DVDs Carrying Encoded Data Infringe Patent Even If Stampers Are Outsourced: Delhi High Court in Philips’ DVD-ROM Patent Dispute

“A Record Carrier Containing the Modulated Signal Is Itself Infringing – Regardless of Who Encoded It”, In a significant ruling impacting the enforcement of Standard Essential Patents (SEPs) in India, the Delhi High Court held that DVD manufacturers who replicate discs containing EFM+ modulated signals—as per the DVD-ROM standard—are liable for patent infringement, regardless of whether they encoded the data themselves or sourced stampers from licensed third parties.

The Division Bench comprising Justice C. Hari Shankar and Justice Om Prakash Shukla delivered its judgment in appeals filed by several Indian DVD replicators against a ₹20 crore money decree passed in favour of Koninklijke Philips N.V., a global electronics giant asserting infringement of its Indian Patent No. 218255, covering the EFM+ (Eight-to-Fourteen Modulation Plus) technology critical to the DVD standard.

The court decisively rejected the replicators’ defence that they merely used stampers encoded by Moser Baer and did not themselves infringe the patent. “The existence of the EFM+ encoded signal on the replicated DVD is, by itself, sufficient to establish infringement of Claim 12,” the Court held, asserting that Claim 12 is a product claim, and liability attaches to the final article, not merely the encoding process.

“The Patent Covers the Output, Not Just the Process – If the DVD Embodies the Modulated Signal, It Is Infringing”

Dismissing the distinction between direct and indirect infringers, the Court clarified the broad sweep of Section 48 of the Patents Act, holding that “any person who manufactures a product directly obtained from a patented process is liable.”

The appellants—Pearl Engineering, Powercube Infotech, Siddharth Optical and others—had argued that the encoding had been done by Moser Baer, a Philips licensee, and that they were merely replicators using pre-encoded stampers. But the Court was clear: “The appellants cannot escape liability by outsourcing one step of the process when the end product bears the patented characteristics.”

Rejecting the attempt to bifurcate the process, the Court observed, “Claim 12 does not speak of who performed the encoding—it speaks of a record carrier that contains the signal. The encoded data is what infringes.”

In doing so, the Court upheld the Single Judge’s finding that the DVDs manufactured by the appellants were standard-compliant and necessarily embodied the patented signal. It cited evidence from Philips’ expert, PW-2, who had confirmed that the DVDs contained the EFM+ modulated data—a key technical requirement of the DVD-ROM format.

“The Rule Is Simple: If You Manufacture DVDs That Comply with the Standard, You Use the Technology – And If the Technology Is Patented, You Need a Licence”

The Court observed that the appellants had made no serious effort to disprove the presence of the EFM+ encoding on their DVDs and had admitted that their products complied with the DVD standard. “Compliance with the DVD standard implies use of EFM+ technology,” it said. “Use without licence equals infringement.”

Further, the Bench refused to entertain revocation arguments under Sections 64(1)(m), (e), or (j) of the Patents Act. The appellants had claimed that the patent was liable to be revoked for anticipation by prior art, suppression of foreign filings, and improper divisional filing.

But the Court was not persuaded: “There is no prima facie case of suppression or invalidity. The challenge to the validity of the patent is speculative and cannot be a ground to stay execution of a decree.”

“You Can’t Pull ₹20 Crore Figures from Thin Air – Damages Must Be Proved, Not Assumed”

While the Court fully upheld the findings of infringement, it took issue with the quantum of damages awarded by the Single Judge, calling them "arbitrary and unsubstantiated."

In the original order, damages were calculated on the assumption that each stamper could produce 10,000 DVDs, and that every stamper sourced or used by the appellants had in fact been utilised to its full assumed capacity. The Court found this wholly untenable: “Why 10,000 DVDs per stamper? Why not 1,000 or 50,000? There is no evidence, only assumption.”

Taking the example of Siddharth Optical, the Court noted that the decree was based on a presumed manufacture of 65 lakh DVDs, even though “not a single DVD or sales invoice was placed on record by Philips” for that defendant.

It held that “compensation cannot be awarded on guesswork”, and while the existence of infringement was not in dispute, execution of the money decree must be stayed until the damages are fairly re-evaluated.

“We Are Not Rewriting the Law for Foreign Corporations – But Damages Must Be Real, Not Imagined”

The Court struck a delicate balance between enforcing patent rights and preventing manifest injustice. It held that while Philips had a valid decree for infringement, execution must be stayed in view of the “wholly presumptive” basis for the damages. It directed that the stay would remain in place only upon furnishing unconditional bank guarantees by the appellants, equivalent to the principal damages awarded.

“The stay is not unconditional,” the Court clarified. “If security is not furnished, Philips will be entitled to execute the decree.”

The ruling also clarified that simply because a patent is standard essential does not dilute its enforceability. "If the DVD conforms to the standard, it uses the technology. That technology is protected. You cannot plead ignorance."

The decision marks a critical development in the adjudication of Standard Essential Patent litigation in India, with the Court clearly upholding that replicators who manufacture standard-compliant DVDs are liable for infringement even if the encoding is outsourced.

However, it also sends a cautionary note to patentees: damages must be proven, not guessed. The grant of a partial stay pending appeal signals the judiciary's intent to balance strong IP enforcement with procedural fairness, especially in high-stakes commercial disputes.

Date of Decision: 5 January 2026