In March 2013 the Delhi High Court ordered India's leading Android device maker, Micromax, to make a deposit of FRAND royalties in order to avoid the injunctive relief Ericsson originally sought. For the royalties to be deposited, the court set provisional rates ranging from 1.25% to 2% of the price of a device, the percentage depending on which standards (ranging from "GSM only" to "EDGE + GPRS + GSM" and "WCDMA/HSPA") a device actually implemented.
The court has now published an order that came down last week and determined the provisional rates of royalties that Micromax shall pay directly to Ericsson (as opposed to a mere deposit) for the period between the filing of Ericsson's suit and the trial, which is scheduled for late 2015. Those rates are now significantly lower, which means Micromax's lawyers have managed to increase their client's short-term liquidity. The applicable provisional rates are now 0.8% (GSM only, or GPRS + GSM) and 1% (EDGE + GPRS + GSM, or WCDMA/HSPA), for the period until November 13, 2015. Thereafter, the 1% rate goes up to 1.1% for the following 12 months, and a further increase has been determined for the period after November 13, 2016, but it's rather doubtful that those rates will ever play a role since the parties will have more clarity after the trial and will then (if they don't settle anyway) likely seek an adjustment.
While this is a substantial reduction and useful to Micromax, these provisional rates are still far greater than royalty rates awarded by U.S. courts in a couple of key FRAND determination cases to other SEP holders (Motorola and Innovatio).
The court stressed that this set of royalty rates is "purely an interim arrangement and is not a determination of the FRAND rates for the Ericsson portfolio."
Since this is not a FRAND determination, the order does not address in any way the argument that Ericsson's royalty demands should be related to the price of a chipset implementing a given standard as opposed to the price of a complete, multifunctional device. About a year ago, the Competition Commission of India had expressed concern over Ericsson's royalty base.
In March it turned out that Ericsson had asked Micromax for substantially higher royalty rates than another local company, Saral.
This year the Competition Commission of India launched a second investigation of Ericsson's standard-essential patent licensing practices (in particular, certain conditions it tried to impose on an implementer of a standard).
Here's the court order on provisional royalty rates in Ericsson v. Micromax:
Order - Telefonaktiebolaget vs. Mercury - CS(OS) No. 442 of 2014 by Florian Mueller
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