INDIA’S IP ENFORCEMENT TIGHTENS: RS. 290 CR INTERIM SECURITY ORDERED IN CROSS-BORDER PATENT CASE

BACKGROUND AND LEGAL PROCEEDINGS

The Delhi High Court, in the exercise of its judicial authority, has issued a directive to South Korea-based Ace Technologies Corp. the context of a patent infringement litigation initiated by Communication Components Antenna Inc. (CCA), a Canadian corporation and the proprietor of Indian Patent No. 240893. This patent pertains to base-station antenna technology integral to telecommunications infrastructure, notably utilized by Reliance Jio within India. The suit alleges that Ace Technologies unlawfully manufactured and marketed products within Indian territory that infringe upon CCA’s patented technology. Initially, in July 2019, the Court acknowledged the practical difficulties posed by Ace’s minimal asset presence in India and consequently mandated an interim security deposit totaling Rs. 54.5 degrees. This sum was structured as Rs. 40 crores secured through a bank guarantee and Rs. 14.5 crore in cash, representing approximately 10% of the infringing sales volume to safeguard the plaintiff’s interests during ongoing proceedings.

Subsequently, CCA has escalated its claim, seeking damages amounting to Rs. 1,160 crores, reflecting the alleged extensive scale of infringement. In response, invoking its inherent powers under Section 151 of the Civil Procedure Code, 1908 which empowers the Court to issue orders necessary to meet the ends of justice and prevent abuse of the judicial process the Delhi High Court has ordered Ace Technologies to deposit an interim security of Rs. 290 crores, representing 25% of the total claimed damages. This measure serves as a provisional safeguard to secure the plaintiff’s interests pending the final determination of the suit, ensuring that sufficient funds are preserved to potentially satisfy the claim should the plaintiff prevail. The Court’s direction underscores its commitment to balancing the rights of patentees against the procedural challenges posed by defendants with limited Indian assets, thereby reinforcing the protective mechanism of interim relief in patent infringement disputes.

JUSTICE SAURABH BANERJEE, WHILE DELIVERING HIS RULING, EMPHASIZED FOUR KEY CONSIDERATIONS JUSTIFYING THE DIRECTION FOR INTERIM SECURITY DEPOSIT:

1. Status of the Defendants as Foreign Entities:

The primary defendants Ace Technologies Corp, a company incorporated in South Korea, and Shin Ah Ltd., an Australia-based entity incorporated in Hong Kong are both situated in jurisdictions that do not recognize or allow enforcement of Indian decrees under Section 44A of the Code of Civil Procedure, 1908. This lack of reciprocal arrangement for judgment enforcement significantly increases the risk of non-recovery for the plaintiff.

      2.  Financial standing of the Defendants:

An affidavit submitted by Ace indicated that its Indian operations had effectively ceased. Its disclosed Indian assets comprised approximately Rs. 5.7 crore in cash, Rs. 4 – 5 crore worth of equipment, and land valued by itself at Rs. 18 crores. Given the limited and possibly illiquid nature of these assets, there exists a serious concern regarding the defendants’ ability to satisfy any future decree passed in the plaintiff’s favour.

     3. Absence of Alternative Legal Remedies:

Traditional protective measures under Indian procedural law such as attachment before judgment under Order XXXVIII Rule 5 of the CPC were unavailable due to the absence of sufficient attachable assets within India. Consequently, directing the defendants to furnish a security deposit was the only effective mechanism to safeguard the plaintiff’s interests during the pendency of the proceedings.

     4. Proportionality and Established Legal Precedent:

Previous interim orders in similar intellectual property disputes had set the protection level at 10% of the claim value. However, in view of the significantly increased quantum of the claim and the heightened enforcement risks in the present case, the court found that requiring a 25% security was proportionate, reasonable, and not punitive. Indian jurisprudence illustrated by cases such as Nokia Technologies Oy vs Guangdong Oppo Mobile on 17 November 2022 and Rxprism Health Systems Private Limited … vs Canva Pty Ltd & Ors. 18 July 2023 has recognized and upheld the necessity of monetary interim measures in high-stakes, high-risk patent litigation.

ECONOMIC AND STRATEGIC CONTEXT:

An independent valuation of the disputed intellectual property, using accepted methodologies such as the royalty relief method, cost avoidance model, and strategic value analysis, estimated the economic value of the dispute to range conservatively between Rs. 735 crore and Rs. 1,035 crores. Against this backdrop, the plaintiff’s claim of Rs. 1,160 crore is within a reasonable and defensible range. Accordingly, the court held that directing the defendants to furnish Rs. 290 crores (approximately 25% of the claim amount) as interim security is consistent with judicial standards and proportional to the assessed risk and value.

WHY THIS ORDER MATTERS

This Rs. 290 crore interim security order represents the largest in Indian non-SEP (Standard Essential Patent) litigation history. It sets a significant precedent by reinforcing the enforceability of intellectual property rights in India, even outside the highly litigated SEP (Standard Essential Patent) domain. For foreign patent holders like CCA, the ruling sends a powerful signal: enforceable interim relief is now possible even when the defendant lacks tangible assets or operational presence in India. This marks a shift in judicial attitude, aligning with India’s evolving policy framework that favors innovation and robust IP enforcement. The order also establishes a new benchmark for future litigation. Defendants will now be expected to provide greater financial transparency and rigorously substantiate their claims. This is particularly crucial in cross-border disputes involving foreign entities and intangible assets, where interim proceedings can significantly affect final outcomes.

CONCLUSION

The Delhi High Court’s order directing Ace Technologies Corp. to deposit Rs. 290 crore as interim security in a patent infringement suit marks a watershed moment in India’s intellectual property litigation landscape. As the largest interim deposit ever ordered in a non-SEP patent case in India, the ruling underscores a growing judicial willingness to impose stringent interim safeguards particularly in cases involving foreign defendants with minimal local presence and limited attachable assets. By invoking its inherent powers under Section 151 of the Civil Procedure Code and departing from earlier precedents that capped interim security at around 10% of claimed damages, the Court has affirmed its commitment to equitable relief and effective enforcement. The decision also aligns with India’s broader policy direction aimed at strengthening IP protection and fostering innovation-driven growth. Importantly, this order sends a clear signal to global IP stakeholders: Indian courts are prepared to safeguard the interests of patent holders through robust interim mechanisms, even in complex cross-border disputes. Moving forward, this precedent is likely to influence litigation strategy, asset disclosure standards, and risk assessment for foreign companies operating or litigating in India.