Delhi High Court Reinforces Pro Tem Security Mechanism in SEP FRAND Disputes: A Balanced Approach to Protect Patent Holders During Prolonged Litigation
Introduction
In the evolving landscape of intellectual property law, disputes involving Standard Essential Patents (SEPs) continue to test the balance between innovators who develop critical technologies and companies that implement them in consumer products. A recent judgment from the Delhi High Court in a case involving cellular SEPs has provided important clarity on the use of interim measures known as pro tem security. This order underscores that implementers cannot indefinitely use patented technology without fair compensation while negotiations or court proceedings drag on. The ruling offers practical guidance for both patent holders and technology users in India.
Standard Essential Patents (SEPs)
Standard Essential Patents (SEPs) are patents that cover technologies which have become essential to the implementation of a technical standard adopted by the industry. In the telecommunications sector, examples include the 3G, 4G, and 5G cellular communication standards developed by standard-setting organizations such as the European Telecommunications Standards Institute (ETSI).
A patent is considered “essential” if it is impossible (or commercially unviable) to implement the standard without infringing that patent. For instance, if a mobile phone is to be 4G or 5G compliant, it must necessarily use certain specific technical features covered by the SEPs. In this case, the three Suit Patents (IN 283303, IN 317530, and IN 335982) are asserted by the Plaintiffs (Malikie Innovations Ltd.) as SEPs essential to 3G, 4G, and 5G standards. The Plaintiffs claim that Xiaomi’s 4G and 5G compliant mobile phones and handsets infringe these patents.
SEPs create a unique situation because technical standards are meant to be widely adopted for interoperability. Once a patent is declared essential and incorporated into the standard, the patent holder gains significant market power. This is why standard-setting bodies require patent holders to make commitments regarding licensing.
Concept of FRAND
FRAND stands for Fair, Reasonable, and Non-Discriminatory. When a company declares its patents as essential to a standard, it typically undertakes to license those SEPs to any willing implementer (manufacturer) on FRAND terms.
Fair and Reasonable refers to royalty rates that reflect the actual technical contribution and value of the patented invention, without exploiting the monopoly created by standardization.
Non-Discriminatory means the patent holder cannot favour some licensees over others who are similarly situated.
The purpose of FRAND is to balance two competing interests: rewarding innovation by allowing patent holders to earn reasonable returns, and ensuring that standards remain accessible so that the technology can be widely implemented without anti-competitive barriers.
Relevance of SEPs and FRAND in This Case
This Delhi High Court case is a classic SEP infringement and FRAND licensing dispute. The Plaintiffs (Malikie Innovations Ltd., which acquired a large portfolio from BlackBerry) approached Xiaomi in October 2023 seeking a worldwide FRAND license for their cellular SEPs. They allege that Xiaomi has been manufacturing, importing, and selling 4G and 5G compliant devices in India without taking a license, thereby infringing the Suit Patents.
The Plaintiffs filed the suit and an interim application under Section 151 CPC seeking pro tem security (a provisional deposit of royalties) based on their FRAND offers. They argued that Xiaomi was engaging in “hold-out” tactics — delaying negotiations through excessive demands on NDAs, making unreasonably low counteroffers, and continuing to sell infringing products without payment. They relied on precedents such as Huawei v. ZTE, Nokia v. OPPO, Dolby v. Lava, and others to contend that a willing licensee must provide adequate security during negotiations, especially in jurisdictions like India where litigation takes time.
Xiaomi, on the other hand, contested the application by raising several defences typical in SEP cases: non-joinder of BlackBerry (the original patentee), lack of sufficient evidence on validity, essentiality, and infringement, absence of third-party comparable license agreements to prove FRAND rates, and the need for the Court to first establish a prima facie case before ordering any security. Xiaomi also highlighted that they had filed a parallel FRAND rate-setting suit in the Shenzhen Court in China.
