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TMI Blog2016 (3) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... ommunications from the DG which require Ericsson to produce (i) certified copies of all email communication during the period January 2011 to March 2013 by the executives or Ericsson who are or have been related to the discussion/negotiation with Indian companies. The executives include Sh. Harish Sharma, Mr. Max Olofsson, Mr. Alex Fasell, Mr. Chris Houghton and other senior executives from Ericsson global . Ericsson had also placed letter dated 15th June, 2015 addressed to the Additional Director General, CCI which indicates that the Ericsson had received four probe notices (till 15th June, 2015) and was called upon to submit the detailed facts regarding Ownership and Shareholding pattern of Ericsson; copies of audited statements of accounts; details of patents relating to mobile telecom standardisation held by Ericsson; claim-chart mapping with Standards, list of SEPs of Ericsson, basis for charging licence fees as percentage of final product, illustrative rate charged to similarly placed parties; cost incurred etc. Further, certain senior employees of Ericsson have also been summoned to record their statement on oath before the DG. Whether the impugned orders passed under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise within the meaning of Section 2(h) of the Competition Act, since it is admittedly engaged in activities which entail acquisition and control of patents. It is well settled that the provision of any statute must be read in the context of the statute as a whole. A non-obstante clause is a well known legislative device used to give an overriding effect to certain provisions over the others which are inconsistent with those provisions; in the present case, Section 60 of the Competition Act expressly provides that the provisions of the Competition Act shall have effect notwithstanding anything inconsistent in any other law. However, the said provision must be read in the context of the Competition Act as a whole and the mischief that is sought to be addressed by the Competition Act. A prospective licensee who applies for a compulsory licence is expected to have made, prior to his application, efforts to obtain a licence on reasonable terms. However, it further specifies that this consideration would not be relevant where the conduct of a patentee is found to be anti-competitive - if CCI has finally found a patentee s conduct to be anti-competitive and its finding has attained finali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her Section 4 of the Competition Act has been violated, does not mean that a civil court would be adjudicating that issue. Further, merely because certain reliefs sought by Micromax and Intex before CCI are also available in proceedings under the Patents Act also does not exclude the subject matter of the complaints from the scope of the Competition Act. An abuse of dominant position under Section 4 of the Competition Act is not a cause that can be made a subject matter of a suit or proceedings before a civil court. Whether Micromax/Intex could maintain a complaint for abuse of dominance since they had contested Ericsson s claim for infringement? - HELD THAT:- The expression willing licensee only means a potential licensee who is willing to accept licence of valid patents on FRAND terms. This does not mean that he is willing to accept a licence for invalid patents and he has to waive his rights to challenge the patents in question. Any person, notwithstanding that he has entered into a licence agreement for a patent, would have a right to challenge the validity of the patents. This is also clear from clause (d) of Section 140(1) of the Patents Act, which was introduced with effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve practices in patent licensing. iii) The allegations of excessive royalty demands and unfair licensing terms could constitute abuse of dominance, justifying CCI s investigation. iv) The pendency of suits does not bar the CCI from exercising its jurisdiction under the Competition Act. v) The CCI s orders are not perverse and are within its jurisdiction. Petition dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... any proceeding in relation to a claim of royalty by a proprietor of a patent (hereafter also referred to as a 'patentee'). Ericsson contends that any issue regarding a claim for royalty would fall within the scope of Patents Act, 1970 (hereafter the 'Patents Act') and cannot be a subject matter of examination under the Competition Act. This, essentially, is the principal controversy involved in these petitions. Introduction 5. Ericsson was founded in 1876 and is a flagship company of the Ericsson Group. Ericsson is engaged in developing and providing equipment and services relating to the information and communication technology. It is claimed that Ericsson is one of the largest telecommunications company in the world and the Ericsson Group designs and manufactures telecommunication equipment, setups and manages telecommunications network and is engaged in research and development of frontline technologies in the field of data communication and mobile networks. Ericsson claims that it has played a significant role in the growth and expansion of the telecommunications industry in India and its involvement in India dates back to 1903, when Ericsson supplied manual switch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s network across various countries. Thus, any technology accepted as a standard would have to be mandatorily followed by all enterprises involved in the particular industry. In order to accept and lay down standards, various Standard Setting Organizations' (SSOs) have been established. European Telecommunication Standard Institute (ETSI) is one such body, which has been set up to lay down the standards for the telecommunication industry and particularly 2G (GSM, GPRS, EDGE), 3G (UMTS, WCDMA, HSPA) and 4G (LTE) standards. In cases where the technology adopted as a part of an essential standard is patented, the technology/patent is referred to as a Standard Essential Patent (hereafter 'SEP'). The implication of accepting a patented technology as a standard is that all devices/equipments compliant with the established standard would require to use the patented technology and its manufacture would necessarily require a licence from the patentee holding the SEP. 10. In order to ensure that a patentee cannot prevent access to SEP, clause 6.1 of the "ETSI Intellectual Property Rights Policy" expressly provides that: "When an ESSENTIAL IPR relating to a particular STANDARD o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t provided Micromax with certain examples of its SEPs in India and also with documents and mapping test results, which established that one of the Micromax's mobile device (X332) infringed Ericsson's SEPs. Ericsson reiterated its request for a meeting and once again called upon Micromax to execute an NDA, without which it expressed its difficulty in providing details pertaining to its claim of mapping. 12.3. Ericsson states that on 28th April, 2011, a meeting was held between the representatives of Ericsson and Micromax, at which Micromax demanded further information regarding Ericsson's patents. According to Ericsson, it supplied the necessary information pertaining to its patents as well as further information in respect of infringement of Ericsson's patents by other products of Micromax; however, Micromax disputes that it received the necessary and relevant information. 12.4. Apparently, after a further meeting and much correspondence, Ericsson and Micromax executed an NDA on 16th January, 2012. However, the parties could not arrive at a consensus with respect to a PLA. 12.5. Consequently, on 4th March, 2013, Ericsson filed a patent infringement suit being CS(OS) No. 442/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he right to file an application under Order XXXIX Rule 4 of the Code of Civil Procedure (hereafter 'CPC') and if such application was made, the mandate of law required that an endeavor be made to decide the same within a period of 30 days. The Court also clarified that its order would not be read as an expression of opinion in favour of either party. 12.8. Thereafter, Micromax filed an application under Order XXXIX Rule 4 of CPC seeking vacation of the ex-parte interim order passed by the learned Single Judge on 6th March, 2013. On 19th March, 2013, the Court issued notice on the said application (being I.A No.4694/2013 IN CS(OS) No. 442/2013) and passed the following order with the consent of parties: "1. Ericsson and Micromax agree to negotiate a FRAND License Agreement for the next one month, based on FRAND terms. 2. Micromax/Customs shall intimate Ericsson's notified person or counsel for Ericsson whenever a consignment arrives at the Customs. Ericsson's representative or its counsel will, without any delay and within twenty-four hours, take inspection of the consignment. 