This article is written by Meena Annamalai, from Tamil Nadu Dr. Ambedkar Law University, Tamil Nadu.

Introduction

It is a well-known fact in law that Competition dynamics have a close nexus with Intellectual property Rights law. The point of intersection of these two laws can be seen in various provisions under the Competition laws and Intellectual Property Laws. This intersection should be seen as an overlap between the two laws. This intersection should be respected and used to understand each of these legislations and their scope in its purest sense. The nexus between both laws tends to complement each other and hence there is an equilibrium struck between the inter-related provisions under both laws. However one such issue that is of raising concern currently is the scope of jurisdiction when a case involves questions of Intellectual Property rights and Competition Laws. This position is now cleared by the Indian Judiciary in a very convincing manner. 

Delhi High Court reverberates its say on CCI’s jurisdiction

The Delhi High Court (DHC) has time and again delivered judgments that have cleared the air regarding the jurisdictional aspects involved in suits where there is an intersection between intellectual property viz a vis competition law. Just a while ago, amidst the ongoing pandemic lockdown, on the 20th of May, 2020 the Delhi High Court delivered a judgment in the case of Monsanto Holdings Pvt. Ltd. and Others v. Competition Commission of India (CCI) and Others, which is sure to serve as an epiphany moment for the players in the market who revolve around the pivot of IP.

Raison d’etre behind the question of jurisdiction

The question of jurisdiction arises as to whether the innovation bride and competition bridegroom are governed by separate special legislation, namely, the Patents Act, 1970, and the Competition Act, 2002. Intellectual Property Rights holders (Licensor) might file suits in High Courts against the licensee for non-compliance of the terms and conditions of the license, per contra, the licensees might move the CCI justifying their non-compliance in the grounds of abuse of dominant position done by the (Licensor). Here comes the dubiety of whether the Competition Commission of India can step in matters that come under the exception clause of 3(5) of the Competition Act, 2002.

Until now there has been no amendment to both the legislations in terms of inserting a provision that will address the issues of jurisdiction. Much clarity in this area is only got through court judgments. The controversy of the jurisdiction of the Competition Commission of India reached its peak in the wake of Standard Essential Patents (SEPs). 

Standard Essential Patents- Concept

Every Intellectual Property enthusiast must have come across this jargon in one place or the other. Well, every person in his everyday life makes use of these SEPs to make his experience with technology more effective! So, what are they exactly? Patents, as we all know, are the limited monopoly rights (protection) granted to the patent applicant who comes up with an inventive product or process that is capable of industrial application. Some patents become so fundamental that they are required to be used by every person who wishes to produce a product. An example of this is, features like WiFi, LTE, 4G, etc., invented by certain tech-savvy companies by making huge investments in Research and Development (R&D). As a result, they get them patented as well. Now, these patents become very essential that every other mobile phone manufacturer will want to adopt these features in his product so as to make it marketable. Also, it is important to note the point that certain organizations called the Standard Setting Organizations (SSOs) play an active part in setting standards for products. These organizations will follow their Intellectual Property (IP) policies and will set standards accordingly. Once a standard is set for a product, every player in the market has to produce his goods in accordance with the standard set. If the standard set is one that is already patented, then this makes it impossible to produce a product without infringing the patents of the patent holder whose patent is now set as a standard. Therefore those standards that cannot be met unless there is an infringement of a patent are called Standard Essential Patents (SEPs). To make this process of compliance with SEPs simple, the SSOs follow what is famously referred to as FRAND- Fair, Reasonable and Non-Discriminatory basis of royalty rates. Every SEP holder commits himself to license his patents on a FRAND (Fair, Reasonable and Non-Discriminatory) basis to all the SEP- Implementers.

Thus a common cause for litigation in the arena of Standard Essential Patents (SEP) is about the royalty rate that is set on FRAND (Fair, Reasonable and Non-Discriminatory) basis. Since the term, FRAND (Fair, Reasonable, and Non-Discriminatory) has not been defined under any law, the issue of what constitutes a fair, reasonable, and non-discriminatory royalty rate is a moot question. This makes the Standard Essential Patents (SEP)- Implementers approach the Competition Commission of India alleging that the SEP holder is abusing his dominant position by fixing exorbitant royalty rates which are anti-competitive in nature. Whereas the SEP-holder approaches the High Courts to sue for patent infringement and non-compliance by Standard Essential Patents (SEP)-implementer with FRAND (Fair, Reasonable and Non-Discriminatory) terms. Each party to the suit here contends to oust the jurisdiction of the forum where the other party has filed a case. This leads to a conflict in jurisdiction between the two different forums, namely, the Competition Commission of India and High Courts. 

Much thanks to SEP-litigation, which has now brought some clarity to the issues of jurisdiction

Indian jurisprudence saw the birth of Standard Essential Patents (SEP) litigation only in 2009 when Koninklijke Philips Electronic N.V filed two suits in the Delhi High Court alleging infringement of its Patent which was a Standard Essential Patents (SEP) for DVD Video Player. The judgment pronounced by the Delhi High Court, in this case, was the base on which Standard Essential Patents (SEP) jurisprudence was developed in India. However, a lion’s share of Standard Essential Patents (SEP) litigation in India goes to Telefonaktiebolaget LM Ericsson. The issue of jurisdiction became a source of controversy after the Delhi High Court granted an ex parte injunction in favor of Ericsson against Micromax for infringing Ericsson’s Standard Essential Patents (SEPs) relating to 2G, 3G, and 4G technology. This steamed up Micromax to approach the Competition Commission of India in 2013, contending that Ericsson had abused its dominant position in the market by charging excessive and discriminatory royalty rates. The Competition Commission of India found this to be a case fit for further investigation and ordered the Director-General to carry out an investigation. Ericsson challenged the order of CCI in the  Delhi High Court on the ground of jurisdiction contending that the Patents Act, 1970 would govern the issue in hand and not the Competition Act, 2002. 

