Most technology companies consider patent infringement risks as rare occurrences and prefer to adapt an ostrich approach by keeping their heads buried in the sand. Dr. Badri Gomatam, our Chief Technology Officer says that this approach has worked well in past till Indian companies were mostly India-centric and India was not an attractive market for foreign companies. Not Anymore!
Ground realities are changing at an unimaginable speed. Xiaomi’s breakneck expansion into the world’s fastest growing smartphone market, India, has been disrupted by the litigation filed by the Swedish equipment maker Ericsson in the Delhi High Court. The court ordered an interim ban and then royalty deposition of 100 INR for every smartphone imported into India by Xiaomi. Homegrown handset maker Micromax was directed by the Delhi High Court in an interim order, to pay 0.8% to 1.3% of the selling price as the royalty to Ericsson for using Ericsson’s Standard Essential Patents (SPEs) on technologies used in smartphones. Other homegrown manufacturers like Intex and Lava too are dealing with patent infringement issues in various forums such as Courts and Competition Commission of India (CCI).
The recent project management of patent infringement litigations in India indicate even homegrown companies, in the worst case, are not able to access their domestic markets and in the best case, end up paying royalties enough to put their margins under severe pressure. Unfortunately, it is not only patent infringement risk that can adversely impact bottom line, a patent infringement litigation itself, whether or not there is infringement of patents, can dent bottom line by up to 2.5 million INR in India and around 2 million USD in USA.