3. Micromax shall then, pending final determination of royalties payable by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 0.8% of net selling price; ii. For phones/ devices capable of GPRS + GSM - 0.8% of net selling price; iii. For phones/devices capable of EDGE + GPRS + GSM - 1% of net selling price; iv. WCDMA/HSPA phones/devices, calling tablets - 1% of the net selling price." From 13th November, 2015 to 12th November, 2016:- "i. For phones/ devices capable of GSM - 0.8% of net selling price; ii. For phones/ devices capable of GPRS + GSM - 0.8% of net selling price; iii. For phones/devices capable of EDGE + GPRS + GSM - 1.1% of net selling price; iv. WCDMA/ HSPA phones/devices, calling tablets - 1.1% of the net selling price." From 13th November, 2016 to 12th November, 2020:- "i. For phones/ devices capable of GSM - 0.8%) of net selling price; ii. For phones/ devices capable of GPRS + GSM - 1% of net selling price; iii. For phones/devices capable of EDGE + GPRS + GSM 1.3% of net selling price; iv. WCDMA/ HSPA phones/devices, calling tablets - 1.3% of the net selling price." 12.13. A perusal of the abovementioned order indicates that Ericsson had produced twenty-six licence agreements which were perused by the Court and the royalty rates were fixed after perusing the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd requested for a meeting to discuss a PLA. Intex responded by stating that it was not aware of Ericsson's patents in India that were required to be complied with. Thereafter - during the period January, 2009 to November, 2009 - Ericsson and Intex held negotiations for an amicable resolution of the issues but the same were unsuccessful. 13.2. It appears that one of the principal issues raised by Intex concerned the execution of a NDA which included a covenant that the NDA would be governed by the substantive laws of Sweden and the disputes related thereto would be subject to the Swedish jurisdiction. In view of the reluctance on the part of Intex to subject itself to a laws and jurisdiction of a foreign State, Ericsson proposed a modified NDA, which would be governed by the laws of Singapore and subject to the jurisdiction in that country. 13.3. On 26th March, 2013, Intex expressed its willingness to obtain a licence from Ericsson and sought commercial terms for the same. However, Ericsson expressed its inability to provide the same till an NDA was executed between the parties. Finally, an NDA was executed between Ericsson and Intex on 12th April, 2013. 13.4. Ericsson provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position by demanding an unfair royalty structure from Micromax in respect of its SEPs relating to the GSM Technology. It asserted that the royalty demanded by Ericsson was excessive and had no basis in the Indian commercial realities. Micromax contended that profit margin of Indian mobile companies was in the range of six to eight percent and if Micromax was called upon to pay royalties at the rate demanded by Ericsson, it's business would be rendered unviable. 16. It was further alleged that Ericsson had abused its position by using the threat of interim injunction and custom seizures to coerce Micromax to accept the licence terms demanded by it. 17. Micromax also accused Ericsson of attempting to limit the development of technology relating to mobile phones in India to the prejudice of the Indian consumers by seeking excessive royalties for its technology. Micromax asserted that as a consequence of Ericsson's demand for excessive royalties, the Indian handset manufacturers were denied market access in respect of the GSM market. 18. Micromax referred to various notices issued by Ericsson in support of its claim that the conduct of Ericsson was threatening and inflexible. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct. 19.7. That Ericsson was not only charging separate rates from SEP holding companies and non-SEP holding companies but was also offering different royalty rates and commercial terms to potential licensees from the same category. And, it was doing so with a view to make unreasonable gains. It was alleged that this had the effect of altering the conditions o competition. 19.8. That Ericsson had failed to offer any objective basis for its royalty demands. 19.9. That Ericsson had offered its entire pool of patents as a bouquet and had refused to offer specific royalty rates in respect of each of the SEPs allegedly infringed by Intex. Thus, Ericsson was endeavoring to compel Intex to acquire licence for all its patents relating to 2G and 3G technologies without giving any choice to Intex to acquire the rights in respect of only some of the specific patents. This, according to Intex would amount to a practice of bundling and tying, which is proscribed under the Competition Act. 19.10. That the conduct of Ericsson was opaque and non-transparent and, in effect, sought to impose unfair and discriminatory terms/prices and restrict the provisions of goods and services. The impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly noted that it had already formed a prima facie opinion under Section 26(1) of the Competition Act on the information submitted by Micromax and had directed the DG to conduct an investigation. CCI was of the view that Intex's Case (Case No. 76/2013) be also clubbed with Case No. 50/2013 for causing an investigation under proviso to Section 26(1) of the Competition Act. Accordingly, the DG was also directed to investigate the matter by looking into the allegations made by Intex within the specified period. Submissions on behalf of Ericsson 24. Mr C.S. Vaidyanathan, learned Senior Advocate appearing for Ericsson in Intex Petition (W.P (C) 1006 of 2014) contended that whereas the Patents Act is a special act and contains comprehensive provisions for addressing all the matters including protecting the interest of consumers and general public, the Competition Act has been enacted as a general law to promote and sustain competition in the market and to prevent practices having an adverse effect on competition. He referred to various provisions of the Patents Act - in particular Sections 83-90, 92 & 92A - to emphasize that the Patents Act contains provisions to adequately redress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave the jurisdiction to entertain any suit or proceedings in respect of which CCI was empowered to determine under the Competition Act. On the strength of the aforesaid provisions, he contended that the jurisdiction of the Civil Court was not ousted in respect of various matters relating to patent and in particular, grant of injunction under Section 48 of the Patents Act; determination of fair terms for licensing of a patent; and determination of damages. He contended that since the principal grievance of Intex related to non-grant of licence and/or Ericsson's threat to enforce its right as a patentee, the same were expressly covered within the scope of the Patents Act. This, in turn, implied that CCI would have no jurisdiction to determine those issues as by virtue of Section 61 of the Competition Act, the jurisdiction of Civil Courts was ousted in respect of matters falling within the domain of CCI under the Competition Act. 28. He next submitted that Ericsson had already filed a suit for enforcement of its rights and referred to the interim orders passed in the suit by this court for payment of royalty. He also referred to the issues framed by the High Court in Civil Suit No. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of injunctions to prevent infringement of a patent; the terms on which such injunctions could be granted, if any; enforcement of other remedies such as customs inspections etc.; and issues regarding validity and fixing of reasonable fees and damages. He submitted that the Competition Act did not provide any remedy to prevent anti-competitive practices in relation to patent rights and, therefore, the only recourse for redressal of grievances regarding demand of excessive licence fee would be under the Patents Act and not under the Competition Act. 30. He next contended that the test of abuse of dominant position as set out under Section 4 of the Competition Act could not be applied to exercise of rights under the Patents Act which conferred a monopoly to a patentee for exploitation of the patented technology and prevented competition for a limited period of 20 years. 31. He referred to the decision of the Supreme Court in General Manager Telecom v. M. Krishnan & Anr.: JT (2009) 11 SC 690 and Chairman, Thiruvalluvar Transport Corporation v. Consumer Protection Council : (1995) 2 SCC 479 in support of his contention that the Patents Act was a specific law and a complainant could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site indicated the relevant market to be "market of GSM and CDMA technology in India", This was palpably erroneous and also clearly indicated that the CCI had not understood the subject of the SEPs for which royalty was claimed by Ericsson. 