Delhi High Court Orders Quashing Of CCI Proceedings In Ericsson And Monsanto Cases

Ericsson’s Case - A Deep Dive

Ericsson holds a huge portfolio of Standard Essential Patents (SEPs)[i] related to telecom technologies such as 2G, 3G, etc. which are standardised by Standard Setting Organisations (SSOs) like 3GPP, ETSI etc. In India, Department of Telecommunications (DoT) requires all equipment manufacturers which meet standards of various SSOs[ii]

When a patented technology is adopted into a standard, the owners of such patents make a voluntary commitment to negotiate licenses on FRAND (Fair, Reasonable & Non-Discriminatory) terms with prospective willing licensees qua their SEPs.

Pursuant to this commitment, Ericsson approached various Indian mobile handset manufacturing companies informing them that they infringe Ericsson’s SEPs and are required to execute FRAND licenses. However, negotiations did not fructify with certain Indian companies such as Micromax, Intex, and iBall. Therefore, Ericsson was compelled to approach the Delhi High Court seeking enforcement of its patent rights. Ericsson was successful in securing several interim orders in its favour.

Certain companies (Micromax and iBall) relied upon these orders (granting either interim injunctions directing payment of interim royalties) and approached the CCI alleging abuse of dominant position by Ericsson. Along with alleging that Ericsson used threat of injunctive relief, the rates offered by Ericsson were also challenged despite the fact that the said issue was pending before the Delhi High Court. On complaints/information of Micromax and Intex, CCI directed initiation of investigation against Ericsson for alleged abuse of dominant position in violation of Section 4 of the Competition Act.

Aggrieved by said order, Ericsson preferred Writ Petitions before Delhi High Court challenging the jurisdiction of CCI to, at the outset, conduct investigation in such a case as such orders impinged upon Ericsson’s rights as a patentee. While the Ld. Single Judge, vide judgment dated 30.03.2016, agreed with Ericsson’s case that the Patents Act was a complete code in itself dealing with instances of abuse of patent rights; a later enactment and special statue as far as patent rights are concerned, however he dismissed the petitions holding, inter alia, that Competition Act provides remedies different from Patents Act and there is no irreconcilable repugnancy or conflict between the two. Hence, it was held that the jurisdiction of CCI to entertain complaints for abuse of dominance in respect of Patent rights cannot be ousted.

It is against this judgment of the Ld. Single Judge that Ericsson filed an appeal.

Monsanto’s Case - A Deep Dive

Monsanto (now Bayer CropScience Limited) also appealed against a judgment by a Ld. Single Judge of the Delhi High Court, in a writ petition. The said writ petition had been filed by Monsanto impugning certain orders of the CCI in respect of certain complaints filed by Seed companies (informants) with whom patent licenses had been terminated. The writ petition was filed subsequent to patent infringement actions filed against these informants. The contention of the informants before the CCI was that Monsanto was charging royalties excessively and not making patents available reasonably, in violation of the Competition Act. The Ld. Single Judge had dismissed the writ petition, holding that there was no bar in law to the CCI proceeding against Monsanto under the Competition Act concerning the licensing of patented technologies.

The Court’s Stand

Some of the key findings of the judgment dated 13.07.2023 passed by the Delhi High Court are as follows:

a) The question whether a patent license will cause adverse effect on competition within India or will amount to abuse of dominant position is not reserved for CCI alone.

b) Under the Competition Act, the CCI can examine anti-competitive agreements and abuse of dominant position affecting market conditions generally. However, since the Competition Act itself exempts the CCI from looking into reasonable conditions forming part of a license granted by a patentee, that is indicative of the legislature’s intention to keep that assessment within the exclusive domain of the Patents Act.

c) Patents Act is a complete code providing for all mechanisms for determination of unreasonable conditions being imposed by a patentee in grant of a license.

d) The subject matter relevant to the dispute is anti-competitive agreements and abuse of dominant position by a patentee in exercise of their rights under the Patents Act. It is not simply abuse of dominance which both Patents Act and the Competition Act deal with.

e) In this respect, the Patents Act being the special statute dealing with patents, the provisions thereof will prevail over those of the Competition Act on the issue of exercise of rights by a patentee under the Patents Act.

f) If there is inter se settlement between parties, the CCI proceedings seize immediately as the very reason for initiation of the proceedings stood resolved.

In light of the above, all proceedings initiated by the CCI against Ericsson and Monsanto were duly quashed

Authors: Saya Choudhary Kapur, Partner and Bitika Sharma, Partner at Singh & Singh Law Firm. Views are personal.

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