11 September, 2019
I INTRODUCTION
In the past few years, the debate on the interplay between competition law and intellectual property (IP) rights in India has continued to draw attention. In addition to dealing with questions of jurisdiction and addressing disputes dealing with fair, reasonable and non-discriminatory (FRAND) terms, the Competition Commission of India (CCI) has increasingly focused its attention on issues such as the impact of standard-setting on competition; and the use (or abuse) of IP-related judicial processes by dominant enterprises to stifle competition.
The general prohibition on anticompetitive agreements2 and abuse of dominance3 under the (Indian) Competition Act 2002 (the Competition Act) applies equally to IP-related business practices as it would to non-IP related conduct. The only reference to IP rights in the Competition Act is by way of an express carve-out that recognises the right of any person to impose reasonable and necessary conditions for protecting IP rights, specifically conferred under certain identified Indian IP statutes, in the context of anticompetitive agreements.4 This carve-out does not, however, extend to unilateral conduct, thereby exposing IP holders to a comparatively greater risk of scrutiny under the abuse-of-dominance provision (Section 4) of the Competition Act.
In this chapter, we provide (1) a brief overview of Indian jurisprudence on IP and antitrust; (2) issues surrounding antitrust and licensing in India; (3) the international debate surrounding the standard-selection process and the manner in which the CCI and the erstwhile Competition Appellate Tribunal (COMPAT) have interpreted competition claims arising out of standards while issuing prima facie orders;5 (4) the circumstances under which transfer of IP could be viewed as a transfer of assets under the merger control provisions (Section 5) of the Competition Act;6 and (5) the emerging jurisprudence involving IP-related vexatious litigation leading to abuse-of-dominance claims before the CCI.
II YEAR IN REVIEW
The emerging discourse surrounding IP-linked antitrust issues in India is invariably tied to the application of the disciplines contained in Section 3 of the Competition Act (which deals with anticompetitive agreements) and Section 4 of the Competition Act (which deals with abuse of dominance).
The debate on IP-related antitrust issues in India came to the fore in 2014 when the CCI examined7 whether the practice of several domestic and multinational passenger vehicle manufacturers (PVMs) of selling spare parts and diagnostic kits only to authorised dealers resulted in ‘denial of market access’8 to independent repairers and after-sales service providers, or constituted a ‘refusal to deal’.9 Without examining the larger question of the primacy of IP holders’ right to use and commercialise an IP-protected technology the way they deem appropriate, the CCI has held that PVMs’ decisions not to supply spare parts and diagnostic kits to third-party or non-authorised dealers and aftersales independent repairers results in denial of market access, and IP rights do not offer any protection from a finding of infringement under Section 4 of the Competition Act.10 Consequently, the CCI appears to have opened the door for ‘compulsory licensing’ of IP-protected technology to third parties, should it establish that the owner of the IP-protected technology is dominant in a relevant market.
While examining the claim on refusal to deal, the CCI’s approach appears to give primacy to short-term foreclosure effects over the due deference that relatively more mature antitrust jurisdictions, such as the United States, extend to primacy of IP rights, which are essential for fuelling innovation and competition in the long run. Drawing analogies to the sale of medical imaging machines to hospitals,11 the CCI held that selling diagnostic tools in the open market would not compromise the IP rights of the PVMs in the diagnostic tools.12
On appeal by certain PVMs, the COMPAT agreed with the CCI’s findings that PVMs’ decisions not to supply spare parts and diagnostic kits to third-party or non-authorised dealers amounted to refusal to deal.13 Further, the COMPAT dismissed the arguments of the PVMs that restrictions requiring supply of spare parts and diagnostic tools only through authorised dealers were ‘reasonable’ restrictions to protect their IP and that the PVMs were simply trying to prevent the circulation of counterfeit spare parts in the aftersales markets. In this regard, the COMPAT observed that circulation of counterfeit parts would be curbed if the restrictions imposed by PVMs on the sale of genuine spare parts in the aftersales markets were removed.
