DELHI HIGH COURT REFUSES TO STAY ANTI-COMPETITIVE INVESTIGATION AGAINST ERICSSON

The Delhi High Court judgment by Justice Vibhu Bakhru released on March 30, 2016 states that the Competition Commission of India (CCI) can continue to carry out its investigation into Ericsson’s apparent anti- competitive practices.

Facts of the case:

  1. Micromax and Intex had complained to the CCI about Ericsson’s abuse of dominancy by way of demanding huge amount of royalties in respect of the SEPs that it holds, refusing to disclose licensing terms with other licensees and aggressively enforcing their patents to force parties to settle on unfavourable licensing terms.
  2. Ericsson moved the Delhi High Court to prevent this investigation and quash CCI’s order. Ericsson claims that its SEPs are being infringed by Micromax and Intex.
  3. Ericsson contended that any issue regarding a claim for royalty falls within the scope of Patents Act, 1970 and not under the Competition Act.

Judgment and teachings:

    1. The Patents Act is a special legislation compared to the Competition Act for patents and provides for prevention of abuse of patents under Chapter XVI and Section 140.
    1. However, the Patents Act and the Competition Act can be harmonized as :
  • They provide different remedies.
  • Section 90 (1) (ix) of the Patents Act refers to a situation where a competition authority adjudicates abuse of a patent.
  • Section 21 and 21 A of the Competition Act permit the CCI and a statutory authority (including the Controller of Patents) to refer issues to each other.
  • Section 60 of the Competition Act does not over rise the special provisions of the Patents Act and should be read to mean as follows: “Section 60 is enacted only to restate and emphasize that notwithstanding agreements, arrangements, practices and conduct which may otherwise be legitimate under the general laws would nonetheless be subject to the rigors of the Competition Act”.
    1. Therefore, the CCI’s jurisdiction in patent matters is not ousted.
    1. Seeking injunctive reliefs by an SEP holder in certain circumstances may amount to abuse of dominant position.
    1. Disputes, being subject matters of suits, could be entertained by the CCI:

    Merely because a set of facts pleaded in a suit may also be relevant for determination whether Section 4 of the Competition Act has been violated does not mean that a civil court would decide that issue”.

    1. A potential licensee cannot be precluded from challenging the validity of patents in question.
    1. The validity of an order under Section 26(1) of the Competition Act can be examined under Article 226 only from the perspective of:
  • Whether the allegations made in complaints before the CCI could form subject matter before the CCI?
  • The complaint must be examined on a demurer :Whether the impugned orders are perverse?
    1. The Court remarked that “in the given facts and circumstances, it is difficult to form an opinion that the conduct of Ericsson indicates any abuse of dominance…however it is not open for this court, in proceedings under Article 226, to supplant its views…” and dismissed Ericsson’s writ petitions.
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