Dolby International AB & Anr. v Lava International Limited

A. Facts

The Plaintiffs are companies within the Dolby group (Dolby). Dolby owns a portfolio of Indian patents declared as (potentially) essential to the Advanced Audio Coding (AAC) standard. [1]

The Defendant, Lava International Limited (Lava), is an Indian mobile phone manufacturer whose devices implement the AAC standard.

On 31 December 2018, Dolby contacted Lava, asserting its AAC patent portfolio and offering a global FRAND licence, either bilaterally or through the Via LA licensing pool. [2] Dolby provided claim charts, technical specifications, and bilateral royalty rates. [3]

On 16 January 2019, Lava responded denying Dolby's claims and took the position that it would only take a licence for patents held to be valid, essential, and infringed. [4] Lava did not make any counteroffer. [5]

On 17 September 2021, Lava asked for a revised commercial offer; Dolby reiterated its offer on 28 October 2021 and sent a further reminder on 24 January 2022. Lava failed to respond. [6] In August 2023, Dolby provided all claim charts for the asserted patents and called upon Lava to furnish its audited sales statements. [7]

Dolby filed the present suit before the High Court of Delhi (Court) seeking a permanent injunction restraining manufacture and sale of infringing devices. [8] Beyond this, Dolby requested the Court declare that its conduct and licensing rates is FRAND compliant and that Lava be recognised as an unwilling licensee. Dolby further sought damages, delivery up of infringing products, and disclosure of sales accounts and assets. As a interim measure, Dolby applied for a pro tem order directing Lava to make a security deposit pending litigation. [9] The suit was brought on the basis of eight patents, described as representative of Dolby's AAC portfolio, of which five had expired prior to or during proceedings and three remained valid. [10]

Summons were issued on 1 May 2024, on which date Lava sought time from the Court to conclude licensing negotiations with Dolby. [11] On 22 May 2024, the Court recorded that negotiations had failed and listed the application for adjudication. Lava was directed to deposit INR 5.13 per device sold, as volunteered by Lava, subject to revision. [12]

Arguments on the pro tem relief were heard between November 2024 and March 2025, after which judgment was reserved. [13]

On 10 July 2025, the Court ordered Lava to make a pro tem deposit of INR 20,08,06,293.92 (approximately USD 2,340,456.98) for sales spanning 2019 to 2024 [14] , or alternatively, to furnish an equivalent unconditional bank guarantee. [15] In default of such compliance, Dolby was granted the right to seek an interim injunction restraining Lava's sales within India. [16]

B. Court's reasoning

Willingness

The Court held that Dolby complied with the FRAND protocol whereas Lava 'failed to comply with the obligations of an implementor. ' [17] In the Court's prima facie view, Lava's conduct amounted to 'patent holdout.' Lava was deemed an 'unwilling licensee' under the framework established in Huawei v ZTE [18] and followed in Intex Technologies v Ericsson [19] [20] .

Citing Intex Technologies v Ericsson, the Court observed that the FRAND protocol imposes 'mutual reciprocal obligations' on both the patent holder and the implementer. [21] This relationship is 'not a one-way street' where obligations are cast solely upon the patent holder. [21] The conduct of the parties during negotiations is 'one of the key factors' in assessing whether a party is a willing licensor or licensee. [22]

Under this reciprocal framework, the implementer is obligated to respond to a FRAND offer and provide a counteroffer if the initial offer is unacceptable. [23] What is more, in formulating the counteroffer, the implementer has no right to demand third-party licensing agreements from the patentee. [24]

The Court observed the conduct of the parties during pre-suit negotiations. [25] Dolby initiated communication on 31 December 2018, provided technical information including claim charts, offered comparable royalty rates, and responded to queries. By contrast, Lava never made a counteroffer during six years of negotiations. [26] Instead, Lava insisted on licensing only a subset of the portfolio, contrary to established industry practice, [27] and kept demanding third- party confidential licensing agreements. [28] Moreover, Lava never disputed or questioned the validity of the (potential) SEPs, nor did it counter Dolby's claim charts. [29] The Court noted that Lava requested a revised offer on 17 September 2021. Despite Dolby's compliance and a further reminder on 24 January 2022, Lava failed to respond. [6]

The Court stated that Lava's strategy was 'simply to delay the negotiations.' [17] It noted a similar conclusion in its earlier judgment in Ericsson v Lava. [30] There, Lava was found to have 'employed all means and methods for delaying the execution of license' and did not engage in good faith negotiations [31] .