35. Ms Singh further contended that the allegations made by Micromax and Intex did not by any stretch indicate abuse of dominance as Ericsson had only exercised its statutory right and therefore, the orders passed by CCI were wholly without jurisdiction. Submissions on behalf CCI 36. Mr Haksar, learned Senior Advocate, appearing for CCI submitted that the impugned orders were not amenable to judicial review under Article 226 of the Constitution of India as the said orders did not amount to a final expression of opinion on merit. He drew the attention of this Court to paragraph 19 and 20 of the impugned order dated 16th January, 2014 which expressly recorded the above and further directed the DG to conduct the investigation uninfluenced by any observations made in the impugned orders. He strongly relied on the decision of the Supreme Court in Competition Commission of India v. Steel Authority of India Ltd. & Anr.: (2010) 10 SCC 744 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Act which expressly provided the provisions of the Competition Act to have effect notwithstanding anything inconsistent contained in any other law. On the strength of the aforesaid provisions, he contended that the CCI was not concerned with any other aspect regarding grant or exercise of any right pertaining to a patent except to ensure the compliance with Section 3 and 4 of the Competition Act. He referred to the decision of this Court in the Union of India v. Competition Commission of India & Anr.: AIR 2012 (Del.) 66 in support of its contention that the functions and powers of CCI were for addressing specific contraventions as mentioned under the Competition Act. He then referred to the decision of the Supreme Court in M/s Fair Air Engineers Pvt. Ltd. v. N.K. Modi : (1996) 6 SCC 385 wherein the Supreme Court had interpreted the provision similar to Section 62 of the Competition Act in the context of the Consumer Protection Act, 1986 and held that recourse to the provisions of the said Act were available even though an arbitration agreement existed between the parties thereto. 39. Mr Haksar further submitted that there was no conflict between the Competition Act and the Paten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Intex. He then referred to the information filed by Intex under Section 19(1)(a) of the Competition Act and submitted that the same clearly alleged that Ericsson was placed in a position of dominance by virtue of being a patentee in respect of SEPs. The complaint further disclosed that (a) Ericsson had abused its position of dominance as Ericsson had attempted to bundle SEPs held by Ericsson which were not required by Intex; (b) royalty demanded was unfair, unreasonable and discriminatory; (c) necessary information was sought to be obfuscated; and (d) that royalty was demanded on the price of the end product and not on the basis of the value of the component that used or housed the relevant SEP. It is contended that the aforesaid allegations prima facie disclosed violation of Section 4 of the Competition Act and, therefore, fell within the exclusive jurisdiction of CCI. 43. Mr Kathpalia also countered the submissions made on behalf of Ericsson that the Patents Act was a special act and the Competition Act was a general enactment and, therefore, the provisions of the Patents Act would prevail in case of any repugnancy between the two enactments. He submitted that this contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods Act and referred to the decision in the case of Tata Consultancy Services v. State of AP: AIR 2005 SC 371 in support of his contention. 48. Mr Salman Khurshid, learned Senior Advocate appearing on behalf of Micromax also contested the submissions made on behalf of Ericsson on by advancing arguments similar to those advanced by Mr. Haksar and Mr. Kathpalia. 49. Mr Aditya Narain, Amicus Curiae, submitted that the subject matter of disputes related to negotiation of licences for SEPs. Thus, CCI, at the threshold, had to consider whether Ericsson could be considered as an 'enterprise' within the meaning of Section 2(h) of the Competition Act; but, CCI had failed to consider the aforesaid issue while passing the order under Section 26(1) of the Competition Act. According to him, the expression 'any activity' as used in Section 2(h) of the Competition Act would not include negotiation of patent licences and, therefore, Ericsson could not be considered as an enterprise for the purposes of Section 4 of the Competition Act. He further submitted that the impugned orders also did not indicate whether Micromax and/or Intex could be considered as consumers within the meaning of Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the Micromax's case, which was first uploaded on the website on 27th November, 2013, defined relevant market as "market of GSM and CDMA technology in India". This was modified and the certified copy subsequently received described the relevant market to be "the SEPs in GSM compliant mobile communication devices in India". In the case of Intex, the impugned order dated 16th January 2014, described the relevant market as "market of SEPs for 2G, 3G and 4G technologies in the GSMs Standard compliant mobile communication devices". According to Ms. Singh, these varying description indicated CCI's complete lack of understanding of the subject prior to directing investigation against Ericsson. 53. Ms Singh also sought to dispute Mr Kathpalia's interpretation of proviso of clause (iv) to Section 86 of the Patents Act. She submitted that a bare reading of the said proviso would indicate that the Controller of Patents would have the power to award a compulsory licence in case where the patentee had indulged in an anti-competitive practice without insisting on the condition of the applicant making reasonable attempts to obtain a licence from the patentee. Ms Singh thereafter listed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuing a direction for investigation is of a preliminary nature and did not at that stage condemn any person so as to warrant the application of the rule of audi alteram partem. 58. In view of the decision of the Supreme Court in Steel Authority of India Limited (supra), the nature of a direction issued by CCI to the DG to conduct an investigation, is beyond the pail of controversy. The question whether a direction passed under Section 26(1) of the Competition Act is appealable is also no longer res integra. However, the decision in the case of Steel Authority of India Limited (supra) cannot be read as an authority for the proposition that a direction passed under Section 26(1) of the Competition Act is outside the scope of judicial scrutiny under Article 226 of the Constitution of India. 59. CCI is a body established under Section 7 of the Competition Act and performs the functions as mandated under Chapter IV of the Competition Act. CCI being a creature of the statute has to perform its functions and exercise its powers within the confines of the statute. Clearly, any function performed or any order or direction passed by CCI must be in accordance with the provisions of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 240A of the Companies Act, 1956 would also apply to an investigation made by the DG, or any person investigating under his authority, as they apply to an Inspector appointed under the Companies Act, 1956. Section 240 of the Companies Act, 1956 enjoins all officers and other employees and agents of a company being investigated (a) to preserve and produce to an inspector, all books and papers of, or relating to, the company or as the case may be relating to the other body corporate, which are in their custody or power; and (b) otherwise give to the inspector all assistance in connection with the investigation which they are reasonably able to give. By virtue of Sub-section (1B) of Section 240 of the Companies Act, 1956, the Inspector also has the power to retain any book and paper produced for a period of six months. 63. Section 240A empowers an Inspector to apply for an order of seizure of books and papers relating to a company or managing director or manager of such company which he has reasonable grounds to believe would be destroyed, mutated, altered falsified or secreted. Inspector has the power to retain the books and papers seized till the conclusion of the investigation. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that CCI had published the impugned orders in official newsletters and its officers had further publically spoken about such orders in several domestic and international seminars and the same was liable to adversely affect Ericsson's reputation. 66. In the aforesaid circumstances, it could hardly be disputed that the commencement of investigation against Ericsson would certainly prejudice Ericsson. In the given facts, I am unable to accept that Ericsson's challenge to the impugned orders should be rejected at this stage solely on the ground that it does not affect Ericsson's right and, therefore, Ericsson cannot agitate any grievance in that regard. 67. A Division Bench of this Court in the case of Google Inc. & Ors. v. Competition Commission of India & Anr.: 2015 (150) DRJ 192 had also examined the sweeping powers of DG under the Competition Act and concluded that the investigation by a DG ordered by CCI stand on a different pedestal from a show cause notice or from an investigation/enquiry conducted pursuant to an FIR. 68. In the aforesaid view, it is next to be examined as to whether the impugned orders passed under Section 26(1) of the Competition Act can be su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of India and Ors: (2006) 10 SCC 1, the Supreme Court referring to an earlier decision in State of UP and Ors v. Renusagar Power Co. and Ors: AIR 1988 SC 1737, reiterated the aforesaid view and observed that "It is trite law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in exercise of such power or the exercise of power is manifestly arbitrary". 