A recent order from the Delhi HC has instructed Lava International, an Indian smartphone maker, to submit ₹20.81 crore as interim security, either by furnishing a bank guarantee or making a fixed deposit. This amount accounts for estimated royalties from device sales between 2019 and 2024 in an ongoing patent infringement case initiated by Dolby International. However, the case involves several complex legal and licensing issues that still need to be examined.
Background of the Dolby vs. Lava Patent Dispute over AAC Technology
The dispute began when Dolby International, a well-known audio technology company, filed a patent infringement case against Lava International, an Indian smartphone maker. Dolby claimed that Lava continued to use its AAC (Advanced Audio Coding) technology in its devices even after their license agreement ended in December 2020.
Dolby’s AAC technology is protected under standard essential patents (SEPs), which means it is crucial for certain types of tech, like high-quality audio in smartphones. Dolby alleged that after the license expired, Lava did not renew it but continued using the technology without permission, violating Indian patent laws
After multiple unsuccessful efforts to settle the dispute amicably, Dolby approached the Delhi High Court, seeking compensation for damages and interim relief to prevent further losses during the ongoing legal proceedings.
Delhi HC Issues Interim Order in Dolby–Lava Patent Dispute
In its recent judgment, the Delhi High Court ruled in favor of Dolby International in the patent infringement case against Lava International. The court observed that Lava continued using Dolby’s AAC (Advanced Audio Coding) technology—protected under standard essential patents (SEPs)—even after their licensing agreement expired in December 2020.
Although there were multiple attempts to reach a licensing agreement, the court observed that Lava did not actively participate or show genuine interest in resolving the matter. It concluded that Lava was not serious about renewing the license and did not make a fair effort to negotiate, which led to the dispute escalating to legal action. As an interim measure, the court directed Lava to deposit ₹20.03 crore as pro-tem security, representing estimated past royalties for the use of Dolby’s technology between 2019 and 2024.
Lava was given eight weeks to either pay the amount or provide a bank guarantee for the same sum. The court clarified that this was not a final determination of infringement or royalty rate but a safeguard to protect Dolby’s interests during the trial. Additionally, Lava was instructed to continue making half-yearly deposits or guarantees for sales from January 2025 onwards.
Ongoing Proceedings and Expected Outcomes
- The case will proceed to a fast-tracked trial to determine whether Lava violated Dolby’s patent rights and what fair royalty, if any, should be paid.
- If Lava fails to comply with the court’s deposit order, Dolby may request a temporary ban on the sale of Lava’s devices using the disputed technology.
- Lava is also required to continue making payments or guarantees every six months for any ongoing use of the technology after January 2025.
- The outcome of this case could set a precedent for how similar patent and licensing disputes are handled in India.
Role of IPR in the Dolby vs. Lava Patent Dispute
- The court backed Dolby’s intellectual property rights (IPR) over its patented AAC audio technology.
- It found that Lava continued using the technology even after the license expired, violating those IPRs.
- By ordering Lava to deposit ₹20.81 crore, the court protected Dolby’s rights while the case is still ongoing.
- The case reinforced that IPR holders deserve fair compensation, especially for standard-essential patents.
- It also stressed the importance of good-faith negotiations under FRAND terms.
- Overall, the decision strengthens trust in India’s legal system to uphold and enforce IPR effectively.
Conclusion
The case highlights the need to respect intellectual property rights and follow fair licensing practices. It shows that companies must get proper permission to use patented technology. This decision also sets an example for how similar cases may be handled in India, supporting stronger protection for patent holders and encouraging fair business practices.
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