Competition Commission of India to probe standard essential patent abuse

Competition Commission of India to probe standard essential patent abuse

The High Court of Delhi has dismissed an application by Ericsson that would have denied the Competition Commission of India (CCI) jurisdiction to investigate an alleged abuse of dominance in the mobile phone manufacturer’s patent licensing and litigation strategy.  Lest there be any doubt, the case confirms that India’s competition law can apply even in areas covered by patent law.

Ericsson holds numerous patents relating to mobile phone technology including standard essential patents (SEP) used in 2G and 3G mobiles.  Ericsson notified Indian mobile phone manufacturer Micromax of alleged patent infringement and threatened that it would seek interim injunctions and product seizures under customs law.  Micromax made a complaint to the CCI alleging that Ericsson had abused its dominant position by charging excessive royalties on its SEPs.

Ericsson argued before the court that a competition investigation by the CCI was excluded because the complaint related to ongoing litigation over the relevant patents. The court rejected that claim and also ruled that the seeking of injunctive relief by a SEP owner could amount to an abuse of dominance.

The decision is unsurprising when viewed against the practice of other competition authorities including in Europe where the intersection between intellectual property rights and competition law remains an active though controversial enforcement priority. 

In recent years and months the European Commission has continued to focus its antitrust interest on the so-called ‘patent wars’ between the mobile device companies.  These cases involve allegations that there is an abuse of dominance where (a) a dominant company seeks injunctive relief alleging infringement of its SEPs; (b) in circumstances where the other party is willing to enter negotiations as to licensing on fair, reasonable and non-discriminatory (FRAND) terms; and (c) which FRAND licensing the SEP owner had committed to respect. In the Commission’s decisions involving Samsung and Motorola it has accepted that whilst seeking an injunction is a legitimate remedy for patent infringements, this conduct may amount to an abuse of dominance in the context of SEPs where the licensee is willing to enter a licence on FRAND terms.  The CCI may well draw inspiration from these cases in its investigation of similar issues under India’s competition law.

MODERN SLAVERY ACT: ARE YOU READY TO REPORT?

MODERN SLAVERY ACT:  ARE YOU READY TO REPORT?

Suzanne Rab

Did you know that 35.8 million people are victims of modern slavery worldwide?  Modern slavery generates $150 billion profits each year and most of the exploitation occurs in the manufacturing, construction and agriculture sectors.

Does your organisation have a year end on or after 31 March 2016?  If so, you will want to read on to find out how to meet your obligations under the Modern Slavery Act 2015 (“MSA”).

The MSA applies to all organisations with a turnover, or group turnover - that is, the total turnover of a company and its subsidiaries - of £36 million or more which are either incorporated in the UK or carry on a business in the UK.  It requires those organisations to prepare and publish a statement setting out the steps that they have taken during that financial year to ensure that slavery and human trafficking are not taking place anywhere in their supply chains; in any part of their own business. 

Organisations that have a turnover below £36 million may still be required to assist other companies preparing their statements where they are part of the wider supply chain.

The first companies that will have to publish an annual statement are those with a financial year end falling on or after 31 March 2016.  

The Government has published guidance on the new reporting obligation which states that organisations should publish their statement as soon as reasonably practicable after the year end, and ideally within six months of it.

The statement must be approved by the board of directors, signed by a director and must be displayed in a prominent place on the organisation’s website.

The MSA does not specify what should be included in a statement.  The following ‘may’ be included:

• information about the organisation’s structure, its business and supply chains;
• its policies relating to modern slavery;
• its due diligence processes in relation to slavery and trafficking in its business and supply chain;
• the parts of the organisation where there is a risk of modern slavery and the steps it has taken to assess and manage that risk;
• its effectiveness in ensuring that modern slavery is not taking place, measured against appropriate performance indicators;
• training available. 

If an organisation fails to publish a statement, action can be taken against it in the courts and unlimited fines may be imposed. 

I am assisting organisations to comply with their obligation to publish a statement.  Many are also embracing the opportunity to conduct due diligence on the risks of slavery and human trafficking presented by their supply chain and to reinforce their compliance efforts.

Suzanne Rab is a barrister specialising in regulation and competition law at Serle Court Chambers and has wide experience in representing companies on human rights and compliance matters.

