By Jigyasa Pareek

In a significant development for India’s evolving Standard Essential Patent (SEP) jurisprudence, the Delhi High Court in Malikie Innovations Ltd. & Anr. vs Xiaomi Corporation & Ors. [CS(COMM) 734/2025] directed Xiaomi to deposit approximately ₹272 crores (USD 28.7 million) as pro tem security, or alternatively furnish an unconditional bank guarantee of the same amount, in a suit concerning alleged infringement of the SEPs IN 283303, IN 317530 and IN 335982 owned by the Plaintiffs relating to technologies incorporated into 3G, 4G and 5G cellular standards.

The Court reaffirmed that pro tem security in SEP matters is distinct from interim injunctions and may be granted even without a detailed adjudication on validity, essentiality, infringement, and FRAND rates when there arises a prima facie presumption that the challenge is merely an afterthought.

The Plaintiffs had acquired approximately 32,000 patents and patent applications from BlackBerry in 2023 and subsequently, in 2025, acquired rights in additional cellular SEPs, including the suit patents, pursuant to arrangements permitting sub-licensing of the said SEPs to identified entities including the Defendants. According to the Plaintiffs, licensing discussions with the Defendants commenced in October 2023.

The Plaintiffs alleged that despite prolonged negotiations, the Defendants repeatedly delayed substantive engagement, prolonged execution of NDAs, refused to participate in international arbitration proposed by the Plaintiffs, and continued commercially exploiting the suit SEPs without entering into a licence on FRAND terms. The Plaintiffs characterised the Defendants’ conduct as constituting classic “hold-out” behaviour and lacking genuine willingness to negotiate a FRAND licence.

The Plaintiffs argued that implementers are under an obligation to furnish security during the negotiation phase itself and that SEP litigation presents commercial asymmetries because SEP holders are unable to obtain immediate injunctive relief while implementers continue commercially exploiting standardised technologies at scale during the pendency of proceedings. The Plaintiffs therefore sought pro tem security under Section 151 CPC on the basis of the licensing offer made by the Plaintiffs to the Defendants.

The Plaintiffs invoked Xiaomi’s precarious financial position asa ground for grant of pro tem security under Section 151 of CPC. The Plaintiffs argued that pro tem security becomes especially necessary where a defendant either lacks substantial physical assets in India, has a shrinking market presence, or reflects weak financial standing. According to the Plaintiffs, Xiaomi’s financial condition, including issues relating to frozen funds, tax liabilities and negative net worth indicators, justified the need for interim security in order to safeguard the Plaintiffs’ claim.

The Defendants, on the other hand, challenged both the maintainability of the proceedings and the permissibility of granting pro tem relief at this stage. It was contended that BlackBerry had not been impleaded despite allegedly retaining rights in parts of the SEP portfolio; that there existed no prima facie findings on validity, essentiality, infringement, and FRAND rates concerning the suit patents. The Defendants argued that the Court could not bypass the chronology in SEP disputes, namely first determining validity and infringement, then examining the rates offered and determining FRAND rates, and thereafter assessing willingness of the implementer. According to Xiaomi, directing security without such findings would lead to presuming validity of the suit patents and infringement, contrary to Section 13(4) of the Patents Act. It was further argued that pro tem orders are effectively in the nature of ad interim or interim injunctions and therefore fall within the framework of Order XXXIX CPC and amount to a determination of substantive rights of the Plaintiffs, which is beyond the procedural power of the Court under Section 151 of CPC.

A major axis of contest concerned valuation of the suit patents and disclosure of comparable Patent Licence Agreements (PLAs). Xiaomi argued that Malikie had failed to disclose comparable third-party licences necessary for FRAND analysis under the Delhi High Court Patent Rules, and, therefore, could not justify the proposed rates. The Plaintiffs, however, sharply distinguished FRAND rate-setting proceedings from pro tem proceedings. The Plaintiffs argued that the value of the suit patents was supported through a top-down methodology and objective material had been presented to the Defendants for assessing FRAND royalties. The Plaintiffs further emphasised that the threshold applicable at the stage of directing pro tem security is materially lower than the threshold governing the grant of interim injunctions since such orders merely preserve equities temporarily pending final adjudication. It was additionally mentioned that comparable agreements could be produced at a later stage when determination of FRAND issues becomes necessary for trial.

