SCHOOL OF LAW

AURO UNIVERSITY, SURAT

2018-23

Research Paper
On
PRICING ABSUE BY LICENSING OF INTELLECTUAL PROPERTY RIGHT

Submitted by: Vinita Choudhary

Module- Intellectual Property Right

Course: BBA-LLB

Batch: 2018-2023

Submitted to: Ms. Arpita Yadav

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 ACKNOWLEGEMENT:

We take this opportunity to express our profound gratitude and deep regards to Ms Arpita
Yadav for her moral guidance, monitoring and constant encouragement throughout the
completion of this project topic. The blessing, help and advice given by her from time to time
shall carry us a long way in the journey of life we are about to embark. The guideline
provided by her to stick to the deadline was also encouraging. We have made efforts in this
project. However, it would not have been possible without our university and faculties' kind
support and help. We express our sincere gratitude towards them.

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 AIM AND SCOPE OF RESEARCH PAPER

“This research paper aims to explain pricing abuse by licensing and also Conclusions will
therefore need to be drawn as to whether such change is necessary, or whether it has the
potential to cause further issues.” The research paper also cover some of the case laws.

LIMITATIONS

“The Research paper covers the concept of licensing of Intellectual Property, Copyright
misuse and many other things. The research paper also shows the relevance of such
legislation, codifying the principles of such law making. The research is limited to the
resources available at the AURO Library. Books related to the topic are available at the
library. Also, the sources available on the internet helped a considerable deal. Suggestions
from the course-instructor and fellow students have been incorporated wherever necessary.

RESEARCH METHODOLOGY

“For this Research paper titled, “PRICING ABSUE BY LICENSING OF INTELLECTUAL

PROPERTY RIGHT”. Primary resources referred to in the course of research include books,
journals, law reports and cases, most of them accessed from the AURO law library. Other
sources like articles, and the like were accessed online through the use of online databases.
All direct quotations have been properly footnoted. The research conducted for this report
was based solely on secondary data as is common for research of a legal nature. Using
secondary data has benefits in respects of reduced cost and time, it is considered to be the
only appropriate method of collecting and analysing legal data which is not quantitative in
nature.

RESEARCH QUESTION

 Whether the regulations under the Indian jurisdiction govern the price abuse of
patented product?

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 TABLE OF CONTENT

 Acknowledgement……………………………………………………………….2

 Aim & Scope of research paper..……………………………………………...3

 Limitation …………………………………........………………………………3

 Research methodology…………………………………………………………...3

 Introduction.................................................................................................,,,,,......5

 Standard setting of licenses....................................................................., ...........6

 Link of dominance assessment and licenses....................................................,,.8

 Instances of iprs-related abuse of dominance include……………………...…9

 Licensing practices...........................................................................................,,...10

 Need of check and support by the competition rules...............,,........................12

 Conclusion........................................................................................,,...................14

 Bibliography.....................................................................................,,...................15

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 INTRODUCTION:

The concept of licensing of Intellectual Property (IP) is that it facilitates the entry of
inefficient producers, which may result into independently reducing the social welfare and its
effects leading towards the R&D incentives. “The nineteenth century has seen various
arrangement of most recent development in creation of mechanised merchandise which is
keep up by the new advanced technologies.

The notion of Intellectual Property Rights (IPR) isn’t a recent one but however rather a old
and glorious one. Its emergence may be well traced up back to the Renaissance Era. A
Venetian Law which controls the trade protection and the conferment of copyright to
Johannes Gutenburg for the primary ever press may be justly cited because the rudimentary
stages that result in the event of recent laws on intellectual property rights.

There has been a necessity to extend the growth of the Competitive acts in the market, to curb
the malpractices and to stop from having the chances from benefitting from the creations of
many people, counterfeiting, taking unfair advantage of the goodwill of a business etc. and at
the same time it grant various privileges to inventors thus on the encourage and reward
innovations.”1

“ 2Copyright misuse basically happens onces a corporation or any private makes undue use of
a copyright that is on the far side which goes far away from its legal and presented capability
which is in violation of the copyright act. A copyright owner may issue misuse by violating
any public policy where choices are within the copyright act. Licensing agreement to increase
the length of its copyright monopoly may be would be consider as a violation of policies
ruled beneath the Copyright Act.

