Delhi High Court Overturns Philips Decree Against DVD Player Assemblers
KK Bansal and Ors. v. Koninklijke Philips Electronics NV
Decided on: 18th May, 2026
Coram: C. Hari Shankar and Om Prakash Shukla, JJ.
Citation: RFA (OS) (COMM) 17/2018 & 18/2018
Introduction
In a first, the Delhi High Court has quashed a 2018 order directing KK Bansal and Rajesh Bansal, two small assemblers of DVD video players operating out of Delhi, to pay royalty to Koninklijke Philips Electronics NV (Philips) under a patent claimed to be a Standard Essential Patent (SEP). The appellate court has found that Philips has failed to prove the essentiality of IN-184753, failed to establish infringement based on admissible evidence, and that the Bansals’ acquisition of patented components from market authorised dealers in any event constituted the exhaustion of Philips’ patent rights under Section 107A(b) of the Patents Act, 1970.
Background and Suits
Philips filed two cases (CS (Comm) 24/2016 and CS (Comm) 436/2017) in the Delhi HC against the Bansals’ EFM+ decoding devices, which were used to play DVDs that were allegedly infringing Indian Patent IN-184753, which was a decoding device for converting modulated signals into a series of m-bit information words. Philips asked for an injunction and damages.
In both suits, the learned Single Judge found that IN-184753 constituted an SEP in respect of DVD video player technology, that infringement was proved, and the Bansals were liable to pay royalty at FRAND rates of USD 3.175 per DVD player till 7 May 2010 and USD 1.90 per DVD player thereafter till 12 February 2015, with interest being awarded at 10% per annum. The punishment will be Rs. 5 lakhs, which was also slapped on the shoulders of Rajesh Bansal, as he was to be considered a former Philips employee. Both Bansals filed the present appeals being aggrieved by the decree.
Issues Before the Division Bench
The Division Bench formulated four questions:
- Whether the patent suit was an SEP;
- Whether the damages quantified were justifiable;
- Whether the Bansals are infringing the suit patent; and
- Whether the patent suit was barred on the basis of international patent exhaustion under Section 107A(b).
On the Suit Patent and Its SEP Status
A suit patent is first described by the court. All six of IN-184753’s claims are claims for a device rather than a method or process. Philips’ expert witness (PW-2) gave evidence during his cross-examination that the patent claims are not about the decoding technology itself, but rather to an integrated circuit or chip which is fixed to a printed circuit board (PCB). The court found that the protection of the patents under Section 10(4)(c) of the Patents Act is only for what has been claimed. A suit patent is a product patent that is limited to the decoding device kept inside the chip/PCB of the DVD player.
The court found that the failure that was material to its decision was that of the two certificates, the Essentiality Certificates (ECs) issued by Proskauer Rose LLP and Cohausz & Florack, in respect of US’505 and EP’254. There was no evidence from either firm that entered the witness box, no affidavit from anyone from those firms, and the ECs themselves did not reveal how the US patents and the European patents were correlated with DVD Forum standards. In the case of State of Himachal Pradesh vs. Jai Lal, the court clarified that expert reports are not evidence and need to be introduced by the expert, who must appear in the witness box and be open for cross-examination. Otherwise, there were no credible evidentiary weight of the ECs.
Further, the court observed that there were no claim charts which mapped the claims of IN-184753, US’505, or EP’254 to the technical features of the DVD standards, as required by the Division Bench in Intex Technologies (India) Ltd v. Telefonaktiebolaget LM Ericsson. The court found that Philips failed to demonstrate that the suit patent was an SEP.
On Infringement
The brand Philips, found its two failures in evidence to be fatal. The first was an affidavit by a Philips technical expert, Mr Ravi Babu, which was shown to prove infringement by analysis of channel bit data, but there was no evidence that Mr Ravi Babu entered the witness box. The court relied upon the basic rule laid down in Ayaaubkhan Noorkhan Pathan v. State of Maharashtra, which stated that an affidavit can be accepted only when the person making it appears in the witness box and is available for cross-examination.
Second, PW-2 (a Philips IP counsel) testified that he himself tested the Bansals’ DVD players and found infringement, but did not present the logs or analysis of his tests. There was an adverse inference (under Illustration (g) of Section 114 of the Evidence Act) that documents which were withheld would have been unfavourable to Philips, the court finding that PW-2’s oral evidence, without any supporting documents or evidence to support it, breached the rule that oral evidence shall not substitute documentary evidence. The court also pointed out that the testing is on the full DVD player and not the chip or the PCB where the suit patent is claimed to be located, further weakening the relevance of the test to the claims of the patent. It was therefore not proved, directly or indirectly, that there was infringement.
On Patent Exhaustion u/s 107A(b)
The Division Bench, however, both independently and additionally concluded that, even if the infringement was established, Philips’ right to enforce the suit patent would be lost because of the doctrine of international patent exhaustion. The Bansals had bought MediaTek chips/PCBs from the registered partners of MediaTek Shuntak (HK) Trading Company and Sheenland Corporation (HK). The Evidence-in-affidavit by Rajesh Bansal stated that MediaTek was a registered vendor of Philips and, importantly, Philips did not challenge the evidence, so it was accepted, relying on the rule in Muddasani Venkata Narsaiah v. Muddasani Sarojana, that unchallenged evidence is accepted.
The court also held the 2003 amendment of Section 107A(b) of the Patents Act to be conclusive. The pre-amendment provision requires the seller to be duly authorised by the patentee, while the post-amendment provision stipulates that the seller needs to be duly authorised under the law to produce and sell the product. No case was made that Shuntak or Sheenland did not have a legitimate claim to sell the MediaTek PCBs. The court ruled that Philips’ patent was now exhausted since the court had heard that the Philips brand DVD player had the same MediaTek chip as the Bansals’ DVD player, as stated by PW-2.
On FRAND and Quantum of Damages
The court found several reasons why it was unsustainable for the Single Judge to quantify damages. Philips did not have a single third-party licence agreement; though in cross-examination, PW-1 admitted he had copies at Philips’ Netherlands headquarters. This again gave rise to an adverse inference pursuant to Section 114 of the Evidence Act. The court found that a finding of FRAND compliance must be based on an objective comparison of the licences with third parties and cannot be based on the SEP holder’s assertion or informal pre-suit negotiations, which the court described as interim and without prejudice. If the suit patent only covers the decoding device (chip/PCB), and not the whole DVD player, then it would be impossible to assess the royalty per DVD player, since the DVD player contains a multitude of elements that Philips does not own. Punitive damages given to Rajesh Bansal just on the grounds of being a previous employee of Philips were also junked because of a lack of basis.
Decision & Significance
The impugned order dated 12 July 2018 was set aside and quashed. Both appeals were allowed with no order as to costs.
This decision is remarkable in a number of respects. It is one of the first decisions in India to apply all the guiding principles of the claim chart, admissible expert evidence for essentiality certificates, and product-to-claim mapping for infringement in SEP litigation, as set out in the Intex Division Bench decision. It confirms that the 2003 amendment of Section 107A(b) significantly broadened the exhaustion defence by eliminating the requirement to have the authorisation of the patentee, and that the sale of patented components on the open market by any lawfully operating dealer is sufficient to trigger exhaustion. It also establishes a clear benchmark that the royalty determination of FRAND must be based on the production of comparable licence agreements and cannot be based on the extrapolation from informal negotiations or unsubstantiated rate assertions. The judgment also solidifies a rule that was previously established: a patent for a product that only covers a part of the product does not support a claim to the price of the whole product in which that part is incorporated.