MANU/DE/0762/2016

Equivalent/Neutral Citation: 2016C ompLR497(Delhi), (2016)4C ompLJ122(Del), III(2016)C PJ60(Del.), 2016:DHC :2599, MIPR2016(2)91,
2016(66)PTC 58(Del)

IN THE HIGH COURT OF DELHI

W.P.(C) 464/2014, CM Nos. 911/2014 and 915/2014, W.P.(C) 1006/2014, CM Nos.
2037/2014 and 2040/2014
Decided On: 30.03.2016
Telefonaktiebolaget LM Ericsson (PUBL) Vs. Competition Commission of India and Ors.*
Hon'ble Judges/Coram:
Vibhu Bakhru, J.
Counsels:
For Appellant/Petitioner/Plaintiff: T.R. Andhyarujina, Prathiba M. Singh, Senior
Advocates, Chander M. Lall, Anand S. Patak, Ravishekhar Nair, Saya Choudhary Kapur,
Ashutosh Kumar, Archana Sahadeva, Shivanghi Sukumar, Sakshi Agarwal, Akashay
Nanda, Rukma George, Arjun Khera, B. Prashant Kumar, Aditya Jayraj, Sahib Singh
Chaddha and Harita Sahadeva, Advocates
For Respondents/Defendant: A.N. Haksar, Senior Advocate and Avinash Sharma,
Advocate
Case Note:
Judicial review - Maintainability of petition - Section 26(1) of Competition
Act, 2002/Act - Whether present petition was maintainable and that, whether
impugned orders passed under Section 26(1) of Act could be subjected to
judicial review under Article 226 of Constitution of India?
Held, indisputably, scope of Article 226 of Constitution of India was very
wide. Scope of judicial review of directions issued under Section 26(1) of Act
was limited and did not extend to examining merits of allegations. This Court
could not sit as an Appellate Court in exercise of its powers under Article 226
of Constitution of India. In terms of Section 26(1) of Act, a direction to cause
an investigation could be made by CCI only if it was of opinion that there
existed a prima facie case. Formation of such opinion was sine qua non for
exercise of any jurisdiction under Section 26(1) of Act. Thus, in cases where
Commission had not formed such an opinion or opinion so formed was ex facie
perverse in sense that no reasonable person could possibly form such an
opinion on basis of allegations made, any directions issued under Section
26(1) of Act would be without jurisdiction and would be liable to be set aside.
A challenge to jurisdiction of CCI to pass such directions under Section 26(1)
of Act must be examined on a demurrer; that was, information received under
Section 19 must be considered as correct; any dispute as to correctness or
merits of allegations, unless falsity of allegations was writ large and ex facie
apparent from record could not be entertained in proceedings under Article
226 of Constitution of India. Equally, in cases where direction passed is found
to be mala fide or capricious, interference by this Court under Article 226 of
Constitution of India would be warranted. Further since issue related to
jurisdiction of CCI, it would clearly fall within limited scope of judicial review

22-08-2024 (Page 1 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

as available in respect of directions passed by CCI under Section 26(1) of Act.
In addition, Ericsson had also contested impugned directions as being
perverse and without application of mind. It was trite law that no Authority
had jurisdiction to pass perverse orders and, therefore, this challenge would
also fall within limited scope of judicial review. Party concerned would have
to await final determination, that was, an order appealable under Section
53A(a) of Act before filing an appeal before Competition Appellate Tribunal
(COMPAT). However, if CCI refused to direct an investigation, an appeal would
lie against said order. Ericsson did have an alternative remedy of preferring an
appeal but that remedy would be available only on a final determination. Fact
that, Ericsson had an alternative remedy, albeit at a later stage, would not in
any manner disable this Court from entertaining present petition.
Applicability of provision - Meaning of enterprise - Whether Section 4(1) of
Act which was alleged to have been violated by Ericsson-could have any
application as it was contended that Ericsson was not an 'enterprise' within
meaning of Section 2(h) of Act?
Held, Section 4(1) of the Act expressly mandated that "no enterprise or group
shall abuse its dominant position". Alleged abuse of dominance would have to
be considered in context of relevant market in which an enterprise was found
to be in a dominant position. Moreover alleged acts or activities which
constitute abuse would not be dispositive of issue whether a person was an
'enterprise' or not. Definition of 'enterprise' would include any person
engaged in any activity, relating to production, storage, supply, distribution,
acquisition or control of articles or goods. Admittedly, Ericsson had a large
portfolio of patents and was, inter alia, engaged in developing technologies
and acquiring patents. Thus, if patents were held to be goods, Ericsson would
indisputably fall within definition of 'enterprise' within meaning of Section
2(h) of Act, since it was admittedly engaged in activities which entail
acquisition and control of patents. Word 'goods' would encompass all kinds of
property other than land, benefits to arise out of land and things attached to
earth, or permanently fastened to anything attached to earth. Grant of a
patent, essentially, provided grantee, right to exclude others from using
patented invention for specified period; it did not provide grantee (patentee)
right to use patent but merely a right to restrain others from doing so. Nature
of patent rights - right to exclude without right to use - did not in any manner
exclude patent rights from scope of 'goods' as defined under Sale of Goods
Act, 1930. All kinds of property (other than actionable claims, money and
immovable property) would fall within definition of 'goods' and this would
also include intangible and incorporeal property such as patents. Disputes as
to whether Ericsson had fallen foul of any of Clauses of Section 4(2) of Act
were as yet open and had not been finally adjudicated. Proceedings initiated
by CCI for violation of Section 4(1) of Act could not, be held to be without
jurisdiction on account of Ericsson not being an enterprise within meaning of
Section 2(h) of Act.
Interpretation - Consistency between enactments - Whether Patents Act as a
special Act would prevail over Competition Act?
Held, Patents Act not only provides for a statutory grant of Patent rights but
also contained provisions relating to exercise of and enforcement of those

