In the present article we are discussing about enforcement of
the Ericsson's standard-essential patents (SEP) relating to
wireless technology standards such as GSM, EDGE and 3G in
Ericsson, the Swedish company, a big player in mobile network
infrastructure manufacturing, had filed a patent infringement suit
against Micromax in March 2013, Micromax i.e one of India's
largest domestic mobile handset manufacturers. The suit, filed at
the Delhi High Court, involves a huge claim of Rs. 100 crores made
by Ericsson by way of damages which is one of the highest in terms
of damages sought in a patent suit in the Indian IT and
Ericsson, had come up with the legal action against Micromax due
to the failure of three years' negotiation with Micromax for a
license agreement on certain standard-essential patents (SEP)
relating to wireless technology standards such as GSM, EDGE and 3G.
Justice Manmohan of Delhi High Court issued an order on March 19,
2013. While the order allowed Micromax to sell the alleged
infringing products in India, an interim arrangement on payment of
royalties by Micromax to Ericsson was put in place.
As per the Order, the parties were to negotiate the terms of a
license in presence of a mediator and the interim payments were to
be deposited in the court as per the arrangement till the dispute
is finally settled. The Order embodies FRAND (fair, reasonable, and
non-discriminatory) terms, as per which Micromax will be required
to pay anywhere between 1.25% - 2% of sale price as royalty per
phone and tablet.
As the negotiations in presence of the mediator were not
successful, Micromax filed a complaint before Competition
Commission of India (hereinafter CCI) alleging Ericsson of abusing
a dominant position and engaging in practices contradicting to its
previous global commitments on providing its SEP to handset makers
under fair, reasonable and non- discriminatory (FRAND) terms.
Particularly, it has been alleged hat Ericsson had abused its
dominant position by imposing exorbitant royalty rates for standard
essential patents as it was aware that there was no alternative
technology available and it was the sole licensor globally.
The Competition Commission of India (CCI) has
ordered investigation into the matter after finding prima-facie
evidence of Ericsson indulging in unfair trade
practices. The prima facie findings were summarized in an order
dated November 12, 2013. The Director General, CCI is now destined
to conduct through investigation and make a report of his findings
(i.e. whether there are any violations of the provisions of the
Competition Act) to CCI.
Ericsson, vide a separate writ petition before the Delhi High
Court had challenged CCI's jurisdiction to investigate the
Ericsson's actions as the Patent Act itself provides
adequate mechanism to balance the rights of patentee and other
shareholders. The Court here expressed its
unhappiness at CCI entering into an 'adjudicatory and
determinative' process by recording detailed and substantial
reasoning at Section 26(1) stage itself.
The Single judge directed the Director General of CCI to refrain
from passing any final order/report pending the adjudication of
this matter in the Court and restricted him from summoning any
person working abroad without the leave of the Court.
The CCI appealed against this order, and a Division Bench of the
Delhi HC recently modified the single judge order to the extent
that the Director General may call foreign officers for purposes of
the investigation. However, Ericsson can approach the court if it
feels that the call is unnecessary.
Thus, it can be observed that while the battle started in the
form of patent infringement suits, we have already noticed the
defendant taking cover other enactments. It can also be said that
till now, the Courts have done a fair and reasonable job of
balancing between the rights of patentee and other
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