InterDigital vs Xiaomi: An interesting case on Confidentiality Club in Standard Essential Patents Litigation

Recently, the Delhi High Court decided on a patent infringement suit filed by Interdigital Technology Corporation (“InterDigital”), a US-based mobile and video Research & Development company, against Xiaomi Corporation (“Xiaomi”), a China-based internet and telecommunication company. An interesting aspect that was put forth for the consideration of the single judge Bench of the Delhi High Court is on the proposal from InterDigital for setting up of a
“Confidentiality Club” wherein, during ongoing litigation and negotiation of a dispute, certain documents and information of confidential nature pertaining to the technology and its licensing terms would only be made available to a ‘tiered’ group of persons at the exclusion of others. While the Bench of Justice C. Hari Shankar rejected the proposal, it did suggest an alternative approach. The entire development, in this case, is worth a look since it impacts litigation and dispute resolution of standard essential patents in India, a market that has grown in importance in the last few years.

Brief facts of the case: InterDigital sued Xiaomi alleging infringement of InterDigital’s Indian Patents, primarily the following:

• Patent No 262910 (Appl No 8446/DELNP/2007), titled: A METHOD FOR TRANSFERRING DATA OVER AN ENHANCED DEDICATED CHANNEL(E-DCH), A WIRELESS TRANSMIT/RECEIVE UNIT AND A BASE STATION THEREOF
• Patent No 295912 (Appl No 1233/DELNP/2009), titled: DYNAMIC RESOURCE ALLOCATION, SCHEDULING AND SIGNALING FOR VARIABLE DATA RATE SERVICE IN LTE
• Patent No 298719 (Appl No 7010/DELNP/2009), titled: FEEDBACK SIGNALING ERROR DETECTION AND CHECKING IN MIMO WIRELESS COMMUNICATION SYSTEMS
• Patent No 313036 (Appl No 6660/DELNP/2008), titled: METHOD AND SYSTEM FOR A WIRELESS TRANSMISSION/ RECEIPT
• Patent No 320182 (Appl No: 4977/DELNP/2009), titled: IMPLICIT DRX CYCLE LENGTH ADJUSTMENT CONTROL IN LTE _ACTIVE MODE

alleged that Xiaomi has been using the above-mentioned technology contained in Standard Essential Patents (SEPs) without obtaining the license and hence sought three broad reliefs from the High Court

1. A permanent injunction against Xiaomi from manufacturing, selling, assembling, distributing, advertising, exporting, importing, or using, in their devices, technology which infringes the Standard Essential Patents.
2. A direction that Xiaomi is to take a license from InterDigital for usage of its Standard Essential Patents on FRAND (fair, reasonable, and non-discriminatory) terms.
3. Set up a Confidentiality Club as per a new ‘tiered’ format suggested by InterDigital in accordance with Rule 17 of Chapter VII of the Delhi High Court (Original Side) Rule, 2018

While the initial relief (first two mentioned above) sought by InterDigital is an interesting subject-matter in itself dealing with the anti-suit injunction and anti-anti-suit injunctions, this article will limit itself to discuss the other interesting aspect of setting up Confidentiality Club.

Confidentiality Club: Indian courts and laws recognize the concept of Confidentiality Club, for instance, Rule 17 of Chapter VII of the Delhi High Court (Original Side) Rule, 2018 provides for setting up of Confidentiality Club as under:

“Confidentiality Club – When parties to a commercial suit wish to rely on documents/information that is commercially or otherwise confidential in nature, the Court may constitute a Confidentiality Club so as to allow limited access to such documents/information. In doing so, the Court may set up a structure/protocol, for the establishment and functioning of such Club, as it may deem appropriate. An illustrative structure/protocol of the Confidentiality Club is provided in Annexure F. The Court may appropriately mold the structure/protocol of the Club, based upon the facts and circumstances of each case.”

discussed (https://spicyip.com/2020/12/seps-and-confidentiality-clubs-protecting-fair-play-from-excessive-secrecy.html) the Delhi High Court’s decision on the constitution of a Confidentiality Club for sharing confidential documents in InterDigital v. Xiaomi. InterDigital had proposed that the club constituted to assess whether the licensing terms being offered by InterDigital were on FRAND basis have two tiers: an “outer tier” where the material would be accessible to the advocates for both sides, experts appointed by them, as well as representatives of both parties, and an “inner tier” which would receive documents accessible to all of the above except the parties’ representatives. InterDigital argued that this model would preserve confidential commercial information and it has been accepted by courts all over the world in SEP infringement litigations. Further, as matters are highly technical anyway, the parties’ decisions would be in sync with those of the experts. The court rejected this on two grounds – fair play, which requires each party to be aware of the case of the other party that it is supposed to counter; and the nature of the lawyer-client relationship which mandates that the lawyer act on the instructions of the client and not “substitute their judgment for that of the client.” Nikhil comments that this decision is well-reasoned and strikes a balance between the interests of the various stakeholders, while also keeping in mind transparency from a public interest perspective.

Author: Arindam Purkayastha – Patent Attorney at IIPRD. Email: [email protected]