The judgment discusses at length the history of negotiations, the parties’ conduct, the strength of the BlackBerry-derived portfolio, market share data of Xiaomi, and the legal principles governing pro tem security in SEP disputes. The filing of the Chinese rate-setting suit was treated as a significant development, potentially amounting to an admission of the need to license the SEPs.
In essence, the case revolves around enforcing FRAND obligations in the Indian context: whether Xiaomi has acted as a willing licensee, whether the Plaintiffs have made FRAND offers, and whether interim security is warranted to prevent the SEP holder from suffering irreparable harm during the pendency of the suit, while the implementer continues to benefit from the patented technology.
This dispute highlights the global nature of SEP litigation, where parallel proceedings in India, China, the US, and Europe are common, and courts strive to strike a balance between innovation incentives and fair access to standardized technologies.
Factual and Procedural Background
The dispute arose when Malikie Innovations Ltd., which had acquired a significant portfolio of cellular patents originally developed by BlackBerry, approached Xiaomi Corporation and its Indian entities for a license to use patents essential to 4G and 5G mobile technologies. After initial discussions failed to result in an agreement, Malikie filed a commercial suit in the Delhi High Court alleging infringement through the manufacture and sale of mobile devices compliant with these standards.
Alongside the suit, Malikie filed an application seeking a direction for Xiaomi to deposit a pro tem (provisional) security amount. This measure aimed to secure the patent holder’s interests during the long pendency of the case. Xiaomi opposed the application on several grounds, including questions about the ownership of patents, the validity and essentiality of the claimed patents, the fairness of the offered licensing terms, and the overall maintainability of the suit.
Dispute
At the heart of the matter was whether the court could direct an implementer like Xiaomi to deposit security even before a full trial or detailed interim injunction hearing. Malikie argued that Xiaomi’s continued sale of devices using the patented technology without payment amounted to unfair hold-out tactics. Xiaomi, on the other hand, maintained that no such deposit should be ordered without clear proof of infringement and without first determining whether the offered royalty rates were fair, reasonable, and non-discriminatory (FRAND).
Reasoning and Analysis of the Judge
Justice Tejas Karia carefully examined the submissions from both sides. He explained that pro tem security is not the same as a full injunction that stops sales. Instead, it acts as a temporary financial safeguard to maintain balance between the parties while the main case proceeds. The judge noted that SEP disputes often involve complex technical and commercial issues that take considerable time to resolve. During this period, the implementer continues to benefit from the technology while the patent owner remains unpaid, creating an unfair advantage.
The Court found prima facie evidence that the patents were essential and that Xiaomi’s devices used them, based on publicly available declarations and product specifications. Justice Karia observed that prolonged negotiations, exchange of offers and counteroffers, and Xiaomi’s own filing of a rate-setting case in China indicated recognition of the need for a license. He emphasized that once an implementer knows about the patents and uses the technology, it has an obligation to act as a willing licensee, which includes providing appropriate security.
The judge drew support from several important precedents. He referred to the principles laid down in Huawei Technologies Co. Ltd. v. ZTE Corp. (a key European Court of Justice decision) regarding good faith negotiations in SEP cases. He also relied on Indian rulings such as Nokia Technologies OY v. Guangdong OPPO Mobile Telecommunications Corp. Ltd. & Ors. (Neutral Citation: 2023:DHC:4465-DB), where the Division Bench clarified that pro tem orders have a lower threshold than regular interim injunctions and serve to prevent injustice during the interregnum. Other cases like Dolby International AB & Anr. v. Lava International Limited were cited to highlight the court’s equitable powers under Section 151 of the Code of Civil Procedure to pass such orders without a detailed merits examination at this stage.
Justice Karia rejected the argument that full proof of every aspect (including exact FRAND rate) was required before ordering security. He clarified that pro tem relief is meant to preserve the status quo and protect the patent holder’s rights without finally deciding the case. At the same time, he made it clear that the order does not amount to a final finding on infringement or the exact royalty rates.
