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.