In a petition filed by Telefonaktiebolaget LM Ericsson (Ericsson) challenging two orders of the Competition Commission of India (CCI), the Delhi High Court (Court) has held that the jurisdiction of the CCI under the Competition Act, 2002 (Competition Act) to probe allegations of anti-competitive practices and abuse of dominance arising out of the monopoly granted by patent rights cannot be taken away even if the Patents Act, 1970 (Patents Act) provides for efficacious remedies inter alia in the nature of grant of compulsory licenses.
Ericsson had instituted a suit for patent infringement against Micromax and Intex (Defendants) for its Standard Essential Patents (SEPs) relating to 2G and 3G technologies. In an interim order, the Court allowed the Defendants to sell the allegedly infringing devices only after payment of a fixed royalty to Ericsson. Defendants separately filed a complaint before the CCI against Ericsson for abuse of dominant position by inter alia demanding excessive royalties, coercing the Defendants to enter into a license with onerous clauses benefitting Ericsson and not disclosing terms of the licenses agreed by Ericsson with other licensees for the same technology. The CCI prima facie held that Ericsson was abusing its dominant position for use of its SEPs relating to technology used in mobile handsets by the Defendants and accordingly passed two orders initiating enquiry against Ericsson for abusing its dominant position.
Aggrieved by the orders of CCI, Ericsson moved the Court by way of a writ petition challenging the jurisdiction of the CCI to entertain a complaint of abuse of dominant position under the Competition Act.
Looking into the abuse of dominant position, the Court observed that threats coercing the Defendants to enter into non-FRAND (Fair, Reasonable and Non-Discriminatory) terms puts the Defendants into a disadvantageous position and amounts to abuse of a dominant position by Ericsson. The Court explained that the SEP holder may in certain circumstances be seen as abusing its dominant position for seeking an injunctive relief. This is so because the risk of suffering injunctions would, in certain circumstances, exert undue pressure on an implementer and places him in a disadvantageous bargaining position vis-à-vis the SEP holder.
According to Ericsson, the Patents Act being a special act, would prevail over the Competition Act in case of an irreconcilable repugnancy or conflict between the two statutes, and the Defendants should seek remedy under the provisions of the Patents Act. Ericsson argued that the Patents Act is a self-contained statute and it provides remedies for abuse of patent rights by the patentee including abuse of a dominant position The Court disagreed and stated that ”There is no irreconcilable conflict between the Competition Act and Patents Act and in the absence of any irreconcilable conflict between the two legislations, the jurisdiction of CCI to entertain complaints of abuse of dominance in respect of patent rights cannot be ousted”. The Court also held that the Competition Act is not concerned with patent rights of a person or enterprise (which is within the domain of the Patents Act), but the exercise of such rights.