While coming to its decision, the COMPAT also observed that the PVMs did not have valid IP because the PVMs’ copyright protection did not subsist under the copyright laws in India, as the article to which the copyrighted drawings pertained had been produced more than 50 times by an industrial process,14 and the PVMs were not able to prove that the right under a patent registered by a parent outside India is available in India.
More recently, the CCI was faced with the question of determining the ability of a smartphone manufacturer to sell its products separately through online and offline channels. One of the distributors alleged that the distribution agreement specifically disallowed distribution of the manufacturer’s products to online platforms, as this was being undertaken by the manufacturer itself. The manufacturer argued that it owns all the IPs over its products and, therefore, is justified in imposing such restrictions. The CCI observed that the manufacturer only had 7 to 8 per cent market share and products were freely available in the market at competitive prices, but equally noted that owning IP over products does not necessarily allow the manufacturer to impose such exclusivity restrictions in the agreement. Much like its approach in the Auto Parts case, the CCI’s approach appears to suggest that ownership of IP does not necessarily allow exclusive arrangements.15
On the other hand, the CCI held that a restriction on a distributor of smartphones imposed by the manufacturer to not engage with its competitor (owing to concerns pertaining to leakage of IP and technical know-how of the manufacturer) to be a reasonable restriction.16
Further, the Madras High Court17 has ruled that the scheme of the Competition Act empowers the CCI to consider settlement agreements between the complainant(s) and defendant(s). This could be immediately relevant to competition cases initiated at the behest of IP implementers against the potentially anticompetitive practices of IP owners.
However, in House of Diagnostics LLP v. Esaote SpA and Anr,18 the fact that the complainant and defendant entered into a settlement agreement does not appear to be factored into the CCI’s final decision.
The potential repercussion of this judgment of the Madras High Court on settlement in IP cases is discussed in the subsequent paragraphs.
III LICENSING AND ANTITRUST
Antitrust concerns associated with IP licensing arrangements are relatively low on the CCI’s enforcement agenda. Where the CCI has dealt with complaints arising out of the unfairness or restrictions of licensing terms, it has not carried out a detailed analysis nor specifically considered the interplay of IP and antitrust or balancing IP rights with the public interest.
i Anticompetitive restraints
Restrictive terms in licensing arrangements would be examined as vertical restraints under Section 3(4) of the Competition Act. In the absence of any specific provisions for assessing licensing arrangements, antitrust concerns arising out of licensing arrangements are treated within the same conceptual framework that applies to the sale of goods or provision of services under the Competition Act. Simply put, restrictions accompanying IP licensing arrangements are prohibited if they can result in an appreciable adverse effect on competition (AAEC). The CCI is unlikely to reach a finding of AAEC unless the IP licensor enjoys significant market power.19 For instance, any attempt by an IP licensor to determine the pricing decisions (for the licensed IP) of the IP licensee would be scrutinised as a potential resale price maintenance arrangement.20
An IP licensor could also impose territorial or customer-specific restrictions as part of the IP licensing arrangement (e.g., the aforementioned broadcaster 21 being forbidden from broadcasting the licensed video content outside a certain territory or from broadcasting to a specified group of potential viewers). Such territorial or customer-specific restrictions would be scrutinised as an instance of potentially anticompetitive ‘exclusive distribution’22 or an anticompetitive refusal to deal.23 An IP licensor could also restrict the IP licensee from dealing with any competing IP licensor, a restriction that would be examined as a potentially anticompetitive ‘exclusive supply’ arrangement.24
Any attempt by an IP licensor to make the grant of the IP licence conditional on the IP licensee purchasing the IP licensor’s other products, services or licences would be treated as a potentially anticompetitive ‘tie-in’ arrangement.25
Notably, the Competition Act provides a limited carve-out allowing IP owners to impose restrictions, including restrictions accompanying their licensing arrangements, which are reasonable and necessary to prevent the infringement of their existing IP rights.
ii Refusals to license
Unlike in the United States and the EU, where refusal to deal is usually examined as unilateral conduct, in India, refusal to deal can also be scrutinised as an anticompetitive vertical restraint. Thus, a refusal to grant a licence altogether or imposition of unreasonably restrictive licensing terms can be examined as a potentially anticompetitive refusal to deal. For instance, in the Auto Parts case, the CCI viewed the car companies’ refusal to license their diagnostic (software) tools and repair manuals to independent repairers and workshops as an anticompetitive refusal to deal.