The management and licensing of IP drives the profitableness of business and consequently
encourages and incentivizes innovation. Licensing may be a legal mechanism that provides
chances to use or re-use IP, that is already protected.”3

STANDARD SETTING OF LICENSES:

1
Jorge L. Contreras, Fixing FRAND: A Pseudo-Pool Approach to Standards-Based Patent Licensing, SSRN
Electronic Journal (2013).
2
2 India - IP & Antitrust2016 Know-How - GCR, Global Competition a
3
Review - GCR, https://globalcompetitionreview.com/jurisdiction/1000467/india

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By relying a lot of on per unit license fees, the IP owners have the scope to copy the totally
integrated outcome, but after that also it depend upon the flat access fees or proportion
royalties, twice marginalization which end up into more access charges and fewer
downstream companies that will monopoly or joint licensing. This depletion in selection is in
the middle of a discount in shopper costs, and therefore the internet impact edges customers
and should or might not increase the welfare once IP monopolist or patent pool would sell too
several licenses. Vertical combination doesn’t seem to own a lot of impact than within the
case of one owner of IP, whereas the patent pools and cross licensing agreements permits the
IP owners to copy an equivalent outcome as a upstream monopoly dominant all the IP.

“Patent copse incorporated the reciprocal merchandise, which give expansion in double
marginalization, the supposed royalty stacking issue — have the potential to retard diffusion
of recent technologies and decrease the consumer welfare. The effect of licensing policies of
at least one or more upstream proprietors of fundamental protected innovation on the
downstream companies that needs the access to such IP. The terms underneath such
downstream organization which have the admittance to this IP influence such passage
choices, item variety, costs and government assistance”4. We tend to consider each case under
which one party management is the main IP and consequently the case during which various
parties have the command over correlative bits of fundamental IP.

The elements which influence the licensing and its standard among the licensor and licensee
incorporate, sharing the risk of manufacturing or that of the creation, costs and costs
identified with examination and progress in something similar, saving time as opposed to
rehashing, market infiltration, cooperation of new thoughts and products. Thus, every choice
of taking or granting license of IP ought to be based on those variables and business wants of
the gatherings concerned.

For instance, in the case of “Henry v. A. B. Dick Co., the Supreme Court of US upheld the
validity of licensing of a tied or other related products along with the originally patented
product”5.

4
Licensing Intellectual Property Under Indian Laws - Intellectual Property - India, Licensing Intellectual
Property Under Indian Laws - Intellectual Property - India, http://www.mondaq.com/article.asp?
article_id=205176&signup=true .
5

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Normally called the Inherency regulation, this hypothesis expresses that it has the inborn
right of the patent proprietor, in position of his having restrictive rights over his product, to
practice the right strategy to permit the product on any standing and conditions that he chose.

In the case of “Alcatel USA, Inc. v. DGI Technologies, it was states that the protection of
copyright absue has its historical roots related to the doctrine of unclean hands which implies
that the suit of infringement filed by the plaintiff, who himself has abused the advantage
given upon him by the copyright is not within itself justified. In the current case, the Court
discovered copyright absue where the holder of the copyright in software licensed its
utilization depending on the condition that the licensee also uses it only in conjunction with
the copyright holder’s hardware. It recommended that the used of the copyright to secure an
exclusive right or monopoly, which is not granted by the Copyright office and which is in
negotiation to the granted public policy.”6

“In a license agreement covering SEPs, the licensor can’t charge surprising royalty charges or
offer distinctive commercial terms to licensees who is having a place with a same category.
The CCI has condemned the non-disclosure agreement that the licensee couldn’t investigate
into the unfairness of the terms of the license vis-à-vis alternative potential licenses.