22-08-2024 (Page 2 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

rights. Further, Patents Act also included provisions for redressal in event of
abuse of Patents rights. On other hand, Competition Act prescribed certain
anti-competitive agreements and abuse of dominance in addition to
regulating combinations to avoid concentration of market power in general.
Competition Act and Patents Act were special acts operating in their
respective fields, however, viewed in aforesaid perspective Patents Act would
be a Special Act, vis-Ã -vis, Competition Act in so far as patents were
concerned. Patents Act was a self contained code. An enactment might be
considered as special in relation to one Act and yet be considered as general
enactment in relation to another statute. Intention of Parliament in enacting
Competition Act was not to curtail or whittle down full scope of any other law
and, therefore, it was expressly stated that, Competition Act would be in
addition to, and not in derogation of any other Act. In event of any
irreconcilable inconsistency between two legislations, later special statute
would override prior general statute, even though earlier general statute
contained a non-obstante clause. Thus, if there were irreconcilable
differences between Patents Act and Competition Act in so far as anti-abuse
provisions were concerned, Patents Act being a special act shall prevail
notwithstanding provision of Section 60 of Competition Act. Legislative
intention that, Competition Act and Patents Act be worked harmoniously.
Thus, it was mandated that, Controller take into account any finding of anti-
competitive practice, that was returned after a judicial or administrative
process including by CCI under Competition Act, while settling terms of a
compulsory licence issued to remedy such practice. An order inconsistent with
other enactments did not necessarily imply a repeal or abrogation of other
enactments. It merely implied that, order shall be given effect to and to that
extent provisions of other statutes that were inconsistent shall be bypassed.
Section 84 of Patents Act, provided specific remedy to person seeking relief,
orders passed by CCI were in rem. Thus, operative width of two enactments
was different. Question as to whether a condition imposed under agreement
was reasonable or not would be a matter which could only be decided by CCI
under provisions of Competition Act. Neither Controller of Patents discharging
his functions in terms of Patents Act, nor a Civil Court would have any
jurisdiction to adjudicate whether an agreement fall foul of Section 3 of
Competition Act. This was so because Controller of Patents could not exercise
any powers which were not specifically conferred by Patents Act and by virtue
of Section 61 of Competition Act, jurisdiction of Civil Courts to entertain any
suit or proceedings in respect of any matter which CCI or COMPAT was
empowered to determine, stand expressly excluded. Thus, in so far as scope
of Section 3 of Competition Act was concerned, there did not appear to be any
overlap or inconsistency with Patents Act. There was no irreconcilable
repugnancy or conflict between Competition Act and Patents Act. And, in
absence of any irreconcilable conflict between two legislations, jurisdiction of
CCI to entertain complaints for abuse of dominance in respect of Patent rights
could not be ousted. Proviso to Section 84(6)(iv) could not be read to mean
that, a patentee's anti-competitive conduct would have to be first established
in proceedings under Competition Act before Controller could take that into
account. Sub-section (6) of Section 84 only indicated certain factors that
would be required to be taken into account by Controller and question
whether a patentee had adopted anti-competitive practices could also be
considered by Controller. However, if CCI had finally found a patentee's
conduct to be anti-competitive and its finding had attained finality, Controller

