Wednesday, March 30, 2016

Delhi High Court Allows Competition Law Investigation of Ericsson's SEP Licensing Practices to Proceed

Story here from Shamnad Basheer of the Spicy IP Blog; opinion available here.  Bottom line appears to be that complaints filed by Micromax and Intex with the Competition Commission of India (CCI), alleging abuse of dominant position by Ericsson in relation to its FRAND-committed SEPs, may proceed.  Key portion of the opinion (paras. 199-200, pp. 151-52):
. . . there is good ground to hold that seeking injunctive reliefs by an SEP holder in certain circumstances may amount to abuse of its dominant position. The rationale for this is that the risk of suffering injunctions would in certain circumstances, clearly exert undue pressure on an implementer and thus, place him in a disadvantageous bargaining position vis-a-vis an SEP holder. A patent holder has a statutory right to file a suit for infringement; but as stated earlier, the Competition Act is not concerned with rights of a person or an enterprise but the exercise of such rights. The position of a proprietor of an SEP cannot be equated with a proprietor of a patent which is not essential to an industry standard. While in the former case, a non-infringing patent is not available to a dealer/manufacturer; in the latter case, the dealer/manufacturer may have other non-infringing options. It is, thus, essential that bargaining power of a dealer/manufacturer implementing the standard be protected and preserved.
In the present case, apart from instituting suits for infringement against Micromax and Intex, Ericsson has also threatened Micromax with complaints to SEBI, apparently, while Micromax was contemplating and/or in the process of floating a public offer of its shares. Such threats were, undoubtedly, made with the object of influencing Micromax to conclude a licensing agreement. It is not necessary for this Court to examine whether in the facts of this case, such threats also constitute an abuse of Ericsson's dominant position. Suffice it to state that in certain cases, such threats by a proprietor of a SEP, who is found to be in a dominant position, could be held to be an abuse of dominance. Clearly, in certain cases, such conduct, if it is found, was directed in pressuring an implementer to accept non-FRAND terms, would amount to an abuse of dominance.
The court then holds that the CCI has jurisdiction to proceed with its investigation, though the judge is careful to say that he is not taking a position on the merits of the allegations.  After discussing the CJEU's decision in Huawei v. ZTE among other matters, the judge also expresses the view--consistent with Huawei, and at odds with the German courts' pre-Huawei Orange-Book-Standard framework--that one can be a willing licensee and still reserve the right to challenge the validity of the licensor's patent (see pp. 155-58, paras. 204-07).

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Elsewhere in the blogosphere today, Florian Mueller has an interesting post on FOSS Patents on the disgorgement of profits remedy at issue in the U.S. Apple v. Samsung case (now pending before the U.S. Supreme Court, see here) and the U.S. Oracle v. Microsoft copyright case.

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