72. The Supreme Court in the case of Chandigarh Administration and Anr. Etc. v. Manpreet Singh and Ors.: (1992) 1 SCC 380 had explained that although Article 226 of the Constitution of India does not contain any restrictive words, the courts have evolved certain self-constraints over the years. The Court further observed that:- "21. While this is not the place to delve into or detail the self-constraints to be observed by the Courts while exercising the jurisdiction under Article 226, one of them, which is relevant herein, is beyond dispute viz., while acting under Article 226, the High Court does not sit and/or act as an Appellate Authority over the orders/actions of the Subordinate Authorities/Tribunals. Its' jurisdiction is supervisory in nature. One of the main obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Committed an error of law, 3. Committed a breach of the rules of natural justice, 4. Reached a decision which no reasonable tribunal would have reached or, 5. Abused its powers." 77. The question, whether in the given facts the CCI has the jurisdiction to pass directions under Section 26(1) of the Competition Act for causing an investigation and whether such directions are in terms of the statute would clearly fall within the scope of judicial review under Article 226 of the Constitution of India. 78. In terms of Section 26(1) of the Competition Act, a direction to cause an investigation can be made by CCI only if it is of the opinion that there exists a prima facie case. Formation of such opinion is sine qua non for exercise of any jurisdiction under Section 26(1) of the Competition Act. Thus, in cases where the commission has not formed such an opinion or the opinion so formed is ex- facie perverse in the sense that no reasonable person could possibly form such an opinion on the basis of the allegations made, any directions issued under Section 26(1) of the Competition Act would be without jurisdiction and would be liable to be set aside. 79. Any direction under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icsson does have an alternative remedy of preferring an appeal but that remedy would be available only on a final determination. However, the fact that an alternate remedy by way of appeal is available to a party would not denude the jurisdiction of this Court under Article 226 of the Constitution of India. There are several instances - particularly when the jurisdiction of an authority or a Tribunal to pass any directions or orders is challenged - where Courts have exercised their jurisdiction under Article 226 of the Constitution of India despite availability of an alternate remedy. In The State of Uttar Pradesh v. Mohammad Nooh: AIR 1958 SC 86, the Supreme Court referred to various authorities and held that: "If an inferior court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior court's sense of fair play the superior court may, we think, quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the Patents Act is a special Act and provides for redressal of the grievances agitated by Intex and Micromax, a recourse to the Competition Act would be barred. Micromax and Intex on the other hand assert that the provisions of the Competition Act are in addition to and not in derogation of the Patents Act and, therefore, CCI would have jurisdiction to entertain their complaint notwithstanding the remedies available to Micromax and Intex under the Patents Act. 87. Ericsson's challenge to the jurisdiction can - as is apparent from the submissions made by the counsel - be considered under the following broad heads: (i) Ericsson is not an enterprise within the meaning of Section 2(h) of the Competition Act and, therefore, Section 4 of the Competition Act is wholly inapplicable in any matter relating to its exercise of its rights as a proprietor of its SEPs. (ii) The Patents Act is a special Act vis-à-vis the Competition Act and therefore it shall prevail over the provisions of the Competition Act; consequently, insofar as exercise of patent rights are concerned, proceedings under the Competition Act would not be competent and outside the scope of that Act. (iii) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as an enterprise in the context of any allegation of demand of excessive royalty or imposition of unfair and unreasonable terms for grant of patent licences. 90. A plain reading of Section 4(1) of the Competition Act indicates that it proscribes any enterprise from abusing its dominant position. Thus, for the purposes of Section 4(1) of the Act, an enterprise must be the one which is in a 'dominant position'. The expression 'dominant position' is defined under Explanation (a) to Section 4 of the Competition 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;" It, plainly, follows that alleged abuse of dominance would have to be considered in the context of the relevant market in which an enterprise is found to be in a dominant position. The alleged acts or activities which constitute abuse, will not be dispositive of the issue whether a person is an 'enterprise' or not. That question would depend entirely on whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distribution, acquisition or control of articles or goods. Admittedly, Ericsson has a large portfolio of patents and is, inter alia, engaged in developing technologies and acquiring patents. Thus, if patents are held to be goods, Ericsson would indisputably fall within the definition of 'enterprise' within the meaning of Section 2(h) of the Competition Act, since it is admittedly engaged in activities which entail acquisition and control of patents. 94. This brings us to the question whether patents are 'goods' as defined in the Sale of Goods Act, 1930. Sub-section 7 of Section 2 of the Sale of Goods Act, 1930 defines 'goods' as under:- "(7) "goods" means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale;" 95. As is apparent from the above, the definition of goods is extremely wide and takes within its fold every kind of movable property. The word 'property' is defined by virtue of Section 2(11) of the Sale of Goods Act to mean "the general pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the ownership carries with it, the right to use that property and to that extent, patent rights are different inasmuch as they only grant a right to exclude without further right to use. In the case of real or personal property, the right to exclude others essentially follows from the proprietor's right to fully enjoy that property, but in case of a patent, the right to exclude is the only substantive right that is granted to the patentee. However, this distinction between real property and patents does not detract from the fact that patents are property. Adam Mossoff, Associate Professor of Law at George Mason University, School of Law, in an article captioned "Exclusion and Exclusive Use in Patent Law" published in Harvard Journal of Law & Technology Volume 22, Number 2 Spring 2009 states the above in the following words:- "In other words, patents are conceptually differentiated from land, not due to any supposed categorical imperative about the alleged uniqueness of propertized inventions, but because of seemingly important doctrinal differences between the enforcement of tangible and intangible property entitlements." 101. In Vikas Sales Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich one may lawfully exercise over particular things or subjects. The exclusive right of possessing, enjoying, and disposing of a thing. The highest right a man can have to anything; being used to refer to that right which one has to lands or tenements, goods or chattels, which in no way depends on another man's courtesy. The word is also commonly used to denote everything which is the subject of ownership, corporeal or incorporeal, tangible or intangible, visible or invisible, real or personal; everything that has an exchangeable value or which goes to make up wealth or estate. It extends to every species of valuable right and interest, and includes real and personal property, easements, franchises, and incorporeal hereditaments, and includes every invasion of one's property rights by actionable wrong. Labberton v. General Cas. Co. of America, 53 Wash 2d 180, 332 P 2d 250, 252, 254. Property embraces everything which is or may be the subject of ownership, whether a legal ownership, or whether beneficial, or a private ownership. Davis v. Davis, Tax Civ. App. 495 S W 2d 607, 611. Term includes not only ownership and possession but also the right of use and enjoyment of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty" and "special property". We may set them out: "property (Norm. Fr. Proprete; Lat. Proprietas; proprius, one's own), the highest right a man can have to anything, being that right which one has to lands or tenements, goods or chattel which does not depend on another's courtesy. In its largest sense property signifies things and right considered as having a money value, especially with reference to transfer or succession, and to their capacity of being injured. Property includes not only ownership, estates, and interest in corporeal things, but also rights such as trade marks, copyrights, patents, and rights in personam capable of transfer or transmission such as debts. Property is of two kinds, real property (q.v.) and personal property (q.v.). Property in reality is acquired by entry, conveyance, or devise; and in personality, by many ways, but most usually by gift, bequest, or sale. Under the Law of Property Act, 1925, Section 205, 'property' includes anything in action and any interest in real or personal property. There must be a definite interest; a mere expectancy as distinguished from a conditional interest is not a subject o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e patents, copyrights and trade marks, which along with leases, servitudes and securities are described as incorporeal property. The expression "movable property" is stated to include (p. 421) corporeal as well as incorporeal property. Debts, contracts and other choses-in-action are said to be chattels, no less than furniture or stock-in-trade. Similarly, patents, copyrights and other rights in rem which are not rights over land are also included within the meaning of movable property. We are unable to see anything in the said Chapter 13, which militates against the meanings ascribed to the said expression in the judicial dictionaries referred have above. Indeed, they are consistent with each other. 