22-08-2024 (Page 3 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

would also proceed on said basis and-on principle akin to issue estoppel -
patentee would be estopped from contending to contrary. Jurisdiction of CCI
under Competition Act was ousted in matters relating to patents could not be
accepted.
Dominant position - Whether allegations made could be construed as an
abuse of dominance?
Held, since disputes relate to jurisdiction of CCI to entertain complaints made
by Micromax and Intex, same must be addressed on a demurrer. Allegations
made in complaints be accepted as true to determine whether
Micromax/Intex were entitled to any relief on that basis. There was good
ground to hold that seeking injunctive reliefs by an SEP holder in certain
circumstances might amount to abuse of its dominant position. Risk of
suffering injunctions would in certain circumstances, clearly exert undue
pressure on an implementer and thus, place him in a disadvantageous
bargaining position vis-Ã -vis an SEP holder. A patent holder had a statutory
right to file a suit for infringement; but as stated earlier, Competition Act was
not concerned with rights of a person or an enterprise but exercise of such
rights. Position of a proprietor of an SEP could not be equated with a
proprietor of a patent which was not essential to an industry standard. While
in former case, a non-infringing patent was not available to a
dealer/manufacturer; in latter case, dealer/manufacturer might have other
non-infringing options. It was, thus, essential that bargaining power of a
dealer/manufacturer implementing standard be protected and preserved. In
present case, apart from instituting suits for infringement against Micromax
and Intex, Ericsson had also threatened Micromax with complaints to SEBI,
apparently, while Micromax was contemplating and/or in process of floating a
public offer of its shares. Such threats were, made with object of influencing
Micromax to conclude a licensing agreement. It was not necessary for this
Court to examine whether in facts of this case, such threats also constitute an
abuse of Ericsson's dominant position. Suffice it to state that in certain cases,
such threats by a proprietor of a SEP, who was found to be in a dominant
position, could be held to be an abuse of dominance. Clearly, in certain cases,
such conduct, if it was found, was directed in pressuring an implementer to
accept non-FRAND terms, would amount to an abuse of dominance.
Jurisdiction - Sections 4 and 2 of Competition Act, 2002/Act - Whether
disputes, being subject matter of suits, could not be entertained by
Competition Commission of India/CCI?
Held, proceedings under Competition Act before CCI were not in nature of a
private lis. Object of proceedings was to prevent and curb practices which had
an adverse effect on competition in India. Proceedings in suits filed by
Ericsson and proceedings before CCI were not mutually exclusive. It was not
necessary that, an adverse finding against Ericsson by CCI would necessarily
results in grant of relief as prayed for by Intex or Micromax. Scope of enquiry
before CCI would obviously be limited to whether Ericsson had abused its
dominant position and, if so found, CCI might issue orders as contemplated
under Section 27 of Act. Additionally, it must be noted that, Ericsson had filed
a suit after Intex had made a complaint before CCI. Question whether there
was any abuse of dominance was solely within scope of Competition Act and a

22-08-2024 (Page 4 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

civil Court could not decide whether an enterprise had abused its dominant
position and pass orders as were contemplated under Section 27 of Act.
Merely because a set of facts pleaded in a suit might also be relevant for
determination whether Section 4 of Act had been violated, did not mean that,
a civil Court would be adjudicating that issue. Further, merely because certain
reliefs sought by Micromax and Intex before CCI were also available in
proceedings under Patents Act also did not exclude subject matter of
complaints from scope of Competition Act. An abuse of dominant position
under Section 4 of Act was not a cause that could be made a subject matter of
a suit or proceedings before a civil Court.
Dominant Position - Maintainability of claim - Whether Micromax/Intex could
maintain a complaint for abuse of dominance since they had contested
Ericsson's claim for infringement?
Held, proceedings under Competition Act were not in nature of private lis and
scope of enquiry would be only limited to whether there was any abuse of
dominance which was proscribed under Section 4 of Act. Conduct of Micromax
and Intex would have to be taken into account in determining whether
Ericsson had violated its FRAND obligations. A potential licensee could not be
precluded from challenging validity of patents in question. Expression "willing
licensee" only meant a potential licensee who was willing to accept licence of
valid patents on FRAND terms. This did not mean that he was willing to
accept a licence for invalid patents and he had to waive his rights to
challenge patents in question. Any person, notwithstanding that he had
entered into a licence agreement for a patent, would have a right to challenge
validity of patents. This was also clear from Clause (d) of Section 140(1) of
Patents Act, which was introduced with effect from 20th May, 2003. Said
clause expressly provided that, it would not be lawful to insert in any contract
in relation to sale or lease of a patented article or in a licence to manufacture
or use of patented article or in a licence to work any process protected by a
patent, a condition effect of which might be to prevent challenges to validity
of a patent. Thus, a licensee could always reserve its right to challenge
validity of a patent and could not be precluded from doing so. A potential
licensee, could without prejudice to his rights to challenge validity of patents
could take such steps or proceedings which were premised on patents being
valid. Doctrine of election would have no application in this case and it was
not necessary for a potential licensee to elect to accept validity of patents in
order to assail its abuse. It would not be necessary for Micromax or Intex to
waive their rights to challenge a patent for instituting a complaint which was
based on premise that, Ericsson's patents were valid. CCI, could not be faulted
for proceeding on basis that, Ericsson holds SEP's that it asserts it holds; at
any rate, Ericsson could not be heard to complain against CCI proceeding on
such basis.
Jurisdiction - Whether impugned orders were without jurisdiction as being
perverse?
Held, in facts and circumstances, it was difficult to form an opinion that,
conduct of Ericsson indicated any abuse of dominance considering fact that, it
did appear that Ericsson had made efforts to arrive at a negotiated settlement
with Micromax and Intex, who on other hand, appear to have been

