After Delhi court rulings, patent licensing firmly in the focus of India’s competition watchdog 12 May 16
As the first major standards essential patent (SEP) disputes wend their way through India’s court system, a ruling by the High Court of Delhi has made clear that this may well be the next jurisdiction where competition authorities will have their say as to what constitutes anti-competitive behaviour when it comes to patent licensing. A turn in Ericsson’s litigation against Xiaomi, meanwhile, has highlighted that while courts have so far been willing to grant interim injunctions in SEP cases, the information that is disclosed by parties about negotiations will play a big role in whether those orders stand.
The Competition Commission of India (CCI), like regulators around the world, has shown a keen interest in scrutinising FRAND-encumbered licensors with a view to setting guidelines as to what constitutes an abuse of dominant position. After being sued by Ericsson for patent infringement, two Indian mobile phone companies, Micromax and Intex, each filed complaints to the CCI. When the agency ordered full investigations based on prima facie findings in late 2013 and early 2014, Ericsson asked the court in Delhi to stay those probes in a test of whether the CCI has the jurisdiction to investigate patent licensors.
The Delhi High Court had its say at the end of March, and it refused to halt the investigations. An Ericsson spokesperson told IAM that the company “does not agree with the allegations made by Micromax or Intex in front of the Competition Commission of India, but will continue to cooperate with the authorities to reach a fair and reasonable resolution”.
It cannot be said that the decision is a surprising one. Anti-monopoly watchdogs in virtually all the major Asian jurisdictions are wrestling with similar issues. But it could nevertheless be a consequential one, because India is the only Asian country where we have seen high-profile SEP implementers frozen out of markets altogether while litigation is ongoing. That’s the case with Xiaomi, which remains barred from selling certain models in India. Intex and Micromax are selling as usual, but making a deposit for each device sold.
The investigations will be breaking new ground. The CCI itself only came into existence in 2009, and has not previously considered cases related to abuse of dominant patent position. Sanjay Kumar of Perfexio Legal told IAM: “It’s a case of wait and watch, but the court has made it very clear that you need to balance the interest of the parties. There has to be an authority who is really looking closely at the conduct of both sides.”
On the topic of specific conduct, at the end of April, the Delhi High Court partially vacated the injunction it had granted Ericsson against Xiaomi back in December of 2014. It agreed with the Chinese company that Ericsson, when it asked for the injunction, had concealed a licensing agreement between itself and Qualcomm which was relevant to the case. The decision will not necessarily impact Xiaomi’s practical commercial position in India; while the injunctions related to two patents-in-suit were lifted, that still leaves six other patents at issue.
In a statement made to IAM, Ericsson said: “Patent licensing agreements are confidential as industry practice and we had good faith belief for assuming that we presented the necessary information to the Delhi High Court. The real issue at hand is that despite Ericsson’s efforts over the past five years, Xiaomi continues to benefit from Ericsson’s technology in India and around the world without taking a licence.”
Kumar cautions that courts in India are very strict on this issue, something prospective licensees and litigants should take notice of: “If a piece of information is confidential, you can state that in your pleadings, and prevent it from being disclosed, but you cannot abstain from mentioning it. Be the first to say it, because when the other side discloses something you have not, everything else becomes afterthought.” But he reiterates that by and large, the Delhi High Court has granted either interlocutory injunctions or interlocutory relief in most SEP cases: “I’d say if you want to go ahead and enforce your right, the court will take a balanced view.”
The resolution of both the Xiaomi-Ericsson dispute and the CCI’s investigations will likely have a big impact on how many patent owners heed that advice.
Register for more free content
- Read more IAM blogs and articles
- Receive the editor's weekly review by email