Philips v. Rajesh Bansal — Delhi High Court Sets Aside SEP Damages, Holds DVD Patent Not Proven Essential and Imports Exhausted Under Indian Law

Background

Koninklijke Philips Electronics NV (Philips), the Dutch technology company, had obtained Indian Patent IN-184753 covering DVD decoding technology. Philips asserted the patent was essential to the DVD standard and sued K.K. Bansal and Rajesh Bansal, Indian importers of DVD players, for patent infringement. A single judge of the Delhi High Court had ruled in Philips’ favor, finding infringement and awarding punitive damages and royalties calculated on a per-device basis.

The Bansal defendants appealed to the Division Bench, challenging the infringement finding, the essentiality determination, and the damages award. They argued that their imports came from duly authorized distributors of MediaTek—a Taiwanese chipmaker whose chips implemented the DVD standard—and that the imports were therefore protected under Indian patent exhaustion principles.

The Court’s Holding

The Division Bench reversed the single judge’s decree on multiple independent grounds, delivering what commentators have called a landmark ruling for Indian SEP jurisprudence.

Essentiality not proven. The court held that Philips failed to establish that its patent was truly essential to the DVD standard. The bench found the patent specifications “vague,” noting that “the title and claims did not match the description.” Critically, no witnesses involved in the essentiality certification process were presented for cross-examination, violating evidentiary standards. The court emphasized that a patent holder asserting standard-essential status bears the burden of mapping its patent claims onto the standard—and Philips made “no attempt” to do so.

Patent exhaustion applies. Even assuming the patent was essential, the court held that the defendants’ importation of products from authorized MediaTek distributors in China triggered patent exhaustion under Section 107A(b) of the Indian Patents Act. Because the chipsets were originally sold by or through a licensed dealer, the patent rights were exhausted upon first sale, and downstream importers could not be held liable for infringement.

Damages methodology rejected. The court set aside the per-device royalty calculation, holding that if any royalty were appropriate, it should be assessed on a per-chip basis—reflecting that only the chip, not the entire DVD player, practices the patented technology. The absence of comparable license agreements and the failure to follow a proper FRAND negotiation protocol further undermined the damages award.

Key Takeaways

• SEP holders must rigorously prove essentiality through claim-by-claim mapping to the standard, with live witness testimony subject to cross-examination. Self-certification or untested essentiality declarations are insufficient.
• India’s patent exhaustion doctrine under Section 107A(b) provides a robust defense for importers who source from authorized supply chains, even across borders.
• Royalties for component-level patents should be calculated at the component level (per-chip), not the end-product level (per-device)—aligning India with the “smallest salable patent-practicing unit” approach favored in many jurisdictions.
• The ruling raises the evidentiary bar for all SEP enforcement in India, which could affect ongoing disputes involving 4G/5G, Wi-Fi, and other technology standards.

Why It Matters

India is an increasingly important market for standard-essential patent disputes, with major global SEP holders targeting Indian manufacturers and importers of smartphones, IoT devices, and consumer electronics. This ruling significantly raises the bar for SEP enforcement in the country by requiring rigorous essentiality proof and recognizing robust exhaustion defenses. For multinational companies licensing SEPs globally, the decision signals that Indian courts will not simply defer to a patent holder’s claim of essentiality—they will demand the same level of claim mapping and expert evidence required in more mature SEP jurisdictions like Germany and the UK. For Indian importers and manufacturers, the ruling provides meaningful protection when sourcing from authorized supply chains.