Countdown to Implementation of The Collective Rights Management Directive – What does the future hold for Collecting Societies?

Countdown to Implementation of The Collective Rights Management Directive – What does the future hold for Collecting Societies?

Suzanne Rab*

The UK Intellectual Property Office (IPO) has issued Guidance on how to comply with new EU legislation on the regulation of collecting societies and other rights management organisations (CMOs).  The reforms are contained in the (long titled) Directive on Collective Rights Management of Copyright and Related Rights in Musical Works for Online Use in the Internal Market (Directive).  The aim behind the Directive is to ensure that CMOs act in the best interest of rights holders by establishing minimum governance and reporting standards.

Copyright licensing in the EU has traditionally been organised along national lines.  It is not hard to see how this compartmentalisation has come under pressure against EU internal market goals.  Online distribution of content and the demands of service providers for multi-territorial licensing arrangements have further exposed the weaknesses of CMO organisational structures.  For over a decade the European Commission (Commission) has pushed for greater accessibility.  Yet reconciling the tensions between and interests of artists, publishers and consumers has been no easy task. 

Expectations that the Directive would force a seismic shift in the collective management of copyright are probably unlikely to be realised in practice, given the compromise position adopted in its final text.  There are nevertheless important changes about to take effect which will have potentially far-reaching commercial consequences for collecting societies, authors, distributors and music users.

The UK has implemented the Directive through the Collective Management of Copyright (EU Directive) 2016 (2016 Regulations).  Those who have been following the Directive’s legislative journey may have noticed that regulations were issued in the UK in 2014 in the form of the Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014 (2014 Regulations).  However, the 2014 Regulations do not cover all the issues contained in the Directive and will be replaced by the 2016 Regulations when they come into force on 10 April 2016.

The 2016 Regulations contain a number of innovations that are likely to present challenges for CMOs in ensuring that their administration, data management and record keeping are robust.  CMOs that grant multi-territorial licences will be required to have “sufficient capacity” to process efficiently and in a transparent manner the data needed to administer multi-territorial licences. CMOs must, in response to a “duly justified” request from rights holders, service providers or other CMOs, provide current information on their online repertoires.

The 2016 Regulations also preserve many of the provisions in the 2014 Regulations to require appropriate training for CMO staff, independent dispute resolution, and effective and timely complaints procedures for licensees and members.  Licensees must be dealt with in good faith and not only once their licence has been concluded.

The interplay between the Directive and wider EU competition and regulatory policy remains in a state of flux.  It is not long since the EU General Court gave its judgments in proceedings brought by the International Confederation of Societies of Authors and Composers (CISAC) and 21 of its collecting society members.   The Court upheld the Commission’s 2008 decision finding that the collecting societies had violated the EU competition law prohibition on restrictive agreements contained in Article 101(1) of the Treaty on the Functioning of the EU through the provisions in their reciprocal representation agreements. 

Reflecting a similar impetus to break down barriers to online trade and geographic market divisions, only last week the Commission published its interim report in its e-commerce sector inquiry.  The Commission emphasised that one of its priorities is to tackle “unjustified barriers” to cross-border e-commerce.  It has commented that geographical sales restrictions are common on both the online and bricks and mortar world.  The Commission has criticised such practices as geo-blocking which occur when retailers block online purchasers based on their location.  The Commission has also hinted that draft legislation to address geo-blocking competition concerns is in the pipeline and that this may be published as early as May. 

The 2016 Regulations will partly address some of the challenges in dealing with what can be a labyrinth of multi-layered procedures and regulations for EU copyright licensing.  Reform is well overdue.  Whether the Directive does effect meaningful change so as to make the online music market more accessible will depend on how CMOs respond in practice.  Some may choose to race to the bottom by applying the minimum standards and no more.  Given already voiced concerns that those standards do not go far enough, pressure in licensing negotiations for greater transparency and accountability might operate as a tactical lever to push for higher standards than required.  

Suzanne Rab is a barrister at Serle Court Chambers in London.  Suzanne has wide experience of EU law, regulation and competition law matters combining cartel regulation, commercial practices, IP exploitation, merger control, public procurement and State aid.