A refusal to license can equally be scrutinised as an abuse of dominance under Section 4 of the Competition Act, to the extent that the refusal results in a denial of market access,26 restricts the production of goods or services,27 or restricts the technical or scientific development relating to goods or services.28 For instance, in the Auto Parts case, apart from holding the car companies liable for anticompetitive vertical restraints, the CCI also held that the car companies’ refusal to license the diagnostic tools to independent repairers and workshops was an abuse of their dominance.
However, in a later decision, the CCI observed that a delay in licensing on account of plausible business justifications, namely minimising the imminent threat of reverse engineering, could not be considered as denial of market access, as every entity has a right to protect its own commercial interests.29
iii Unfair and discriminatory licensing
Where an IP licensor is in a dominant position (e.g., the owner of a standard-essential patent (SEP)), where dominance can flow from the patent being indispensable for complying with an industry or technical standard), the terms of its licensing arrangements could be scrutinised for being potentially ‘unfair’ or ‘discriminatory’ and thus, abusive. For example, charging excessive royalty rates or charging different royalty rates to similarly placed customers may be viewed as an imposition of unfair or discriminatory prices and thus, an abuse of dominance.30
In a complaint against Monsanto Inc, United States (MIU),31 the CCI reached a preliminary view that MIU had charged ‘unfair’ royalty rates since its trait value (a kind of recurring royalty fees) was a percentage (16 to 18 per cent) of the maximum retail price (MRP) of the seed packet, which is determined in advance of each crop season.32
Subsequently, Monsanto Technology LLC (Monsanto) filed a suit for infringement of patent, trademark and passing off before the Delhi High Court against the Nuziveedu group (sub-licensee of Monsanto’s Bt cotton technology).33 The Nuziveedu group refused to pay the licence fee in terms of the agreements with Monsanto, claiming that Monsanto could not claim more than the ‘trait value’ fixed by the State governments. Recently, a division bench of the Delhi High Court found against Monsanto by stating that plant varieties and seeds cannot be patented under the Indian Patents Act.34 The division bench’s decision was recently set aside by the Supreme Court. The case was remanded back to the single judge bench of the Delhi High Court to decide on injunctive relief.35 The observations of the Supreme Court in this case may have a bearing on the CCI’s investigation against MIU. The CCI’s investigation has been stayed by the Supreme Court.
The CCI has also dealt with the issue of discriminatory or unfair licensing terms in a few cases. In Atos/Verifone,36 the CCI examined allegations that Verifone, a manufacturer of point of sale (POS) terminals, had imposed unfair and discriminatory conditions in the grant of licences for its software development kits (SDKs), a basic version of which was required to operate POS terminals,37 value-added service (VAS) providers38 and third-party processors,39 such as Atos. In its licensing arrangements with VAS providers, Verifone restricted the licensee from using any third party to develop or assist in developing any software using the licensed software, without first obtaining prior permission from Verifone and disclosing certain confidential information, including the names of its customers. Verifone contended that these restrictions were further to its IP rights pursuant to which it could legitimately restrict the grant of its licence to third parties without its permission. The CCI disagreed with Verifone’s plea and viewed the restrictions as simply the means to further Verifone’s entry and growth in the VAS market. The CCI also held that Verifone’s rationale for not allowing VAS developers to develop payment software (i.e., that it may damage the basic software of the POS terminal that was necessary for its functioning) was inconsistent with Verifone’s practices in other countries. The CCI also found the SDK licence agreement imposed ‘unfair’ disclosure requirements on VAS providers that were driven by Verifone’s desire to gain confidential commercial information from VAS providers and enable it to exploit the lucrative VAS market. Based on these findings, the CCI held that Verifone had imposed unfair and discriminatory terms in its SDK licence agreements with VAS providers and imposed a penalty of approximately US$670,000.40
The CCI’s approach towards excessive pricing claims in the IP licensing context is consistent with its general approach on unfair pricing, where it has chosen to adopt a simple cost-plus approach for determining whether the price has a reasonable relation to the economic value of the product supplied. The CCI applied this principle to initiate an investigation into MIU’s practices; the CCI was of the prima facie opinion that there was ‘no economic justification’ to charge trait value based on the MRP of the seed packet. The CCI’s decisions on IP and antitrust issues are being contested before the appellate courts and it will take a while before definite guidance on these issues emerges.
