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TMI Blog2024 (11) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... ned so as to ensure FINALITY and CLOSURE . Furthermore, the threat of continued investigations by the CCI could compel parties to engage in prolonged and costly legal battles, defeating the purpose of settlements. The question whether JCB s stance is misleading or not would have been for the High Court to decide, not the CCI. Thereafter, the Information makes an reference to the ad-interim injunction dated 25th November, 2011 granted by the Delhi High Court. The allegation is that the litigation in itself is an overall diabolical and insidious strategy and is a misuse of judicial process. In the entire Information, the repeated allegations are of abuse of judicial process and regulatory process. Details of various hearings in the Delhi High Court are set out in the Information. The consequences of the litigation are set out in the Information and it is argued that JCB abused its dominance in view of the said litigation, which is termed as a predatory litigation - No issues regarding anti-competitive practices were also raised in the information, apart from the allegation of abuse of dominant position in the garb of filed injunction suit and being lead players in the market. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y JCB against BMPL seeking an injunction restraining infringement of copyright, piracy of registered design, passing off etc. The said suit being CS(OS) 2934/2011 was filed on 24th November, 2011 before the Original Side of this Court and an ex-parte ad interim injunction was granted in favour of JCB on 25 th November, 2011. Vide the said order dated 25th November, 2011, local commissioners were also appointed to visit various premises of BMPL in Bangalore, Coimbatore and Noida for seizure of products. 4. Considering that the suit was based on the registered designs of JCB, the Defendant therein i.e., BMPL chose to challenge the validity of the said designs. BMPL then filed cancellation petitions before the Controller of Designs. However, parallelly, an interim arrangement was arrived at between the parties, which was recorded vide order dated 12th December, 2011. Some settlement negotiations ensued between the parties and BMPL agreed to change the design of some of its parts during negotiations. Various meetings were also held between the two parties. 5. While the said settlement talks were underway, BMPL filed an Information under Section 19(1)(a) of the Competition Act, 2002 (he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 17. Accordingly, the Commission directs the Director General (DG) to cause an investigation into the matter and to complete the investigation within a period of 60 days from receipt of this order. 7. Aggrieved by the above order, the Petitioners filed the present civil writ being W.P.(C) 2244/2014 seeking quashing of the order dated 11th March, 2014. Reply affidavits were filed by the Respondents i.e., CCI and BMPL in the present writ emphasising the malafides of JCB and stated that JCB sought to amend the original suit C.S.(OS) 2934/2011 through an amendment application dated 12th May, 2014 due to lack of due diligence. BMPL alleged in the counter-affidavit that the said suit majorly affected the sales and business of BMPL and if not for the said suit, their business would have flourished. CCI in their counter-affidavit asserted that the investigation by CCI focused on the Petitioner s alleged abuse of judicial process to harass its competitors, which was considered as an abuse of dominant position under competition laws. As per CCI, predatory litigation, intended to harass rather than win has been recognized internationally as a violation of competition laws. 8. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight of the aforesaid order and given the manner in which the action has been taken by the respondent, I am prima facie, of the view that further proceedings in the matter before the respondent be stayed. It is, accordingly, so directed. Ali hardware seized by the respondent shall be placed in a sealed cover and kept in safe custody by respondent No.1. 12. Vide order dated 26th September, 2014 further proceedings before the CCI were stayed by the High Court and all the hardware, which was seized, was to be retained in the safe custody of CCI. The said order was challenged by CCI before the Division Bench in LPA 715/2014 titled Competition Commission of India v. JCB India Ltd. Ors. which was rejected on 2nd December, 2014. The operative portion of the said order reads as under: 26. Coming to the merits of the case, it is relevant to note that the learned Single Judge initially by order dated 04.04.2014 allowed the Director General to proceed with the investigation, however, granted stay only to the extent of passing a final order/report. The said order has been accepted and acted upon by both the parties. It appears that the whole grievance of the writ petitioner is only with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, violating the High Court s directives. Thirdly, it was averred that the search was carried out by unauthorized personnel, and documents irrelevant to the investigation were seized, demonstrating a disregard for legal procedures and judicial orders. 16. It was further stated that the search and seizure breached the statutory provisions under the Companies Act, 1956, and the Indian Evidence Act, 1872. The Petitioners averred that the DG s application for the search lacked reasonable grounds to believe that documents would be destroyed or altered, a necessary criterion under Section 240A of the Companies Act, 1956. Moreover, it was also asserted that the Companies Act, 1956, was repealed and was replaced by the Companies Act, 2013, making the application and subsequent order invalid. The Petitioners further alleged that the search warrant was obtained through misrepresentation and fraud, and the conduct of the search violated procedural safeguards, including seizing privileged attorney-client communications. 