confirmed that parties who withhold financial data shall have damages estimated based on available information in the market, punishing companies for concealing sales records on a court order.

Subsequent Developments:

• Stricter Enforcement Patent Licensing: The ruling was to encourage stricter enforcement of licensing frameworks, leading to more active litigation by patent holders.
• Efficient Ju in Patent Disputes: Courts may now fast-track cases where delays are used as obstructions, improving the efficiency of patent filing in India.
• Industry Response or Potential Appeals: While Defendants may attempt to appeal the ruling, the judgment serves as a cautionary example for unauthorized patent use in industries dealing with standard-essential patents.

Conclusion

Summary of the Case

• Philips sued the Defendants for patent infringement, due to unauthorized DVD replication without licensing.
• Defendants challenged the validity of the patent, accused Philips of filing errors, and argued late filing.
• The Delhi High Court upheld Philips’ patent, dismissed fraud claims, and confirmed wilful infringement.
• Damages awarded:
• Pearl Engineering: INR 7.22 crore
• Siddharth Optical: INR 2.61 crore
• Powercube Infotech: INR 13.43 crore
• Additional aggravated damages and litigation costs imposed due to procedural misconduct.
• Interest is applied at 12% per year until full payment.

Personal Analysis & Case Significance

This case gave strength to patent rights in India, particularly for standard-essential technologies like DVDs. It clarifies key legal principles, including:

1. Mere clerical errors can not justify cancellation; ill-intention must be proven.
2. Technical inventions beyond software, which include some hardware improvements, are patentable under Section 3(k).
3. Directors can be made liable personally if they actively engage in infringement.
4.  Estimates based on market reports ensure patent holders receive fair damages.

Reference(S):

 World Intellectual Property Organization (WIPO), ‘The Patents (Amendment) Rules, 2020’ (2020) https://www.wipo.int/wipolex/en/text/594104 accessed [20 May 2025]