IV STANDARD-ESSENTIAL PATENTS
i Standard-selection process and antitrust
Industry standards are widely acknowledged to be one of the fundamental drivers of the modern economy. Standard setting through stakeholder collaboration usually results in significant efficiencies; for instance, the interoperability of standards, consumer safety, technological innovation and the introduction of performance standards in the market. While antitrust authorities have recognised the pro-competition benefits of standardisation, the standard-selection process itself involves deliberation and communication between competitors that may raise potential antitrust concerns. For instance, coordination in a standard-selection process may lead not only to minimum price-fixing, but also to a buyers’ cartel, in which the licensees (voting members of the standard-setting organisation) coerce patent holders to accept lower royalties in exchange for having their patents incorporated into a standard.41
Apart from the coordination concerns involved in a standard-selection process, the adoption of industry standards involving IP may result in the creation of an SEP. Once a patent is included in a standard and is widely adopted, it grants absolute monopoly power to the SEP holder.42 The SEP holder is under an obligation to license on a FRAND basis and a failure to do so could be an abuse of dominant position. The task of an antitrust regulator is therefore not limited to adjudicating only violation of FRAND commitments by the SEP holder,43 but also extends to claims involving abuse of the standard-setting process. Globally, much of the antitrust litigation and controversy in relation to standard-selection processes have revolved around SEPs, and specifically patent hold-ups.44
In India, the antitrust concerns surrounding standard-selection processes have also followed this trend, looking at issues surrounding FRAND terms for the Global System for Mobile Communications standard, in the Ericsson v. Micromax case and others. In March 2013, Ericsson sued Micromax, claiming damages worth approximately 1 billion rupees, alleging that Micromax had refused to enter into a licensing agreement covering Ericsson’s patented innovations across several wireless technology standards after three years of negotiations failed to yield a licensing agreement. Micromax, contested the claims, arguing that Ericsson was not licensing its SEPs on FRAND terms.
Micromax, and subsequently Intex, approached the CCI alleging abuse of dominance by Ericsson. The CCI, noting that the practices adopted by Ericsson were discriminatory and contrary to FRAND terms, directed the Director General of the CCI (DG)45 to investigate Ericsson for any potential violation of the provisions of the Competition Act. This order of the CCI was challenged by Ericsson before the Delhi High Court. During the pendency of these proceedings, Ericsson and Micromax entered into a global patent licence agreement and ended their dispute. Even though Micromax has apparently written to the CCI to withdraw its complaint, the Delhi High Court noted that, notwithstanding such withdrawal, the CCI would be at liberty to proceed against Ericsson for any potential abuse of its dominant position.46
In addition, the CCI has turned its attention more recently to the potentially anticompetitive effects arising out of voluntary non-SEP technical standards.47 Recently, the CCI considered whether the digital projection and screening of Hollywood films in India, through Digital Cinema Initiative (DCI)-compliant servers – agreed and enforced between six Hollywood movie production houses (HMPs) by way of a joint venture – would lead to an anticompetitive horizontal agreement or abuse of dominant position. The HMPs, to protect their proprietary content from piracy, required the cinema owners and digital cinema service providers to comply with DCI technology. Arguably, the DCI-compliant servers provide better image quality to the viewers and protect HMPs from piracy of their proprietary content. The CCI considered protection from piracy as a reasonable defence under the Competition Act to require the projection of films through DCI-compliant technology (for protection of HMPs’ copyright), and decided that the allegations did not merit investigation.48 On considering this issue on appeal, however, the COMPAT equated the requirement of DCI-compliant servers by HMPs with the process of private standardisation, and held that adoption of high standards could possibly have resulted in the creation of entry barriers for non-DCI compliant service providers.
