Delhi High Court’s Ruling on SEP Deposits: A Balanced Approach
On the recent Delhi High Court decision in Dolby v. Lava, directing the India-based implementer to pay INR 20.81 Crores as pro-tem security, Shailraj Jhalnia argues for a more balanced approach on how the Courts should calculate such deposits, keeping in mind the interests of both the SEP holders and implementers. Shailraj is a third year law student pursuing B.A. LL.B. from National Law School of India University, Bangalore, with a keen interest in IP Law, Arbitration and Criminal Law. His previous post can be accessed here.
Prima Facie, Not Per Se: Rebuilding SEP Interim Jurisprudence after Nokia v Oppo
By Shailraj Jhalnia
Recently, the Delhi High Court directed Lava to deposit ₹20.81 crore as a pro tem security in a pending SEP infringement dispute against Dolby. The dispute centres on Dolby’s Indian patents related to audio compression standards allegedly used in Lava’s smartphones. Significantly, the Court granted this relief without adjudicating essentiality, validity, or infringement, reasoning that Dolby had established a prima facie case based on licensing history, claim charts, and Lava’s negotiation conduct. This adds a new take to the prima facie assessment by the Courts in SEP disputes after the (now overruled) four-factor test in Nokia v. Oppo and the two-step approach in Intex v. Erricson.
In the Dolby case, while the Delhi High Court has rightly rejected the rigid “four‐fold test” for interim relief, there is a danger that courts will now direct large deposits based only on “surrounding factors” like negotiation history. This post argues for a middle path where any deposit is capped and calibrated, tied to what the implementer itself deemed reasonable. This calibrated approach guards against both hold-up and hold-out, aligning India with global norms.
4, 2, ka 1? Looking at Different Tests Proposed by the Courts in SEP Disputes
In Nokia v Oppo (2022), a single judge in the Delhi High Court demanded a rigorous “four‐fold test” – essentially an unequivocal admission on (i) patent validity and essentiality, (ii) actual use of the technology, (iii) infringement, and (iv) that the licensor’s proposed rate is FRAND. The Court held that unless all four were admitted, the implementer could not be saddled with interim payment of royalties. This approach imposed an onerous burden on SEP owners even at the provisional stage. In fact, the Division Bench (2023) flatly rejected this four‐fold criterion. The Court quippedif a defendant admitted all four points, “there would be no necessity to file a suit for infringement at all”.
In Intex v Ericsson (2023), the Delhi High Court overruled Nokia/Oppo’s strict test. The Court made clear that Pro-tem orders do not require a mini-trial on validity or essentiality. The Division Bench held that interim relief is inherently provisional and should not import the high bar of final‐trial admissions. Instead, it endorsed a pragmatic “two‐step” approach: once a licensor shows a First facie case of infringement (for instance, the device practices the claimed standard) and that it has offered a FRAND license, the implementer must either accept that offer or come forward with a conditional counter‐offer plus appropriate security. The implementer cannot freely sell while stonewalling negotiations; if it continues using the SEP without paying any royalty, it gains an unfair advantage. Crucially, the Intex decision explicitly stated that the four‐fold test “is contrary to law” and not applicable at the interim stage.
Building on Intex, the Dolby in Lava (July 2025) decision further illustrates the trend toward flexible interim deposits. There, the Delhi HC ordered Lava to deposit ₹20.81 crore covering past sales of infringing phones, without resolving any disputes on patent validity or essentiality. Justice Bansal was at pains to clarify that this was not a merits finding: the order “does not confer any final finding on infringement or liability, nor does it mandate acceptance of the plaintiffs’ licensing rate as binding“. Rather, the Court based the deposit on the parties’ history: Dolby’s persistent FRAND offers (even proposing a global or patent-pool license) and Lava’s allegedly dilatory, “unwilling licensee” conduct. For example, Lava was found to have known about Dolby’s SEP claims since 2018, kept using the technology thereafter, and never made any counter‐offer. In short, the Court distilled from the record that Dolby had continuously sought a FRAND deal while Lava dragged its feet – a prima facie case, in the Court’s view, that justifies securing security. Notably, this order relies on a Secured Deposit (the money goes to Court and can be refunded if Lava ultimately prevails), not a final injunction, preserving the status quo until trial.
