Intersection between IPR & Competition Law
Authors: Nishtha Kheria and Varun Vikas Srivastav, Amity Law School, Noida.
Under the competition act 2002, the main objective is to prevent any kind of practices which cause adverse effects on the competition in promotion of competition in markets and to protect the interests of the buyers and can even ensure that there is freedom of any trade which is carried on by the participants in the market.
The purpose of CCI is to prohibit:
- Anti-competitive agreements.
- Abuse of dominant position
- Regulation in the combinations of enterprises.
The intersection in the IP and the competition law can be observed only when there is an imbalance in the exclusive rights of the IP law and the anti-competitive practices which are usually protected by the competition law. So, In the Case of Ericsson vs Micromax, Ericsson had tried to enforce the standard essential patents and on the other hand Micromax had confronted anti-competitive practices by Ericsson which was based on the royalty practices which was tried by Ericsson to impose on the defendant.
In the context of IPR section 4 of the competition act is abused in situations when the IPR holder gets involved in:
- Directly or indirectly striking unfair conditions on the price.
- Limiting the production of goods in the market.
- Limiting the technical development to the chauvinism of consumers.
- Denying access to the market in any manner.
- Use of the dominant position in one market so that it can enter or protect the other market.
Understanding the intersection:
Standards require technicality or some specifications which help in providing a design for a product that is adopted by the standard-setting organization (SSOs)[i]. These are developed to coordinate or interpret the standards[ii]. SSO is considered to be the bureau of Indian standards (BIS). The SSO plays a very important role in the intersection in the standards and the intellectual property rights and mostly there is a requirement of technology for achieving any standards which can be protected by the patents. Patents are necessary because without them the standards cannot be achieved. So therefore, they are also known as standard-essential patents (SEPs)[iii].
Therefore, the patentees enjoy the exclusionary rights which they have over the patented technology. Section 3 of subsection 5 of the competition act states that the reasonable conditions as may be necessary for protecting whereas reasonable conditions cannot be defined or explained in the act. In most of the circumstances common sense prevails to check whether an act of the patentee is reasonable[iv].
Intellectual property, and competition:
Competition law has started to become more intertwined with intellectual property such as copyrights, trademarks, patents, etc. If there is the promotion of innovation from the enforcement of intellectual property rights then it can lead to both promotion or limitation of competitiveness (USDOJ.Govt, 2007).
Many concerns are raised over the effects and the consequences of anti-competitive effects because:
- The intellectual property is designed with the consequences of the violation of the antitrust laws.
- The effects on the competition when industry standards accept the property.
- Intellectual property’s cross-licensing.
- There is an eternal length of life if the trade secrets have remained a secret[v].
Ericsson vs king tech:
In 2011 Ericsson had applied to the commissioner of customs stating the complaints they had about the import of goods by king tech electronics. This was considered to be the beginning of the litigation of SEP in India. when the customs authorities had detained all the consignments which belonged to king tech then king tech went to the Delhi high court stating that the commissioner had detained all the goods without stating any appropriate reason to prove that the goods had infringed the patents which were then claimed by Ericsson. It was also held that determinations could not be made by the commissioner of customs because he was not competent.
In reply the Delhi high court had then ruled because the commissioner’s order had not shown any kind of application of mind concerning the claims which were made by him. Ericsson even didn’t follow the procedure through which he could approach the court for ascertaining the claim over his patents. Due to this the order of commissioner was set aside and the goods of king tech were then released. Ericsson then filed an appeal that challenged the order before the high court which then directed the commissioners of the customers to pass new order for the case which in turn created a proper reason for believing that the goods of king tech had infringed the patents of Ericsson[vi].
Ericsson vs Micromax:
The second time when SEP litigation had taken place in India had involved a suit filing in march 2013 where Ericsson had filed the suit against Micromax informatics limited. Ericsson had made claims that Micromax had infringed at least eight SEPs on AMR and had sold the mobile device complaint which had standard issued by the European telecommunication standard institute and had received recognition by the department of telecommunication in India. It was assumed that Micromax had not obtained the licenses of technology from the Ericsson under the terms of FRAND. Due to this Ericsson had demanded a permanent injunction, damages up to Rs 100 crores.
By March 2013 the Delhi high court had provided with interim relief to Ericsson and had ordered Micromax to pay the interim royalty payments. Ericsson was even provided with permission by the court to inspect all the consignments for Micromax which had arrived at the customs. Micromax had filed a complaint in the competition commission of India and had claimed that Ericsson had abused their dominant position in the market by imposing royalty rates so that they can license their GSM technology under the terms of FRAND[vii].
Ericsson vs Gionee:
The third SEP litigation contained a suit that was filed by Ericsson against gionee and had claimed the infringement of the SEPs for which Micromax was sued. Then the Delhi high court ordered gionee for making interim royalty payments for their sales[viii].
