GD Goenka University International Virtual Moot Court Competition 2020

Date of competition 8-9, August 2020

MOOT PROPOSITION
BEFORE THE HON’BLE SUPREME COURT OF INDIA IN THE JOINT HEARING IN
THE MATTER OF

TechC and Anr. ----------------------------------------------------------

PETITIONER
v.
Q.M DigitariaLtd -----------------------------------------------------
RESPONDENT

Competition Commission of Digitaria -----------------------------

PETITIONER v.
Q. M Digitaria Ltd --------------------------------------------------
RESPONDENTS

I. In 2015, two of the largest corporations engaged in the development of communication

technology products, Digital Machine (DM) ,and Quantum Machine (QM.), both companies
incorporated in Quantaria, started a confidential joint venture. The objective of this venture
was to harnesses the phenomenon of quantum entanglement in such a way so as to render
a technology where two devices, anywhere on the world would be able to communicate
with each other. The uniqueadvantage, however, that these devices would offer, is that
there communication would be completely non-reliant on any telecommunications service
provider, or would not even need satellites to mediate the communication between two
devices. In other words, the two devices will communicate with each other directly, with no
intermediary of any description, instantaneously and with no possibility of interception of
any kind.
II. The initial negotiations were successful andthe ‘Project-7G-phone’ was launched. Two years
later, the executives of the two companies met to discussthe prototype of the 7G-phone.
However, at this stage, the executives from DM demanded a changein the existing terms of
 the joint venture agreement and ask for sole ownership of all patent rights arising out of the
project in return for revenue sharing with QMas and when 7G-phone was commercialized in
the future. QM allegedbad faith on part of DM and withdrew its partnership. Both
companies asked their employees working on the project to save all relevant research data
on the respective companies’ servers. In the end, both companies possess almost all the
research data created up to that point. Given the confidential nature of the project, both
parties avoided from going for dispute resolution on either breach of contract or copyright
ownership.This point onwards, both DM and QM independently keep on developing the 7G-
phone.
III. On 1stMarch2018, DMheld a big press conference in Cloudia, Quantaria and announced to
the world that it has developed 7G-phone successfully (with the same attributes as
envisaged in the beginning). It also declared that, it will soon commercialize its product for
use at the personal consumer level. It had also filed a patent application with the Quantaria
Patent and Trademark Office for several component technologies of the 7G-phone on
10thFebruary 2018.
IV. However, on 2ndMarch, 2018 QM announced that it too had succeeded in developing the
7G-phone. Although it used technologies different in theircomposition and mechanism from
the one used by DM, yet the final device was functionally equivalent.QM too applied for
patents with the Quantaria office on 15thFebruary 2018 for the component technologies it
had developed.
V. One challenge with both these technologywas that direct communication was possible
between two devices only once two devices were paired with each other. Pairing, in
turn,was done only on bringing the phones in physical contact with each other. Once paired,
the phone would then be able to communicate (including voice calling) over an infinite
physical distance.
VI. This creationdeveloped a sensation in the market. The leaders of variouswell-known
telecommunication device manufacturers of the globeorganised meeting with CEOs of both
QM and DM. Given the limitation that for using 7G-Phone technology, two purchasers will
have to pair the devices, the Smartphone companies suggested that the 7G-phone
technology be integrated with existing smartphones. They advised that this way, the
consumer will also be able to call other people with whom they have not paired their
phones.
VII. In the meantime, World Telecommunications Standards Institute (WTSI), a renowned
Standard Setting Organization (SSO) of which DM, QM and all major manufacturers of
smartphones were members, initiated developinga Standard for integration of 7G-phone
technology with the smartphones. It called all its members including DM and QM to the
Discussion.
VIII. In this discussion, WTSI put it forward that given the functional equivalence of both
technologies, the ones developed by DM and QM, WTSI was at a liberty to create a standard
with either of the said two technologies being essential to the standard. Given the choice,
the standard will include the technology for which the owner shall undertake to license all
standard essential patents (SEPs) on Fair Reasonable and Non-discriminatory (FRAND) terms.
IX. To this proposal, executives from DM expressed their dissatisfaction and refused any
adherence to FRAND terms. They threatened that if their technology (which they claimed to
be better) was not included in the standard, the Company will introduce proprietary 7G-
phones produced and marketed by DM and that given the premium brand value of DM, they
will surely acquire the market.
 X. On the other hand, QM agreed to licensing its SEPs on FRAND terms as a quid pro quo for
induction of its technology in the standard. WTSI refused to be threatened by DM’s claim
and accepted QM’s proposal. Pursuant to these developments, the industry geared up for
manufacture, marketing and sale of the 7G-phone integrated smartphones.
XI. QM filed patent applications for all 7G-phone related technologies in Digitaria on 20thApril
2018. The patents were granted on 20thOctober 2018.
XII. Hatato, aDigitarian company engaged in aggressive marketing of smartphones in Digitaria,