Essentially, in its analysis, the COMPAT viewed the requirement of DCI-compliant technology introduced by HMPs as being a private standard-setting process (that may result in an abuse of dominance). Accordingly, it ordered the DG to conduct an investigation into the matter. Interestingly, neither the CCI nor the COMPAT delved deeper into the protection available to efficiency-enhancing joint ventures under the Competition Act.49
While the approach adopted by the COMPAT seems to suggest that a private standard-setting process involving non-SEPs can indeed be investigated under the Competition Act, it remains to be seen how the CCI will balance, on one hand, the need to protect IP developed jointly for the promotion of minimum cinematic ‘quality’ standards with, on the other hand, the competing claims that the IP is being misused to keep out ‘non-compliant’ film distributors and result in an abuse of dominance.
V INTELLECTUAL PROPERTY AND MERGERS
The Indian merger control regime requires the mandatory notification of all mergers and acquisitions that meet certain jurisdictional thresholds; these thresholds are assessed on the basis of the sum of the acquirer and target company’s assets and turnover collectively. However, the question of whether the licensing of IPs constitutes the ‘acquisition’ or ‘transfer’ of assets (and consequently requires notification) has been the subject of some debate. Since IPs can be transferred through many methods, including through their assignment, exclusive licensing, non-exclusive licensing or sub-assignable licensing, for a limited duration or perpetually, the CCI has been called upon to identify situations where such licensing might require merger notification. The CCI has now clarified, through its decisional practice, that the licensing of an IP will not in itself constitute a transfer or acquisition if the licence is demonstrably non-exclusive – both as a matter of law (de jure) and as a matter of fact (de facto). The licensor must, among other things, establish that it itself continues to use the IP, or indeed license out the IP to others for wider use; and that the licence is not exclusive, irrespective of terminology used in the licence agreements. As a corollary, IP licences that do not meet this test, either de jure or de facto, will be treated as asset acquisitions that trigger merger notification to the CCI if no statutory exemption is available.50
VI OTHER ABUSES
Sham or vexatious litigation as a tool to exclude competition is one of the important issues in IP and antitrust, since it involves the strategic use of IP infringement actions before courts with the ultimate objective of excluding a rival from the market. Globally, mature antitrust regulators have examined vexatious litigation as a strategy involving denial of market to a competitor. In the European Union and the United States, the courts have laid down two broad principles that need to be satisfied when resolving an antitrust claim based on vexatious litigation: first, the lawsuit must be objectively baseless to the extent that no reasonable litigant could except success on the merits; and second, the IP holder’s utilisation of the court system must be conceived in the framework of a plan to eliminate competition.51
While in India, litigation in relation to both SEP and sham complaints are ongoing, the focus of this section is on complaints involving sham IP litigation. In the past eight years of antitrust enforcement, the CCI has received three complaints regarding sham litigation as a potential abuse of dominance. The CCI initiated an investigation into the first-ever complaint based on vexatious litigation in 2014.52 However, in the subsequent complaints, the CCI has refrained from directing investigations based on sham litigation, requiring the presence of exceptional circumstances. In all these cases, the CCI has effectively followed the principles laid down by the courts in the European Union and the United States to examine claims involving vexatious litigation. The CCI’s approach in the first case of this nature involved a complaint against JCB India Ltd (JCB), where the complainant, Bull Machines Private Limited, alleged that JCB had, as patent holder, used an ex parte infringement injunction obtained from the High Court to strategically delay its own competing product launch. The withdrawal of the patent infringement suit by JCB soon after the product launch had been successfully delayed, formed the basis of the CCI’s investigation into whether JCB had engaged in sham or vexatious litigation.53
In more recent cases, however, the CCI appears to be increasingly reluctant to view as abusive conduct the use of court proceedings to enforce legitimate IP rights. For instance, recently the CCI, in an initiation order in Biocon v. Roche, considered that Roche had been engaged in a long-drawn-out (and continuing) legal battle involving IP rights before the Delhi High Court and noted that recourse to legal proceedings is a right of every party and, as a general principle, cannot be viewed as being sham litigation except under exceptional circumstances.54 It seems the intensity of the underlying patent battle, as reflected by the time taken in arguments before the High Court, has weighed heavily with the CCI in determining that the patent litigation was not vexatious.
