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Introduction
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Inside every DVD player sits a chip that takes encoded data off the disc and converts it into something a television can display. Koninklijke Philips Electronics NV, the Dutch multinational, claimed that the conversion technique this chip performs fell within the claims of its Indian patent, that every DVD player in circulation therefore used its protected technology, and that two manufacturers selling budget DVD players in Haridwar had been doing so for years without a licence.
K.K. Bansal ran Bhagirathi Electronics and his son Rajesh Bansal ran Mangalam Technology. Both sourced component boards from China, assembled them in Haridwar, and sold the finished players under the brand names SOYER and PASSION. Philips filed suits against both in 2009, and the patent at the centre of the dispute, Indian Patent IN-184753, expired in February 2015 while the suits remained undecided. By the time the matter reached a Single Judge, injunctive relief had become moot and only damages remained.
Justice Mukta Gupta, by a common judgment dated 12 July 2018, decreed both suits in Philips' favour. She directed royalty payments at USD 3.175 per DVD player until May 2010 and USD 1.90 per player until the patent's expiry in February 2015, with interest at ten percent per annum, and awarded punitive damages of Rs. 5 lakh against Rajesh Bansal on the ground that he had once been a Philips employee. The Bansals appealed against the whole of the decree.
On 18 May 2026, a Division Bench of the Delhi High Court comprising Justices C. Hari Shankar and Om Prakash Shukla reversed every element of the 2018 decree in K.K. Bansal and Others v. Koninklijke Philips Electronics NV. The court found that the suit patent stood unproved as an SEP, that infringement was unestablished, that the supply chain exhausted whatever rights Philips held over the components, that the royalty rate rested on the wrong base and the wrong evidence, and that the punitive damages lacked any legal foundation, with all four findings of the trial court failing and both appeals succeeding in full. The DVD as a consumer product ceased to matter years ago, but the legal questions this case resolves go to the heart of how standard essential patent litigation now operates in India.
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Background: Parties and the Dispute
Koninklijke Philips Electronics NV received grant of Indian Patent IN-184753 in April 2001. The patent claims a decoding device that converts a modulated signal into a series of eight-bit information words, which is the EFM-Plus (EFM+) decoding function embedded in every DVD player's chipset. Philips also held US Patent 5696505 and European Patent EP 745254B1, both of which the DVD Forum, the body responsible for setting DVD technology standards, had formally certified as essential to the DVD standard.
Philips' position in the suits was that IN-184753 corresponded to these foreign equivalents, that the DVD standard depended on the technology the patent claimed, and that any manufacturer assembling a standard-compliant DVD player necessarily used the patented technique. The Bansals, it contended, had manufactured and sold such players for years without paying anything.
The Bansals' answer rested on four arguments. First, Philips had never proved IN-184753 was an SEP in India through admissible evidence. Second, the component boards they bought came from MediaTek's authorised supply chain, which exhausted Philips' patent rights before the boards ever reached Haridwar. Third, Philips had not proved infringement through any mapping of the patent's claims onto either the DVD standard or the Bansals' products. Fourth, the royalty figures Philips claimed as FRAND bore no relationship to any comparable licences Philips had actually granted to anyone else.
Issues
The Division Bench framed four principal questions. First, whether IN-184753 constituted a standard essential patent in India. Second, whether Section 107A(b) of the Patents Act, 1970, operated to exhaust Philips' patent rights through the Bansals' supply chain. Third, whether Philips had proved infringement through direct or indirect means. Fourth, whether the damages calculation, covering the royalty rate, the royalty base, and the punitive award, withstood appellate scrutiny.
Doctrine
What Makes a Patent Standard Essential in India
Standard essential patents sit at the intersection of patent law and competition policy. A Standard Setting Organisation brings together engineers, manufacturers, and patent holders to define the technical specifications a product must meet to interoperate with other products on the market. DVD players, smartphones, Wi-Fi routers, and 5G devices all function on technical standards maintained by SSOs. When a patent holder participates in standard-setting and contributes technology that the standard adopts, the holder typically submits an essentiality declaration to the SSO, committing to license the patent on FRAND terms to any manufacturer that implements the standard.
The critical legal distinction, which Indian courts have progressively sharpened, is the distance between declaring a patent essential and proving it essential. A declaration tells the SSO that the holder asserts essentiality, while proof requires an entirely different exercise.
In Intex Technologies (India) Ltd. v. Telefonaktiebolaget LM Ericsson (FAO(OS)(COMM) 296-297/2018, 2023:DHC:2243-DB), the Division Bench judgment that now governs SEP litigation in India, requires the patent holder to produce claim charts, which are documents mapping the patent's claims, feature by feature, onto the technical specifications the relevant standard mandates. The claim chart exercise shows the court precisely which claim in the patent corresponds to which mandatory technical element in the standard, and without that mapping, the assertion that a patent is essential remains exactly that: an assertion.