102. In Rustom Cavasjee Cooper v. Union of India: (1970) 1 SCC 248, the Supreme Court, while considering the scope of the expression "property" as appearing in Entry 42 of List III of the Seventh Schedule of the Constitution of India, observed as under: "Under that entry "property" can be compulsorily acquired. In its normal connotation "property" means "highest right a man can have to anything, being that right which depend on anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings initiated by the CCI for violation of Section 4(1) of the Act cannot, at the threshold, be held to be without jurisdiction on account of Ericsson not being an enterprise within the meaning of Section 2(h) of the Competition Act. (ii) Whether the Patents Act as a special Act would prevail over the Competition Act. 106. The next issue to be addressed is whether the CCI would have the jurisdiction to entertain complaints regarding abuse of dominance in view of the specific provisions under the Patents Act enacted to address the issue of abuse of dominance by a patent holder. It is contended on behalf of Ericsson that the Patents Act provides for an adequate mechanism to prevent any abuse of patent rights granted under that Act. It is urged that any issues regarding abuse of patent rights including abuse of dominance as contemplated under Section 4 of the Competition Act, are required to be addressed under the provisions of the Patents Act and, thus, the applicability of the Competition Act in certain matters regarding patents is ousted. It is contended that the Patents Act is a special Act which contains comprehensive provisions relating to grant of patents rights as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of India constituted a High Level Committee to examine the then existing provisions of the Monopolies and Restrictive Trade Practices Act, 1969 for shifting the focus of the law from curbing monopolies to promoting competition. The Committee was requested "to suggest a modern competition law in line with international developments to suit Indian conditions". The terms of reference required the Committee to recommend as under:- "(a) a suitable legislative framework, in the light of international economic developments and the need to promote competition, relating to competition law, including law relating to mergers and demergers. Such a legislative framework could entail a new law or appropriate amendments to the MRTP Act, 1969:- (b) changes relating to legal provisions in respect of restrictive trade practices after reviewing the existing provisions and ensuring clear demarcation between the jurisdiction of the MRTP Commission and the Consumer Courts under the Consumer Protection Act, 1986 so as to avoid any overlapping of jurisdiction; and (c) suitable administrative measures required in order to implement the proposed recommendations including restruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on competition within India. Section 4 of the Competition Act prohibits any enterprise or group from abusing its dominant position. Section 5 of the Competition Act outlines the scope of a 'combination' and Section 6 of the Competition Act prohibits any person or enterprise from entering into a combination, which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India and expressly declares such combinations to be void. 117. Section 7 of the Competition Act provides for establishment of CCI and Section 8 provides for its composition. Section 16 of the Competition Act provides for appointment of Director General for the purposes of assisting CCI and Section 17 of the Act provides for appointment of Secretary, experts, professionals and officers and other employees of CCI. 118. Section 18 of the Competition Act provides that the duty of CCI would be to "eliminate practices having adverse effect on competition, promote and sustain competition, protect the interest of consumers, and ensure freedom of trade carried on by other participants, in markets in India". The function to administer and execute the Act vests pre- dominantly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th and eventually lapsed with the dissolution of the Third Lok Sabha on 3rd March, 1967. 120. Thereafter, the Patents Act, 1970 was enacted to consolidate the patents laws in India and, apart from certain provisions, came into force on 20th July, 1972. 121. After its enactment, the Patents Act, has been subjected to three sets of substantial amendments by three Acts: The Patents (Amendment) Act, 1999 (17 of 1999); The Patents (Amendment) Act, 2002 (38 of 2002); and The Patents (Amendment) Act, 2005 (15 of 2005). These sets of amendments - apart from seeking to simplify and make the Patents Act a modern legislation - were enacted to comply with India's obligations as a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (hereafter 'TRIPS'). 122. By virtue of the Patents (Amendment) Act 2002, Section 48 of the Act, which specifies the rights granted to a patentee, was substituted to read as under: "48. Rights of patentees.- Subject to the other provisions contained in this Act and the conditions specified in section 47, a patent granted under this Act shall confer upon the patentee- (a) where the subject matter of the patent is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. In situations of national emergency or other circumstances of extreme urgency, the right holder shall, nevertheless, be notified as soon as reasonably practicable. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly; (c) the scope and duration of such use shall be limited to the purpose for which it was authorized, and in the case of semi-conductor technology shall only be for public non- commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive; (d) such use shall be non-exclusive; (e) such use shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use; (f) any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Section 84(1) of the Act provides that any person interested may, at any time after expiry of three years from the date of the grant of patent, apply to the Controller of Patents for grant of a compulsory licence on the following grounds:- "(a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or (b) that the patented invention is not available to the public at a reasonably affordable price, or (c) that the patented invention is not worked in the territory of India." 128. Section 83 of the Patents Act specifies the following principles that are required to be considered while exercising powers conferred under Chapter XVI of the Patents Act:- "83. General principles applicable to working of patented inventions. - Without prejudice to the other provisions contained in this Act, in exercising the powers conferred by this Chapter, regard shall be had to the following general considerations, namely;- (a) that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veloped; or (iv) the establishment or development of commercial activities in India is prejudiced; or (b) if, by reason of conditions imposed by the patentee upon the grant of licences under the patent or upon the purchase, hire or use of the patented article or process, the manufacture, use or sale of materials not protected by the patent, or the establishment or development of any trade or industry in India, is prejudiced; or (c) if the patentee imposes a condition upon the grant of licences under the patent to provide exclusive grant back, prevention to challenges to the validity of patent or coercive package licensing; or (d) if the patented invention is not being worked in the territory of India on a commercial scale to an adequate extent or is not being so worked to the fullest extent that is reasonably practicable; or (e) if the working of the patented invention in the territory of India on a commercial scale is being prevented or hindered by the importation from abroad of the patented article by- (i) the patentee or persons claiming under him; or (ii) persons