In sum, the jurisprudence on the point of vexatious litigation under the Competition Act so far has developed on the basis of the CCI’s prima facie orders.55 Since the prima facie orders of the CCI are not determinative of their final findings or meant to list detailed reasoning, the CCI’s approach to vexatious litigation remains a matter of some speculation.56
VII OUTLOOK AND CONCLUSIONS
The Madras High Court observed in Tamil Nadu Film Exhibitors Association v. Competition Commission of India57 that the Competition Act permits the parties to settle their dispute, subject to CCI’s satisfaction that the settlement would not lead to or help continue any anticompetitive practice in India. This observation opens the door for the CCI to consider the global licence agreement between Micromax and Ericsson58 and the subsequent request by Micromax to terminate the proceedings against Ericsson while examining the allegations against Ericsson. While the Competition Act is designed to remedy instances of anticompetitive practice affecting the market as a whole and not just the interest of select competitors, the CCI may very well continue to examine the allegations against Ericsson; the very fact that the complainant, Micromax, no longer wishes to pursue its claims against Ericsson may likely weaken the CCI’s case against Ericsson. That said, the CCI’s decision in Esaote59 does not seem to take into account the fact that the complainant and the defendant had settled their contractual dispute.
To conclude, CCI has adopted a largely balanced and progressive approach in ensuring that the enforcement of competition law is not at odds with preservation of IPs. In doing so, it has taken cues from decisional practice in other jurisdictions, and has evolved its own jurisprudence on issues such as whether patent litigation is sham, or indeed on the role of private standards in the market. However, much of the future direction of the CCI’s decision-making in this area will be determined in appellate review, where the Indian Supreme Court is likely to have the last word. As with many other issues, the enforcement of antitrust law on questions involving IP is likely to continue to evolve in the coming years.
For further information, please contact:
Samir R. Gandhi, Partner, AZB & Partners
samir.gandhi@azbpartners.com
Footnotes
1 Samir Gandhi and Aditi Gopalakrishnan are partners, Gaurav Bansal is a senior associate and Arunima Chatterjee is an associate at AZB & Partners.
2 Contained in Section 3 of the Competition Act.
3 Contained in Section 4 of the Competition Act.
4 Section 3(1) of the Competition Act prohibits enterprises from entering into agreements that cause or are likely to cause an appreciable adverse effect on competition (AAEC) within India. Section 3(5) of the Competition Act provides that the prohibition on enterprises from entering into agreements that cause an AAEC does not extend to the right of any person to restrain any infringement of, or to impose reasonable conditions as may be necessary for protecting, any of his or her rights that have been or may be conferred upon him or her under: (1) the Copyright Act 1957; (2) the Patents Act 1970; (3) the Trade and Merchandise Marks Act 1958 or the Trade Marks Act 1999; (4) the Geographical Indications of Goods (Registration and Protection) Act 1999; (5) the Designs Act 2002; and (6) the Semiconductor Integrated Circuits Layout-Design Act 2000.
5 Section 26(1) of the Competition Act authorises the CCI to issue orders directing the Director General to investigate a matter, where the CCI is of the prima facie view, upon receipt of information or reference made by the government or a statutory authority, that the provisions of the Competition Act may have been violated.
6 Section 5 of the Competition Act includes an acquisition of asset where the acquirer enterprise or group and the target enterprise exceed the prescribed jurisdictional thresholds.