Expert opinions in Indian courts must comply with Section 45 of the Indian Evidence Act, 1872, which requires that the person whose opinion the court receives must be present and available for cross-examination. When a law firm or consultancy issues a certificate asserting that a patent is essential to a technical standard, that certificate qualifies as an expert opinion within the meaning of Section 45, and if the certificate's author does not appear before the court, it carries no evidentiary weight. The Supreme Court established this principle in State of Himachal Pradesh v. Jai Lal, (1999) 7 SCC 280.
How Courts Determine FRAND Rates
A FRAND commitment means the patent holder may not charge whatever the market will bear simply because the standard mandates the patent. The commitment runs in two directions, the holder must offer licences on reasonable terms to all willing implementers, and the implementer must negotiate in good faith rather than hold out indefinitely.
When a court must itself fix a FRAND rate in the absence of agreement, two evidentiary requirements become decisive. The patent holder must produce comparable licence agreements concluded with other licensees on similar terms, as these agreements provide an objective benchmark for what is fair and non-discriminatory. The assertion that a uniform rate applies to all licensees, made without placing any of the actual agreements before the court, does not substitute for those documents, and Section 114 of the Indian Evidence Act, 1872, allows a court to draw an adverse inference when a party withholds evidence in its possession.
The royalty base must also correspond to what the patent actually covers. A patent directed at a chip or PCB inside a DVD player claims only that component and does not claim the mechanical drive, the video processor, the audio decoder, the casing, or the hundreds of other components that together make up a DVD player. Setting a royalty on the retail price of the complete device, for a patent that governs only one component, inflates the damages base with value the patent holder never created and cannot own, and the royalty must attach to the smallest saleable patent-practising unit.
International Patent Exhaustion Under Section 107A(b)
The Patents Amendment Act of 2002 inserted Section 107A(b) into the Patents Act, 1970. The provision states that any person who imports a patented product from a person whom the law duly authorises to produce, sell, or distribute that product does not infringe the patent. This embeds international exhaustion into Indian patent law: a patent holder who authorises a manufacturer or distributor to produce and sell a product anywhere in the world loses the right to pursue further royalties from downstream buyers in India who acquire that product through the authorised supply chain.
The phrase "duly authorised under the law" does not require the importer to hold a direct contractual relationship with the patent holder, and a downstream buyer who acquires from an authorised distributor, who in turn acquired from an authorised manufacturer, stands within the protection of the provision.
Analysis
On Essentiality
Philips submitted Essentiality Certificates from Proskauer Rose LLP and Cohausz & Florack, two firms that had examined the US and European equivalents of IN-184753 and certified them as essential to the DVD standard, but neither firm produced a witness for examination or cross-examination before the trial court. Applying the Supreme Court's ruling in State of Himachal Pradesh v. Jai Lal, (1999) 7 SCC 280, the Division Bench held that the certificates could not stand as evidence because their authors had not appeared and no one had tested their reasoning under cross-examination.
The Division Bench also found IN-184753 vague on its face, noting that the patent's title and description did not align with the scope of its claims, which the court read as directed narrowly at a decoding device at the chip or PCB level. A patent that cannot present its own scope clearly cannot anchor a claim of broad essentiality to an industry standard.
Philips produced no claim charts, and the mapping exercise that Intex v. Ericsson requires, which shows the court which claim in IN-184753 corresponds to which mandatory feature in the DVD Forum's technical specifications, never formed part of Philips' evidence. Without that exercise, the court had no basis to conclude independently that the patent's claims covered technology the standard compelled every implementer to use, and the Division Bench found IN-184753 unproved as an SEP.
On Infringement
The Division Bench recognised two routes to proving SEP infringement. The direct route requires the patent holder to demonstrate, through testing or technical analysis, that the accused product implements the technology the patent claims. The indirect route works through the standard: if the standard mandates the patented technique and the accused product complies with the standard, the product necessarily uses the patent, without any need for testing each individual device.
Philips' technical expert submitted an affidavit asserting that the Bansals' DVD players used the EFM+ decoding method the patent described, but that expert did not take the stand and did not testify in examination-in-chief on the contents of the affidavit. The Division Bench held that an unexamined affidavit from an expert who has not confirmed its contents under oath and submitted to cross-examination carries no evidentiary weight, and the direct route therefore failed.