A significant aspect emphasised by the Plaintiffs concerned Xiaomi’s parallel proceedings before the Shenzhen Intermediate People’s Court in China seeking determination of FRAND rates in relation to the Plaintiffs’ entire portfolio of SEPs and enforcement of Plaintiffs’ FRAND obligations on a global basis including India. According to the Plaintiffs, Xiaomi’s invocation of the jurisdiction of the Chinese Court itself constituted a clear acknowledgement that the Plaintiffs possessed an enforceable SEP portfolio requiring licensing and royalty determination. The Defendants, however, argued that the Chinese civil suit was limited solely to Chinese patents, involved China-wide FRAND licensing terms, and concerned only devices sold within China. Therefore, according to the Defendants, the filing of FRAND rate determination proceedings before the Shenzhen Court could not be construed against them.

The Court’s reasoning is particularly significant because it systematically synthesises several strands of recent Delhi High Court SEP jurisprudence, including Xiaomi vs Ericsson, Intex vs Ericsson, Nokia vs Oppo, Panasonic vs Oppo and Dolby vs Lava.

At the outset, the Court reaffirmed that pro tem arrangements in SEP disputes are fundamentally distinct from interim injunctions. Relying upon Xiaomi vs Ericsson and Dolby vs Lava, the Court observed that pro tem orders are intended to temporarily balance equities between parties during the pendency of technically complex SEP litigation and preserve the Court’s ability to direct effective final relief.

The Court expressly recognised the asymmetrical commercial realities underlying SEP litigation. The Court observed that while SEP holders are compelled to engage in prolonged FRAND negotiations and complex adjudicatory proceedings before obtaining final relief, implementers continue manufacturing and selling standard-compliant devices throughout this period. Consequently, absent interim security arrangements, implementers derive a substantial commercial advantage through continued unlicensed use of SEPs.

Significantly, the Court reiterated that the SEP framework imposes reciprocal obligations upon both SEP holders and implementers. Relying upon the Division Bench judgment in Intex vs Ericsson, the Court observed that FRAND obligations are not “one-way streets” applicable only to patentees. The Court emphasised that implementers cannot adopt a position of silence or indefinite delay while continuing commercial exploitation of standard-essential technology. According to the Court, an implementer must either accept the SEP holder’s offer or furnish a counteroffer accompanied by appropriate security in order to demonstrate willingness to obtain a licence.

The Court thus rejected the proposition that a pro tem deposit necessarily requires detailed exploration of the merits of the case. While acknowledging the observation in Nokia vs Oppo that pro tem deposits follow prima facie findings on essentiality, validity and infringement, the Court simultaneously relied upon the same precedent to hold that the threshold for such relief is lower than that governing interim injunctions. The Court stressed that pro tem orders merely preserve equities and maintain the Court’s ability to ultimately direct effective relief; they do not confer final adjudicatory advantage upon SEP holders.

The Court also made important observations regarding comparable Patent Licence Agreements. Rejecting Xiaomi’s contention that disclosure of all third-party licences was a prerequisite to interim relief, the Court relied upon Nokia vs Oppo to hold that non-furnishing of comparable PLAs is not determinative at the pro tem stage because the Court is not engaged in final FRAND rate determination. The Court observed that an implementer cannot avoid furnishing security merely by demanding access to all third-party agreements. Importantly, the Court observed that implementers can take recourse to their own licence agreements executed with other SEP holder/licensors to assess whether an offered rate appears commercially reasonable. The Court also stressed that the licensee has an option either to accept the licensor’s offer or to give a counteroffer along with an appropriate security to establish that he is a willing licensee.