The Court then turned to post-suit conduct. [32] After summons issued on 1 May 2024, Lava sought time to conclude negotiations. [33] Lava then contended that five of the suit patents had expired, while the remaining three had not been discussed and were still being assessed. [34] Lava continued to insist on disclosure of third-party agreements, which Dolby refused on grounds of third-party confidentiality. [35] The Court noted that despite Dolby offering both bilateral and pool licensing, Lava failed to provide a counteroffer or approach the licensing pool. [36]

The Court analysed Lava's 15 May 2024 counteroffer. [37] The Court found the proposed figures had 'no basis whatsoever' and the underlying methodology was 'not discernible.' [38] The counteroffer, made only after suit was filed despite five years of discussions, indicated an 'attempt to delay' than good-faith behaviour. [39] The offer failed to propose quantifiable licensing terms or provide necessary sales data. [39] In the Court's view, such conduct 'undermines the very spirit of good faith negotiations that is central to the FRAND framework. ' [39]

The Court observed that throughout this prolonged period of delay, Lava continued to market infringing devices. [39] Consequently, Lava "not only acted as an unwilling licensee but also derived an unfair advantage by selling infringing products without paying the requisite royalties." [39]
 

Pro tem deposit

The Court ordered Lava to make a pro tem deposit for sales spanning 2019 to 2024. [40] The Court cited jurisprudence from Intex v Ericsson, Nokia v Oppo [41] , and Oppo v Interdigital [42] to extract the governing legal principles. [43]

The Court distinguished SEP cases from standard patent infringement cases, as SEP holders cannot claim injunctions without first conducting negotiations under the FRAND protocol. [44] Given this distinction, Indian courts are empowered to order pro tem deposits without requiring a separate application or adherence to interim injunction standards. [45] Such an order is a protective, ad-interim measure operating until the interim injunction application is decided. [46] It is a 'temporary arrangement without a detailed exploration of merits', distinct from an injunction. Unlike an injunction, it does not stop the manufacturing and sale of devices. [47] Instead, the measure of damages is the 'revenue loss to the patentee which it would have got by way of royalty. ' [48]

The purpose of a pro tem deposit is to balance the SEP holder's right to technology value with the implementor's right to contest the patent. [49] This prevents the implementer from 'unfairly benefit[ing] from the use of patented technology during potentially lengthy litigation' before validity, essentiality and FRAND terms are determined. [49]
 

The standard for pro tem orders

The Court emphasised that a pro tem order normally requires a prima facie finding on patent essentiality and validity. [50] However, this finding does not necessitate an in-depth exploration of merits or a full adjudication of invalidity grounds. [51] The required level of scrutiny depends on the facts and circumstances of the case. [52] Where an implementer fails to raise a 'credible challenge' during negotiations and 'only during litigation as an afterthought'; the Court may rely on surrounding factors to determine validity and essentiality. [53] This prevents the pro tem threshold from collapsing into the (higher) standard required for an interim injunction. [53]

Drawing from Atlas Global Technologies v. TP-Link [54] , the Court identified factors relevant to the pro tem deposit determination, with emphasis on:

• The defendant's awareness of the patents and the persistence of negotiations over several years.
• The status of the plaintiff's patents as SEPs already licensed to third parties.
• The defendant's launch of products without securing licenses, despite the plaintiff's offer to license.
• The plaintiff's provision of claim charts mapping the patents to standards to establish essentiality and infringement.
• The defendant's continued sale and revenue generation while the plaintiff asserts its patents globally without receiving royalties. [55]

Applying this standard, the Court examined whether Dolby established a prima facie case regarding: (i) patent validity; (ii) patent essentiality; and (iii) infringement. [56]
 

Validity

The Court concluded that Dolby had prima facie established the validity of the suit patents without the need for an 'in-depth examination. ' [51] The Court highlighted that Lava had never questioned the validity of the suit patents during six years of negotiations. [57] Although Lava stated that it was having a 'technical evaluation' conducted, it never reverted to Dolby with the results, nor did it initiate invalidity proceedings. [57] The grounds of invalidity, first raised in these proceedings [58] were viewed as 'only to avoid making a pro tem deposit' and delay adjudication. ' [58] The Court rejected Lava's argument that the new standard was a rehashed version of the prior one, observing that standards evolve incrementally. [59]