22-08-2024 (Page 5 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

manufacturing/dealing with products using patented technologies without
either obtaining a licence from Ericsson or approaching Controller of Patents
for a compulsory licence. However, it was not open for this Court, in
proceedings under Article 226 of Constitution of India, to supplant its views
over that of concerned Authority; in this case CCI. This was not a case where
it could be held that, no reasonable person could have formed a view that,
complaints filed by Intex and Micromax, prima facie, disclosed abuse of
dominance by Ericsson. This was also not a case where impugned orders could
be stated to have been passed on no material at all. Therefore, impugned
orders passed by CCI were not without jurisdiction. Although at stage of
passing an order under Section 26(2) of Act, CCI was not required to enter
into an adjudicatory process, nonetheless, it had to form a prima facie view
and this would include a view as to its jurisdiction to entertain
information/complaint. It was thus apposite for CCI to notice contours of
controversy raised by Ericsson and take a prima facie view. This would also be
necessary to outline area in which investigations were required to be
undertaken by DG. Ericsson had also filed complaints relating to high-handed
and officious manner in which investigations were being conducted. Ericsson
had also expressed its apprehension as to a breach of confidentiality in
relation to confidential information provided to CCI. CCI, DG and employees of
CCI were obliged to maintain confidentiality and secrecy of confidential
information provided by Ericsson and must take adequate measures to
maintain the same. Petitions dismissed.
JUDGMENT
Vibhu Bakhru, J.
1 . These petitions have been filed by Telefonaktiebolaget LM Ericsson (Publ), a
company incorporated under the Laws of Sweden (hereafter also referred to as
'Ericsson'), inter alia, impugning orders dated 12th November, 2013 and 16th January,
2014 (hereafter referred to as the 'impugned order' or 'impugned orders') passed by the
Competition Commission of India (hereafter 'CCI') under Section 26(1) of the
Competition Act, 2002 (hereafter referred to as 'the Competition Act'). The impugned
order dated 12th November, 2013 was passed pursuant to an information filed by
Micromax Informatics Ltd. (hereafter 'Micromax') under Section 19(1)(a) of the
Competition Act and the same is the subject matter of W.P.(C) No. 464/2014 (hereafter
also referred to as the 'Micromax Petition') and the impugned order dated 16th January,
2014 was passed pursuant to an information filed by Intex Technologies (India) Ltd.
(hereafter 'Intex') and is the subject matter of W.P. (C) No. 1006 of 2014 (hereafter
also referred to as the 'Intex Petition').
2 . The controversy raised in these petitions are similar and, therefore, these petitions
were taken up together.
3 . Both Micromax and Intex have alleged that Ericsson, which has a large portfolio of
Standard Essential Patents (SEPs) in respect of technologies that are used in mobile
handsets and network stations, has abused its position of dominance. The information
filed by them before the CCI under Section 19 of the Competition Act has persuaded the
CCI to pass the impugned orders directing the Director General (DG) CCI to investigate
the matter regarding violation of the provisions of the Competition Act. The CCI has
further directed that if DG finds that Ericsson has contravened the provisions of the
Competition Act, he shall also investigate the role of persons who at the time of such

