Issues in Indian SEP cases - PowerPoint Presentation

1. Issues in Indian SEP casesProf. Avirup BoseJindal Global Law SchoolJindal Initiative on Research in IP and CompetitionO.P. Jindal Global University

2. FRAND LITIGATION IN INDIACases 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)

3. Cci on frandFrom 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 FRANDFRAND licenses are primarily intended to prevent “hold ups” and “royalty stacking”, common problems associated with standardisation of technologyEricsson 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

4. ANALYSING CCI’s positionInitial 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

5. Cci on frandTwo 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)

6. PartyDuration of NegotiationsInjunction passedParallel proceedings adoptedVringo v ZTE13 monthsYesIPABEricsson v Micromax 40 monthsYesCCIEricsson v Intex60 monthsYesIPAB and CCIEricsson v XiaomiNAYesNAEricsson v Best IT World42 monthsYesCCIEricsson v Lava Int.48YesCounter Claim, and a suit for declaration in District court

7. ROLE OF CCI IN FRAND POLICY MAKING IN INDIAThe 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 termsNational 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

8. Way ahead: informed AND EVIDENCE BASED competition policy on frandTake 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.”

9. 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.

10. Thank YouJindal Initiative on Research in IP and CompetitionJindal Global Law SchoolO.P. Jindal Global University