India: Abuse Of Dominant Position In IPR License Agreements: Ericsson-Intex Spat

Last Updated: 27 May 2014
Article by PSA


An Indian mobile handset maker, Intex Technologies (India) Limited ("Intex") filed a complaint with the Competition Commission of India ("CCI") against the Swedish company, Telefonaktiebolaget LM Ericsson ("Ericsson") in 2013 alleging abuse of dominance by Ericsson while negotiating a licensing agreement. Intex complained that Ericsson offered to enter into a global patent license agreement with them and demanded exorbitant royalty rates and unfair terms for licensing its patents, which Intex finally did not agree. CCI made a prima facie determination of abuse of dominant position and ordered an investigation under section 261 of the Competition Act, 2002 ("Act"). However, before the investigation was completed, Ericsson filed a writ petition at the Delhi High Court ("DHC") challenging this order of CCI.

In light of the above facts, this e-newsline will examine the two proceedings: (i) complaint with CCI; and (ii) the case before the DHC; and explain how a case of alleged abuse of dominant position was made out here when the issue is related to patent licensing agreement, which falls within the exception of the anti-competitive agreements.

1. Factual Matrix and the CCI Order

Ericsson had a sizeable business in handset manufacturing and manufacturing network; however, pursuant to a change in strategy its focus shifted on the business of patent licensing/monetization, which formed one of its prominent revenue streams. While licensing, Ericsson executed a global patent licensing agreement with the licensee and gained royalty. In parallel, it also executed Non-Disclosure Agreements ("NDAs") asking the licensee to keep the terms of the licensing agreement and NDA confidential. Intex sourced custom-made mobile devices, among other products from various countries and marketed them in India under its brand name. In 2013, while executing the licensing agreement with Ericsson, Intex complained to CCI that:

(i) The terms of the licensing agreement were highly unfair and discriminatory;

(ii) The royalty rates were extremely high, excessive and discriminatory; and

(iii) Ericsson had refused to share with Intex the commercial terms and royalty payments it had with other companies on the grounds of NDA with them, which strongly suggested that different royalty rates/commercial terms were being offered to the potential licensees belonging to the same category.

In the complaint, Intex informed CCI that Ericsson had licensed the patents to different companies in the same market on different terms and conditions and charged different rates of royalty thereby forcing inequitable and discriminatory market pricing of same products. This practice and insistence of Ericsson was likely to render the business of Intex unviable, if its competitors were able to sell the same products at lower rates. Intex approached CCI to investigate the matter and determine the potential abuse of dominant position by Ericsson. Dominant position2 has been defined under the Act to mean a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market in its favour. Abusive conduct may include imposing discriminatory or unfair or excessive price or conditions of sale, restricting or even limiting production/technical development, exclusive deals or cross-subsidizing the costs in one market by leveraging a dominant position in some other market.

Ericsson claimed to be the patentee of a huge portfolio of Standard Essential Patents3 required for mobile handsets and network stations. CCI noted that SEP holders are under an obligation "to license the SEPs to every party under Fair, Reasonable and Non-Discriminatory (FRAND) terms, in terms of the irrevocable commitment made to standard setting organization, such as the European Telecommunications Standard Institute (ETSI)4," FRAND licenses are primarily intended to prevent patent hold-up and royalty stacking. This means that when standard technologies are protected by patent rights, there is a possibility for "hold-up" by the patent owner to demand higher royalties or burdensome licensing terms before the standard was chosen. Hold-up can subvert the competitive process of choosing among technologies and undermine the integrity of standard-setting activities. Ultimately, the high costs of such patents get transferred to the final consumers. By standardization, which is a voluntary process, a number of companies reach a consensus for setting common technology standards under the support of a standard setting organization, which in the present case is ETSI. In simple terms, standardization is the process of developing and implementing technical standards. Such technological standards are termed as SEP, when they are patented and for which there are no non-infringing alternatives. Once a patent is declared as SEP, it faces no competition from other patents unless that patent becomes obsolete due to new technology/inventions.

Upon review of the information and documents filed by Intex, prima facie it became apparent to CCI that Ericsson was dominant in the relevant market of GSM and CDMA technologies in India and it held a large number of GSM and CDMA patents. CCI prima facie found that Ericsson was dominant in this particular market as:

(i) Ericsson had 33,000 patents to its credit, with 400 of which were granted in India. It was the largest holder of SEPs for mobile communications like 2G, 3G and 4G patents used for smart phones, tablets etc;

(ii) Ericsson held SEPs and there were no other alternate technology in the Indian market, so, it enjoyed complete dominance over its present and prospective licensees in the relevant product market.

CCI considered the following facts in order to conclude prima facie abuse of dominance:

(i) The royalty rates charged by Ericsson were contrary to the FRAND terms as they had no linkage to the patented product;

(ii) Ericsson refused to share the terms of FRAND licenses given to licensees similarly placed to Intex, possibly because Ericsson was imposing discriminatory and non uniform terms;

(iii) Each user of Ericsson's SEP was made to sign NDA, which meant that users were not able to find out terms of royalty given to other users and this reduced transparency; and

(iv) A jurisdiction clause, in violation of FRAND principles, was imposed, which debarred Intex from having disputes adjudicated in India (where both parties carry on business).