22-08-2024 (Page 6 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

contravention, were in-charge of and responsible for the conduct of Ericsson so as to fix
the responsibility of such persons under Section 48 of the Competition Act. The
substratal dispute between Ericsson and Micromax/Intex relate to Ericsson's demand for
royalty in respect of SEPs held by Ericsson and which it claims has been infringed by
Micromax and Intex.
4 . According to Ericsson, the impugned orders passed by the CCI are without
jurisdiction as it lacks the jurisdiction to commence any proceeding in relation to a
claim of royalty by a proprietor of a patent (hereafter also referred to as a 'patentee').
Ericsson contends that any issue regarding a claim for royalty would fall within the
scope of Patents Act, 1970 (hereafter the 'Patents Act') and cannot be a subject matter
of examination under the Competition Act. This, essentially, is the principal controversy
involved in these petitions.
Introduction
5 . Ericsson was founded in 1876 and is a flagship company of the Ericsson Group.
Ericsson is engaged in developing and providing equipment and services relating to the
information and communication technology. It is claimed that Ericsson is one of the
largest telecommunications company in the world and the Ericsson Group designs and
manufactures telecommunication equipment, setups and manages telecommunications
network and is engaged in research and development of frontline technologies in the
field of data communication and mobile networks. Ericsson claims that it has played a
significant role in the growth and expansion of the telecommunications industry in India
and its involvement in India dates back to 1903, when Ericsson supplied manual switch
boards to the Government of India. It is claimed that Ericsson has a significant presence
in India with around 20,000 employees across 25 offices located in various parts of the
country.
6 . Micromax is an Indian company and its registered office is situated in Gurgaon,
Haryana. Micromax claims that it is the 12th largest mobile handset manufacturer in the
world and is focused on providing innovative products catering to the needs of the
Indian consumers. Micromax states that it has a product portfolio of more than 60
models of mobile phones.
7 . Intex is a company incorporated under the Companies Act, 1956 and has its
registered office in New Delhi. It has a pan-India presence and its product portfolio
consists of over 250 items from 29 product groups including Mobile Phones, Multimedia
Speakers, Desktops LED/LCD TVs CRT, DVD players, Computer UPS, Cabinets and
Headphones. Intex claims that it offers products with innovative and high-end
specifications at affordable prices. Intex claims that it has a Centre for market research
and related design and development in Delhi, which is well-equipped and is manned by
highly qualified personnel. The said centre is engaged in product development, bench
marking, quality up-gradation, etc. Intex sources mobile devices - which are made to
their design and specifications -from various countries and the same are marketed
under its brand name. The mobile phones business of Intex contributes approximately
65% of Intex's revenues. Intex states that it provides approximately 35 models of
mobile phones in the price range of Rs. 950/- to Rs. 3,000/-. Intex also has a portfolio
of smart phones in the price range of Rs. 4,000/- to Rs. 25,000/-. In addition, Intex
also develops mobile phone applications for its mobile phones.
8 . Ericsson holds several patents in India in respect of technologies relating to
infrastructure equipment, including 2G, 3G and 4G networks as well as mobile phones,

22-08-2024 (Page 7 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

tablets, data cards and dongles etc. Some of the patents held by Ericsson are SEPs.
Essentially, these are the technologies which have been accepted as standards to be
uniformly accepted and implemented across various countries in order to ensure
uniformity and compatibility for a seamless transmission of data and calls across the
world.
9. The use of a standard technology ensures that there is a uniformity and compatibility
in communications network across various countries. Thus, any technology accepted as
a standard would have to be mandatorily followed by all enterprises involved in the
particular industry. In order to accept and lay down standards, various Standard Setting
Organizations' (SSOs) have been established. European Telecommunication Standard
Institute (ETSI) is one such body, which has been set up to lay down the standards for
the telecommunication industry and particularly 2G (GSM, GPRS, EDGE), 3G (UMTS,
WCDMA, HSPA) and 4G (LTE) standards. In cases where the technology adopted as a
part of an essential standard is patented, the technology/patent is referred to as a
Standard Essential Patent (hereafter 'SEP'). The implication of accepting a patented
technology as a standard is that all devices/equipments compliant with the established
standard would require to use the patented technology and its manufacture would
necessarily require a licence from the patentee holding the SEP.
10. In order to ensure that a patentee cannot prevent access to SEP, clause 6.1 of the
"ETSI Intellectual Property Rights Policy" expressly provides that:
"When an ESSENTIAL IPR relating to a particular STANDARD or TECHNICAL
SPECIFICATION is brought to the attention of ETSI, the Director-General of
ETSI shall immediately request the owner to give within three months an
irrevocable undertaking in writing that it is prepared to grant irrevocable
licences on fair, reasonable and non-discriminatory ("FRAND") terms and
conditions under such IPR to at least the following extent:
• MANUFACTURE, including the right to make or have made customized
components and sub-systems to the licensee's own design for use in
MANUFACTURE;
• sell, lease, or otherwise dispose of EQUIPMENT so MANUFACTURED;
• repair, use, or operate EQUIPMENT; and
• use METHODS
The above undertaking may be made subject to the condition that those who
seek licences agree to reciprocate."
Admittedly, Ericsson is bound by the aforesaid policy and in terms thereof, has
undertaken to offer its SEPs on Fair, Reasonable And Non-Discriminatory (FRAND)
Terms. The disputes between the parties relate to the patents concerning the
technologies pertaining to 2G and 3G devices that are claimed by Ericsson to be SEP's
for which Ericsson is bound to offer licences on FRAND terms.
Substratal Disputes
11. Ericsson alleges that the products manufactured and dealt with by Micromax and
Intex violate its patents. Ericsson further claims that it made best efforts to negotiate a
Patent Licencing Agreement (PLA) with Micormax and Intex on FRAND terms but its