Ericsson vs Intex:
The fourth litigation was filed which had involved Ericsson when a complaint was filed against Ericsson before the CCI in September 2014 by Nintex technology. They had filed a complaint because Ericsson was demanding huge royalty rates as compared to the cost of the product and was using unfair means for licensing their SEPs to Intex. Then CCI had ordered an investigation for the actions of Ericsson which was based on the allegations which were made by Intex and Micromax. Then Ericsson had filed for a suit for patent infringement of the SERPs. When various contradictory statements were made by Intex before the CCI and the court which was related to the validity of the SEPs then the court had concluded that the SEPs were prima facie valid. Intex was then finally asked to restrain from any importing of goods which were in turn infringing the SEPs of Ericsson[ix].
Ericsson vs Xiaomi:
Ericsson had filed another suit against Xiaomi before the Delhi high court for the infringement of the SEPs for which Micromax and Gionee were sued. Ericsson informed the court that even when he requested Xiaomi for licensing of the SEPs but Xiaomi had launched the infringing devices in India. The court had awarded Ericsson an ex parte injunction for preventing the sales, manufacture, import for the Xiaomi device. Later this injunction was challenged by Xiaomi in the Delhi high court and had claimed that the latest device was then sold in the market of India and was using QUALCOMM chips and was licensed by Ericsson[x].
Ericsson vs iBall:
Ericsson had written a letter to iBall which stated that the devices of IBall were infringing the patents of Ericsson of the same SEPs. Ericsson then proposed to discuss his FRAND licensing with iBall. On which IBall agreed but at laid one condition that all the patent infringements should be disclosed to them. On which Ericsson said that he is ready to disclose all details only if a nondisclosure agreement is signed. After which iBall had brought the matter to the CCI and claimed that Ericsson had refused to identify the SEPs and had given a threat that they would infringe the proceedings. Then CCI had found that there was a prima facie abuse of the dominant position by the Ericsson and had ordered an investigation. On this Ericsson had challenged the order of CCI before the Delhi high court and claimed that the order was arbitrary in nature and didn’t have any jurisdiction[xi].
The protection of the IPR rewards the inventor was provided a monopoly right for a limited period. Whereas on the other hand competition law acts against all the monopoly rights which are deemed to be abusive in nature. Competition law even helps in enhancing the conditions of the market. Intellectual property rights always work against the principle which will further lead to the conflicts in the two areas of law. Competition law plays a vital role in arresting the monopoly rights which are abused and are granted by IPR. IPR helps in innovations and will help in increasing the competition in the market. India can use licensing provisions if there is any excessive pricing of products which even includes all the patented software and technology. The CCI will come up with some special guidelines which will deal with both the guidelines of competition and intellectual property.
Ericsson vs. iBall interim (Delhi high court August 21, 2015).
Intersection between Intellectual Property (IP) and Competition Law. (2016, JAN 04). Retrieved from IIPRC: https://www.iiprd.com/intersection-between-intellectual-property-ip-and-competition-law/
Khurana & Khurana Advocate & IP Attorneys. (2016, Jan 4). Retrieved from https://www.khuranaandkhurana.com/2016/01/04/intersection-between-intellectual-property-ip-and-competition-law/
Mondaq. (13 December 2007, 13 December 2007 13 December 2007). Retrieved from https://www.mondaq.com/india/patent/54494/patent-law-in-india
TELEFONAKTIEBOLAGET LM ERICSSON (PUBL), 17578 of 2013 (Delhi High court 2010-2013).
Telefonaktiebolaget Lm Ericsson … vs Intex Technologies (India) , 6735/2014 (Delhi High court March 13, 2015).
TELEFONAKTIEBOLAGET LM ERICSSON Vs. XIAOMI TECHNOLOGY (High court 2012).
The centre for internet and society. (2012, July). Retrieved from https://cis-india.org/a2k/blogs/ericsson-v-kingtech.pdf/view
The Competition Commission of India. (2017). Retrieved from https://www.cci.gov.in/sites/default/files/CA/CCI%20Competition%20Assessment%20Guidelines%202017.pdf
USDOJ.Govt. (2007, April). Retrieved from https://www.usdoj.gov/atr/public/hearings/ip/222655.pdf
Wolters Kluwers. (2016, July 13). Retrieved from http://competitionlawblog.kluwercompetitionlaw.com/2016/07/13/ericsson-v-micromax-a-kick-start-to-the-sep-frand-antitrust-jurisprudence-in-india/?doing_wp_cron=1590579315.0821080207824707031250
[i] A Brief History of Standards and Standardization Organizations: A Chinese Perspective
[ii] “Content overview”. Scopus. Elsevier. Retrieved 2016-12-13
[iii] Shapiro, Carl, “Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting”, forthcoming Innovation Policy and the Economy, Volume I, MIT Press, 2001
[iv] K D Raju, The Inevitable Connection between Intellectual Property and Competition Law: Emerging Jurisprudence and Lessons for India, Vol 18, March 2013, pp 111-122
[v] The Role of Competition Law (Act): An Asian Perspective
[vi] See more about this on http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=263209&yr=2011
[vii] See more about this on https://www.cci.gov.in/sites/default/files/502013_0.pdf
[viii] See more about this on http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=211053&yr=2013
[ix] See more about this on https://www.cci.gov.in/sites/default/files/762013_0.pdf
[x] See more about this on http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=250092&yr=2014
[xi] See more about this on https://www.cci.gov.in/sites/default/files/042015_0.pdf