This evolution reflects practical realities – assessing technical issues like patent validity or essentiality is complex and usually requires a full trial, expert evidence, and time. It may indeed be “unrealistic and procedurally inefficient” to expect a district Court to resolve those matters at an interim hearing. Nonetheless, there is a danger that if Courts routinely direct deposits based only on “surrounding factors” (past offers, negotiation attitude, sales volume), provisional security could be turned into a near‐automatic outcome for SEP holders. Yet, there is a risk that pro tem deposits formally held with the court may become quasi-automatic procedural tools that tilt early leverage toward SEP holders. Even if the deposited amount is not disbursed until final adjudication, the mere requirement to furnish significant sums at the outset can exert commercial pressure on implementers, especially smaller players. In effect, any patent owner who has made an offer could demand large deposits, irrespective of the strength of their case.
A Calibrated Framework for Pro Tem Deposits
India can take a nuanced middle path. We should not revive Nokia/Oppo’s rigid four-fold proof (which even the Courts now reject), but neither should we allow empty pro tem orders. One approach is to require credible First facie indicators before ordering a deposit, without demanding an exhaustive inquiry. Instead of depending on the mere presence of claim charts or similar licenses which are compulsorily filed to start with, courts may instead emphasize more substantial pointers. These may encompass whether the SEP owner has enforced the same patents in the past (domestically or internationally), whether the implementer has refused counter-offers or delayed negotiations after notification, whether there’s proof of ongoing use after the dispute, or whether the asserted SEPs have been independently essentiality tested (e.g., through pools or third-party audits). These qualitative indicators provide courts with a more secure standing to judge whether a pro tem deposit is appropriate, rather than resorting to it as a procedural reflex. If the implementer only raises technical objections, a deposit could be appropriate. On the other hand, where the implementer points to glaring flaws (say, an expired patent or a pending invalidation proceeding), the Court should probe those issues or at least not fixate on the SEP holder’s ask.
Importantly, any deposit should be capped and calibrated. A helpful guideline is to tie the deposit to what the implementer itself deemed reasonable. For instance, Nokia’s plea in the Oppo case explicitly asked that any interim payment be limited to either Oppo’s last FRAND counter‐offer or the proportionate amount from their prior licence. In practice (Para 50), Indian Courts often limit deposits to the rate proposed by the implementer. This makes sense: if the implementer was willing to pay (say) ₹X per device in its last written offer, why should it be forced to put up more than that? Pro tem deposits are granted to balance the SEP holders’ right to receive value for the use of their technology with the implementor’s right to contest the patent. Thus the right approach could be to not apply the principles which are otherwise followed to determine infringement and unwillingness of the licensee but to come to a common figure which will not impose undue pressure on the licensee and assure the SEP holder as well. In Dolby case the Court had held that Lava was not able to justify where it came with the INR 5 figure but this should not automatically mean that it should be directed to deposit the amount that Dolby says it signed with other similar companies. In fact, this method is used by the Courts in the calculation of final royalties payable after the trial. So the question is should the same formulae/ method be applied here as well?
Capping the deposit, taking the implementer’s own number (or at most some fixed multiplier thereof), instead of relying solely on the figure of the SEP owner aligns with fairness. Likewise, Courts could impose deposits in stages or percentages – for example, requiring only a fraction of total sales, subject to upward revision only upon showing of bad faith.
This calibrated approach maintains the equitable character of pro tem relief. It guards against hold‐up by not granting an SEP holder carte blanche to demand millions without scrutiny, and against hold‐out by not allowing implementers to drag their feet cost-free. Such a balance would help harmonise India’s practice with global norms: protecting SEP owners’ reasonable expectations for compensation (by ensuring they have security) without unduly penalising implementers who genuinely dispute the case.
In sum, India can avoid both extremes. The strict Nokia formula is dead, but wholesale deference to licensing history alone is risky. By insisting on concrete prima facie evidence and limiting deposits to what the implementer agreed (or a modest fraction thereof), Courts can make interim FRAND orders more principled. This middle path – structured like Huawei v ZTE’s process and Unwired Planet’s focus on industry practice – will ensure SEP disputes are resolved fairly and efficiently, without new technical tests or automatic injunctions.