The royalty rates charged by Ericsson had no linkage to patented product as since the
innovation lived inside the chipset but Ericsson determined its sovereignty on the on the retail
price of the whole phone. In this manner, while the technology continued as before, the
royalty may vary for two manufacturers based on the pricing of their phones. Consequently,
furthermore as well, the licensor probably won't force on the licensee bound burdening
provisos, for example, the jurisdictional conditions. Such provisions suspend the licensee
from having certain recommended debates to be a mediated in the area any place each the
gatherings practice their business activities. Such clauses clearly impose upon the abuse of
dominance on a part of the licensor towards the set licensee.

LINK OF DOMINANCE ASSESSMENT AND LICENSES

6
Patrick Rey & David J. Salant, Abuse of Dominance and Licensing of Intellectual Property, SSRN Electronic
Journal (2008).

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 IPRs, by their nature, produce a sort of monopoly which means a degree of economic
exclusivity. “The production of that legitimate exclusivity, in any case, does’t essentially
establish the flexibility to practice market power. Indeed, even in the event that it will
present market power that prevailing situation inside the market doesn't without anyone
else address an encroachment of rivalry law nor wills it force on the IPR holders the
necessity to permit that property to other people. Plus, rivalry specialists are generally
elaborate the worried about the maltreatment of the prevailing position, whatever the
wellspring of such predominance, instead of with any maltreatment of IPRs.” 7 Much,
nevertheless, moreover depends upon current real factors of each such case concerned.
The IP owner faces a compromise between the two conflicting forces. With expanding the
quantity of licenses intensify the item determination, that permits downstream
organization or companies to higher meet the consumer demand, so it creating added
value. However, it additionally enhances the downstream competition that which
dissipates profits. We will in general receive a system that mirrors this compromise,
during which the IP proprietor can have a motivating force to sell a higher or a more
modest assortment of licenses than is socially entrancing.

INSTANCES OF IPRS-RELATED ABUSE OF DOMINANCE INCLUDE:

7
Livemint, Intellectual property vs competition law
https://www.livemint.com(2016),https://www.livemint.com/Opinion/GWrGWACHE69WH4Nobl407N/
Intellectual-property-vs-competitionlaw.html

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 Monopoly pricing: This can be a sometimes to a huge rivalry worry in developed
countries in the view of the abundance of market substitutes. In developing countries, on
the grounds that the varity of accessible substitutes might be more limited and in view of
which most of IPRs-protected merchandise or firmly held by foreign interests, observance
to discipline monopoly pricing practices by IPRs holders is of huge significance.

 Restrictions on end users: one main case in this purpose is that such which grab attention
on certain restrictions on finish users as abuse of predominant position is that the
Microsoft case, which additionally integrate a monopoly-pricing dimension.

LICENSING PRACTICES:

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 IP perfectionists contend that IP systems are sufficient to inside arranged out the negative
aftermaths of excessive monopoly power generally commonly made by covetous IP
owners. For instance, is excessive pricing or a refusal to supply the patented. invention in
amounts sufficiently necessary to satisfy the market. It is consequently that the Indian
patent system (and a few elective balance put systems) specifies that in such things of
misuse, the IP proprietor likely could be hit with an obligatory permit. India summoned
this compulsory licensing provision below Section 84 of the Patent Act, some years ago
in an exceedingly case pitting Bayer, a German multinational pharmaceutical company,
against
 Natco Pharma Ltd, an Indian generic company. “Natco had appealed to the patent
trademark office database conflict that Bayer’s worth for its patented anti-cancer drug,
Nexavar, was outrageous at Rs2.8 lakh and unreasonably to a huge fragment of the
patient population which it totally was able to supply the drug at less than 1/30th of the
patented price, which is, at Rs 8, 800. The patent trademark office database dominated in
favour of Natco, holding in pertinent part that Bayer’s worth was inordinate.
 In any case, the patent trademark office database failed to exhibit any metric to arrive at
this conclusion of excessive pricing. It shrewdly depended on Bayer’s own affirmation
that the drug reached only 2% of the patient population, and took this to mean that the
drug was unaffordable to the opposite 98% of patients. This, obviously, makes one
wonder whether the others wished the medication in the smallest degree inside the
primary spot. Eventually, India is home to a huge number of patients that never so much
as see the insides of a decent hospital and/or others who put their faith in faith healers and
traditional medicines.

