ISSUES IN INDIAN SEP

CASES

Prof. Avirup Bose

Jindal Global Law School
Jindal Initiative on Research in IP and Competition
O.P. Jindal Global University
 FRAND LITIGATION IN INDIA

Cases decided by Competition Commission of India (prima facie orders):

• Micromax v Ericsson (2013)
• Intex v Ericsson (2013)
• iBall v Ericsson (2015)
Cases decided by Delhi High Court:
• Ericsson v Intex (2015)
• Ericsson v CCI (2016)
Other major relevant cases:
• Ericsson v Lava (2016)
• Ericsson v Xiaomi (2016)
 CCI ON FRAND

From the three prima facie orders, CCI stance on FRAND encumbered SEP cases may be
summarised as below:
• As a member of ETSI, Ericsson is bound by contractual obligations under FRAND
• FRAND licenses are primarily intended to prevent “hold ups” and “royalty stacking”, common
problems associated with standardisation of technology
• Ericsson is dominant in the relevant market of SEPs for 2G, 3G and 4G technologies in GSM
standard compliant mobile communication devices in India
• Licensing practices adopted by Ericsson were discriminatory since royalties were being charged
on the price of the end device (EMVR) as opposed to the chip set where the technology is
implemented (SSPPU)
• The non disclosure agreements (NDAs) that implementers were forced to sign was indicative of
discriminatory licensing practices and a breach of FRAND obligations of applying FRAND
terms fairly and uniformly to similarly placed players
 ANALYSING CCI’S POSITION

• Initial orders decided in 2013 (also the very first FRAND cases in India)
• iBall judgment delivered by CCI on May 12, 2015. 2 months after Intex order was
delivered by Delhi High Court in March, 2015 but almost mimicking the same 8
page judgment delivered in preceding cases of Micromax and Intex right at the start
in 2013 and no reference of the detailed High Court Intex judgment (CCI and Delhi
High Court holding contradictory positions from one another in the FRAND debate)
• The order speaks about what NDAs are. It is unclear as to its treatment of NDAs and
whether they are per se anticompetitive under Indian competition law (some points
of similarity with the District Court of Delaware case against Rockstar Consortium)
• Analysis on conduct of informant (willingness to license, potential hold out
strategy) absent from analysis
 CCI ON FRAND

Two additional broader questions arising from CCI FRAND orders: pertain to:
A) Should there be a threshold of inquiry for CCI prima facie orders under S.26(1) of the
Competition Act that determines further investigation of a case (more on this in the next slide)
B) Relevant market definition in competition cases.
In 2017, Supreme Court order discarding the Competition Appellate Tribunal’s “myopic” definition
of relevant market held “the concept of relevant market implies that there could be an effective
competition between the products which form part of it and this presupposes that there is a
sufficient degree of interchangeability between all the products forming part of the same market
insofar as specific use of such product is concerned and the CCI must look at evidence that is
available and relevant to the case at hand while determining the relevant market.” (CCI v.
Coordination Committee of Artists and Technicians of WB Films and Television)
- In cases involving IPRs, there may also be an error of circularity in market definitions when
markets are defined based on patented technology which thereby presumes dominance prior to
market definition (a trend in all IP cases decided by CCI so far such as FRAND cases and
Monsanto)
- Narrow market definitions are problematic and recent CCI orders in Uber, Ola, online retail sector
etc. have been applauded for broader definitions that are more cognizant of innovation in new
business models in India)
Party Duration of Negotiations Injunction passed Parallel proceedings
adopted

Vringo v ZTE 13 months Yes IPAB

Ericsson v Micromax 40 months Yes CCI

Ericsson v Intex 60 months Yes IPAB and CCI

Ericsson v Xiaomi NA Yes NA

Ericsson v Best IT World 42 months Yes CCI

Counter Claim, and a suit

for declaration in District
Ericsson v Lava Int. 48 Yes court
 ROLE OF CCI IN FRAND POLICY
MAKING IN INDIA

• The DIPP Discussion Paper released in 2016 specified a set of questions that
needed resolution for effective policy making in FRAND. Some of the questions
pertained to whether the existing provisions in the various IPR related
legislations, especially the Patents Act, 1970 and Anti-Trust legislations, are
adequate to address the issues related to SEPs and their availability on FRAND
terms. Furthermore, in the realm of competition, one of the queries it raised was
whether the practice of Non-Disclosure Agreements (NDA) leads to misuse of
dominant position and is against the FRAND terms
• National IPR Policy (in line with TRIPS) supports the necessity of the CCI’s
intervention in case of anti-competitive licensing terms resulting in distortion of
market competition
 WAY AHEAD: INFORMED AND EVIDENCE
BASED COMPETITION POLICY ON FRAND
• Take lessons from global discourse on: royalty determination and appropriate
base, bargaining dynamics and willingness of parties, hold ups and hold outs
(Huawei v ZTE, Cisco v CSIRO, Ericsson v D-Links, Unwired Planet v ZTE
etc.)
• Work harmoniously with other regulatory bodies such as Telecom Regulatory
Authority of India and IP enforcement in India where turf wars are a growing
challenge. In Ericsson v CCI, the High Court held that “Sections 21 and 21A
of the Competition Act - clearly indicates that the intention of the Parliament
was that the Competition Act co-exist with other regulatory statues and be
harmoniously worked in tandem with those statues and as far as possible,
statutory orders be passed which are consistent with the concerned statutory
enactments.”
 CONTINUED..

• Not don the robe of a price regulator in cases involving excessive pricing and royalty
determination. In Manjit Singh Sachdeva v. Director General of Civil Aviation,
dismissing a complaint at the prima facie stage, CCI held “The Commission can
neither go into the issue of MRP i.e. what should be the MRP for any product or
service and fix the MRP, nor the Commission can give direction to the Government of
India that it should fix MRP of a service being provided by private entrepreneur. In
fact that will be contrary to the spirit of competition law.”
• To develop a more nuanced approach towards treatment of non disclosure agreements
that recognises that NDAs are a significant part of licensing deals and a legitimate
business practice and establish clear parameters on the types of NDAs that could be
considered anti competitive or not, instead of adopting a blanket approach against
differential pricing.
 THANK YOU

Jindal Initiative on Research in IP and Competition

Jindal Global Law School
O.P. Jindal Global University