The Court noted that Dolby's AAC portfolio has over 940 licenses with market leaders, a fact Lava did not dispute. [60] The Court also referred to court orders placed on record from Dolby's prior suits ('Oppo' and 'Vivo') where parties settled for Global Patent License Agreements. [61] Despite being consent orders, the Court held that they prima facie reflect patent validity, presuming that 'no one pays good money for bad patents. ' [62] Finally, the Court stated that Lava's own counteroffer amounted to a 'prima facie admission' of essentiality and validity. [63] This reflected the strength of Dolby's portfolio and 'the FRAND nature of its licenses.' [64]
 

Essentiality

The Court held that Dolby established prima facie essentiality throuungh unrebutted claim charts mapping the suit patents to standards. [65] It was observed that despite receiving these charts during negotiations; Lava did not question or object to them, nor did it file counter-claim charts. [66]
 

Infringement

The Court found that 'a prima facie case of infringement was made out.' [67] The Court applied the indirect two-step test approved in Intex v. Ericsson, which utilises the "Law of Transitivity". It includes:
(i) Mapping the patent to the standard to establish it as a SEP; and
(ii) Showing the device conforms to that standard ('if A=B and B=C, then A=C'). [68]

The Court found that, on the first step, the suit patents had already been held prima facie essential. On the second, Lava's own website confirmed that its devices to be AAC compliant. [69] Furthermore, Android 14 documentation mandates that handheld devices implement AAC plus standard, and Google's own terms state such implementations "may require patent licenses". [70]

While Lava's experts confirmed the devices implement the relevant standards, they contended that the 'devices do not infringe the suit patents. ' [71] The Court rejected this stance, noting that the Lava experts failed to disclose any alternate technology used by the devices. [72] An implementer is mandated to disclose alternate technology; this burden cannot be shifted to the patentee [72] .

The Court also rejected the defence of patent exhaustion. [73] A party must prove the product 'was obtained in a manner respecting the patent holder's rights. ' [73] According to the Court, Lava had not demonstrated any agreement with its suppliers showing they held a licence from Dolby. [73]
 

Amount of pro tem deposit

A perusal of the license agreements submitted by Dolby showed that the rates offered to Lava were "comparable to the rates offered to other similarly placed entities" . [74] The Court thus determined the amount of pro tem deposit on the basis of the aforementioned comparable rates offered by Dolby to Lava. [75]

C. Other issues

Expired patents

The Court rejected Lava's contention that expired patents are exempt from royalty or pro tem deposits. [76] While five patents have expired, they remained valid when negotiations commenced in December 2018. The Court held that 'Lava cannot take advantage of its own wrong' by benefiting from its own delays.' [77]

The Court clarified that standard implementation necessitates the use of all constituent essential patents. Consequently, 'the license has to be for the entire portfolio and not on a patent-by-patent basis. ' [78] The suit patents serve as mere representatives of the entire portfolio [79] . The natural expiration of individual patents or the introduction of new ones does not exempt an implementer from royalty obligations for the portfolio as a whole. [80]
 

Date of liability

The Court dismissed Lava's submission that a pro tem deposit should accrue only from the date of the suit's institution. [81] It clarified that royalty obligations arise from the date the patentee first asserts the SEPs. [82] Dolby's first offer was made on 31 December 2018, yet Lava delayed negotiations for almost six years. [83] Accordingly, Lava was held liable from 31 December 2018. [84]
 

Financial condition

The Court deemed a pro tem deposit necessary to balance the equities and protect Dolby's interest against the risk of an unenforceable decree. [85] A primary objective of a pro tem deposit is to secure the plaintiff's interest in the event it ultimately succeeds. [86] The Court observed that it must be 'conscious of the fact that trials in India take a long time to conclude.' Thus, there must be a mechanism to ensure the 'patent owner is not left with a paper decree.' [87]

In its prima facie assessment of Lava's financial reliability, the Court took note of evidence placed on record by Dolby regarding existing decrees and ongoing investigations. [88] Consequently, the Court determined that Lava's financial condition 'does not inspire confidence.' It found a 'genuine apprehension' that Lava may be unable to satisfy an eventual decree. [85]