 But that as it may, even assumptive this attractive heuristic might have worked during
this, for example, future cases can request the definition of a rigorous frame for decisive
“excessive" or “unaffordable" pricing; one designed on a nuanced understanding of the
health care market, buying power, insurance schemes and furthermore the like”8.

 The way of thinking cost of the numerous a choice from the Competition Commission of
India (CCI), noted those who traverse the IP-competition interface, leaves much to be
consider.
8
Basheer, S., 2021. Intellectual property vs competition law. [online] mint.

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 “Talking explicitly of the Shamsher Kataria case which involved automobile spare
components, any place the CCI unhesitatingly articulated that the area are regularly no
copyright security over industrial drawings that underlie spare parts, onces the courts are
fighting for this issue for quite a long years on finish. Successfully, we tend to or struck
among the evil and furthermore the remote ocean. Hence the competition cure might
further be worse than the patent which is adequately meant to heal engendering a
introgenesis of elements.
 An ex-post examination of a purported patent abuse has less to do with measuring the
technical merit of an invention (requiring some competence in science/technology) and
additionally to try and do with economics and furthermore the like”9.
 IPRs may moreover be utilized as a horizontal restriction and so contribute to the
formation, existence or activities of a classic combine. During this respect, we will
specify pooling and cross-authorizing rehearses, which may, purposefully or something
else, fill this need. Pooling and cross-authorizing game plans are arrangements of two or
extra holders of different things of IP to permit on another or the outsiders. Pooling and
cross-permitting, notwithstanding, advantage separate treatment as they cause amplified
hazard of arrangement among contenders. They are, in this manner, level by normally
while the greater part of the contrary arrangements are mainly vertically prohibitive.

NEED OF CHECK AND SUPPORT BY THE COMPETITION RULES

 Competition law will facilitate innovation and technology transfer by promoting static
potency through competition in worth etc. and additionally significant by encouraging
9
Abuse Of Dominant Position In IPR License Agreements: Ericsson-Intex Spat - Intellectual Property - India,
Abuse Of Dominant Position In IPR License Agreements: Ericsson-Intex Spat - Intellectual Property - India,
http://www.mondaq.com/india/x/316472/Patent/Abuse Of Dominant Position In IPR License Agreements
EricssonIntex Spa

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 dynamic potency for the longer term. Like IP policy, competition law can also contribute
to green technology development and diffusion, but however they have been balanced
with each other.
 There are three fundamental ideas which structure the premise of Competition law and
they are:

(1) Cartels and other anti-competitive agreements and practices

(2) Merger Control and

(3) Abuse of Dominant Position.

 With the authorization of Competition Act, 2002 there is comparable impact on M&A
activities, intra-group mergers, demergers and acquisitions, joint ventures, agreements
and arrangements with competitors and agreements and arrangements with suppliers,
merchants and so forth.
 “The Competition act explains the sensible elements which might but forced for
assurance of perceived licensed innovation under IP laws, for example the copyright act
1958, the patent act, 1970, the Trademarks Act, 1999, the Geographical Indications of
Goods Act, 1999, the Designs Act, 2000, the Semi-conductor Integrated Circuits Layout-
Design Act, 2000. What should to be noted is that the above IP law don’t have a
superseding impact over the Competition Act. Furthermore, the exception given to the
intellectual property right holder is just to the degree that accommodates the sensible
conditions which appear to have been important to secure the IP holder's privileges.
 The purpose of the Competition Act is extremely clear, the licensing agreement ought in
no way restrictor hamper rivalry and exchange. In case of any irrational limitations which
are essentially against serious, at that point such authorizing arrangements would raise
worries under the Competition Act”. In spite of the fact that adroitly there is no
contention between the securities conceded under different IP rules in India and the
Competition Act, the issue is how they are adjusted w
 hile shaping the permitting understanding. As the Competition act is at its beginning stage
in India, the examination of authorizing arrangements has at different events not pulled in
the consideration of the Competition Commission of India (CCI). Subsequently it is
prudent that the permitting arrangements ought to be drafted inside the legitimate
boundaries in harmonization with the Competition Act.