7 See In re: Shri Shamsher Kataria v. Honda Siel Cars India Ltd & Others (Case No. 03/2011, 25 August 2014) (the Auto Parts case). Three passenger vehicle manufacturers (PVMs) appealed the Auto Parts case before the COMPAT, which upheld the findings of the CCI. The COMPAT’s decision has also been appealed and is currently pending before the Supreme Court. More recently, another PVM has appealed the Auto Parts case before the National Company Law Tribunal (NCLAT). The NCLAT admitted the appeal and directed the PVM to deposit 10 per cent of the penalty amount (penalty deposit direction). The PVM challenged the penalty deposit direction before the Supreme Court. While the Supreme Court has granted an ad interim stay on the penalty deposit direction, a final decision in this regard is yet to be passed.
8 Conduct listed as abusive under Section 4 of the Competition Act.
9 Refusal to deal is identified as a type of vertical restriction in Section 3(4) of the Competition Act. Explanation (d) to Section 3(4) of the Competition Act defines ‘refusal to deal’ as including any agreement that restricts, or is likely to restrict, by any method, the persons or classes of persons to whom goods are sold or from whom goods are bought.
10 Paragraph 20.5.85, p. 157 of the Auto Parts case.
11 Taking the example of whether the sale of CT scan machines to hospitals would compromise the IP right of the CT scan machine manufacturer, the CCI concluded that this would not be the case as then all CT scan manufacturers would need to open diagnostic centres for diagnosing patients.
12 See Paragraph 20.6.22, p. 190 of the Auto Parts case.
13 Shri Shamsher Kataria v. Honda Siel Car & Others (see footnote 7); Toyota Kirloskar Motor Private Limited & Ors v. Competition Commission of India & Others (Appeal No. 60 of 2014).
14 Section 15(2) of the Copyright Act 1957: ‘Copyright in any design, which is capable of being registered under the Designs Act 2000, but which has not been so registered, shall cease as soon as any article to which the design has been applied has been reproduced more than fifty times by an industrial process by the owner of the copyright or, with his licence, by any other person.’.
15 In a recent decision, the CCI rejected the contention that an enterprise is free to exploit its IP in any way, including restricting online sales (M/s KC Marketing v. Oppo Mobiles MU Private Limited, Case No. 34 of 2018).
16 Tamil Nadu Consumer Products Distributors Association v. Vivo Communication Technology Company, Case No. 15 of 2018.
17 Tamil Nadu Film Exhibitors Association v. Competition Commission of India (Writ Appeals Nos. 1806 and 1807 of 2013).
18 Case No. 9 of 2016.
19 Automobiles Dealers Association, Hathras, UP v. Global Automobiles & Ors and Pooja Expo India Private Limited (Case No. 33 of 2011).
20 Pursuant to Explanation (e) to Section 3(4) of the Competition Act, an IP licensor could impose a price ceiling (i.e., a maximum resale price) but not a price floor (i.e., a minimum resale price).
21 See footnote 17.
22 Pursuant to Explanation (c) to Section 3(4) of the Competition Act, ‘exclusive distribution agreements’ include ‘any agreement to limit, restrict or withhold the output or supply of any goods or allocate any area or market for the disposal or sale of the goods are identified under the Competition Act as a vertical restraint and is prohibited if it results in an AAEC’.
23 Pursuant to Explanation (d) to Section 3(4) of the Competition Act, ‘refusal to deal’ includes ‘any agreement which restricts, or is likely to restrict, by any method the persons or classes of persons to whom goods are sold or from whom goods are bought’.
24 Pursuant to Explanation (d) to Section 3(4) of the Competition Act, ‘exclusive supply agreements’ include ‘any agreement restricting in any manner the purchaser in the course of his trade from acquiring or otherwise dealing in any goods other than those of the seller or any other person’.
25 Pursuant to Explanation (a) to Section 3(4) of the Competition Act, a ‘tie-in’ arrangement includes ‘any agreement requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods’.
26 Section 4(2)(c) of the Competition Act.
27 Section 4(2)(b)(i) of the Competition Act.
28 Since the CCI has held that for a vertical restriction to qualify as an anticompetitive vertical arrangement, market power is necessary, vertical restrictions may equally be examined as unilateral conduct (where the entity imposing the restriction is a dominant entity).