On 30th September 2014 Intex Technologies (India) Limited filed an information with the Competition Commission of India (CCI) alleging violation of Section 4 of the Competition Act, 2002 by Ericsson just as Micromax did.  The Competition Commission of India once again reached the same conclusion and ordered an investigation. Meanwhile, Ericsson approached the Delhi High Court and was successful in getting an injunction against Intex on the 13th of March, 2015, for infringing its Standard Essential Patents (SEP). Ericsson once again, approached the Delhi High Court challenging the jurisdiction of the Competition Commission of India. Both the petitions filed by Ericsson were clubbed by the Delhi High Court and on 30th March 2016, the court delivered the judgment upholding the jurisdiction of the Competition Commission of India.

However what we can observe by reading the above is that until now the courts have harmoniously construed the Patents Act, 1970, and the Competition Act, 2002, and have struck a balance between the two in matters of jurisdiction involved in Standard Essential Patent-Litigation. 

Not only for SEP-litigation, for every IP-holder

The very recent case of Monsanto Holdings Pvt. Ltd. and Others. v. Competition Commission of India and Others reinforced the fact that the Competition Commission of India has got jurisdiction to pass orders for an investigation in order to determine a Section 4 violation of the IPR-Holder is applicable not only in Standard Essential Patents (SEP)-Litigation but also in litigation between a market player who is a Dominant IP-Holder and a Licensee.  In the instant case, certain seed manufacturers in India accused Mahyco Monsanto Biotech (India) Pvt. Ltd (MMBL) for charging unreasonable high rates based on the MRP of the seeds, for licensing its Bt. Cottonseed technology for which there was no substitute in the market. It was alleged that Mahyco Monsanto Biotech (India) Pvt. Ltd (MMBL) could not have done this but for the absence of competitors in the market. The Competition Commission of India found merits in the arguments of the complainant for a prima facie case and held that Mahyco Monsanto Biotech (India) Pvt. Ltd (MMBL) was abusing its dominant position. The Petitioners, Mahyco Monsanto Biotech (India) Pvt. Ltd (MMBL), challenged the decision of the Competition Commission of India on the ground of jurisdiction in the Delhi High Court.

In this case, it was argued by the petitioners, that the earlier decision of the DHC in the Ericsson case, permitting jurisdiction of Competition Commission of India in such matters, now no longer holds good in law after the subsequent decision of the Supreme Court in CCI v. Bharti Airtel Ltd. And Ors. Thus, pleading that Patent Controller had to first determine whether the agreements entered into by MMBL are an abuse of its rights under the Patents Act, which shall be used by the Competition Commission of India to determine a case under Section 4. However, the Delhi High Court, in this case, clarified the position and held that Bharti’s case was certainly not an authority for the present case and held the arguments of the Petitioners to be bereft of merits and upheld the order and jurisdiction of the Competition Commission of India. 

Conclusion

Now it is quite a settled position in law that when questions of economics and markets come to play, the Competition Commission of India will be the body that is empowered to deal with such issues. Since the issue of license in terms of the rates has an immediate impact on the market players and competition, it will be more appropriate for the specialized bodies to decide under the special laws. Whereas issues regarding compulsory licensing or whether the patent is valid are IP specific issues that can be dealt with under the IP laws by the High courts and Intellectual Property Appellate Board. After much deliberation by the Delhi High Court regarding the jurisdictional issues of Competition Commission of India in IPR cum Competition litigation, it is now an accepted position de jure that Competition Commission of India has the jurisdiction to order an investigation and take up cases against SEP-Holders and IP- Holders to determine abuse of dominant position. 

References

1. W.P.(C) 1776/2016 and CM Nos. 7606/2016, 12396/2016 & 16685/2016; https://www.livelaw.in/pdf_upload/pdf_upload-375093.pdf
2. https://indiankanoon.org/doc/156062069/
3. Case No 50/2013; http://infojustice.org/wp-content/uploads/2013/12/CCI-Case-no-50-2013.pdf
4. Telefonaktiebolaget lm Ericsson v. Competition Commission of India and Another ; W.P.(C) 464/2014 & CM Nos.911/2014 & 915/2014 (Judgment delivered on 30th March, 2016)
5. Intex Technologies (India) Limited v. Telefonaktiebolaget LM Ericsson (Publ) Case No. 76/2013; https://www.cci.gov.in/sites/default/files/762013_0.pdf
6. TELEFONAKTIEBOLAGET LM ERICSSON (PUBL)v. INTEX TECHNOLOGIES (INDIA) LIMITED ; I.A. No. 6735/2014 in CS(OS) No.1045/ 2014
7. https://indiankanoon.org/doc/74163100/
8. TELEFONAKTIEBOLAGET LM ERICSSON (PUBL) v. CCI W.P.(C) 464/2014 & CM Nos.911/2014 & 915/2014; https://indiankanoon.org/doc/164770226/
9. Monsanto Holdings Pvt. Ltd. and ors. v. Competition Commission of India and ors. W.P.(C) Nos. 1776/2016 & 3556/2017
10. Civil Appeal No. 11843/2018, decided on 05.12.2018.
11. W.P. (C) Nos. 1776/2016 & 3556/2017; Pg. 22.
12. Competition Act, 2002.
13. Patents Act, 1970

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