• [1] Dolby International AB v Lava International Ltd CS(COMM) 350/2024, 2025: DHC:5426, para. 2.
• [2] Ibid, para. 43.
• [3] Ibid, paras. 43, 7(V)-(VI).
• [4] Ibid, para. 44.
• [5] Ibid, paras. 44-45.
• [6] Ibid, para. 45.
• [7] Ibid, para. 46.
• [8] Ibid, para. 7(XI).
• [9] Ibid, paras. 1 and 7(XI).
• [10] Ibid, para. 3.
• [11] Ibid, paras. 4-5.
• [12] Ibid, para. 5.
• [13] Ibid, para. 6.
• [14] Ibid, para. 107.
• [15] Ibid, para. 108(i)-(ii).
• [16] Ibid, para. 108(iii)- 108(iv).
• [17] Ibid, para. 48.
• [18] Huawei Technologies Co. Ltd v ZTE Corp (C-170/13) EU:C: 2015:477
• [19] Intex Technologies (India) Ltd v Telefonaktiebolaget LM Ericsson [2023] DHC 2243-DB
• [20] Dolby International AB v Lava International Ltd CS(COMM) 350/2024, 2025: DHC:5426, para. 49.
• [21] Ibid, para. 13 (quoting Intex v Ericsson, paras. 69-73).
• [22] Ibid, para. 14.
• [23] Ibid, para. 15(ii)-(iii).
• [24] Ibid, para. 15(i).
• [25] Ibid, para. 47.
• [26] Ibid, para. 47(v).
• [27] Ibid, para. 47(vi).
• [28] Ibid, para. 47(vii).
• [29] Ibid, para. 47(viii).
• [30] Telefonaktiebolaget LM Ericsson v Lava International Ltd [2024] DHC 2698
• [31] Dolby International AB v Lava International Ltd CS(COMM) 350/2024, 2025: DHC:5426, para. 50 (quoting Ericsson v Lava, paras. 675, 678).
• [32] Ibid, paras. 51-58.
• [33] Ibid, para. 51.
• [34] Ibid, para. 52.
• [35] Ibid, para. 57.
• [36] Ibid, paras. 58.
• [37] Ibid, paras. 55-56.
• [38] Ibid, para. 102.
• [39] Ibid, para. 58.
• [40] Ibid, para. 108(i).
• [41] Nokia Technologies v. Guangdong Oppo 2022 SCC OnLine Del 4014
• [42] Guangdong Oppo Mobile Telecommunications Corp Ltd v Interdigital Technology Corporation [2024] DHC 4547-DB.
• [43] Dolby International AB v Lava International Ltd CS(COMM) 350/2024, 2025: DHC:5426, para. 38.
• [44] Ibid, paras. 38(I).
• [45] Ibid, paras. 30-34.
• [46] Ibid, paras. 37.
• [47] Ibid, para. 22.
• [48] Ibid, para. 12.
• [49] Ibid, para. 38(IV).
• [50] Ibid, para. 38(V).
• [51] Ibid, para. 69.
• [52] Ibid, para. 39.
• [53] Ibid, para. 40.
• [54] Atlas Global Technologies v. TP Link Technologies CS(COMM) 575/2023
• [55] Dolby International AB v Lava International Ltd CS(COMM) 350/2024, 2025: DHC:5426, para. 41.
• [56] Ibid, para. 60.
• [57] Ibid, para. 61.
• [58] Ibid, para. 62.
• [59] Ibid, para. 63.
• [60] Ibid, para. 64.
• [61] Ibid, paras. 65-66.
• [62] Ibid, para. 66.
• [63] Ibid, para. 67.
• [64] Ibid, para. 68.
• [65] Ibid, para. 70,73.
• [66] Ibid, para. 71.
• [67] Ibid, para. 81.
• [68] Ibid, paras. 74-75 (quoting Intex v Ericsson, paras. 93-98).
• [69] Ibid, para. 76.
• [70] Ibid, para. 77.
• [71] Ibid, paras. 78-80.
• [72] Ibid, paras. 80.
• [73] Ibid, paras. 82-83
• [74] Ibid, para. 103.
• [75] Ibid, para. 104.
• [76] Ibid, para. 95.
• [77] Ibid, para. 90.
• [78] Ibid, para. 92.
• [79] Ibid, para. 91.
• [80] Ibid, paras. 91-93
• [81] Ibid, para. 96.
• [82] Ibid, para. 97
• [83] Ibid, para. 98
• [84] Ibid, para. 98.
• [85] Ibid, para. 87.
• [86] Ibid, paras. 84-85.
• [87] Ibid, para. 85.
• [88] Ibid, para. 86.