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 IPRs and rivalry strategy, consequently, it is beneficial to find out if a legitimate balance
of separate interests in safeguarding the IPRs and a serious financial climate requires the
foundation of global control on rivalry.
 One fundamental truth is that TRIPs perceives that some licensing practices or conditions
relating to IPRs, which limit rivalry, may adversely affect exchange and may obstruct the
exchange and dispersal of innovation. In any case, the Agreement, instead of multi-
lateralising and fitting explicit guidelines controlling enemy of serious maltreatments of
IPRs, basically alludes Member States to their public laws.
 “Rivalry law, in this manner, while no affecting the actual presence of IPRs, works to
contain the activity of the property rights inside the appropriate limits and cutoff points
which are inborn in the selectiveness presented by the responsibility for resources. This is
the place where one dives from grandiose standards and comprehensively characterized
goals to commonsense execution to manage the strains between the two strategies when
the activity of IPRs leads to some opposition concerns in light of the counter serious
measurements that it might epitomize.”10

CONCLUSION:

The proliferation of competition doesn’t really imply that it likewise precludes the presence
of predominant situation in the market. In any case, what is precluded is the maltreatment of
such predominant position. Transparency is the sign of decency and the equivalent applies to
lead of IP business as well. The larger question is whether CCI be permitted to research the
10
Herbert J. Hovenkamp, IP and Antitrust Policy: A Brief Historical Overview, SSRN Electronic Journal (2005).

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conditions forced by a proprietor of IP for the security of its privileges and to control any
encroachment. Licenses Act gives legal assurance to business misuse of licenses to its holder.
Section 3(5) of the Act gives an exemption of against serious arrangements and obviously
specifies that nothing contained in section 3 of the Act will confine "the privilege of any
individual to control any encroachment or to force sensible condition, as might be essential
for securing any of his rights...." But does that imply that holders of ensured IPRs can force
any condition? The appropriate response would be in the negative since, in such a case that
they do as such, CCI can absolutely research the "reasonableness" of the conditions forced in
their arrangements.

BIBLIOGRAPHY:

➢ Abuse Of Dominant Position In IPR License Agreements: Ericsson-Intex Spat -

Intellectual Property - India, Abuse Of Dominant Position In IPR License Agreements:
Ericsson-Intex Spat - Intellectual Property - India,

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http://www.mondaq.com/india/x/316472/Patent/Abuse Of Dominant Position In IPR License
Agreements EricssonIntex Spat

➢ Jorge L. Contreras, Fixing FRAND: A Pseudo-Pool Approach to Standards-Based Patent

Licensing, SSRN Electronic Journal (2013).

➢ Herbert J. Hovenkamp, IP and Antitrust Policy: A Brief Historical Overview, SSRN

Electronic Journal (2005).

➢ India - IP & Antitrust 2016 Know-How - GCR, Global Competition Review - GCR,
https://globalcompetitionreview.com/jurisdiction/1000467/india

➢ Licensing Intellectual Property Under Indian Laws - Intellectual Property - India,

Licensing Intellectual Property Under Indian Laws - Intellectual Property - India,
http://www.mondaq.com/article.asp?article_id=205176&signup=true

➢ Livemint, Intellectual property vs competition law https://www.livemint.com(2016),

https://www.livemint.com/Opinion/GWrGWACHE69WH4Nobl407N/Intellectualproperty-
vs-competition-law.html.

➢ Amiti Sen, 'Competition law could be an effective tool to check IP abuse'@businessline

(2018), https://www.thehindubusinessline.com/news/world/competition-law-could-be-
aneffective-tool-to-check-ip-abuse/article24116625.ece.

➢ R. Siebert, What Determines Firms Choices Between Ex Ante And Ex Post Licensing
Agreements?, 11 Journal of Competition Law and Economics 165–199 (2015)

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