29 Justickets Pvt Ltd v. Big Tree Entertainment (Case No. 8 of 2016).
30 Section 4(2)(a)(ii) of the Competition Act.
31 Cases Nos. 37, 38 and 39 of 2016.
32 In addition to the trait value, MIU’s licensor entity in India (Mahyo Monsanto Biotech Limited) also charged a significant upfront one-off non-refundable fee of approximately US$75,000.
33 Monsanto Technology LLC and Ors v. Nuziveedu Seeds Ltd and Ors, CS (COMM) 132/2016.
34 Nuziveedu Seeds Ltd and Ors v. Monsanto Technology LLC and Ors, FAO (OS) (COMM) 86/2017, CM APPL 14331, 14335, 15669, 17064/2017.
35 Monsanto Technology LLC and Ors v. Nuziveedu Seeds Ltd and Ors, Civil Appeals Nos. 4616 and 4617 of 2018.
36 M/s Atos Worldline India Pvt Ltd v. M/s Verifone India Sales Pvt Ltd and Anr, Case No. 56/2012.
37 POS terminals along with their core applications are either sold directly to the customers, such as banks and retail outlets, or to the third-party processors (TPPs), who act on behalf of the acquiring banks and also render VAS to develop and integrate applications into POS terminals.
38 VAS providers develop applications including loyalty, bill payment, money transfer, top-up and dynamic currency conversion for integration into POS terminals. Customers of VAS providers, including banks and financial institutions, use these services to customise commission, install and maintain POS terminals at merchant locations.
39 TPPs track the process of payment from the time a card is swiped for payment until a customer receives a printed charge slip at the POS terminal of the merchant.
40 The CCI’s decision has been appealed and is currently pending before the NCLAT.
41 Sony Electronics v. Soundview Technologies Inc, 157 F Supp 2d 180 (D Conn 2001).
42 A standard, by definition, eliminates alternative technologies. When a patented technology is incorporated in a standard, adoption of the standard eliminates alternatives to patented technology. The value of a patent becomes significantly enhanced after the patent is incorporated in a standard.
43 Broadcom Corp v. Qualcomm Inc, 501 F 3d 297, 314 (Third Circuit 2007).
44 Patent hold-up refers to a situation where participants chose not to make a complete disclosure of their patents during the standard-selection process, and once the standards were widely adopted, demanded unreasonable royalty. Also see In re Rambus Inc, Docket No. 9302 (FTC 2002); In re Union Oil Co of Cal, Docket No. 9305 (FTC 2003); In the matter of Dell Computer Corp 121 FTC 616 (1996).
45 Director General is the investigative arm of the CCI.
46 Telefonaktiebolaget Lm Ericsson (Publ) v. Competition Commission Of India and Another (WP(C) Nos. 464/2014 and 1006/2014).
47 In re K Sera Sera Digital Cinema Pvt Ltd v. Digital Cinema Initiatives, LLC & Ors (Case No. 30 of 2015).
48 Section 3(5) of the Competition Act provides for an IP protection carve-out, by allowing the IP holder to impose reasonable conditions for protection of IP, but this carve-out applies only to horizontal and vertical agreements under Section 3 and not to abuse of dominance under Section 4.
49 The case is pending before the Supreme Court of India.
50 Combination Registration No. C-2016/11/456, AT&T and Time Warner Inc.
51 See ITT Promedia NV v. Commission of the European Communities (Case T-111/96); Professional Real Estate Investors Inc v. Columbia Pictures Industries, 508 US, 49, 60–61 (1993).
52 M/s Bull Machines Pvt Ltd v. M/s JCB India Ltd & Ors (Case No. 105 of 2013).
53 ibid.
54 Biocon Limited & Mylan Pharmaceuticals Private Limited v. F Hoffmann-La Roche AG & Ors (Case No. 68 of 2016).
55 CCI’s prima facie orders are essentially directions to the DG to initiate investigations.
56 InPhase Power Technologies Pvt Ltd v. ABB India Ltd (Case No. 12 of 2016).
57 See footnote 17.
58 See footnote 46.
59 See footnote 18.