Applying these principles to the facts of the case, the Court found several indicators suggesting prima facie unwillingness on Xiaomi’s part. The Court noted that Xiaomi had engaged in licensing discussions with the Plaintiffs for nearly three years, exchanged multiple offers and counteroffers, and continued commercially exploiting the suit SEPs throughout this period.

Although Xiaomi attempted to distinguish the Chinese proceedings by contending that they related only to Chinese patents and not global FRAND determination, the Delhi High Court treated the filing as an important surrounding circumstance indicative of Xiaomi’s recognition of Malikie’s SEP position. The Court emphasised that submissions made before foreign courts are relevant and can be relied upon in Indian proceedings irrespective of whether the foreign proceedings concern the entire global SEP portfolio or only a subset thereof.

On validity, the Court observed that the suit patents pertained to technologies forming part of fundamental wireless cellular communication standards. The Court did not undertake a detailed inquiry regarding the validity of the suit patents and treated them as prima facie valid for the purposes of the instant application.

On essentiality, the Court held that the Plaintiffs had prima facie established the essential nature of the suit patents on the basis of the material placed on record, including the claim charts, the Plaintiffs’ ETSI declarations identifying the suit patents as essential or potentially essential intellectual property rights, and Xiaomi’s own conduct in seeking FRAND rate determination before the Shenzhen Court in relation to the Plaintiffs’ SEP portfolio.

On infringement, the Court accepted the Plaintiffs’ contention that Xiaomi’s devices were expressly marketed as 4G and 5G compliant across multiple product lines, including Xiaomi, Redmi and POCO devices. The Court further emphasised that the burden to prove the use of alternate technology lies with the defendant. Since Xiaomi had failed to identify any such alternative technology in support of its non-infringement defence, the Court held that the Plaintiffs had prima facie established infringement of the suit patents.

Another particularly important aspect of the judgment concerns the Court’s observations regarding financial vulnerability as a relevant factor while considering pro tem security. The Court accepted the Plaintiffs’ submission that pro tem security may become necessary where the defendant lacks substantial physical assets in India, has a shrinking market presence, or reflects weak financial standing. The Court observed that the Defendants’ financial condition did not sufficiently inspire confidence regarding satisfaction of eventual liabilities and therefore constituted an additional equitable consideration supporting the grant of pro tem security.

Perhaps the most practically consequential portion of the judgment lies in the Court’s methodology for quantifying the pro tem security amount. Since the parties’ licensing discussions had involved multiple offers and counteroffers, the Court determined that the most appropriate basis for quantification would be the negotiation history itself rather than a detailed FRAND adjudication at this stage. The Court noted the “substantial difference” between Malikie’s proposed royalty figures and Xiaomi’s counteroffers. Relying on earlier decisions such as Koninklijke Philips and Dolby, the Court held that security should be assessed with reference to the SEP holder’s offer rather than solely the implementer’s counteroffer.

Ultimately, the Court calculated the pro tem amount as 19.12%, corresponding to Xiaomi’s Indian market share, of the mean value between Malikie’s second lump-sum offer and Xiaomi’s second counteroffer, arriving at USD 28.7 million, approximately ₹272 crores. Xiaomi was directed either to deposit the amount with the Registrar General within six weeks or furnish an unconditional bank guarantee from an Indian bank. The Court further clarified that failure to comply could entitle Malikie to seek interim injunctive relief.

At the same time, the Court clarified that the order does not constitute a final determination on infringement, validity, liability, or FRAND rates.

The judgment marks another decisive step in the Delhi High Court’s evolution toward a robust SEP enforcement framework that increasingly recognises implementer hold-out as a serious structural concern. More importantly, the decision reflects the Court’s continued movement away from treating SEP disputes solely through the lens of conventional patent injunction jurisprudence. The Court is consciously developing a sui generis interim framework tailored to the realities of FRAND licensing and standardised technology markets.