directly or indirectly purchasing from him; or (iii) other persons against whom the patentee is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all not be lawful to insert- (i) in any contract for or in relation to the sale or lease of a patented article or an article made by a patented process; or (ii) in license to manufacture or use a patented article; or (iii) in a licence to work any process protected by a patent, a condition the effect of which may be- (a) to require the purchaser, lessee, or licensee to acquire from the vendor, lessor, or licensor or his nominees, or to prohibit him from acquiring or to restrict in any manner or to any extent his right to acquire from any person or to prohibit him from acquiring except from the vendor, lessor, or licensor or his nominees any article other than the patented article or an article other than that made by the patented process; or (b) to prohibit the purchaser, lessee or licensee from using or to restrict in any manner or to any extent the right of the purchaser, lessee or licensee, to use an article other than the patented article or an article other than that made by the patented process, which is not supplied by the vendor, lessor or licensor or his nominee; or (c) to prohibit the purchaser, lessee or licensee from using or to restrict in any manner or to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is whether provision of such remedies excludes the applicability of the Competition Act to certain abuse of patent rights - such as demand for excessive royalty and imposition of unreasonable terms for grant of patent licences. 138. As mentioned earlier the Patents Act was amended to make it TRIPS compliant. The TRIPS Agreement, as mentioned above, obliges the signatory countries to recognise intellectual property rights but does not disable member countries to enact laws, consistent with the TRIPS Agreement, for restricting and curbing its use in certain cases. Article 8.2 of the TRIPS Agreement expressly permits measures required to prevent abuse of intellectual property rights by right holders. Similarly, Article 31 of the TRIPS Agreement recognises that laws of member states could permit use of patents without authorisation by the rights holder, however, it enjoins the member states to respect certain parameters which are articulated in Article 31 of the TRIPS Agreement. 139. The High Level Committee constituted by the Government for recommending the legal framework for competition law (Sh. S.V.S. Raghvan Committee) was also cognizant that with the opening of the economy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-use and certain misuse of patent rights. The Parliament also introduced sub clause (d) to Clause (iii) of Sub- section (1) of Section 140 of the Patents Act to declare clauses in licences and contracts the effect of which may be "to provide exclusive grant back, prevention to challenges to validity of Patent and Coercive package licensing", as void. These provisions for safeguarding national and public interest from any adverse effect of grant of patent rights are permissible under the TRIPS agreement and were enacted inter alia to avoid any ambiguity as to India's obligations there under. This is also apparent from the opening remarks of the Minister of Commerce and Industry made while introducing the Patents (Amendment) Bill, 2002. The relevant extract of which is quoted below:- "Hon. Chairman, Sir, my brief introduction of this Bill to further amend the Patent Act, 1970 must begin with an acknowledgement of the uniquely constructive debate and support during the passage of the Bill in the Upper House. The Government's sensitivity to all issues and its responsiveness to suggestions for improvement was equally matched by an appreciation of the need to hono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relating to public health and nutrition. More importantly, the Committee has fully restructured the existing provisions relating to public interest, compulsory licensing, Government use, national security, protection of traditional knowledge and protection of public health and nutrition as contained in Chapter XVI (Working of Patents, Compulsory Licences and Revocation) of the Patents Act. xxxx xxxx xxxx xxxx There are provisions in the Bill providing a wide-ranging and powerful weapon to the Government to extinguish the patentee's exclusive right immediately and acquire it if the occasion warrants. Let any crisis situation be visualised; the present Bill covers all contingencies. xxxx xxxx xxxx xxxx Critics have asserted that vis-à-vis TRIPS the Bill does too much; others have observed that it does too little. If anything, these criticisms confirm the fine balance which the Bill strikes between meeting our international obligations and all of our national concerns. I would categorically state that all aspects and relevant provisions of TRIPS, the Paris convention and other Conventions, post-TRIPS patent laws of different countries and the Doha Declaration have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts Act also includes provisions for redressal in the event of abuse of Patents rights. On the other hand, the Competition Act proscribes certain anti-competitive agreements and abuse of dominance in addition to regulating combinations to avoid concentration of market power in general. Undoubtedly, the Competition Act and Patents Act are special acts operating in their respective fields, however, viewed in the aforesaid perspective the Patents Act would be a Special Act, vis-à-vis, the Competition Act in so far as patents are concerned. The Patents Act is a self contained code. 145. It is now well settled that an enactment may be considered as special in relation to one Act and yet be considered as general enactment in relation to another statute. In Life Insurance Corporation of India v. D.J. Bahadur: (1981) 1 SCC 315, the Supreme Court had observed:- "…..for certain cases, an Act may be general and for certain other purposes, it may be special and the court cannot blur a distinction when dealing with the finer points of law." In a later judgment - Allahabad Bank v. Canara bank and Another: (2000) 4 SCC 406 - the Supreme Court has explained the above principle by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t power that may not be permitted under the Competition Act. Section 60 of the Competition Act must be read in the aforesaid context. 149. It is well settled that the provision of any statute must be read in the context of the statute as a whole. A non-obstante clause is a well known legislative device used to give an overriding effect to certain provisions over the others which are inconsistent with those provisions; in the present case, Section 60 of the Competition Act expressly provides that the provisions of the Competition Act shall have effect notwithstanding anything inconsistent in any other law. However, the said provision must be read in the context of the Competition Act as a whole and the mischief that is sought to be addressed by the Competition Act. Thus, in my view, Section 60 is enacted only to restate and emphasize that notwithstanding agreements, arrangements, practices and conduct which may otherwise be legitimate under the general laws would nonetheless be subject to the rigors of the Competition Act. Section 60 cannot be read to curtail or whittle down the provisions of other statutes; this interpretation would also be in sync with provisions of Section 62 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute. Unless it is concluded that the provisions of the two of legislations cannot co-exist, the question of reading the provisions of a statute to have been impliedly repealed does not arise. 154. In Kunter v. Phillips: (1891) 2 Q.B. 267, it was observed as under:- "It is only when the provisions of a later enactment are so inconsistent with or repugnant to the provisions of an earlier one then only the two cannot stand together and the earlier stands abrogated by the later". 155. The above principle was reiterated by the Supreme Court in R.S. Raghunath v. State of Karnataka and Anr.: (1992) 1 SCC 335, in the following words:- "30. It is further observed that such a presumption can be rebutted and repeal by necessary implication can be inferred only when the provisions of the later Act are so inconsistent with or repugnant to the provisions of the earlier Act, that the two cannot stand together." 156. The provisions of the Patents Act which can be construed as dealing with a subject matter which is common with the Competition Act are essentially provisions of Chapter XVI and Section 140 of the Patents Act. Section 84 of the Patents Act provides for grant of compul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent holder has refused to grant licence on reasonable terms or has violated the FRAND assurances - is also available to willing licensee to defend a suit for infringement, I have some reservations regarding this proposition. However, in the present case, Micromax and Intex have taken such defence in the infringement suits filed by Ericsson and issues have been struck by the court; therefore, I am refraining from dilating on this aspect any further as this aspect would be best debated in the suits filed by Ericsson. 161. Section 4 of the Competition Act, which is relevant for the purposes of these petitions, concerns abuse of dominant position. Sub Section (1) of Section (4) prohibits such abuse and Sub-section (2) of Section 4 provides for what constitutes an abuse of dominant position. In certain cases, denial of market access by an enterprise placed in a position of strength in the relevant market may constitute an abuse of dominant position. If an enterprise falls foul of Section 4 and it is so established after due investigation, the CCI is empowered to pass all or any of the orders as indicated under Section 27, which reads as under:- "(a) direct any enterprise or ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also relevant to refer to Section 21A of the Competition Act which was introduced by the Competition (Amendment) Act, 2007 with effect from 20th May, 2009. The said Section enables CCI to make a reference to any statutory authority, which is charged with implementation of any Act, if it proposes to make any decision contrary to the provisions of the Act and an issue in this regard is raised by any party. Section 21A of the Competition Act reads as under:- "21A. Reference by Commission.-(1) Where in the course of a proceeding before the Commission an issue is raised by any party that any decision which, the Commission has taken during such proceeding or proposes to take, is or would be contrary to any provision of this (sic) [recte any] Act whose implementation is entrusted to a statutory authority, then the Commission may make a reference in respect of such issue to the statutory authority: Provided that the Commission, may, suo motu, make such a reference to the statutory authority. (2) On receipt of a reference under sub-section (1), the statutory authority shall give its opinion, within sixty days of receipt of such reference, to the Commission which shall consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al or an administrative process. The relevant clause reads as under:- "(1) In settling the terms and conditions of a licence under section 84, the Controller shall endeavour to secure- xxxx xxxxx xxxx xxxx (ix) that in case the licence is granted to remedy a practice determined after judicial or administrative process to be anti-competitive, the licensee shall be permitted to export the patented product, if need be." The above clause also indicates the legislative intention that the Competition Act and the Patents Act be worked harmoniously. Thus, it is mandated that the Controller take into account any finding of anticompetitive practice, that is returned after a judicial or administrative process including by the CCI under the Competition Act, while settling the terms of a compulsory licence issued to remedy such practice. 167. It is important to reiterate that an order inconsistent with other enactments does not necessarily imply a repeal or abrogation of other enactments. It merely implies that the order shall be given effect to and to that extent the provisions of other statutes that are inconsistent shall be bypassed. In Harishankar Bagla and Anr. v State of Madhya Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 170. It is not necessary that any particular relief be granted to the person who provides information under Section 19 of the Competition Act; the focus of the Competition Act is to ensure that the offending anti competitive agreements, conduct and combinations are terminated and such conduct is not repeated. 171. At this stage, one may also refer to Section 3 of the Competition Act which prohibits a person, enterprise or association of persons/enterprises from entering into certain anti-competitive agreements which cause or are likely to cause appreciable adverse effect on competition within India. There does not appear to be any provision(s) of such wide import under the Patents Act. Sub-section (5) of Section 3 of the Competition Act expressly provides that Section 3 would not restrict the right of any person to impose reasonable conditions for protecting its right, inter alia, under the Patents Act. The relevant extract of sub-section (5) of Section 3 of the Competition Act is reproduced below:- "(5) Nothing contained in this section shall restrict-- (i) the right of any person to restrain any infringement of, or to impose reasonable conditions, as may be necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as whether a claim for compensation in respect of motor vehicle accidents could be entertained under the Consumer Protection Act, 1986. In that context, the Court had noted that the Motor Vehicles Act, 1988 contains specific provisions for adjudicating claims of compensation in respect of motor vehicles accidents. Clearly, the claims for compensation under both the Acts could not be made simultaneously and, therefore, the inconsistency between the two Acts was apparent. The Supreme Court further noted that the Motor Vehicles Act was a special Act while the Consumer Protection Act which dealt with extending protection to consumers in general was a general Act. The Court then proceeded to examine the provisions of both the Motor Vehicles Act, 1988 and Consumer Protection Act, 1986 and concluded that a claim for compensation for a fatal injury resulting from a motor vehicle accident would fall squarely within the ambit of Section 165 of the Motor Vehicles Act, 1988 and not within the scope of the Consumer Protection Act, 1986. The Court held that "ordinarily the general law must yield to the special law" and the Motor Vehicles Act, 1988 being a special law would prevail over a general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicates certain factors that would be required to be taken into account by the Controller and the question whether a patentee had adopted anti-competitive practices could also be considered by the Controller. However, if CCI has finally found a patentee's conduct to be anti-competitive and its finding has attained finality, the Controller would also proceed on the said basis and - on the principle akin to issue estoppel - the patentee would be estopped from contending to the contrary. 178. In view of the aforesaid discussion, the contention that the jurisdiction of CCI under the Competition Act is ousted in matters relating to patents cannot be accepted. (iii) Whether the allegations made could be construed as an abuse of dominance 179. At the outset, it must be mentioned that since the disputes relate to the jurisdiction of CCI to entertain the complaints made by Micromax and Intex, the same must be addressed on a demurrer. In other words, all allegations made in the complaints be accepted as true to determine whether Micromax/Intex are entitled to any relief on that basis. 180. A perusal of the complaints in question indicate that both Micromax and Intex allege that E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 183. Ericsson is a member of various Standard Setting Organizations (SSOs) including European Telecommunications Standards Institute (ETSI) which is responsible for setting standards and specifications in the field of telecommunications. Setting such industry-wise standards is necessary in the field of communications as all market participants involved in the industry must necessarily work on technologies that are compatible for seamless communication. Products and equipments used in the telecommunication industry must conform to the standard set to ensure inter-operability. This is to ensure that information is transmitted through various products (such as handsets and networks) used by various industry participants and customers. 184. Universal Mobile Telecommunication System (hereafter 'UMTS') standard which has been set by ETSI, has also been accepted in various other countries including by TRAI in India. Clearly, an inclusion of a patented technology in a standard such as UMTS could place the patent holder in a position of substantial market power. Clearly, an SEP holder such as Ericsson would be in a position to demand supra-competitive royalties from all implem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite legitimate for a patentee to seek injunctive relief to enforce such rights. However, on the other hand, a refusal by a patentee to grant a licence may result in adverse effect on competition. 187. Given the nature of the right that a patentee enjoys, it is not easy to reconcile a patent holder's refusal to grant a licence to use his patent as a violation of antitrust laws. The interface between IPR rights and antitrust laws have been a subject matter of debate in various jurisdictions and more particularly in cases where a patentee holds an SEP. 188. In Broadcom Corporation v. Qualcomm Incorporated: 501 F.3d 297, the United States Court of Appeals considered Broadcom Corporation's (hereafter 'Broadcom') appeal against a decision of the District Court dismissing Broadcom's action against Qualcomm alleging monopolisation in Wideband Code Division Multiple Access (WCDMA) technology in the UMTS Standards and anti-competitive conduct of tying and exclusive dealing. Broadcom had alleged that Qualcomm had falsely promised to licence its patent on FRAND terms and had induced SSOs to include its technology as an essential part of UMTS Standard. Qualcomm had thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant to the standard but had amended its patent applications to cover the standard. The Federal Trade Commission found that Rambus had distorted the standard setting process and engaged in anti-competitive hold up. 192. The question whether the demand of excessive royalties and certain terms of licensing could be considered as an abuse by an SEP holder has also been considered by authorities in the European Union under Article 101 and 102 of the Treaty on the Functioning of the European Union (hereafter 'TFEU'). In the case of Eurofix-Bauco v. Hilti, the European Commission held that it was an abuse to demand excessive royalty with the sole object of blocking or unreasonably delaying a licence. This decision of the commission was upheld on appeal (Case T-30/89 Hilti AG v. Commission: [1991] ECR II-1439). 193. The issue whether the action of an SEP holder in seeking injunctive reliefs against a potential licensee offends Article 102 of TFEU has also been a subject matter of debate in various cases. In what is known as the "Orange book case", a court in Germany considered the defence that seeking an injunction against infringement of patent would amount to an abus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In their decision, in the case of Motorola, the European Commission held that Motorola has abused its dominant position by seeking injunctive reliefs against Apple. The Commission reasoned that even though the parties could not agree on FRAND terms, Apple had agreed to submit the FRAND disputes to a binding resolution of a German Court. Importantly, the Commission noted that any such resolution should also contain a commitment on the part of Apple not to challenge Motorola's patent. In the case of Samsung, the Commission did not proceed to make any decision with regard to infringement and accepted the binding commitments offered by Samsung not to seek injunctions in relation to any of its present or future SEPs for mobile devices for a period of five years against any potential licensee who accepted the specified licensing framework which provided for (a) a negotiation period of 12 months; and (b) in absence of a consensus, a determination by Court or an arbitrator of FRAND terms. 195. A mention must also be made on a recent decision rendered by the Court of Justice of the European Union delivered on 16th July, 2015 in Huawei Technologies Co. Ltd v. ZTE Corp., ZTE Deutschlan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proprietor of an SEP which considers that that SEP is the subject of an infringement cannot, without infringing Article 102 TFEU, bring an action for a prohibitory injunction or for the recall of products against the alleged infringer without notice or prior consultation with the alleged infringer, even if the SEP has already been used by the alleged infringer. Prior to such proceedings, it is thus for the proprietor of the SEP in question, first, to alert the alleged infringer of the infringement complained about by designating that SEP and specifying the way in which it has been infringed. As the Advocate General has observed in point 81 of his Opinion, in view of the large number of SEPs composing a standard such as that at issue in the main proceedings, it is not certain that the infringer of one of those SEPs will necessarily be aware that it is using the teaching of an SEP that is both valid and essential to a standard. Secondly, after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, it is for the proprietor of the SEP to present to that alleged infringer a specific, written offer for a licence on FRAND terms, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther patents are valid or essential to the standard in which they are included during the standardisation procedure, and, secondly, to the right to effective judicial protection guaranteed by Article 47 of the Charter, an alleged infringer cannot be criticised either for challenging, in parallel to the negotiations relating to the grant of licences, the validity of those patents and/or the essential nature of those patents to the standard in which they are included and/or their actual use, or for reserving the right to do so in the future." 196. It is relevant to note that the aforesaid judgment was rendered in the context of Article 102 of TFEU which reads as under:- "Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of services, with a view to reduce competition or eliminate the competitors." 198. Although the language of Article 102 of TFEU is materially different from the language of Section 4 of the Competition Act, a close examination does indicate that Section 4 of the Competition Act would also cover abuse of a dominant position as proscribed by Article 102 of TFEU. Clause (a) and clause (b) of Section 4(2) of the Competition Act are similar in their import as clause (a) and (b) of Article 102 of TFEU. Clause (c) of Article 102 of TFEU postulates that applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage, may constitute abuse of dominant position. In comparison, clause (c) of Section 4(2) of the Competition Act is much wider and takes within its sweep any practice or practices which results in denial of market access. Clause (d) of Article 102 of TFEU and clause (d) of Section 4(2) of the Competition Act are similarly worded. 199. In view of the aforesaid, there is good ground to hold that seeking injunctive reliefs by an SEP holder in certain circumstances may amount to abuse of its domin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot mutually exclusive. It is also necessary to bear in mind that it is not necessary that an adverse finding against Ericsson by CCI would necessarily results in the grant of relief as prayed for by Intex or Micromax. The scope of enquiry before CCI would obviously be limited to whether Ericsson has abused its dominant position and, if so found, CCI may issue orders as contemplated under Section 27 of the Act. Additionally, it must be noted that Ericsson had filed a suit after Intex had made a complaint before the CCI. 202. The contention that since, by virtue of Section 61 of the Competition Act, the jurisdiction of the Civil Courts is barred in relation to matters that CCI or COMPAT are empowered to decide and some issues before the CCI and in the suits are common, the subject matter would be outside the scope of the Competition Act, also cannot be accepted. The question whether there is any abuse of dominance is solely within the scope of the Competition Act and a civil court cannot decide whether an enterprise has abused its dominant position and pass orders as are contemplated under Section 27 of the Competition Act. Merely because a set of facts pleaded in a suit may also be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence parallely while negotiating for grant of licence. In Vringo Infrastructure Inc. v. ZTE: (2013) EWHC 1591 (Pat.), the High Court of England and Wales had considered the defendant's plea for a decision on the validity of the plaintiff's claim to the patents, in a suit for infringement, before proceeding to decide the FRAND issues. In that case, the plaintiff, Vringo Infrastructure Inc. (Vringo), instituted actions for infringement of its SEPs by ZTE (UK) Ltd. Vringo was prepared to offer a licence for its global SEP portfolio on FRAND terms. ZTE, on the other hand, asserted that Vringo's patents were invalid and/or not infringed and insisted on this issue being decided before deciding the issue as to the licence terms. In view of the defence taken by ZTE, Vringo contended that ZTE was not a willing licensee. This was rejected by the Court and it was held that ZTE's stand that the Vringo's patents were invalid and/or not infringed did not mean that ZTE was not a willing licensee. 205. In my view, a potential licensee cannot be precluded from challenging the validity of the patents in question. The expression "willing licensee" only means a potential licensee who is willing to ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of the Constitution of India, to supplant its views over that of the concerned authority; in this case the CCI. This is not a case where it can be held that no reasonable person could have formed a view that the complaints filed by Intex and Micromax, prima facie, disclosed abuse of dominance by Ericsson. This is also not a case where the impugned orders can be stated to have been passed on no material at all. Therefore, I am unable to accept that the impugned orders passed by CCI are perverse and, therefore, without jurisdiction. 209. Mr Narain had pointed out that the CCI having permitted Ericsson to file its submission ought to have considered the various issues raised by Ericsson but the impugned orders do not disclose that the CCI had considered the contentious issues. In my view, there is considerable merit in the said submission. Although at the stage of passing an order under Section 26(2) of the Act, the CCI is not required to enter into an adjudicatory process, nonetheless, it has to form a prima facie view and this would include a view as to its jurisdiction to entertain the information/complaint. It was thus apposite for the CCI to at least notice the contours of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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