CCI free to continue its enquiry in cases relating to abuse of dominance of Patent Rights

Delhi High Court: While upholding the jurisdiction of Competition Commission of India (CCI) to entertain complaints regarding abuse of dominance of Patent Rights, the Court dismissed a challenge by Ericsson to two orders passed by CCI to look into allegations of abuse of market dominance. In order to confirm regularity in communication networks across various countries, patented technology is adopted as a standard essential patent (SEP) and use of such technology would require a license from the patentee holding the SEP, in this case Ericsson. These have to be licensed on fair, reasonable and non-discriminatory (FRAND) terms. Ericsson had challenged two orders passed by the CCI whereby it was prima facie held that the Swedish firm was abusing its dominant position for use of its SEPs relating to technology used in mobile handsets by Micromax Informatics Ltd and Intex Technologies (India) Ltd.

In its complaint before CCI, Micromax and Intex alleged that Ericsson, which has a large portfolio of Standard Essential Patents (SEPs) in respect of technologies that are used in mobile handsets and network stations, had abused its position of dominance as it was demanding excessive royalties on mobile phones. It was, however, asserted by Ericsson that the SEPs had been granted on fair, reasonable and non-discriminatory terms and that it had not abused its dominant position.

The CCI had directed investigation into the allegations, prompting Ericsson to approach the Court. The firm had claimed that the CCI did not have the jurisdiction to issue such orders as the dispute in the case was on issues of grant of patent licenses, which would come under the jurisdiction of the Controller General of Patents, Designs and Trade Marks or a Civil Court. The single bench comprising of Vibhu Bhakhru J., held that there was “no irreconcilable repugnancy or conflict between the Competition Act and the Patents Act. And, in absence of any irreconcilable conflict between the two legislations, the jurisdiction of CCI to entertain complaints for abuse of dominance in respect of Patent rights cannot be ousted.” The bench also noted that while the dispute under the Patent Act would be specific to the parties involved, the “the orders passed by CCI are in rem.” The Court also held that the purpose and objective of both the Competition Act, 2002, and the Patents Act, 1960, were different and that they do not overlap. Effectively, CCI would be at liberty to continue its investigation into anti-competitive practises by Ericsson regarding use of its Standard Essential Patents (SEPs) by other companies such as Micromax and Intex. The Court further observed that “It is also necessary to clarify that nothing stated herein should be construed as an expression of opinion – prima facie or otherwise – on the merits of the allegations made by Micromax and Intex; all observations made or views expressed herein are in the context of the jurisdiction of CCI to pass the impugned orders.”  [Telefonaktiebolaget LM Ericsson v. CCI, W.P.(C) 1006/2014 & CM Nos.2037/2014 & 2040/2014, Decided on 30-03-2016]

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