22-08-2024 (Page 8 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

efforts were unsuccessful. Consequently, Ericsson was constrained to initiate
proceedings for infringement of its patents.
12. The proceedings initiated by Ericsson against Micromax (CS(OS) No. 442/2013),
including the course of events leading to initiation of the proceedings as well as filing of
information by Micromax before CCI, is briefly outlined as under:
"12.1. Ericsson sent a communication on 3rd November, 2009 to Micromax
alleging that the products manufactured by Micromax were in violation of the
patents held by Ericsson and invited Micromax to negotiate for a patent licence
on FRAND terms. Ericsson also called upon Micromax to sign a Non-Disclosure
Agreement (NDA) for commencing the negotiation process. Micromax replied by
expressing its inability to respond to Ericsson's letter dated 03.11.2009 in
absence of the requested details of the subject patents (Ericsson's SEPs).
12.2. Ericsson states that by a letter dated 5th February, 2010, it provided
Micromax with certain examples of its SEPs in India and also with documents
and mapping test results, which established that one of the Micromax's mobile
device (X332) infringed Ericsson's SEPs. Ericsson reiterated its request for a
meeting and once again called upon Micromax to execute an NDA, without
which it expressed its difficulty in providing details pertaining to its claim of
mapping.
12.3. Ericsson states that on 28th April, 2011, a meeting was held between the
representatives of Ericsson and Micromax, at which Micromax demanded further
information regarding Ericsson's patents. According to Ericsson, it supplied the
necessary information pertaining to its patents as well as further information in
respect of infringement of Ericsson's patents by other products of Micromax;
however, Micromax disputes that it received the necessary and relevant
information.
12.4. Apparently, after a further meeting and much correspondence, Ericsson
and Micromax executed an NDA on 16th January, 2012. However, the parties
could not arrive at a consensus with respect to a PLA.
12.5. Consequently, on 4th March, 2013, Ericsson filed a patent infringement
suit being CS(OS) No. 442/2013 in this Court. Ericsson has alleged that eight of
the SEPs held by it, which related to the three technologies pertaining to 2G
and 3G devices were infringed by Micromax. The three technologies are briefly
described as under:--
A. Adaptive Multi-Rate (AMR) speech codec - a feature that conserves
use of bandwidth and enhances speech quality; (AMR)
B. Feature in 3G phones-Multi service handling by a Single Mobile
Station & A mobile ratio for use in a mobile radio communication
system: (3G)
C. Enhanced Data Rates for GSM Evolution (EDGE) - A transceiving unit
for block automatic retransmission request; (EDGE)
The eight patents claimed to be infringed by Ericsson are as under:--

22-08-2024 (Page 9 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 12.6. On 6th March, 2013, this Court passed an ad-interim order directing the
Custom Authorities to inform Ericsson as and when the consignments of mobile
phones are imported by Micromax. This Court also directed the Custom
Authorities to decide Ericsson's objections, if any, in accordance with
Intellectual Property Rights (Imported Goods), Enforcement Rules, 2007 till
further orders. In addition, the Court also appointed a Local Commissioner to
inspect the premises of Micromax and collect documents relating to sale and
import of products that allegedly infringed Ericsson's patents.
12.7. Aggrieved by the aforesaid order, Micromax preferred an appeal being
FAO(OS) No. 143/2013 before a Division bench of this Court which was
disposed of by an order dated 12th March, 2013. The Division Bench further
directed the Custom Authorities to decide Ericsson's objections, if any, in
respect of the goods imported within the shortest possible time. The Court also
observed that Micromax would have the right to file an application under Order
XXXIX Rule 4 of the Code of Civil Procedure (hereafter 'CPC') and if such
application was made, the mandate of law required that an endeavor be made
to decide the same within a period of 30 days. The Court also clarified that its
order would not be read as an expression of opinion in favour of either party.
12.8. Thereafter, Micromax filed an application under Order XXXIX Rule 4 of
CPC seeking vacation of the ex-parte interim order passed by the learned Single
Judge on 6th March, 2013. On 19th March, 2013, the Court issued notice on the
said application (being I.A No. 4694/2013 IN CS(OS) No. 442/2013) and
passed the following order with the consent of parties:
"1. Ericsson and Micromax agree to negotiate a FRAND License
Agreement for the next one month, based on FRAND terms.
2 . Micromax/Customs shall intimate Ericsson's notified person or
counsel for Ericsson whenever a consignment arrives at the Customs.

