Court underscores implementers' obligation to furnish security during FRAND negotiations for 4G and 5G SEPs, balancing equities without detailed merits examination.
In a landmark judgment dated April 30, 2026, the Delhi High Court, presided over by Justice Tejas Karia, directed Xiaomi Corporation and its associated entities to deposit Rs. 272 crores (approximately USD 28.7 million) as “pro tem” security in a patent infringement suit filed by Malikie Innovations Ltd. The suit involves allegations of unauthorized manufacture, import, and sale of devices compliant with 3G, 4G, and 5G standards that allegedly infringe Malikie’s Standard Essential Patents (SEPs).
The plaintiffs, Malikie Innovations Ltd and another, hold a portfolio of cellular SEPs acquired from BlackBerry Limited, including three key patents related to long-term evolution (LTE) technology. The portfolio covers technologies essential to modern cellular communication standards and is declared as essential or potentially essential to the relevant standards before the European Telecommunications Standards Institute (ETSI).
Malikie Innovations claimed that despite multiple offers on Fair, Reasonable, and Non-Discriminatory (FRAND) terms and ongoing negotiations since October 2023, Xiaomi has engaged in delay tactics and has refused to furnish security or execute a license agreement. The defendants, while acknowledging negotiations, disputed the validity and essentiality of the patents and questioned the plaintiffs' failure to produce third-party license agreements or valuation of the patents.
Rejecting these contentions, the Court emphasized that “pro tem” security is a temporary measure to protect the SEP holder’s interests during litigation and does not require a detailed inquiry into the merits or full prima facie adjudication of patent validity or essentiality. The Court relied on precedents, including Nokia Technologies OY v. Guangdong OPPO Mobile Telecommunications and Dolby International AB v. Lava International, to hold that implementers have a legal obligation to furnish security commensurate with the SEP holder’s FRAND offer even during negotiation stages.
The Court found that Malikie had established a prima facie case on validity, essentiality, and infringement based on patent declarations, claim charts, and the defendants’ own public admissions regarding 4G and 5G compliance of their devices. The recent filing by Xiaomi before the Shenzhen Intermediate People’s Court in China seeking FRAND rate-setting for the same patents was considered an implicit admission of essentiality and the obligation to pay royalties.
Further, the Court noted the precarious financial position of the Indian subsidiary of Xiaomi, including ongoing investigations and asset seizures, creating a risk that the plaintiffs might not be adequately compensated without the security deposit. The defendants’ complex corporate structure with no physical assets in India was also a factor in favor of ordering security.
In quantifying the pro tem security, the Court adopted a balanced approach by calculating 19.12% of the mean of the plaintiffs’ and defendants’ latest offers based on the defendants’ Indian market share, arriving at the sum of Rs. 272 crores. Xiaomi was directed to deposit this amount within six weeks or furnish an unconditional bank guarantee for the same. Failure to comply would entitle Malikie to seek interim injunctions or other reliefs.
The Court clarified that this order does not constitute a final finding on infringement or the FRAND nature of the royalty rate but is intended to maintain the status quo and ensure equity during the pendency of the suit.
This judgment underscores the Indian judiciary’s evolving approach towards balancing the rights and obligations of SEP holders and implementers in the rapidly developing telecommunications sector, particularly in cases involving 4G and 5G technologies. It affirms that implementers cannot indefinitely delay or avoid payment obligations during negotiations and must provide appropriate security to SEP holders.
Bottom line:-
Standard Essential Patents (SEPs) - Court can pass a "pro tem" order requiring defendants to deposit security to protect the interests of SEP holders during litigation, even without a full prima facie adjudication of patent validity and essentiality.
Statutory provision(s): Patents Act, 1970 (Sections 11A, 13(4), 48, 109), Code of Civil Procedure, 1908 (Section 151, Order XXXIX Rules 1 and 2), Delhi High Court Rules Governing Patent Suits, 2022 (Rule 4A(viii), Rule 3B(vi))
Malikie Innovations Ltd v. Xiaomi Corporation, (Delhi) : Law Finder Doc id # 2892923
