A new dawn, and a new pro-tem order is out from the Delhi High Court. A short while ago I wondered if temporary deposit orders were here to stay, seems like the answer is yes! The Malikie v. Xiaomi pro-tem order is not the best news for the development of Indian SEP jurisprudence. It adds confusion to assessment of essentiality, nuances of rate calculation and shows the faults of finding reasonings in precedents where fact-sensitive analysis require different decisions.
The Court continues speedily on its high horse, crafting the Indian standard essential patent (SEP) jurisprudence one lengthy order at a time, and at 82 pages, I think this is the longest judgment concerning pro-tem security deposits. In this recent deliberation the court directs payment of pro-tem deposits to the tune of ₹272 crores (approx. USD 28.7 million), going from Xiaomi to Malikie Innovations. In this post, I discuss some interesting fact patterns that set this order apart from the steadily growing line of pro-tem precedents that we have discussed regularly on the blog (see here).
Facts
Ireland-based Malikie Innovations Ltd. is a non-practicing entity (NPE) that has acquired from BlackBerry the rights to license the latter’s SEP portfolio which, in true NPE fashion, it has been litigating in jurisdictions like the UPC and USA. Parallel proceedings between Xiaomi and Malikie are ensuing before courts in China (Case No. Yue 03 Min Chu 2724) and India.
In the SEP suit before the Delhi High Court, the suit patents are 3 cellular SEPs pertaining to 4G and 5G technology. Malikie alleges that Xiaomi has engaged in unlicensed manufacture, import and sale of 4G and 5G compliant mobile phones. Offers and counter-offers had been made over the course negotiations that started in October, 2023, ultimately resulting in the filing of the suit in Delhi. In keeping with the Huawei FRAND protocol, Malikie sought payment of security deposit. The Delhi High Court combs again through its pro-tem precedents to decide on the issues of valuation of suit patents, valuation of security deposit, requirement of comparable licenses, and yet again, the requirements for granting a pro-tem deposit order. The suit before the Shenzhen Intermediate People’s Court seems to be a defensive action from Xiaomi in requesting rate-setting for corresponding Chinese patents. The Chinese Civil Suit has had some bearing on the DHC’s decision, I discuss more on this below.
Delhi High Court’s Pro-tem Basics
Analysis of the Court on the general principles supporting pro-tem orders reiterates capping the procedural requirement at prima facie evaluations of validity, essentiality and infringement, without detailed examination of merits of the case. It, additionally, clarifies that if evidence is raised against the SEP implementer for having challenged the suit patents as an afterthought post-negotiation, then it creates an additional prima facie presumptionin favour of the SEP holder.
This prima facie presumption did work in the favour of Malikie. The court accepted the plaintiff’s contention that in addition to the global strength of the Blackberry portfolio, the suit patents were prima facie valid since opposition was raised only in the interim application. Prior to the filing of this suit, no oppositions were raised in respect of these patents. Prima facie infringement was also a straightforward assessment based on test reports furnished by Malikie. Cellular mobiles offering 4G and 5G services are advertised as such on Xiaomi’s website. Xiaomi did not claim that any other alternate technology was being used.
On assessment of essentiality, the court has gone overboard. Essentiality of the suit patents has been found through claim charts filed in the proceedings, declarations to ETSI and reliance on Xiaomi’s parallel Chinese civil court proceedings. This last prong raises new issues. In the Chinese case, Xiaomi has sought the following relief (para 59):
First, I am not convinced with the present court deciding that “the Defendants’ assertion that the Chinese Civil Suit is limited solely to Chinese patents, involves China-wide FRAND licensing terms, and concerns only devices sold within China, cannot be accepted” (para 62). Prayer (b) above does seem to signal to the contrary. But more importantly, was this acceptance really required and what purpose does it serve for a pro-tem determination? I think the claim charts and ETSI documents should have been enough to establish prima facie essentiality.