17. In the said writ petition, an application- Crl.M.A. 9444/2016 was moved by the Petitioners seeking interim relief. Vide order dated 2nd June, 2016, the CCI was restraine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement was taken on record vide order dated 26th August, 2021. The said order of the Supreme Court, reads as under: Delay condoned. These matters were sent for mediation before the Mediation centre at Delhi High court. Fortunately, the matters have been settled between the parties before the Mediation Centre and now an application (I.A. No. 87472 of 2021) has been filed with the following prayers:- a. Direct that the Settlement Agreement dated 22.07.2021 arrived between the parties in Mediation to be taken on record and accordingly disposed of: (i) Dispose of present SLP bearing SLP No. 7518-7519 of 2018 titled as 'Bull Machine Pvt. Ltd. vs. J.C. Bamford Excavators Ltd. Anr.'; (ii) Dispose of SLP bearing Diary No.13878 of 2018 titled as 'Bull Machine Pvt. Ltd. vs. J.C. Bamford Excavators Ltd. Anr.'; (iii) Dispose of Civil Suit being J.C. Bamford Excavators Limited Anr. vs. Bull Machines Pvt. Ltd., {Original CS {OS) No. 2934 of 2011) (C.S {Comm.) No. 610 of 2018) before High Court of Delhi, filed by JCB and all proceedings, actions, and applications relating to these proceedings and any other applications which are the subject matter of the dispute; (iv) Dispose of Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Case 105 of 2013, and terminate the proceedings/actions emanating from the said Impugned Order; Both the writ petitions are now listed before this Court for hearing and disposal. iv. Submissions: 21. Mr. Sandeep Sethi, ld. Sr. Counsel appearing on behalf of the Petitioners primarily relied upon the decision of the ld. Division Bench of this Court in Telefonaktiebolaget LM Ericsson (PUBL) v. Competition Commission of India Anr. [2023:DHC:4783-DB] to argue that under similar circumstances, ld. Division Bench of this Court has held that once a settlement has been arrived at, the CCI proceedings cannot continue. 22. It is his submission that the original suit litigation was between two private parties i.e., JCB and BMPL. It did not involve any issues such as formation of cartels or anti-competitive combinations or abuse of dominance. He submitted that there was no public impact which was raised in the Information given under Section 19(1) of the Act by BMPL. He further submitted that the jurisdiction of the CCI was triggered under Section 19(1) of the Acton the basis of the design infringement suit which was filed at the Delhi High Court by JCB, terming it as sham litigation . It is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arnessing monetary profits. He referred to foreign decisions to elaborate that the Eleventh Circuit Court in the US supports a legal policy favouring settlements, acknowledging the practical concerns that antitrust scrutiny of reverse payment agreements could necessitate in patent validity litigation. However, it was submitted that the potential for reverse payments to harm competition outweighs these concerns, as such payments often indicate that a patentee seeks to maintain monopoly profits by preventing competition. Therefore, reverse payments need to be scrutinized under antitrust laws to ensure they do not unjustly hinder competition, despite the general preference for settling disputes. He further stated that litigation and settlements can be means to achieve market dominance. 28. Mr. Bansal further submitted that since, as a matter of principle, a settlement agreement can have an anti-competitive effect, some window has to be left for the CCI to examine such settlements. The question is not in respect of the merits of the suit which has been filed between the parties. The question is whether it would constitute abuse of dominance to file a suit. Reliance is placed by Mr. Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove in the order passed by the Supreme Court dated 26th August, 2021 have resulted in the disposal of the following proceedings: SLP No.7518-7519 of 2018 and SLP bearing Diary No.13878 of 2018. Original Civil Suit numbered CS(OS) 2934/2011. An appeal i.e. before the High Court of Calcutta, challenging the Order of the Controller of Patents dated 30th January 2017 with respect to the JCB India s Design Registrations bearing number 200017, and An appeal i.e. before the High Court of Calcutta challenging the Order of the Controller of Patents dated 25th January 2017 with respect to the JCB India s Design Registrations bearing number 200018 34. In respect of the suit and design cancellations etc., the Supreme Court observed clearly that the settlement agreement is taken on record and the SLPs are disposed of. The prayers in respect of the SLPs, the Civil Suit, the appeals were all granted. The settlement agreement also sought disposal of the CCI proceedings in Case No. 105 of 2013 pending before CCI. However, insofar as the CCI proceedings were concerned, the Supreme Court directed the parties to approach the High Court for early disposal of the present writ petitions W.P. (C) No.2244 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l demonstrate the mischief perpetrated by JCB. First, the images relied upon by JCB to obtain the injunction clearly demonstrate the misrepresentations on various counts that were made by JCB before the Hon'ble Delhi High Court in order to obtain the ex parte ad interim injunction. For instance: (i) Annexure 12 demonstrates how JCB took images of its own product, misrepresented to the Hon'ble Delhi High Court one of the said images as a part belonging to Bull Smart, and placed it before the Hon'ble Delhi High Court to obtain the ad interim injunction. It is noteworthy, that (a) the image of the Bull Smart part (which would have shown the difference in design from the JCB part) was never placed before the Hon'ble Delhi High Court, and (b) the bucket design over which an infringement has been claimed by JCB was, in fact shown as a part of the patent owned by Bull Machine and was in use, many years well before the design registration was obtained by JCB. xxx xxx XXX 13. Second, JCB cannot claim a valid design registration over the disputed components because the disputed components were already in production by JCB prior to the design registrations and the images were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by JCB before the Hon'ble High Court of Delhi. It is the case of the Informant that the bad faith litigation initiated by JCB against it alleging infringement of its design rights was totally false and that the said legal proceedings before the Hon'ble High Court of Delhi were only initiated to harass it and prevent the launch of 'Bull Smart', which in effect would have competed with backhoe loaders of JCB in the relevant market. Furthermore, it is the case of the Informant that the injunction was obtained on the basis that the Informant had allegedly infringed the registered designs and copyrights of JCB while manufacturing 'Bull Smart', which designs/ copyrights themselves were obtained fraudulently. 