22-08-2024 (Page 10 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 Ericsson's representative or its counsel will, without any delay and
within twenty-four hours, take inspection of the consignment.
3 . Micromax shall then, pending final determination of royalties
payable by the parties, agree to abide by the following interim
payments as per term sheet enclosed with letter dated 05th November,
2012, purely as an ad-interim arrangement and subject to the final
outcome of its negotiations with Ericsson.
A. For phones/devices capable of GSM - 1.25% of sale price.
B. For phones/devices capable of GPRS + GSM - 1.75% of sale
price.
C. For phones/devices capable of EDGE + GPRS + GSM - 2%
of sale price.
D. WCDMA/HSPA phones/devices, calling tablets - 2% of the
sale price.
E. Dongles, data cards - USD 2.50.
Micromax undertakes to make a deposit of interim payments in Court,
as set out above, within five working days of the intimation by Customs
of the arrival of the consignment. Post inspection, Ericsson will
forthwith inform the Customs that it has no objection to the release of
the consignment so that the consignment could immediately be handed
over to Micromax.
Both the parties agree that the royalties, if any, for the past period will
be negotiated as part of the final FRAND agreement that may be arrived
at between the parties."
12.9. The aforesaid interim arrangement was extended by an order dated 10th
April, 2013 and Justice A.P. Shah (Retired Chief Justice, High Court of Delhi)
was appointed as a mediator. The Court further directed Ericsson to disclose to
Micromax agreements entered into by it with similarly placed parties on the
condition of confidentiality.
12.10. The efforts to resolve the disputes through mediation were unsuccessful
and on 10th May, 2013, the Mediator filed a report informing the court about
the failure of the mediation proceedings.
12.11. After failure of the efforts to mediate, on 24th June, 2013, Micromax
filed information under Section 19(1)(a) of the Competition Act, before CCI,
inter alia, accusing Ericsson of abusing its position of dominance in the relevant
market. This was registered by the CCI as Case No. 50 of 2013.
12.12. The interim application filed by Ericsson (IA No. 3825/2013) as well as
the application filed by Micromax under order XXXIX Rule 4 CPC (IA 4694/2013
in the suit CS(OS) No. 442/2013) was disposed of by the Court on 12th
November, 2014; the Court modified the interim arrangement agreed to by the
parties and directed Micromax to pay royalty at the following rates:--
From the date of filing of the suit till 12th November, 2015:--

22-08-2024 (Page 11 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 "i. For phones/devices capable of GSM - 0.8% of net selling
price;
ii. For phones/devices capable of GPRS + GSM - 0.8% of net
selling price;
iii. For phones/devices capable of EDGE + GPRS + GSM -1%
of net selling price;
iv. WCDMA/HSPA phones/devices, calling tablets - 1% of the
net selling price."
From 13th November, 2015 to 12th November, 2016:--
"i. For phones/devices capable of GSM - 0.8% of net selling
price;
ii. For phones/devices capable of GPRS + GSM - 0.8% of net
selling price;
iii. For phones/devices capable of EDGE + GPRS + GSM -1.1%
of net selling price;
iv. WCDMA/HSPA phones/devices, calling tablets - 1.1% of the
net selling price."
From 13th November, 2016 to 12th November, 2020:--
"i. For phones/devices capable of GSM - 0.8%) of net selling
price;
ii. For phones/devices capable of GPRS + GSM - 1% of net
selling price;
iii. For phones/devices capable of EDGE + GPRS + GSM 1.3%
of net selling price;
iv. WCDMA/HSPA phones/devices, calling tablets - 1.3% of the
net selling price."
12.13. A perusal of the abovementioned order indicates that Ericsson had
produced twenty-six licence agreements which were perused by the Court and
the royalty rates were fixed after perusing the said agreements and after
hearing the parties. The Court had, however, clarified that the arrangement was
an interim arrangement and was not a determination of the FRAND rates.
12.14. The learned counsel for Micromax informed this court that Micromax
had sought a modification of the aforesaid order dated 12th November, 2014,
which was not accepted and Micromax's application (IA No. 10933/2015) was
disposed of by an order dated 7th July, 2105. Micromax has appealed against
the said order before a Division Bench of this Court (FAO No. 555/2105) which
is stated to be pending.
12.15. On 7th July, 2015, the following issues were framed in CS(OS) No. 442
of 2013:

22-08-2024 (Page 12 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 "1. Whether the plaintiff is the registered proprietor of the suit patents
being IN203034, IN203036, IN234157, IN203686, IN213723,
IN229632, IN240471 and In241747? OPP
2 . Whether the suit patents being IN203034, IN203036, IN234157,
IN203686, IN213723, IN229632, IN240471 and IN241747 are Standard
Essential Patents? OPP
3 . Whether the plaintiff has offered to Defendant No. 2 a license on
fair, reasonable and non-discriminatory (FRAND) terms and conditions?
OPP
4. Whether the defendant No. 2 is an 'unwilling licensee'? OPP
5 . Whether the defendant No. 2 has bonafidely negotiated with the
plaintiff in order to take a license in respect of the plaintiff's Standard
Essential Patents? OPD
6 . Whether the defendant No. 2 is infringing the suit patents being
IN203034, IN203036, IN234157, IN203686, IN213723, IN229632,
IN240471 and IN241747? OPP
7 . Whether the suit patents being IN203034, IN203036, IN234157,
IN203686, IN213723, IN229632, IN240471 and IN241747 are invalid in
nature and are liable to be revoked in the light of the grounds raised by
the defendant No. 2 in its counter claims? OPD
8 . Whether the plaintiff is entitled to damages/payment of royalties
from the defendant No. 2 for sales made by it of devices working as per
the plaintiffs patented technology and if so, since what period and for
what amounts? OPP.
9. Relief."
13. A brief outline of the proceedings initiated by Ericsson against Intex (CS(OS) No.
1045/2014) including the course of events leading to initiation of the proceedings as
well as filing of information by Intex before the CCI, is as under:
"13.1. Ericsson sent a communication to Intex on 16th December, 2008
informing Intex of the infringement of its SEPs and requested for a meeting to
discuss a PLA. Intex responded by stating that it was not aware of Ericsson's
patents in India that were required to be complied with. Thereafter - during the
period January, 2009 to November, 2009 - Ericsson and Intex held negotiations
for an amicable resolution of the issues but the same were unsuccessful.
13.2. It appears that one of the principal issues raised by Intex concerned the
execution of a NDA which included a covenant that the NDA would be governed
by the substantive laws of Sweden and the disputes related thereto would be
subject to the Swedish jurisdiction. In view of the reluctance on the part of
Intex to subject itself to a laws and jurisdiction of a foreign State, Ericsson
proposed a modified NDA, which would be governed by the laws of Singapore
and subject to the jurisdiction in that country.
13.3. On 26th March, 2013, Intex expressed its willingness to obtain a licence
from Ericsson and sought commercial terms for the same. However, Ericsson

