- What are Pro Tem Deposits?
Ordinarily, in Indian Patent Litigation, a Patentee is either entitled to seek interim injunction or at the very least interim deposits to be made in its favour in lieu of an interim injunction, under the following specific provisions:
- Order XXXIX Rules 1& 2 of the Code of Civil Procedure, 1908
- Rule 5(v) of the High Court of Delhi Rules Governing Patent Suits, 2022
However, the Court would issue an injunction or an order of interim deposits against the Defendant only if the following three requirements stood established in favour of the Plaintiff in the facts of the case – (i) prima facie case (ii) balance of convenience and (iii) irreparable harm.
However, in the context of Standard Essential Patent (SEP) Litigation, the SEP claimers started asserting that there was a need to secure them even prior to a determination of all the above factors, since such a determination in the SEP context is bound to take considerable time, as more often than not in an SEP suit, unlike an ordinary patent suit the SEP claimer assert 4-6 patents, which they believe are representative of their entire portfolio. SEP claimers argued that since they have essentially given up their right to seek any interim injunction (which an ordinary patentee is entitled to) on account of accepting the legal obligation of offering their patents on Fair, Reasonable and Non-Discriminatory (FRAND) rates, it was only fair that the court secure their interests through the means of a “pro tem” deposit. Since otherwise even after succeeding on merits, they may be just left with a paper order without any force, since the alleged infringer either could exit the market or siphon off its funds to deliberately frustrate the realisation of such a decision.
“Pro tem deposit” therefore, refers to an interim security or deposit, made by a party before a proper determination of merits of the claims made. This is essentially a stop gap arrangement put in place by the court, to ensure that a delay in determination of the merits of a matter, even at the interim stage, does not prejudice the Patentee. The pro tem deposit is ordinarily required to be in place only till the determination of the Order XXXIX Rule 1 & 2 application, however, if the parties consent to it, the said deposit can be extended till the final determination of the matter.
The earliest example of a pro tem order within the SEP space, was in the case of the Ericsson v. Xiaomi, wherein the Division Bench of the Delhi High Court vacated the “sweeping” ex-parte ad interim injunction order passed against Xiaomi by the Single Bench and instead directed pro tem deposit till the matter was decided by the Single Bench on the interim applications on merits. However, while passing the pro tem order, the Court did not articulate any specific guidelines, perhaps because this issue was not argued in any great detail at the time. But when SEP jurisprudence in Indian Courts evolved to where interim injunctions became a thing of the past, SEP claimers started falling back on the above order, to justify their demand for pro tem deposits in SEP matters.
- Pro Tem deposits- When is it justified?
Now while the issue of pro tem deposits consistently kept being brought up by SEP claimers, accused implementers also put across their very valid concerns of deposits being allowed just for the asking of SEP claimers, especially when there is no guarantee that their patents are indeed SEPs or valid for that matter and when the central issue of FRAND rates were yet to be assessed by the Court. It was also pointed out that even internationally the SEP claimer is not entitled to any reliefs prior to evidencing the merits of their claims.
The courts were therefore, understandably faced with the complicated dilemma of whether or not to treat SEP litigations different to other patent matters and allow for such deposits even prior to an adjudication of the SEP claimer’s case, or to hold that SEP suit cannot be so sui generis so as to have a different set of SOPs apply to it. While this issue repeatedly came up in multiple SEP suits, the Division Bench of the Delhi High Court in the Ericsson v. Intex case, clarified that interim reliefs in SEP matters can only be granted pursuant to a prima facie finding of (i) infringement and validity (in case there is challenge to this effect), (ii) unwilling licensee and/or (iii) FRAND compliance by the SEP holder in the royalties sought by it.
However, a definitive answer on the issue of Pro Tem deposits was rendered by the Division bench of the Delhi High Court in the case of Nokia v. OPPO, wherein the court held that “Normally speaking, a pro-tem deposit should be directed only after a prima facie finding of essentiality and validity of the suit patents has been recorded”. But, in the specific facts of the said case, the Court was of the view that an order for pro tem deposits was made out, which was that the parties already had a license agreement for the Plaintiff’s SEPs, leading to the presumption that the challenge by the alleged infringer to the essentiality and validity of the SEPs was merely a second thought.
- Are Pro Tem deposits here to stay?
The ratio in the Nokia v. Oppo case and the Intex v. Ericsson case was applied in the latest SEP case of Atlas v. TP Link, in which pro tem deposits were ordered by the Court by relying on the above said decisions.
The Delhi High Court ordered for pro tem deposits even prior to rendering a finding on essentiality and validity of the asserted SEP, since in the facts of the said case, the Court had found that the Defendant had been in negotiations for 2 years, had made several counter offers, was embroiled in litigation in two foreign jurisdictions and the foreign Defendants had not entered appearance despite service from the Court. The Court also directed that failure to deposit would lead to an injunction.
It may be relevant to point out that this is the first order in an SEP matter post 2019 where a pro tem deposit has been ordered even prior to reply of the Defendant being filed, reinforcing the point that a pro tem deposit is likely in an SEP case even on the first effective day of hearing.
It is therefore clear that pro tem deposits as an issue is only going to get more and more popular by the day, and thus Courts must be wary of the remedy ultimately becoming a curse. Concerns persist about the potential disruption of the SEP litigation landscape, emphasizing the need for cautious and equitable application of pro tem deposits in the Indian SEP Jurisprudence. Though intended as a stop-gap measure to safeguard the interests of SEP holders, a premature application of the pro tem measure could tilt the balance of power in favor of the claimant, and potentially prejudice the Defendant’s opportunity to put forward a case on merits. With careful scrutiny and stringent adherence to the prerequisites for its application, the potential risks associated with pro tem deposits could be effectively mitigated, preserving the integrity of the legal process and fostering a climate of equitable innovation and competition.
 Judgement dated 16.07.2019 in Natco Pharma Limited. Vs Bristol Myers Squibb Holdings Ireland Unlimited Company and Ors. 263(2019) DLT622
 Order dated 16.12.2014 in Xiaomi Technology and Anr. v. TLM Ericsson, FAO(OS) 522/2014
 Judgement dated 29.03.2023 in Intex Technologies v. Ericsson, FAO (OS) (COMM) 296/2018
 Decision dated 3.07.2023
 Order dated 28.08.2023 in Atlas Global Technologies LLC v. TP Link Technologies & Ors., CS(Comm) 575/2023