Therefore, the CCI ordered detailed investigation of the matter and, also, clubbed this matter with the ongoing investigation in another case (Micromax Informatics Limited and Ericsson), wherein Micromax had similarly alleged that Ericsson was demanding unfair, discriminatory and exorbitant royalty for its patents regarding GSM technology. In that case, it was alleged that the royalty demanded by Ericsson was excessive when compared to royalties charged by other patentees for patents similar or comparable to the patents held by Ericsson and CCI had ordered an investigation.

2. The case before DHC

Miffed by the CCI orders of November 28, 2013 (Micromax) and January 16, 2014 (Intex), Ericsson moved the DHC challenging the jurisdiction of CCI to rule on these cases. It alleged that CCI has no jurisdiction to investigate Ericsson's action in as much as the Patent Act itself provides adequate mechanism to balance the rights of patentee and other stakeholders and took refuge of sections 3(5)(i) and 62 of the Act. Under section 3(5)(i), anti-competitive agreements does not restrict the right of a person to restrain any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his rights conferred under the Patents Act, 1970. Section 62 provides that the application of other laws is not barred and the remedies of the Act shall be in addition to, and not in derogation of, the provisions of any other applicable law for the time being in force. In light of the aforesaid, Ericsson alleged that the matter was outside the jurisdiction of CCI since it was purely contractual and no final rate of royalty was concluded eventually.

Further, talking about its efforts during the negotiation of the global patent licensing agreement, Ericsson contended that it made whole hearted efforts to negotiate licensing agreement with Intex for more than four years. However, Intex adopted various delaying and mala fide tactics to hinder the process. Eventually, Intex had evinced interest in pursuing negotiations, yet it simultaneously went behind Ericsson's back and filed revocation petitions against five of Ericsson's SEPs with the patent office. Thereafter, it lodged the complaint with CCI. Ericsson alleged that during the inter-se communication, Intex had acknowledged use of Ericsson's SEPs and yet continued using SEPs without paying any royalty to Ericsson. During the negotiation period, Intex's revenues grew by 30%. Finally, Ericsson contended that the revocation applications filed by Intex and CCI investigations are coercive tactics adopted by Intex to pressurize Ericsson to grant low royalty rates.

The DHC expressed its displeasure at CCI entering into an "adjudicatory and determinative" process by recording detailed and substantial reasoning at section 26(1) stage itself, wherein it has the obligation to do so at section 26(7) stage. Citing a Supreme Court ("SC") judgement in CCI vs. Steel Authority of India Limited and Another5, wherein it was held that an order passed under section 26(1) of the Act is an administrative order and an aggrieved party has a right to challenge it at section 26(7) stage, the DHC observed that such orders prejudiced the remedy by rendering it illusory under section 26(7). Finally, 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 DHC and restricted CCI from summoning any person from Ericsson working abroad without the leave of the DHC. As this order restricted the investigative powers of the CCI, it appealed against this order before a Division Bench of the DHC, which decided to modify the single judge's order to the extent that the Director General could call foreign officers for purpose of the investigation. However, in such an event, Ericsson could approach the DHC if it felt that summon from CCI was unnecessary. Certainly, the above orders of DHC have limiting effect on the investigating powers of the CCI but since these matters are still at their preliminary stages, it would be too premature to comment on the overall effect of the orders. It seems that CCI could appeal against the order of the Division bench as well.


The Act certainly does not prohibit companies from maintaining a dominant position but what is prohibited is the abuse of such dominant position. Transparency is the hallmark of fairness and it applies to conduct of business as well. The larger question is whether CCI be allowed to investigate the conditions imposed by an owner of IP for the protection of its rights and to restrain any infringement. Patents Act provides statutory protection for commercial exploitation of patents to its holder. Section 3(5) of the Act provides an exception of anti-competitive agreements and clearly mentions that nothing contained in section 3 of the Act shall restrict "the right of any person to restrain any infringement or to impose reasonable condition, as may be necessary for protecting any of his rights...." But does that mean that holders of protected IPRs can impose any condition? The answer would be in the negative because if they do so, CCI can certainly investigate the "reasonableness" of the conditions imposed in their agreements. In the current spat, if the investigations lead to the finding that Ericsson's global patent licensing agreements with discriminatory non disclosure conditions and different royalty terms with each party could have an appreciable adverse effect on competition and is actually an abuse of dominant position in the relevant market in India, the DHC will certainly allow CCI to adjudicate on the matter and could remove all restrictions imposed on CCI so far.


1 This section provides for the procedure for inquiry on receipt of a reference.....or on information received under section 19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the Direct General to cause an investigation to be made into the matter.

2 See section 4(2) Explanation (a) of the Act.

3 An SEP is a patent that claims that an invention must be used to comply with a technical standard. These essential standards are established by technical or industrial experts and these experts are usually the insiders of the industry because every company or industry involved has proprietary technology and they want to see their technology used in the standard.

4 A non-profit organization with more than 700 member organizations from 62 countries, which is officially recognized by the European Union as a European Standards Organization. ETSI produces globally applicable standards for information and communication technologies i.e. fixed, mobile, radio, converged, broadcast and internet technologies, some of which are covered by patents held by ETSI or ETSI members like Ericsson.

5 (2010) 10 SCC 744.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions