FICCI Online

Certificate Course
on Intellectual
Property and
Competition Law
(IPComp)

RELATION BETWEEN
IPR AND COMPETITION
LAW

MODULE 3
 This module appraises the combination of innovation and legal rules to balance the
sustainable development and growth in economy. It includes the attributes of IPR (effects,
policies, its compatibility or conflict with competition law). This module portrays the role of
Trade-Related Aspects of Intellectual Property Rights (TRIPS) for harmonizing the IPR with
competition law for innovation encouragement as well as social and economic welfare (Parallel
Imports, Compulsory Licensing).

Purpose of this section is to provide inclusive knowledge of Standard-Essential Patents

(SEP), Fair, Reasonable and Non-discriminatory (FRAND) licensing in India, MoA’s draft
notification on compulsory license of Genetically Modified technology on FRAND terms and
Anti-trust cases with emphasis on latest SEP and FRAND litigations in India.

Chapter Title Page No.

COMBINATION OF INNOVATION AND LEGAL
1 RULES TO BALANCE THE SUSTAINABLE 3-5
DEVELOPMENT AND GROWTH IN ECONOMY
BROADNESS OF IPR AND ITS EFFECT ON
2 INNOVATION AND COMPETITION LAW 6-7
IPR AND COMPETITION LAW
3 8-15
CONFLICT BETWEEN IPR AND COMPETITION LAW
4 16-18

STANDARD ESSENTIAL PATENTS (SEP), FAIR,

5 REASONABLE AND NON-DISCRIMINATORY 19-23
(FRAND) LICENSING IN INDIA
FAIR REASONABLE AND NON-DISCRIMINATORY
6 (“FRAND”) 24-25
MOA'S DRAFT NOTIFICATION ON COMPULSORY
7 LICENSE OF GENETICALLY MODIFIED 26-31
TECHNOLOGY ON FRAND TERMS
ANTI-TRUST CASES (WITH FOCUS ON LATEST SEP
8 AND FRAND LITIGATIONS IN INDIA) 32-35

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 1

CHAPTER 1:
COMBINATION OF INNOVATION AND
LEGAL RULES TO BALANCE THE
SUSTAINABLE DEVELOPMENT AND
GROWTH IN ECONOMY

Innovation is an important factor in determining competitiveness and economic growth it

helps to face global challenges like sustainable development. The advancement in new
technologies strengthens the role of innovation in growth.

Economic Sustainability is well defined as the capability of an economic system to

produce a constant and improved growth of its economic indicators, more particularly the
capacity to generate incomes and employment in order to sustain the populations. Economic
sustainability within a territorial means the capability, through the most efficient mix of
resources, to produce and maintain the highest benefit, in order enhance the specificity of
territorial products and services.

The innovation and proper laws paddle the cycle of economic development for
implementation of innovations in economic growth. An innovation ecosystem is a combination
of two economies viz:

a) Knowledge Economy: It comprises knowledge producers, driven by fundamental

research.
b) Commercial Economy: It comprises knowledge users, driven by the marketplace.

In India innovation is very vast, as it comprises knowledge producers such as science and
technology institutions, academia and innovating individuals and knowledge users such as,

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 2

industry-production/services in the public and private sectors. Government gives priority to
research and development for boosting economic development and growth in all the domains and
industries. Many financial institutes such as Industrial Development Bank of India (IDBI) and
the Small Industries Development Bank of India (SIDBI) support innovation and
commercialization of innovation and technology. To support the R&D and innovation
economical help is provided by Department of Scientific and Industrial Research (DSIR) to
several institutions and industries.

The main purpose of the innovation is to enable technology development and growth. Needs
to be meant for sustainable development of economy with the help of innovation are described as
follows:

a) Policies and their implementation: policies in a comprehensive way focusing on the

innovations and entrepreneurship with the system to operate them uniformly which
results in filling up the gaps of understanding to achieve desired results.
b) Adequate funding in R&D: proper funding for the research purpose to facilitate
innovations is should be provided.
c) Smooth funding procedures: providing funding by removing complex, cumbersome,
lengthy and bureaucratic procedures.
d) Strong linkage between stakeholders: the linkages between industry, especially medium
and small-scale enterprises and R&D or academic institutions should be strong enough to
promote and bring technologies or innovations in the market.
e) Conductive education system: general education system focusing not only on grades and
on careers but also towards the innovation and entrepreneurship is required to be
implemented.
f) Elimination of Risk aversion among entrepreneurs: eliminating the hesitant of
entrepreneurs to take on innovative ideas because of the risks involved, including the low
availability and high cost of funds.
g) Adequate protection of intellectual property rights: awareness among people for the
importance and need of the intellectual property rights (IPR) for the economic
development is required.

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 3

Initiatives taken by government to promote sustainable developments of economy

India follows five-year plans for planning and implementation and the 12th Five Year Plan
(2012-2017) includes a lead paper on “Technology and Innovation” (Planning Commission,
2011), which says that:

"Strengthening the innovation ecosystem requires a platform for information sharing and
dissemination to ensure: (1) improved access to knowledge and (2) support in the form of
resources, linkages, mentoring and outreach. Greater knowledge of innovations can stimulate
their adoptions on a longer scale. This decentralized, open and networked model would enable
information sharing on innovations and collaboration among stakeholders."

The Ministry of Science has undertaken the initiatives and Technology as mentioned below:

a) Biotechnology Industry Research Assistance Council

b) India Innovation Growth Program
c) National Innovation Foundation
d) Promoting Innovation in Individuals, Start-ups and MSMEs (PRISM)
e) Council of Scientific and Industrial Research Innovation Complexes
f) Patent Assistance Programs operated by the Technology Information, Forecasting and
Assessment Council and the National Research Development Corporation
g) Technology Business Incubators operated by the Department of Science and Technology
h) Small Business innovation Research Initiative
i) Technology Development and Demonstration Program

Other ministries programs include programs from the Ministry of New and Renewable
Energy and Ministry of Communication and Information Technology.

For the proper utilization of technology, research and development for economic welfare and
growth, it is mandatory to possess appropriate legal rules. Intellectual Property Rights (IPR)
and Competition law collectively focuses on the sustainable economic development and growth.
Clear and enactable Intellectual Property Rights (IPR) is solution to many business related

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 4

problems.

A competitive market also enhances the innovative efforts of the purchasers. By rewarding
innovative efforts with the opportunity to increase earnings, competition encourages individuals
and firms to capture sales by being the first to market a new better or cheaper product or service.
Antitrust laws protect or maintain competition in the market to avoid abuse of dominance and
cartels, because such protection maintains opportunities for innovation by those competing in the
market. However, antitrust laws do not constrain the legitimate use of intellectual property rights.

Competition law promotes antitrust by prohibiting anticompetitive acts. Strong laws to

protect competition are a necessary complement to vigorous enforcement of intellectual property
rights. Antitrust law and intellectual property are not opponents, but instead serve the same
goals, as both seek to promote innovation and competition. Antitrust laws to prevent the
inappropriate use of intellectual property rights in the creation, dissemination and marketing of a
product or service. Efficient and pro-competitive legal laws related to Licensing and Contractual
Restrictions on the use of Intellectual Property enables sustainable development.

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 5

CHAPTER 2:
BROADNESS OF IPR AND ITS EFFECT ON
INNOVATION AND COMPETITION LAW

In industrialized countries, Intellectual Property Rights (IPR) is part of the infrastructure

supporting investments in Research and Development (R&D) leading to innovation. By granting
temporary exclusive rights on inventions, IPR allow right-holders to price their products above
marginal cost and hence recoup their initial research investment. Such exclusive rights create
incentives for the conduct of R&D. However, by granting monopoly rights on an invention, IPR
impede its dissemination.

The results under provision of protected goods and monopoly distortions are usually considered
satisfactory costs for the creation of new knowledge and the surge in social welfare that it entails.
In general, IPR are perceived as contributing to the promotion of technological innovation and to
the relocation and dissemination of technology, in a manner encouraging to social and economic
welfare (WTO-TRIPs Agreement, Art. 7). Still, growing numbers of experts question these
affirmations for Least Developed Countries (LDCs) and argue that IPR “do little to stimulate
innovation in developing countries.” IPR may provide an incentive for innovation but there is
limited local capacity in LDCs to make use of it.

Similarly, even if stronger IP protection supports an increase in technology transfer, limited local
absorptive capability may limit the prospective to use it. Finally, the environment in which IPR
exist, for example the quality of the legal system and the importance of transaction costs, might
severely coerce the incentive effect, as exemplified by a case study of the maize breeding
industry in Mexico (Léger, 2005). In these countries, the balance between self-motivated benefits
and static costs might not be positive. Still, IPR is an important issue in bilateral, regional and
multilateral trade discussions. Pressure is put on LDCs to sign up for stronger standards of IP
protection without having a perfect picture of the impacts IPR have in these economies (Fink and

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 6

Maskus, 2005).

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 7

CHAPTER 3:
IPR AND COMPETITION LAW

World has changed radically after globalization. In other words, as coined by Thomas Friedman,
the world is flat now. Among others, markets internationally could not have remained untouched
and have been drastically pretentious. Some have reengineered, some have revamped and some
are in a state of flux. Unfortunately has been observed in certain quarters that unregulated
markets have the tendency to adopt monopolistic or near monopolistic character thereby
affecting consumer welfare.

It was realized that markets have an imperative role to play in any economy be it developed or
developing economies. Economic theory brings out clearly the paybacks that flow from a market
of competitive nature. Efficiency is associated with competition and the efficient functions of the
markets could be achieved only when there is competition. Regulatory framework therefore
becomes imperative to halt the degeneration of the markets to a monopolistic or a near-
monopolistic situation.

Competition Policy basically promotes efficiency and maximizes welfare. Competition Policy
essentially comprises in place a set of policies that promotes competition in local and national
markets, which includes a liberalized trade policy, openness to foreign investments and
economic deregulation. Subsequently, Competition Law basically comprises legislation,
judicial decisions and regulations specifically aimed at preventing anti-competitive business
practices and unnecessary government interventions, avoiding concentration and abuse of market
power and thus preserving the competitive structure of the markets.

IPR and Competition Law

Competition law and IPR policies are bound together by the economics of innovating and an
intricate web of legal rules that seeks to balance the scope and effect of each policy.

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 8

IPR protection is a policy tool meant to foster innovation, which benefits consumers through the
development of new and better-quality goods and services and spurs economic growth. It
bestows on innovation the right to justifiably exclude for a restricted period of time, other parties
from the benefits rising from new knowledge and more precisely from the commercial use of
innovative products and procedures based on that new knowledge. In other words, innovators or
IPR holders are compensated with a temporary monopoly by the law to earn the costs incurred in
the research and innovation progression. As a result, IPR holders earn rightful and reasonable
profits so that they have incentives to engage in further innovation.

Competition law on the other hand, has always been regarded as an essential mechanism in
curbing market distortions, disciplining anti-competitive practices avoiding monopoly and abuse
of monopoly, inducting optimal distribution of resources and benefiting consumers with fair
prices, wider choices and better qualities. It therefore ensures that the monopolistic power
accompanying with IPR is not excessively compounded or leveraged and extended to the
detriment of competition. Besides seeking to protect competition and the competitive process
which in turn nudges innovations to be first in the market with a new merchandise service at a
price and quality that accentuates the importance of motivating innovation as a competitive input
and thus also works to boost consumer welfare.

Regulating IPR vis-a-vis Competition Law

Competition law thus, having no impact on the very existence of the IPRs, operate to contain the
exercise of the intellectual property rights within the proper bounds and limits, which are
inherent in the exclusivity deliberated by the proprietorship of intellectual assets. This starts the
tussle when implementation of IPRs give rise to some competition concerns because of anti-
competitive dimensions that it may embody.

Competition law is a framework of legal provisions deliberated to retain competitive market

structures. Competition laws in general pursue to:

a) prohibit anti-competition agreements;

b) prevent abuse of dominant position; and

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 9

c) regulate mergers and acquisition.

However, Section 3(5)1 of the Competition Act, 2002 defines the edge between the paradigm of
Competition law and IPR. It states that nothing contained in this section shall restrict:-

1) The right of any person to confine any infringement of or to impose realistic conditions, as
may be necessary for protecting any of his rights which have been or may be deliberated upon
him under:

a) The Copyright Act, 1957

b) The Patent Act, 1957

c) The Trademarks Act, 1957

d) The Geographical Indication of Goods (Registration & Protection) Act, 1999

e) The Design Act, 2000

f) The Semi-Conductor Integrated Circuits Layout Design Act, 2000.

Generally discoursing, IPRs related competition issues include:-

1) Exclusionary terms in the licensing of IPRs, specifically the annexation of restrictive clauses
such as territorial restraints, exclusive dealing arrangement, tying or grant back necessities in
licensing contracts;

2) Use of IPR to reinforce or extend the abuse of dominant position on the market unlawfully;

3) IPRs as an element of mergers and co-operative measures; and

4) Refusal to deal.

1 https://indiankanoon.org/doc/229714/

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Case of Mahyco-Monsanto

Mahyco-Monsanto (a 50-50 joint venture between Maharashtra Hybrid Corporation and

American Agricultural Company) was found guilty of price extorting (price above the market
price when no alternative retailer is available) in a Bt Cotton case filed by the Andhra Pradesh
government and some civil society organizations before the Monopolies and Restrictive Trade
Practices (MRTP) Commission of India. Mahyco-Monsanto was charging an exceptionally high
royalty fee for its Bt gene which made the seed too costly for the farmers. As there was no
competition due to their IPR on Bt cotton seeds, Mahyco-Monsanto had a monopoly and had
acted subjectively.

The Competition law applies to IPR in relation to abuse of dominant position and combination.
Therefore, abuse of dominance due to an IPR is responsible for action under the Indian
Competition Act just as IPR- related transactions in combination leading to an anti-competitive
effect.

Complementary in Nature

However, competition law continues to be a vital means of confirming continued innovation and
economic growth. The aims and objectives of IPRs and competition laws are harmonizing, as
both aims to cheer innovation (investment in research and development), competition (use of
innovation in the economy) and increase consumer welfare (protecting consumers from
exploitation).

Harmonizing IPR with Competition Law

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is an

international agreement administered by World Trade Organization (WTO) that sets down
minimum standards for many forms of intellectual property regulation as applied to nationals of
other WTO members. It was conveyed at the end of Uruguay Round of the General Agreement
on Tariffs and Trade (GATT) in 1994. India is a co-signer for the Agreement on Trade
Related Aspects of Intellectual Property Rights (TRIPS).

The TRIPS agreement familiarized intellectual property law into the international trading system

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 11

for the first time and remains the most wide-ranging international agreement on intellectual
property till date.

TRIPS Agreement covers 9 categories of Intellectual Property:- they are Copyrights, including
the right of performers, producers of sound recordings and broadcasting organization,
geographical indications, including designations of origin , industrial designs, integrated circuit
layout designs, patents, monopolies for the creator of new plant varieties, trade mark, trade dress,
and unrevealed or confidential information.

TRIPS ensure that protection and enforcement of all intellectual Property should result in social
and economic welfare and balance of rights and obligations. Rising out of this, TRIPS does try
to achieve a degree of balance amongst Competition law (protecting the consumers) and
Intellectual Property Rights (protecting the innovators). Some of the tools provided to attain a
notch of balance are parallel imports (Section 6), Compulsory Licensing (Section 31) and
Control of anti- competitive practices (Section 40).

A. Parallel Imports

Parallel Imports are imports of patented or trademarked merchandise from a country where it is
previously marked. For e.g.:- in Mozambique 100 units of Bayer’s CIPROFLOXACIN(500mg)
costs US$ 740 but in India Bayer sells the same drug for US$ 15 (owing to local generic
competition) Mozambique could import the product from India without Bayer’s consent.

According to the theory of collapse of IPR, the exclusive right of the patent holder to import the
patented product is exhausted and thus ends, when the product is first launched in the market.
When a state or group of states applies this principle of enervation of IPRs in a given territory
parallel importation is official to all residents in the state in question. In a state that does not
recognize this principle, however only the patent holder who has been registered has the right to
import the protected product.

Sometimes referred to as “grey market” parallel imports often take place when either there is
differential pricing of the same product, brand name or generic drugs in different markets (using

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 12

owing to local manufacturing costs or market conditions). TRIPS agreement explicitly states
that this practice cannot be challenged under the WTO dispute settlement system and so is
effectively a matter of national discretion.

B. Compulsory Licensing

The TRIPS agreement allows compulsory licensing as part of the agreement’s overall attempt to
strike equilibrium between promoting access to existing drugs and promoting research and
development into new drugs. Under TRIPS Article 312, a WTO member may in its domestic
law provide for compulsory licensing of national or extreme emergency or in cases of public
non-commercial use. TRIPS waive the requirement of prior negotiation in emergency cases or
when the subject matter of the patent is required for public non-commercial use. The scope and
the duration of the license shall be limited to the purpose for which it was sanctioned. The
TRIPS Agreement does not specifically list the reasons that might be used to justify Compulsory
Licensing. However, the Doha Declaration on TRIPS and Public Health confirms that countries
are free to determine the grounds for granting Compulsory Licenses. In Article 31, the TRIPS
Agreement does prescribe a number of conditions, which ought to have been fulfilled before
issuing compulsory licenses. In Specific, such situations require that:

a) Normally the person or company applying for a license must have tried to negotiate a
deliberate license with the patent holder on reasonable commercial terms. Only if that
fails can a compulsory license be issued and even when a compulsory license has been
issued the patent owner has to receive payment, the TRIPS Agreement says “the right
holder” shall be paid adequate remuneration in the situations of each case, taking into
account the economic value of the consent but it does not define “adequate remuneration”
or “economic value”.
Again, Compulsory Licensing must meet certain additional requirements such as:
i. It cannot be given solely to licenses (e.g.—the patent holder can continue to
produce); and
ii. It should be subject to legal evaluation in the country.

2 https://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 13

Case of Natco Compulsory licensing in India

The first compulsory license application made in India was by Natco Pharma
(Hyderabad based Indian Pharmaceutical Company) for the production and exportation of
Roche’s patented anti-cancer drug – ERLOTINIB to Nepal, the Sub-Himalayan Kingdom.
Further, ERLOTINIB, Natco Pharma had also applied for the issue of a second compulsory
license to the IPO for production and export of SUNITNIB which is also an anti-cancer drug.

C. Control of anti –Competitive practices in Contractual licenses

Article 403 of the TRIPS Agreement identifies that some licensing practices or
conditions pertaining to IPRs, which restrain competition, may have adverse effects on trade and
may impede the transfer and dissemination of technology.

Member countries may consistently adopt, appropriate procedures with the other
provisions of the Agreement to prevent or control practices in the licensing of Intellectual
Property Rights, which are abusive and anti-competitive.

The TRIPS delivers for a mechanism where a country seeking to take action against such
practices involving the companies of another member country can enter into discussions with
that other member and exchange overtly available non-confidential information of relevance to
the matter in question and of other information available to that member, subject to domestic law
and to the conclusion of mutually satisfactory agreements regarding the safeguards of its
confidentiality by the requesting member . Similarly, a country whose companies are subject to
such action in alternative the member can enter into discussions with that member. The interface
between competition law and IPRs protection is very complex. It needs to be handled very
carefully.

There are certain similarities between IPR and Competition Law. IPR system promotes
innovation which is a key form of competition, on the other hand , competition policy by keeping
market exposed and effective, preserves the primary source of pressure to innovate and diffuse

3 https://www.wto.org/English/docs_e/legal_e/27-trips_04d_e.htm

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 14

innovation . However, there are also encounters such as when as IPR serves to establish market
power. A regulatory balance therefore should be maintained. Current developments indicate that
the implementation of competition laws no longer begins with the assumption that restrictive use
of IP is necessary anti-competitive. Current enforcement instead starts with three basic
expectations about intellectual property.

First, intellectual property is equivalent to other forms of property so that ownership

provides the same rights and responsibilities;

Second, the existence of IP does not spontaneously mean that the owner has market
power; and

Third, the licensing of IP may often be necessary in order for the owner efficiently to
combine complementary factors of production and thus may be pro-competitive.

Raghavan Committee perceived that innovation has always been a catalyst in a growing
economy resulting in more developments. The advent of fresh innovation give rise to healthy
competition at macro as well as micro-economic levels. IP laws help protect these innovations
from being exploited unlawfully. In view of this IP and Competition laws have to be applied in
tandem to ensure that, the rights of all stakeholders including the innovators and the consumer or
public in general are protected.

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 15

CHAPTER 4:
CONFLICT BETWEEN IPR AND
COMPETITION LAW

In quest of globalization, India has responded positively by opening up its economy,

removing controls and restoring liberalization. In pursuit of increasing the efficiency of the
nation’s economy, the government of India recognized the liberalization, Privatization and
Globalization era. As a result, Indian market faces competition from within and outside the
country. This lead to need of a
tough legislation to dispense
IPR and Competition Act Competition act opposes Monopoly
while IPR promotes monopoly

justice in the commercial matters

IPR protects rights of creators and
and hence the Competition Act, owners of a work of human
intellectual creativity
2002 was passed to deal with the
Competition act can penalized the
same. IPR holder who misuse their
dominant position

Healthy and fair Both have to co-exist so that a

balance between both laws can help
economic growth while taking care of
competition has upheld to be an consumers/common public’s welfare

effective mechanism, which

enhances economic efficiency. Significance of both between IPR and
Competition Act

Therefore, the purpose of initiating the competition law was to curb monopolies and
encourage competition in Indian market. Intellectual property (IP) refers to creations of the mind:
inventions, literary and artistic works, symbols, names, images and designs used in commerce.

An Intellectual Property Right (IPR) is an elusive right “protecting commercially

valuable products of the human intellect”, it comprises patents, copyrights, trademarks and other
similar rights. An IPR includes the right to eliminate others from exploiting the non-corporeal
asset.

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 16

 IPR is divided into two categories: Industrial property, which includes patents,
trademarks, industrial designs and geographic indications of source and Copyright, which
embraces literary and artistic works such as novels, poems and plays, films, musical works such
as drawings, paintings, photographs and sculptures, and architectural designs. Rights related to
copyright comprise those of performing artists in their performances, producers of phonograms
in their recordings and the broadcasters in their radio and television programs.

IPRs and competition are normally regarded as areas with conflicting objectives. The
reason is that IPRs, by designating boundaries within which competitors may implement
monopolies over their innovation, they appear to be against the principles of static market access
and level playing fields pursued by competition rules, in precise the restrictions on horizontal
and vertical restrains or on the abuse of dominant positions.

Intellectual Property Rights and Competition Law have been defined as an unhappy
marriage. The former may be seen to promote monopolies while the other is designed to oppose
them. In other words, on one hand, IP laws work towards forming monopolistic rights whereas
competition law battles it. In view of this there looks to be a conflict between the objectives of
both the laws.

Competition laws involves in formulating a set of policies, which promote competition in

market. These are targeted at preventing unfair trade practices. The dominant company also
frames it with the intention of shortening abuse of monopoly in the market. Consumer welfare
and a healthy competition in the market are the main objectives of the Competition Law.

On the other side, intellectual property laws are monopolistic in nature. They guarantee
an exclusive right to the creators and owners of work, which are a result of human intellectual
creativity. In addition, they prevent commercial exploitation of the innovators by others. This
legal monopoly may, depending on the absence of substitutes in the relevant market, lead to
market power and even monopoly as defined under competition law. It is an advantage granted
to the owner over the rest of the industry or sector. When the advantage or dominant position is
abused, it creates a conflict between IPR and Competition law.

In order to combat with IPR monopolies, Competition laws often include two major

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 17

measures such as parallel imports and compulsory licensing. A Compulsory License is where an
IPR holder is authorized by the state to surrender his exclusive right over the intellectual
property right, under the provision of Trade-Related Aspects of Intellectual Property Rights
(TRIPS). On the other hand, a parallel import includes goods, which are brought into the country
without the authorization of the appropriate IPR holder and are placed legitimately into a market.

Innovation has always been a cause in a growing economy resulting in more innovation.
The advent of fresh innovations gives rise to healthy competition at macros as well as micro
economic levels. Intellectual Property laws help protect these innovations from being exploited
unlawfully. In view of this intellectual property and competition, laws have to be practical in
tandem to ensure that the rights of all investors including the innovator and the consumer or
public in general are protected.

The common objective of both policies is to promote innovation, which would eventually
lead to the economic development of a country however; this should not be the impairment of the
common public. For this, the competition authorities need to ensure the co-existence of
competition policy and IP laws since a balance between both laws would result in an economic
as well as consumer welfare.

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 18

CHAPTER 5:
STANDARD ESSENTIAL
PATENTS (SEP), FAIR,
REASONABLE AND NON-
DISCRIMINATORY (FRAND) LICENSING
IN INDIA

The concept of Standard Essential Patents (SEPs) is new to India. It became part of
Patent lawyers and court’s vocabulary few years back when Ericsson sought to enforce its SEP’s
against a local Indian handset producer, Micromax essentially imports phones from China. The
Indian Patent does not contain any special provisions with respect to SEP’s. In general, the
Patent Act does not lay down any precise criteria or terms & conditions to be complied when
licensing a technology. Thus, fortitude of the terms like pricing value etc. is purely based on the
market demand of technology and thus is very biased in nature differing from case to case. The
situation does becomes different in case of SEP where a patented technology becomes a market
standard. Thus, patentee is required to license the technology on terms that are Friendly,
Reasonable and Non-discriminatory popularly known as FRAND terms. Often Licensee
would allege that Patentee is exploiting its dominant position to demand royalty that is not based
on FRAND terms. Thus, in most Standard Essential Patent (SEP) cases the court’s role is to
ensure that the holder of a Standard Essential Patent (SEP) does not abuse the dominant
market position it has gained from widespread adoption of a voluntary technical standard.

The basic idea behind the patent system is to reconcile the interaction between patents,
which are primarily ‘private’ and ‘exclusive’ as in contradiction of standards, which are meant to
be ‘public’ and ‘non-exclusive’. The Competition Commission of India (CCI) was formed

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 19

with the objective to generate and tolerate fair competition in the economy that will provide a
‘level playing field’ to the producers and make the market work for the welfare of the
consumers.

The Competition Act, 2002 is based on the principle that competition is essential for the
progress of technology with the parallel aim of dealing with issues like “Abuse of Dominant
position” and “Anti-Competitive Agreement”. The recent SEP lawsuit cases are the result of
coinciding ambit between patent law and the
competition law. Once a patent is professed
standard-essential producers and patent owners
often arrive into licenses for the use of patented
technologies. These commercially accepted
SEP technologies are then said to be ‘locked-
in’, which makes products marketable. This
necessity of a product to incorporate an SEP
slopes the bargaining power in favor of the
patent owner. Therefore, companies are
increasingly trying to protect technologies as
SEPs.

Recently, Apple and Nokia have entered

the SEP battlefield. Apple has stated that Nokia
already has agreements to license its patents on
fair and reasonable terms.

Significance of both between IPR and Competition Act It was then stated that Nokia had
reportedly transferred these patents to Patent Asserting Entities (PAEs) that act on Nokia’s
behalf in order to extensively chase the royalties. The outcome of this case is said to be critical
for future patent litigation and could settle the dust around FRAND, SEPs, Licensing and
Litigation. In India, Standards Setting Organizations (SSOs) such as the Telecom Standards
Development Society of India (TSDSI) and Telecom Engineering Centre (TEC) play an
important role in the development of standards for Telecom Equipment, services and inter-

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 20

operability amongst them. Also, there is an SSO known as the Development Organization of
Standards for Telecommunications in India (DOSTI), a private SSO committed to the
improvement of telecom standards appropriate for Indian conditions amongst many others. The
SEP legal battleground in India is progressively garnering a number of observers from all over
the world and within India as well. Micromax Informatics Limited, Telefonaktiebolaget LM
Ericsson and Intex Techs. (India) Ltd. have fought many cases regarding SEPs and FRAND
terms before the Competition Commission of India (CCI) for levy of hefty royalty sums. The
cases provided view points on basis on which royalty rates in SEPs be decided but hasn’t yet
clearly addressed the queries such as whether the Smallest Saleable Patent Practicing
Component (SSPPC), or on the net price of the Downstream Product, or some other standard
should be used to estimate the royalty norms. Questions have also been elevated as to whether
the total payment of royalty in case of numerous SEPs used in one product should be covered,
amongst many other less discovered avenues.

Major issues involved in SEP litigation

1. Patent holdup:

Once a patent is implemented as a standard and achieves commercial acceptance, it becomes

'locked-in'. It is obligatory for a manufacturer to use the same; otherwise, his product would be
incompatible with other companies' products and hence unmarketable. Such a situation
strengthens the SEP holder's bargaining power because the licensee does not have alternatives to
the same technology. Patent holdup happens when a SEP holder takes advantage of a locked-in
patent by trying to impose unreasonable royalty rates. Unless inhibited by a Standards Settings
Organizations (SSO) to comply with FRAND licences, the SEP holder can exploit the locked
in position to obtain suggestively higher royalties than it would have obtained before the patent
was incorporated as a standard. However, even after obligating to FRAND such a situation arises
due to the imprecise nature of FRAND.

In the cases of Micromax and Intex the CCI noted, "hold-up can subvert the competitive process
of choosing among technologies and undermine the integrity of standard-setting activities.
Ultimately, the high costs of such patents get transferred to the final consumers."

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 21

Further, in such cases the licensor fixes the licensee by a non-disclosure/confidentiality
agreement with respect to the terms of the license, which confines the other licensees from
obtaining knowledge of the royalty, rates imposed on such preceding licenses. This acts as an
impediment in the demeanor of licensing negotiations between the parties and thus leads to
major rivalry concern in FRAND litigations.

2. Royalty base

The reasonableness of a royalty amount depends on the right selection of the royalty base. The
SEP holders tend to enforce the royalty rate on the net sale price of the final product rather than
only on the component, which includes the infringed patent. This means even if SEP is used in a
single component of a multi component product, the implementer would be liable to pay the
royalty on the components, which do not include the SEP. In such cases, the whole idea of
FRAND weakens as calculating a royalty on the entire product carries a considerable risk that
the patentee will be improperly compensated for non-infringing components of that product.

In Virnetx Inc. v. Cisco Systems, the US Court of Appeals for the Federal Circuit held that the
royalty base must be closely knotted to the claimed invention rather than the entire value of the
product.

3. Royalty Stacking

Royalty stacking is the condition where royalties are layered upon each other leading to a higher
aggregate royalty. This happens when different SEP holders impose similar royalties on different
components of same multi component product, leading the royalties to exceed the total product
price.

This concern was raised by the CCI in the cases of Micromax and Intex wherein the Delhi High
Court had ordered Micromax to pay royalty to Ericsson on the basis of net sale price of the
phone rather than the value of technology used in the chipset merged in the phone which was
said to be infringed. CCI noted that "For the use of GSM chip in a phone costing Rs. 100,
royalty would be Rs. 1.25 but if this GSM chip is used in a phone of Rs. 1000, royalty would be
Rs. 12.5. Thus, increase in the royalty for patent holder is without any contribution to the

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 22

product of the licensee. Higher cost of a smartphone is due to various other softwares/technical
facilities and applications provided by the manufacturer/licensee for which he had to pay
royalties/charges to other patent holders/patent developers. Charging of two different license
fees per unit phone for use of the same technology prima facie is discriminatory and also reflects
excessive pricing vis-a-vis high cost phones."

4. Availability of Injunctive relief

Threat of injunction becomes a powerful weapon when used by a SEP holder for imposing its
royalty rates, as in such a case an SEP implementer would think that accepting an unreasonable
royalty would be less risky than curbing an action of infringement. The use of injunctive relief
against willing licensees is prima facie breaking of FRAND obligation as the FRAND royalty
rates by itself are an adequate remuneration to the SEP. Such an action is also considered to be
abusive of dominant position and hence a violation of competition laws. Therefore, an injunction
should only be claimed when the licensee is unwilling to pay the judicially resolute FRAND
royalty or where monetary compensation is not an adequate remedy.

The emphasizing principle behind permitting of injunction is that a party must suffer an
irreparable damage if the same is not granted. The law on injunction in India is based on the
principles of equity. In the said case, the remedy existing for the SEP holder is in the form of
royalty. The only thing which is to be determined is whether the quantum of the same is
adequate. Further, a SEP holder indulging in setting up a SSO, inevitably enunciations to license
the technology on FRAND terms. In such a case, even if the royalty is low, injunction should not
be approved unless there is permanent harm caused to the SEP holder.

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 23

CHAPTER 6:
FAIR REASONABLE AND NON-
DISCRIMINATORY (“FRAND”)

Reasonable and Non-Discriminatory Terms (RAND), also known as Fair, Reasonable, and
Non-Discriminatory terms (FRAND), are a licensing responsibility that is often required
by Standard-Setting Organizations (SSOs) for members that contribute in the standard-setting
process.

Standard-setting organizations are the industry groups that set common standards for a specific
industry in order to guarantee compatibility and interoperability of devices manufactured by
different companies.

Standard-setting organizations generally have rules that govern the ownership of patent
rights that apply to the standards they implement. One of the most common rules is that a patent
that applies to the standard must be adopted on “Reasonable and Non-Discriminatory Terms”
(RAND) or on “Eair, Reasonable, and Non-Discriminatory Terms” (FRAND). The two
terms are generally interchangeable; FRAND seems to be preferred in Europe and RAND in the
U.S.

Standard-setting organizations
include this obligation in their
bylaws as a means of enhancing
the pro-competitive character of
their industry. They are intended
to prevent members from
appealing in licensing abuse
based on the monopolistic
advantage generated because of

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 24

having their Intellectual Property (IPR) included in the industry standards. Once an organization
is offering a FRAND license, they are required to offer that license to anyone, not necessarily
members of the group.

Without such obligation, members could use monopoly power inherent in a standard to impose
unfair, unreasonable and discriminatory licensing terms that would damage competition and
inflate their own comparative position.

Essential patents’ are basically declared as criterions for the entire industry by standard-setting
organizations on the premise that they will be licensed on fair, reasonable and non-
discriminatory terms to anybody ready to seek such a license. Such an arrangement is a trade-off
for the patentee because while it ensures that its patents are used by the entire industry, it will
have to stick to fair and reasonable terms

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 25

CHAPTER 7:
MOA'S DRAFT NOTIFICATION ON
COMPULSORY LICENSE OF
GENETICALLY MODIFIED TECHNOLOGY
ON FRAND TERMS

The Ministry of Agriculture (MoA) has ablaze another salvo in its fragmentary war against
Monsanto by publishing and notifying the “Licensing and Formats for GM Technology
Agreements Guidelines, 2016”. These guidelines, which appear to be targeted at Monsanto, are
in addition to an effort by the Department of Industrial Policy and Promotion (DIPP) to
revoke Monsanto’s Bt. cotton patent under Section 664, a Competition Commission of India
(CCI) inquiry into Monsanto’s licensing practices and finally, the Cotton Price Seed Control
Order, 2015 (CSPO) whereby the Ministry of Agriculture decided to fix IP royalties between
Monsanto and its Indian partners for the Bt patents held by the former Monsanto’s.

Each of these measures taken by the Government of India are extraordinary and have raised
eyebrows because it appears that the government is palpably taking sides in what is essentially a
commercial argument between Monsanto and Indian seed companies.

An introduction to the Licensing and Formats for Genetically Modified (GM) Technology
Agreements Guidelines, 2016

The “Licensing and Formats for Genetically Modified (GM) Technology Agreements
Guidelines, 2016” (“Guidelines”), issued by the MoA in the Gazette of India on May 18, 2016
goes far beyond the Cotton Price Seed Control Order, 2015 (CSPO) move to standardize

4 https://indiankanoon.org/doc/1949393/

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 26

technology licensing fees. These Guidelines entail all patentees of GM technology to offer their
technology on a Fair, Reasonable and Non-Discriminatory (FRAND) basis to any seed
company willing to pay Monsanto, a government authorized royalty for the patent. In other
words, Monsanto cannot deny anybody a license. In case the patentee does not respond within 30
days, the guidelines create a belief that the license has been granted. The clause below is
reproduced as:

(5) The Licensor shall not refuse grant of a license to any eligible seed company fulfilling the
aforesaid criteria. The Licensor shall award the license for the Genetic Engineering Appraisal
Committee (GEAC) approved GM Trait within 30 days of receipt of a request from Licensee
along with proof of fulfilling the qualification criteria. An Agreement shall be signed by the
Licensor and the Licensee in accordance with the approved License Format. If the Licensor fails
to meet the above obligation, the Licensee is deemed to have obtained the license for the GEAC
approved GM Trait as per FRAND mechanism and the deemed license holder shall abide the
terms of such licensing guidelines and agreement issued under the Order.

These Guidelines were required because the CSPO’s reduction of royalty payable to Monsanto
was rendered useless by the fact that Monsanto had already dismissed its licensing agreements
with nine of the biggest Indian seed companies. When it appeared that, some of the companies
like Nuziveedu were continuing to sell seeds with Monsanto’s GM technology and trademarks,
the company instituted patent and trademark infringement lawsuit before the Delhi High Court in
February this year. Before the High Court, Nuziveedu meekly complied to be restrained from
manufacturing any new seeds after disposing its existing stock and consented with paying
remaining royalties to Monsanto.

Since the technology licensing agreements were terminated and the courts interfered to restrain
IP infringement, the government’s orders under the CSPO had no real practical conclusion for
the biggest Indian seed companies. Thus, the Ministry of Agriculture advised these guidelines on
May 18th 2016 to basically force Monsanto to license out its technology.

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 27

The patentability determination in the preamble of the Licensing and Formats for
Genetically Modified (GM) Technology Agreements Guidelines, 20165

These Guidelines instigate with an inquisitive preamble, reproduce below as:

“And whereas, even though biotechnology inventions are patentable, once the GM Traits
developed through biotechnology are transferred into a variety (“transgenic variety”), the
transgenic variety per se cannot be patented; the seeds carrying such trait also cannot be
patented and hence, the plant varieties including transgenic varieties carrying the GM Traits can
be protected only under the Protection of Plant varieties and Farmer’s Rights Act, 2001.

And whereas, the transgenic varieties become the intellectual property of the breeder or
company who has developed it;”

The last declaration i.e. “the transgenic variety becomes the intellectual property of the breeder
or company who has developed it” appears inaccurate because a new variety developed by a seed
company, which carries a modified genetic sequence patented by a biotech company like
Monsanto, will contain IP rights fitting to both the Seed Company and Monsanto. While the new
variety is protected under the Protection of Plant Varieties & Farmer’s Rights Authorities Act,
2001, the altered genome is protected under the Patents Act, 1970. Given that Monsanto’s
patented Bt gene technology is being introgressed into the variety developed by the seed
company, the genome of the seeds will always contain Monsanto’s patented gene sequence.
Therefore, the transgenic variety will have IP belonging to both, the Seed Company and
Monsanto.

5 http://agricoop.gov.in/sites/default/files/draftlincen_0.pdf

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 28

Genetically Modified (GM) Patents as Standard
Essential Patents (SEP) and the FRAND Requirement

The requirement of the Guidelines for patentees of

Genetically Modified (GM) technology related to amplified
insect resistance in cotton seeds is quite surprising because
FRAND or “Fair, reasonable and non-discriminative”
tool is usually used in the framework of Standard
Eessential Patents (SEPs) such as the telecom patents being emphasized by Ericsson against
various Indian companies.

The development of assured technologies depends on the entire industry accepting certain
standards. Smart Agriculture in an article published 6 months ago (H/t to Shamnad for this
article) reports that Prabhakar Rao who is the Chairman of the Nuziveedu Group was actively
lobbying the government to apply FRAND principles to GM seeds. It reports that his office has
been circulating an academic article published in the Colorado Law Review titled Genetically
Modified Seeds as De Facto Standard Essential Patents (2014). The article, which was written
in the context of increasing punitive damages that were being obligatory on American farmers in
patent litigation introduced by Monsanto, argues that Genetically Modified (GM) seeds should
be treated on the same lines as SEPs, which are licensed on a FRAND basis. As a result of such
classification, the authors debates that farmers will be liable to pay only sensible royalties in case
of infringement rather than the punitive damages that were being imposed by American courts on
farmers.

The difficulty in extending FRAND principles to GM seeds is twofold: The first is the factual
issue regarding the technology itself. Monsanto’s GM patents, give it an exclusive monopoly
over a certain genetic sequence incorporating genes from the Bacillus thurgingiensis (Bt)
genome into the cotton genome – the consequential seed is resistant to the Bollworm, a pest
which has caused havoc to the cotton crop in India. Monsanto licences this Bt technology to
Indian seed companies, who integrated it into the different varieties of seeds that they sell in
different parts of the country depending on local soil and climate conditions.

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 29

If a seed company desires to sell cotton seeds without Monsanto’s Bt technology, it can still do
so the only variance is that these seeds will not be resistant to the Bollworm, but they will still
grow cotton. The issue of Bollworms can still be embark upon through increased pesticide use.
Thus, Monsanto’s Bt technology is compatible. This is dissimilar from cellular phone technology
where certain new contestants could simply not enter the market if denied access to SEPs.

The second problem in applying FRAND principles to Genetically Modified (GM) patents is
that FRAND as a concept is supposed to be a deliberate act, wherein both parties arrive into a
contract (usually through SSOs) agreeing to be regulated by the principle of FRANDs. If there is
no such contract between both parties approving to apply such principles, as is the case with
Monsanto and Indian seed companies, there is no interrogation of FRAND principles applying
to the contract.

Of course, Monsanto can still be scrutinized under competition law that investigation will require
that how the Bt patents in questions are upsetting competition downstream. As stated earlier, the
CCI has already begun such an inquiry against Monsanto under the Competition Act.

The legality of the ‘Licensing and Formats for Genetically Modified (GM) Technology
Agreements Guidelines, 2016’ from a TRIPS perspective

To begin with an analysis under international law i.e. the Agreement on Trade Related
Intellectual Property Rights (TRIPS). One of the major points of argument during the
negotiation of TRIPS was the concept of ‘license of rights’. The concept of ‘licenses of right’
which was preserved in Section 876 and 887 of the Patents Act allowed any person to seek a
license for a certain class of patents (mainly process patents for technologies like drugs and
chemical) at a royalty rate determined by the Controller and subject to an upper ceiling of 4% of
the net ex-factory sales price. In other words, even though patents were being granted for these
technologies, the patents were de-facto obtainable to everybody after a snootiness period of three
years provided the legislative royalty be paid. The developed countries were against such blanket
licensing provisions, instead they required each case to be decided on a distinct basis.

6 https://indiankanoon.org/doc/11776/
7 https://indiankanoon.org/doc/1190205/

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 30

Article 318 of the final version of TRIPS clearly states that members can authorize the use of a
patent without the authorization of the patentee but that each one “such use shall be considered
on its individual merits”. As a result India erased the provisions related to “licenses of rights”
from the Patents Act but retained the compulsory licensing provisions, meanwhile those
provisions provide only for a case-by-case consideration. However, the Guidelines under
discussion endeavor to reconstruct a “license of rights” framework by allowing all seed
companies the right to a license from patentees of Genetically Modified (GM) technologies
associated to increased insect resistance in cotton seeds, provided that they agree to pay
government instructed royalties. Although Monsanto appears to be the only target of these
guidelines, it will be relevant to anybody else who owns patents in Genetically Modified (GM)
technologies related to increasing insect resistance in cottonseeds.

The constitutionality of the ‘Licensing and Formats for Genetically Modified (GM)
Technology Agreements Guidelines, 2016’9

The instantaneous legal issue is whether the Guidelines are legal under domestic law. The MoA
under Clause 5(8) of the CSPO draft these Guidelines. The CSPO has been brought in by the
Indian government under powers deputized to it by Parliament through the Essential
Commodities Act, 1955 and its legality is currently under challenge because the government
cannot evade patent rights by resorting to powers under the Essential Commodities Act. If that
challenge succeeds, these guidelines will inevitably be null and void. The MoA had the power to
only draft a setup of licensing agreement but instead it produced new functional rights.

8 https://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm
9 http://egazette.nic.in/WriteReadData/2016/169713.pdf

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 31

CHAPTER 8:
ANTI-TRUST CASES (WITH FOCUS ON
LATEST SEP AND FRAND LITIGATIONS
IN INDIA)

1. Ericsson vs. CCI

Micromax and Intex, both appealed that inflated royalty rates and unfair licensing terms
proposed by Ericsson amount to a patent holdup. Further, FRAND terms have been violated by
Ericsson’s opaque licence negotiations and legal intimidations used to coerce licensees. Intex
further alleged that Ericsson ‘bundled’ their licenses, offering unwanted licenses along with the
requested ones in an anticompetitive routine.

Here, the court deliberated the issue of whether the refusal to grant a patent license can amount
to anti-competitive behavior. The court discussed that since the only manner in which a patent
can be exercised is through the right to prevent third parties from making use of the patent in any
manner, it is difficult to reunite the use of the only accessible right of the patent holder as
amounting to an anti-trust defilement. However, on the other hand, a refusal by a patentee to
grant a license may result in adverse effect on competition.

In the light of comprehending this interface between exercise of IP rights and antitrust laws,
important precedents in competition cases pertaining to SEPs from the United States and
Germany are discussed, with special reference to Article 10210 of the Treaty of the Functioning
of the European Union (anti-abuse provision). The relationship in significance of the Article
with Section 411 of the Competition Act demonstrates that as per international standard on
SEPs, there is adequate ground to seek relief before the CCI for abuse of dominance.

10 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E102:EN:HTML
11 https://indiankanoon.org/doc/1780194/

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 32

Ericsson argued that Micromax and Intex had acknowledged Ericsson as the proprietor of the
SEPs in their grievance before the CCI.

The court appraised the question of the right of a licensee to reserve its right to encounter the
validity of the patents by considering foreign decisions on the subject. Specific attention was
given to Vringo Infrastructure v ZTE (2013) EWHC 1591 (Pat.), before the High Court of
England and Wales. Here, the patent holder, Vringo had contended that ZTE was an unwilling
licensee as they had declined to purchase the license for the patents up until the issue of validity
of the patents had been resolute. This contention was forbidden on the basis that the question of
validity and the willingness to purchase a license were distinct issues.

The High Court acknowledged this judgment and indicated that a ‘willing licensee’ would not
amount to one eager to accept an invalid patent and surrendering the right to challenge the
patent’s validity. Even Section 140(1) (d)12 of the Patents Act states that no patent license
agreement can include conditions preventing the right to challenge a patent’s validity, and thus
licensees can hold their right to do so at all times. This would no hesitation, apply to probable
licensees as well. As a result, the court held that no relinquishment of the right to challenge the
patent’s validity had taken place when Micromax and Intex entered into licence negotiations for
the same.

Are the CCI’s orders being made without jurisdiction in this case?

The court stated that from the facts discussed in the judgment, the complaints prima facie appear
to disclose no abuse of dominance, as it appeared that, Ericsson had endeavored to arrive at a
negotiated settlement with both Micromax and Intex had been manufacturing without a licence
from Ericsson or obtaining a compulsory licence from the Controller of Patents. At the same
time, this was not a case, “where no reasonable person could have formed a view that the
complaints filed by Intex and Micromax, prima facie, disclosed abuse of dominance by
Ericsson.”

12 Section 140(1) (d)12 of the Patents Act: “[(d) to provide exclusive grant back, prevention to challenges to
validity of Patent & Coercive package licensing,] and any such condition shall be void.”

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 33

The court made it clear that it was outside its purview to consider the merits of the matter when it
would be discussed by the concerned authority (CCI). The court clarified that, “nothing stated
by it in this case, should be construed as an expression of opinion – prima facie or otherwise –
on the merits of the allegations made by Micromax and Intex; all observations made or views
expressed herein are in the context of the jurisdiction of CCI to pass the impugned orders.”

The court went on to need the CCI not to discount the matters raised by Ericsson and to ensure
appropriate actions to ensure confidentiality and secrecy throughout the investigation of sensitive
material.

Observations

The clarification on the edge between patent law and competition law is of enormous importance
to the continuation of the SEP wars. It approves the Indian legal position that questions of
FRAND licensing and indecorous refusal of SEP licenses may amount to abuse of dominance.
This could possibly act as legal ammunition for SEP license seekers when negotiations come to
a standstill and yet their use of the said patent is vital. As a result, avoidance of compliance with
the FRAND terms would become significantly more risky for patent holders and they may find it
safer to grant the licenses in complete accordance with these terms.

Additionally, it has now been made clear that license seekers may file complaints before the CCI
at the same time as interrogative the validity of the patent before the Patent Board. As a result,
patent holders may be under a great deal of inspection to avoid exploitation of license seekers
through either unfair terms or incorrectly granted patents.

2. Google Anti-trust case

Google is facing a probe by the Competition Commission of India (CCI) into assumed anti-
competitive practices.

According to a Press Trust of India (PTI) report, while there was no official word on the insides
of the probe report, it believed to contain comments and inputs from a host of units present in the
Internet business including some well-known e-commerce firms and web portals. While

RELATION BETWEEN IPR AND COMPETITION LAW 1.3 34

compliances from some of them appear to suggest violations on part of Google, others have
sided with the US-based global giant.

Disclaimer: the study material mentioned in the module is for academics purpose to
provide information and understanding, it should not be interpreted as a legal advice or opinion.

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