Delhi High Court: While hearing a batch of appeals filed by appellants seeking stay of execution of money decrees passed in favour of the respondent, Koninklijke Philips NV, in the Philips DVD Patent case, the Division Bench of *C. Hari Shankar, J and Om Prakash Shukla, J, held that an award of damages cannot be founded on conjectures or assumptions, and the aspect of number of replicated DVDs of the decree fell within the narrow exception for staying money decrees. Accordingly, the Court granted a conditional stay on execution of money decrees.
Background
The respondent, Koninklijke Philips N.V., had instituted several commercial suits alleging infringement of Indian Patent IN 218255 relating to a method of converting information words into a modulated signal using EFM+ coding technology, asserted to be a standard essential patent in relation to DVDs. During pendency of the suits, the patent had expired by efflux of time, rendering the relief of permanent injunction infructuous.
By judgment dated 20-2-2025 (‘impugned judgment’), the Single Judge decreed the suits to the extent of damages and costs alone, holding the appellants liable for infringement and awarding substantial compensatory as well as additional damages with interest. Aggrieved, the appellants preferred intra-court appeals and, pending adjudication thereof, sought stay of execution of the decrees under Order 41 Rule 5 of the Civil Procedure Code, 1908 (‘CPC’) herein.
Analysis, Law and Decision
The Division Bench noted, at the outset, that it was adjudicating only the stay applications and not the merits of the appeals. Relying extensively on the Supreme Court’s decision in Lifestyle Equities CV v. Amazon Technologies Inc., 2025 SCC OnLine SC 2153, the Court reiterated that although money decrees are ordinarily not stayed in appeal, the power to grant stay is not completely foreclosed and may be exercised in exceptional cases.
The Court emphasised that unconditional stay of a money decree can be granted only where the impugned judgment is egregiously perverse, riddled with patent illegality, facially untenable, or where comparable exceptional circumstances exist. The requirement of ‘sufficient cause under Order 41 Rule 5 of the CPC mandates a careful and reasoned assessment by the appellate court.
Applying this framework, the Court examined the appellants’ objections sequentially. On the question of infringement, it noted that the central controversy concerned Claim 12 of the Philips patent, which relates to a ‘record carrier’ containing an EFM+ encoded signal. The appellants contended that they merely undertook mechanical replication of DVDs using stampers procured from third parties and did not themselves engage in the EFM+ encoding process.
This contention had been rejected by the Single Judge, who had held that Claim 12 was directed at the end product which was the DVD itself, irrespective of the method of manufacture. According to that reasoning, the presence of an EFM+ encoded signal on the DVD was sufficient to establish infringement. The Court found this construction to be a reasonable one and not vitiated by perversity at the interim stage. Consequently, it declined to stay the decree on this basis.
The Court further declined to interfere with the findings on patent validity. The challenges raised under Sections 64(1)(m), 64(1)(e), and 64(1)(j) of the Patents Act, 1970 were found to involve factual determinations that had already been examined in depth by the Single Judge. The Court held that these questions would require comprehensive scrutiny at the stage of final disposal and, at present, did not warrant a stay on execution.
The Court also endorsed the Single Judge’s fixation of the FRAND royalty at USD 0.03 per DVD, noting that this figure was not disputed by the appellants during the course of arguments.
However, the Court diverged from the Single Judge on the issue of quantification of damages. While it accepted that reliance on data obtained from Moser Baer to ascertain the number of stampers supplied to the appellants was justified, it found fault with the subsequent inferential step.
The Single Judge had proceeded on the assumption that each stamper was capable of producing 10,000 DVDs. On this premise, production volumes in the range of several tens of millions were computed, forming the basis of the damages awarded. The Court found that this assumption lacked evidentiary support and held that,
“There is no basis forthcoming, from the impugned judgment for the presumption of the figure of 10,000 DVDs per stamper… It appears, therefore, to be entirely the ipse dixit of the Single Judge.”
Emphasising that an award of damages cannot be founded on conjectures or assumptions, the Court held that this aspect of the decree fell within the narrow exception recognised by the Supreme Court for staying money decrees. At the same time, it declined to grant a complete stay, given that the findings on infringement and validity were left untouched.
The Court further dispensed with any direction requiring deposit of the decretal amount. Instead, it directed the appellants to furnish unconditional and irrevocable bank guarantees, with an auto-renewal clause, covering the principal sum of damages awarded. Subject to the furnishing of such guarantees within eight weeks, execution of the decree shall remain stayed until further directions.
[Sukesh Behl v. Koninklijke Philips NV, RFA (OS) (COMM) No. 8 of 2025, decided on 5-1-2026]
Advocates who appeared in this case:
For the Appellant: J. Sai Deepak, Senior Advocate, Anuradha Salhotra, Rahul Chaudhry, Nikhil Sharma, Mugdha Palsule, Avinash, Advocates
For the Respondent: Dayan Krishnan, Senior Advocate, Pravin Anand, Vaishali R Mittal, Pallavi Bhatnagar, Saijal Arora, Siddhant Chamola Advocates