15. The Commission observes that the predation through abuse of judicial processes presents an increasingly threat to competition, particularly due to its relatively low anti-trust visibility. 42. A conjoint reading of the Information and the impugned order dated 11th March, 2014 leaves no manner of doubt that the core of the impugned order of the CCI, is the filing of the Delhi High Court infringement proceedings which were termed as bad faith litigation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pending. Regulatory authorities such as the CCI are no exception to the same. It is imperative that the CCI and similar bodies honour the outcomes of mediation and respect the settlements reached between parties. By doing so, they not only uphold the legitimacy and reliability of the mediation process but also foster a legal environment where parties are encouraged to resolve disputes amicably without fear of subsequent regulatory interference. Furthermore, when regulatory authorities like the CCI respect mediation settlements, it prevents the undermining of negotiated agreements and protects parties from the threat of ongoing inquiries. This recognition reinforces the concept that mediation is not merely a preliminary step but a conclusive process that provides binding and enforceable outcomes. The Supreme Court in Salem Advocate Bar Association, T.N. v. Union of India [(2005) 6 SCC 344] laid emphasis on the concept of settlement while dealing with Section 89 of the CPC, as set out below: 55. As can be seen from Section 89, its first part uses the word shall when it stipulates that the court shall formulate terms of settlement . The use of the word may in later part of Section 89 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stem. It is one of the methods of alternative dispute resolution and resolves the dispute in a way that is private, fast and economical. It is a process in which a neutral intervenor assists two or more negotiating parties to identify matters of concern, develop a better understanding of their situation, and based upon that improved understanding, develop mutually acceptable proposals to resolve those concerns. It embraces the philosophy of democratic decision-making [Alfin, et al., Mediation Theory Practice (2nd Edn., 2006) Lexis Nexis]. 17. Thus, mediation being a form of Alternative Dispute Resolution is a shift from adversarial litigation. When the parties desire an on-going relationship, mediation can build and improve their relationships. To preserve, develop and improve communication, build bridges of understanding, find out options for settlement for mutual gains, search unobvious from obvious, dive underneath a problem and dig out underlying interests of the disputing parties, preserve and maintain relationships and collaborative problem solving are some of the fundamental advantages of mediation. Even in those cases where relationships have turned bitter, mediation has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the settlement, but later on ratified the same were not bound by the settlement. Both the said contentions found favour by the Labour Court, and accordingly, the settlement was set aside. The matter finally reached the Supreme Court, and it was held that merely because some workers have resented later, the settlement cannot be vitiated and that it was binding on all the workers, both the members of the union on the date of settlement, as also the workmen who had ratified the settlement later. It was held by the Supreme Court that, in Para. 10, at page 31: The settlement cannot be weighed in any golden scales and the question whether it is just and fair has to be answered on the basis of principles different from those which come into play when an industrial dispute is under adjudication. If the settlement had been arrived at by a vast majority of the concerned workers with their eyes open and was also accepted by them in its totality, it must be presumed to be just and fair and not liable to be ignored while deciding the reference merely because a small number of workers were not parties to it or refused to accept it or because the Tribunal was of the opinion that the workers deser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely different category as may be contemplated under Section 3 of the Act. Under Section 3 there is a clear exception to disputes relating to the intellectual property. Section 3 of the Act is set out below for reference: Anti-competitive agreements. (1) No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. (2) Any agreement entered into in contravention of the provisions contained in sub-section (1) shall be void. (3) Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which (a) directly or indirectly determines purchase or sale prices; (b) limits or controls production, supply, markets, technical development, investment or provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (37 of 2000); (g) any other law for the time being in force relating to the protection of other intellectual property rights. (ii) the right of any person to export goods from India to the extent to which the agreement relates exclusively to the production, supply, distribution or control of goods or provision of services for such export. 52. While intellectual property rights recognise, grant and enforce monopoly rights, under certain circumstances, competition law does not encourage monopolies. The recognition of monopolies under IP laws is for the purpose of encouraging innovation and creativity. The same also has a statutory basis. Every IP dispute cannot be converted into a competition dispute as it would severely impinge upon statutory rights recognised under various statutes protecting intellectual property. Moreover, any attempt to hijack an IP dispute from the jurisdiction of a High Court or a commercial court to the Competition authority has to be viewed with caution and in a manner so as not to tread upon the forum seized of the IP dispute . 53. Allegations of `sham litigation or predatory litigation as being an attempt to abuse dominance, especially when Courts are st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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