too was preparing for launch of Smartphones with integrated 7G-phones technology. For
licensing of the patents it approached QM Digitaria a subsidiary of QM (Quantaria), and duly
authorized by the parent company to negotiate on its behalf.
XIII. QMDgitaria mentioned that any negotiations will be entered into only under the condition
that any specific terms proposed by QMDgitaria shall not be disclosed by Hatato to a third
party, irrespective of whether the negotiations lead to a licensing agreement or not. While
Hatato was uncomfortable with such a condition being imposed, it reluctantly agreed and
entered into negotiations with QMDigitaria.
XIV. No sooner had the negotiations started that they fell apart. The executives of Hatatofelt that
a Royalty rate of 1.3% charged on the final sale value of handsets, as demanded by
QMDgitaria would substantially hurt their profits.
XV. At the same time, TechC, another smartphone manufacturing company, also approached
QMDgitaria. Under similar conditions of negotiations as imposed on Hatato,QMDigitaria
demanded 1.4% royalty on the final sale value of handsets. The negotiations fell apart here
as well.
XVI. Both Hatato and TechC decided to go ahead with the production of the phones with 7G-
phone technology.
XVII. While the market was still in anticipation of the 7G-phones, DM launched the first ever 7G-
phone in Digitaria along with rest of the world on April 5, 2018. It branded its product as 7G-
phone, a clever improvisation on its traditional brand, phone. The marketing for the phone
had started from October of 2018 itself, with an aggressive campaign by the Company all
over Digitaria, covering print, electronic and social media.
XVIII. Due to the spread of Corona Virus Lead Pandemic Covid-19 in the month of February 2020
there were great demand for the high end phone and meeting technologies in the global
market. Because most of the Companies and Universities globally declared work from home.
In the months from Marchto June, 2020, QMDigitaria, Hatato, TechC,and 10 other
companies started marketing and launched their 7G-phones and with in-built meeting
application named Toom.
XIX. As soon as Hatato and TechC7G-phones were launched, a suit for patent infringement,
privacy and cybersecurity was instituted by QMDgitaria against both the companies in Dubli
High Court.
XX. The petition, filed by QM Digitaria, sought a ban on Toom app claiming lack of internet
safety of the application and contended that the software application poses a threat to
privacy of the individuals using it and also breaches cyber security.The petition said that
Toom app is not safe and does not have end-to-end encryption and is violating the
Information Technology Act, 2000, and Information Technology (Procedure and Safeguards
for Interception, Monitoring and Decryption of Information) Rules, 2009.
XXI. QM Digitaria, in its plea raised concernabout cases of hacking and cyber breaches, which are
being incessantly reported by the users ofHatato and TechC 7G-phones in-built Toom
Meeting Applications.The penetration of offending software was increasing with each day
 have pan Digitaria ramifications, the plea said.It said that there is a need for a legislation to
be put in place in order to effectuate a standard regulation to safeguard the rights of citizens
as has been brought to light by various users.It was important to realisehow Hatato and
TechC 7G-phones in-built Toom Meeting Applications consistently violates its duty to
implement and maintain reasonable security practices, and misleads consumers about the
security benefits of the product. Hatato and TechC 7G-phones in-built Toom Meeting
Applications have targeted consumers, businesses, and schools. Rather than lending a hand
to people in need during pandemic, Hatato and TechC 7G-phones in-built Toom Meeting
Applicationsviolates the privacy of its millions of users by misusing and exploiting their
personal information, and falsely, deceptively, and misleadingly advertising fictitious security
benefits of the programme.
XXII. The Dubli High Court granted an interim injunction against Hatato and TechC. In a
subsequent hearing, the High Court allowed continuation of sales of the Handsets with in-
built Toom Application by the companies subject to payment of royalties to the tune of 1.0%
charged on the final sale value.
XXIII. DM too had applied for and was successfully granted patents in Digitaria for its 7G-phone
related patents. While the proceedings in High Court of Dubli were going on, DMDigitaria
approached Hatato and TechC offering its own patents in license to TechC and Hatato for a
royalty rate of 0.6 % on the final sale value. While DM’s business strategy accommodated
such a situation where only two DM7G-phones would be able to pair with each other and
pairing with other brands was not allowed, Hatato and TechC could not afford to limit their
pairing option to handsets from just two or three companies. They refused DM’s offer.
XXIV. Hatato and TechC moved the Competition Commission of India against QMDgitaria, alleging
an abuse of dominant position. CCD (Competition Commission of Digitaria) decided in favor
of Hatato and TechC. However, Competition Appellate Tribunal (CAT) reversed its holding.
XXV. Hatato and TechC moved the Supreme Court against CAT’s order. They also moved Supreme
Court against DubliHigh Court’s order to impose interim injunction on the parties.
XXVI. Supreme Court of Digitaria agreed to join and hear both the matters.

Note:

1. Participants shall not call WTSI’s authority for setting the standards in question.
2. The applicable Law to the problem will be taken to be as extant in India as on the date of
submission of Memorials
3. Quantaria is in Pari Materia to USA
4. Digitraia is in Pari Materia to India
5. Dubli in Parimateria to Delhi

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