Final Decision of the Court and Point of Law Settled
The Court disposed of the application by directing Xiaomi to deposit a substantial security amount with the Registrar General of the Delhi High Court within six weeks, either in cash (as fixed deposit) or through a bank guarantee. It was further clarified that failure to comply could lead to further reliefs, including possible injunction. Importantly, the order emphasized that this was only a provisional measure and would not prejudice the final outcome of the suit.
This judgment settles an important point of law: In SEP infringement cases involving FRAND licensing, Indian courts have the discretion to order pro tem security at an early stage based on a prima facie view of essentiality and use. This mechanism prevents undue delay tactics and ensures that patent owners are not left remediless during lengthy proceedings, while still allowing full adjudication of all issues at the appropriate stage.
Case Details
Title: Malikie Innovations Ltd & Anr. Vs Xiaomi Corporation & Ors.
Date of Order: 30 April 2026
Case Number: CS(COMM) 734/2025 & I.A. 17510/2025
Neutral Citation: Not Available
Name of Court: High Court of Delhi
Name of Hon’ble Judge: Justice Tejas Karia
Disclaimer: Readers are advised not to treat this as substitute for legal advise as it may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
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Headnote: Delhi High Court directs deposit of pro tem security in SEP FRAND dispute emphasizing lower threshold for provisional relief to balance interests of patent holders and implementers during pendency of litigation.
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Delhi High Court Directs Xiaomi to Deposit ₹272 Crores as Pro Tem Security in SEP Infringement Suit by Malikie Innovations
Case Title: Malikie Innovations Ltd & Anr. Vs Xiaomi Corporation & Ors.
Case Number: CS(COMM) 734/2025 & I.A. 17510/2025
Date of Judgment: 30 April 2026
Court: High Court of Delhi
Judge: Hon’ble Mr. Justice Tejas Karia
Facts & Dispute:
Malikie Innovations Ltd. (which acquired a large cellular SEP portfolio from BlackBerry) filed a suit alleging infringement of three Indian SEPs essential to 4G and 5G standards by Xiaomi’s mobile devices. The Plaintiffs claimed that despite approaching Xiaomi in 2023 and making FRAND offers, the Defendants engaged in hold-out tactics, continued unlicensed sales, and later initiated FRAND rate-setting proceedings in China. Xiaomi contested the suit’s maintainability (non-joinder of BlackBerry), disputed essentiality/infringement/FRAND compliance, and argued that pro tem security could not be ordered without a full prima facie adjudication.
Reasoning of the Court:
Justice Tejas Karia held that in SEP cases, pro tem security is a distinct equitable relief with a lower threshold than Order XXXIX injunctions. It serves to balance equities during prolonged litigation and prevent implementers from gaining unfair advantage through continued use of SEPs without compensation. The Court found prima facie infringement based on claim charts, ETSI declarations, and Xiaomi’s self-declared 4G/5G compliance. It viewed Xiaomi’s negotiations, counteroffers, and the Chinese rate-setting suit as indicative of recognition of the need to license. The Court relied on precedents such as Nokia Technologies OY v. OPPO, Dolby v. Lava, and Huawei v. ZTE, emphasizing that implementers must furnish security commensurate with the SEP holder’s offer during negotiations.
Decision:
The Court allowed the application in part and directed Xiaomi to deposit ₹272 crores (approx. $28.7 million, calculated as 19.12% of the mean of the parties’ second lump-sum offers, corresponding to Indian market share) with the Registrar General within 6 weeks, either as cash in an interest-bearing FDR or as an unconditional bank guarantee. Failure to comply would entitle the Plaintiffs to seek interim injunction. The order clarifies that it does not amount to a final finding on infringement, validity, or FRAND rates.
Disclaimer: Do not treat this as substitute for legal advice as it may contain subjective errors.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
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