Delhi High Court’s Pro Tem Security Order Against Xiaomi in FRAND–SEP Litigation: Detailed Analysis

The Delhi High Court, in Malikie Innovations Ltd. & Anr. Vs Xiaomi Corporation & Ors., has passed a significant order directing Xiaomi entities to provide interim monetary security of about ₹272 crore. This security is to safeguard alleged Standard Essential Patent (SEP) rights pending final adjudication of infringement and FRAND (Fair, Reasonable and Non-Discriminatory) royalty issues.

The ruling clarifies that implementers of standardized technology, such as 3G, 4G and 5G cellular standards, cannot continue to commercially benefit from such technology indefinitely without furnishing appropriate security, even where questions of infringement, validity, essentiality and FRAND rates are still under contest.

1. Factual Matrix and Parties’ Positions

1.1 SEP Portfolio and Alleged Unlicensed Use

The dispute centers on a set of cellular communication SEPs allegedly forming part of a larger portfolio originally associated with BlackBerry and later acquired/licensed by the plaintiffs. These include Indian patents claimed to be essential or potentially essential to 3G, 4G and 5G telecommunication standards.

The plaintiffs asserted that:

  • Their portfolio is offered to implementers on FRAND terms.
  • Xiaomi and related entities are manufacturing, importing and selling devices in India and globally that are marketed as compliant with 4G and 5G standards.
  • Despite prolonged negotiations and exchange of technical and commercial information, the parties have not reached a concluded FRAND licence.

The plaintiffs alleged that Xiaomi continues to benefit from the standardized technology embodied in the SEPs without any royalty payment, and therefore interim financial security is necessary to protect their commercial interests pending final trial.

1.2 Course of FRAND Negotiations

According to the plaintiffs, they initiated licensing discussions in October 2023. Over time, they claim to have:

  • Shared technical documentation, including claim charts mapping asserted patents to relevant cellular standards.
  • Explained their licensing model and royalty computation framework.
  • Entered and periodically renewed confidentiality undertakings to facilitate disclosure of sensitive commercial data.
  • Proposed dispute resolution options, including arbitration, to break any deadlock in negotiations.

Despite these efforts, the plaintiffs contended that:

  • Xiaomi continued to sell standard-compliant devices without executing a licence.
  • Negotiations were marked by delays, procedural objections and a pattern of behaviour amounting to “hold-out” – i.e., continued commercial exploitation of standardized technology without taking or paying for a licence.

On this basis, the plaintiffs sought pro tem (temporary) monetary security until the suit is finally decided.

1.3 Plaintiffs’ Core Arguments

The plaintiffs positioned their case on the following pillars:

  • Ongoing commercial exploitation: Xiaomi’s devices are publicly marketed as 4G/5G compliant, which, according to the plaintiffs, indicates reliance on technology covered by the asserted SEPs.
  • Technical mapping: Claim charts have been shared to show how the asserted patents correspond to standardized features. Xiaomi has not identified any alternative non-infringing technology that would still enable conformity with the relevant standards.
  • Reciprocal FRAND obligations: While SEP owners must make FRAND offers and negotiate transparently, implementers are also expected to:
    • Engage substantively in negotiations,
    • Provide timely data (including sales information) needed for royalty assessment,
    • Make reasonable counteroffers, and
    • Provide suitable security where they continue to exploit the technology without a concluded licence.
  • Chinese FRAND proceedings: Xiaomi’s proceedings before the Shenzhen Intermediate People’s Court to determine FRAND royalties for Chinese patents were cited to show an implicit recognition that the broader portfolio contains SEPs that must be licensed against royalty payment.
  • Nature of pro tem security: The plaintiffs stressed that ordering interim security is not equivalent to final royalty fixation. Instead, it is a temporary protective mechanism to prevent uncompensated use of SEPs for extended periods during litigation.

1.4 Defendants’ Objections and Defence

Xiaomi and other defendants opposed the interim relief on multiple grounds:

1.