HC upholds CCI jurisdiction over patent matters

In a huge win for the Competition Commission of India (CCI), the Delhi High Court on Wednesday upheld its jurisdiction to investigate patent-related competition matters. The regulator would now be able to freely investigate and pass orders in the cases filed by Micromax and Intex against Ericsson, alleging abuse of dominance in the market of technology patents.

"Merely because certain reliefs sought by Micromax and Intex before CCI are also available in proceedings under the Patents Act does not exclude the subject matter of the complaints from the scope of the Competition Act. An abuse of dominant position under Section 4 of the Competition Act is not a cause that can be made a subject matter of a suit or proceedings before a civil court," said the court.

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According to sources, Ericsson would now be taking this case to the division bench of the high court or to the Supreme Court. "We are reviewing the court's order. We do not have any comments at this point in time," said an Ericsson spokesperson.

The CCI had ordered an investigation in November 2013 and January 2014 against Ericsson on complaints by Micromax and Intex. The regulator prima facie (based on the first impression) found merit in the complainants' allegations that Ericsson had been demanding unfair, discriminatory, and exorbitant royalty for its GSM technology patents.

Ericsson then filed a case in Delhi high court questioning the jurisdiction of CCI to investigate such patent matters. The Wednesday's judgment is likely to affect Monsanto's recent petition in Delhi high court where it asked the court to quash CCI probe against it by giving similar arguments.

"The judgment is an empathetic victory for the anti-trust regulator in India. It is an attempt by the high court to split the pie between the patent regulator and the anti-trust regulator while dealing with anti-trust issues that now and then trespass IPR (intellectual property rights) issues also. The judgment will have a domino effect on several other cases, pending adjudication on the same lines," said Vaibhav Choukse, competition lawyer at J Sagar Associates.

INTELLECTUAL PROPERTY RIGHTS
Ericsson vs Micromax

• November 3, 2009: Ericsson alleges patent violation by Micromax, invites it to negotiate for licence
• April 28, 2011: Meeting held between executives of Ericsson and Micromax, latter demands more information regarding patents
• March 4, 2013: After the failure of talks, Ericsson files patent infringement suit against Micromax at Delhi High Court; court appoints mediator for talks
• June 24, 2013: After the failure of mediation proceedings, Micromax files a complaint against Ericsson at CCI alleging abuse of dominance in the relevant market of technology patents
• November 12, 2013: CCI directs the D-G office to investigate whether Ericsson had violated the provisions of the Competition Act. Ericsson goes to Delhi High Court; says CCI doesn’t have jurisdiction

The court observed that in the present case, apart from instituting suits for infringement against Micromax and Intex, Ericsson has also threatened Micromax with complaints to the market regulator, apparently, while Micromax was contemplating or was in the process of floating a public offer of its shares. "Such threats were, undoubtedly, made with the object of influencing Micromax to conclude a licensing agreement," said the court.

Ericsson holds several patents in India in respect of technologies relating to infrastructure equipment, including 2G, 3G, and 4G networks as well as mobile phones, tablets, data cards and dongles, among others. Some of the patents held by Ericsson are standard essential patents (SEPs).

SEPs are technologies which have been accepted as standards to be uniformly accepted and implemented across various countries in order to ensure uniformity and compatibility for a seamless transmission of data and calls across the world.

On March 4, 2013, Ericsson filed a patent infringement suit alleging that eight of the SEPs held by it, which related to the three technologies pertaining to 2G and 3G devices were infringed by Micromax. It filed a similar case in Delhi high court against Intex only after the latter filed a case in CCI.

"A patent holder has a statutory right to file a suit for infringement; but the Competition Act is not concerned with rights of a person or an enterprise but the exercise of such rights," said the court.