Second, this court has considered the Nokia order as holding that the defendant’s filing of a FRAND case in China is prima facie proof of essentiality of the suit patents. In my opinion, this kind of analysis has been taken out of context and makes for a slippery slope. It has been admitted by the DHC that every pro-tem determination must be fact-sensitive. In Nokia, the essentiality of suit patents was established through a series of facts of the case which included years of prior royalty payments and negotiations. The Nokia court admittedly did not have to undertake a serious prima facie assessment of essentiality in the same way that was required from the Malikie court, and thus, was justified in acknowledging the filing of a Chinese suit in a limited capacity. In Malikie the same emphasis combined with quite different facts from Nokia seems, to me, misplaced. Parallel litigation is a common phenomenon in SEP disputes. Placing persuasive value on a foreign decision would be one thing, but persuasion on the mere filing of a foreign suit is overkill.
Third, what kind of persuasive impact can be drawn from this into domestic deliberations? If seeking FRAND rate-setting for Chinese SEPs at the Shenzhen Court can show Defendants’ admission of essentiality and validity of Plaintiff’s Indian suit patents, then why did this court not demand to see these overlapping Chinese patents? If it did, the order does not speak of such an assessment. If the Shenzhen court ultimately finds one of the Chinese patents non-essential, what impact would that have on DHC’s pro-tem findings? I raise this contention specifically because the judge opens with how this order was reserved on 24.12.2025, and the present application listed on 24.04.2026 was “for the limited purpose of bringing to the attention of this Court” the fact of the Chinese proceedings. How much emphasis does the court need to give to a foreign parallel proceeding at this stage in the suit (and why?), I hope, remains an open question to be argued and discussed properly in future pro-tem orders.
Lastly, another basic contention in these orders is whether pro-tem relief should be granted. What is usually required is to show that the SEP implementer is in dire financial constraints, or situated abroad and with the means to shift assets out of the reach of the SEP holder. I almost believed that there was scope in this order for a different holding than the precedents, on this ground. In para 5.8, the plaintiffs argue an excellently profitable growth of the Defendants notably in India, in part from continuing to sell infringing 4G and 5G devices – a cause for granting pro-tem deposit. Contrast this to para 7.16, where Defendant 2 is argued to be subject to FEMA enquiries, in a ‘precarious’ financial position – also a cause for grant of pro-tem security. The Defendants vouched for sound financial health, however, the latter reasoning survived. Perhaps these averments were sufficient for a prima facie analysis, but it does compel me to ask if the courts should be more discerning in satisfying the grant of pro-tem relief when urgency of such a measure is being disputed. Alas, this ties back to my lament on lack of an explanation from the DHC on what an ‘exceptional situation’ for grant of deposit under Rule 5(v) could actually be.
Pro-tem Quantification
In keeping with precedents, the court has held that third-party PLAs need not be furnished from the plaintiff to defendants for valuation of suit patents at the stage of security deposition. The defendants, being in the same business, may use their own PLAs to decide FRAND rates during negotiations.
Now the usual expectation of security quantification, as per the Huawei FRAND protocol, is understood to be a payment close to the counter-offer of the SEP implementer. Courts in Germany have demanded payment close to the SEP holder’s offer, though these courts have lately been questioning the efficacy of Huawei. The Malikie court does not cite German case law, instead it draws this inference from Philips and Dolby. In para 96, the judge states –
This, again, is a reliance on precedent taken out of context. In both the cited cases, the fact of hold-out was clearly established and no substantive counter-offers had been made, hence, the final pro-tem rates (albeit questionably deduced) reflected the holders’ offers. Confusingly, the judge then goes on to accept the mean of the negotiated offer and counter-offer, tallied further to the Indian market share of 19.12%. What exactly was being taken into consideration from Philips and Dolby becomes unclear, but this vague phrasing leaves it open for future SEP holders paying attention here to increase emphasis on their offers.
Finally, in general practice, Huawei protocol requires rendering an account in respect of acts of use. In precedents, the fact of past sales has been instructive in modification of pro-tem quantum. Since the information on acts of use was presented and countered in this case, perhaps in keeping with the prima facie nature of inquiries, the court could come to an understanding of a rough number of sales made. The market share (whether unit or revenue based, the order does not specify) is a comparative metric that is generalised and subject to periodic change with market forces; it does not hold the same evidentiary weight as actual use/sales data. It is trite to say that ad-interim stages result in broader approximations, however, I was left looking for a more equitable explanation than just the fact of court not using data because Plaintiffs had advanced some arguments.