The indirect route failed because Philips never mapped IN-184753 onto the DVD Forum's technical specifications. Proving indirect infringement requires showing that the standard mandates the claimed technique; without the claim chart exercise, that predicate remains unproved. Both routes to infringement proof failed, and the Division Bench found infringement unestablished.
On Exhaustion
The Bansals sourced their component boards from Shauntak and Sheen Land, registered vendors of MediaTek, which manufactured and sold EFM+ decoder chips under a licence from Philips and therefore qualified as an authorised party within the meaning of Section 107A(b). The supply chain ran from Philips through MediaTek to its registered vendors and from there to the Bansals in Haridwar.
Philips objected that the Bansals' written statement had originally attributed their components to Sony and SANYO, and that the MediaTek exhaustion argument appeared only at the affidavit stage and in final submissions, long after Philips' evidence had closed. The Division Bench did not allow this procedural objection to foreclose the exhaustion defence. The court found the supply chain authorisation established and held that Section 107A(b) applied: the Bansals had acquired components that an authorised licensee in the chain had sold, and Philips' patent rights over those components exhausted at the point of authorised sale, before the boards reached India.
This reading of Section 107A(b) extends the exhaustion protection to assemblers who stand several steps removed from the patent holder in the supply chain, without requiring privity between the importer and the patentee: an authorised chain suffices.
On FRAND Rate
Philips' own witness admitted during cross-examination that copies of third-party licence agreements with other DVD player manufacturers existed and sat at Philips' headquarters in the Netherlands, and Philips chose not to produce those agreements before the court. The Division Bench drew an adverse inference under Section 114 of the Indian Evidence Act: a party that withholds evidence it controls invites the presumption that the evidence would not support its position.
The absence of comparable licences left the court without any objective reference point, since Philips' position that it had charged all licensees the same rate says nothing about whether that rate was reasonable or non-discriminatory relative to market practice. FRAND compliance requires an objective comparison against actual third-party agreements, not a self-referential assertion of consistency, and pre-suit negotiations between Philips and the Bansals, which Philips conducted on a without-prejudice basis as attempted settlement communications, could not substitute for this comparison.
The Division Bench also held that the royalty base the Single Judge applied was wrong, since the suit patent covers a decoding chip at the component level and not a DVD player as a whole. Calculating royalty per complete device for a chip-level patent compounds the damages base with the value of every other component in the product, which Philips did not invent and cannot claim, and the court rejected the per-DVD-player basis entirely.
On Punitive Damages
The Single Judge awarded Rs. 5 lakh in punitive damages against Rajesh Bansal solely on the basis that he had formerly worked as an employee of Philips. The Division Bench set this aside without hesitation, since prior employment with a patent holder does not constitute aggravated infringement. The award required findings that Rajesh Bansal had taken confidential information from Philips, had specifically targeted its proprietary processes in his own business, or had engaged in conduct that went beyond ordinary assembly and sale of standard-compliant products, and the absence of any such findings left the punitive award without foundation.
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Conclusion
The K.K. Bansal v. Koninklijke Philips Electronics NV case overturns every element of the 2018 decree, which India's IP law community recognised as the country's first post-trial SEP judgment even while criticising its analytical gaps. The Division Bench invented no new law, applying instead, with more rigour than the trial court managed, legal standards already in place, the Intex v. Ericsson template for claim charts and infringement tests, the Evidence Act's requirements for expert testimony, Section 107A(b)'s exhaustion provision, and the basic principle that FRAND rates need external reference points.
What has changed is the precision with which those standards must now be satisfied. An SEP holder in Indian litigation must work through each element sequentially and prove each one with admissible evidence before the next becomes relevant, i.e., essentiality through claim charts and cross-examinable witnesses, infringement through either product testing or standard-to-claim mapping, exhaustion excluded by tracing the supply chain, and FRAND rates established through actual comparable licences placed on the record and calculated over the correct royalty base.
My own reading of this case is that the 2018 decree imposed real financial liability on small assemblers who sourced components through an authorised supply chain, using a royalty rate calculated without any evidentiary foundation in comparable licences, for a patent whose essentiality was never independently verified in India. The Division Bench's reversal corrects all of that without any doctrinal overreach, applying settled law throughout.
The technology at the centre of this dispute is obsolete, but standard essential patents now govern 4G and 5G connectivity, Wi-Fi, Bluetooth, and virtually every communication-intensive device that India's manufacturers produce and import. The evidentiary template this judgment confirms will determine the outcome of those disputes for years to come: every implementer facing an SEP claim in an Indian court will draw on this ruling, and every SEP holder preparing to litigate in India needs to understand what it now demands of them.
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~ Adv. Koushik Chittella
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