22-08-2024 (Page 13 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 expressed its inability to provide the same till an NDA was executed between
the parties. Finally, an NDA was executed between Ericsson and Intex on 12th
April, 2013.
13.4. Ericsson provided its commercial terms for a PLA to Intex on 23rd April,
2013 and the same were discussed between the parties at a meeting held on
23rd May, 2103, wherein Ericsson agreed to provide the revised terms. These
were provided by Ericsson to Intex on 30th May, 2013. Intex made a counter-
offer on 19th June, 2013, which, according to Ericsson was unfeasible.
13.5. On 23rd August, 2014, Intex filed revocation proceedings in respect of
five SEPs held by Ericsson before the Intellectual Property Appellate Board
(IPAB). Ericsson claims that this was not communicated to it and it continued to
make efforts to resolve the impasse.
13.6. It appears that the negotiations between Ericsson and Intex continued
thereafter. Admittedly, the licence offered by Ericsson to Intex included its
entire portfolio of 2G and 3G SEPs. On 19th September, 2013, Ericsson
explained to Intex that the licence offered by it would also include any new
patent that may be granted to Ericsson in relation to the aforesaid technological
standards. According to Intex, the offer made by Ericsson was unreasonable.
13.7. On 30th September, 2013, Intex filed a complaint (information) under
Section 19(1)(a) of the Competition Act before the CCI, which was registered as
Case No. 76 of 2013.
13.8. By an impugned order dated 16th January, 2014 passed under Section
26(1) of the Competition Act, CCI directed the DG to investigate whether Intex
had violated the provisions of the Competition Act. This led Ericsson to file the
Intex petition.
13.9. Thereafter, on 15th April, 2014, the Petitioner filed a patent infringement
suit against Intex being CS(OS) No. 1045/2014, which was similar to the suit
filed by Ericsson against Micromax (CS(OS) No. 442/2013) in all material
aspects. The court has also passed an interim order for payment of royalty at
rates similar to that as directed in the case of Micromax. Intex has also not
accepted the same and has preferred an appeal before a division bench of this
court (FAO No. 138/2015) which is stated to be pending consideration."
Information filed by Micromax under Section 19(1)(a) of the Competition Act
14. On 24th June, 2013 Micromax filed a complaint/information under Section 19(1)(a)
of the Competition Act before the CCI, inter alia, alleging that Ericsson had contravened
the provisions of the Competition Act.
15. Micromax alleged that Ericsson had abused its dominant position by demanding an
unfair royalty structure from Micromax in respect of its SEPs relating to the GSM
Technology. It asserted that the royalty demanded by Ericsson was excessive and had
no basis in the Indian commercial realities. Micromax contended that profit margin of
Indian mobile companies was in the range of six to eight percent and if Micromax was
called upon to pay royalties at the rate demanded by Ericsson, it's business would be
rendered unviable.
16. It was further alleged that Ericsson had abused its position by using the threat of

22-08-2024 (Page 14 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

interim injunction and custom seizures to coerce Micromax to accept the licence terms
demanded by it.
1 7 . Micromax also accused Ericsson of attempting to limit the development of
technology relating to mobile phones in India to the prejudice of the Indian consumers
by seeking excessive royalties for its technology. Micromax asserted that as a
consequence of Ericsson's demand for excessive royalties, the Indian handset
manufacturers were denied market access in respect of the GSM market.
18. Micromax referred to various notices issued by Ericsson in support of its claim that
the conduct of Ericsson was threatening and inflexible. In particular, Micromax referred
to a notice dated 29th June, 2011 whereby Ericsson had threatened to file an intimation
with Securities Exchange Board of India (SEBI) in the context of Micromax's IPO (Initial
Public Offer). Micromax also referred to Ericsson's notice dated 5th November, 2012,
whereby, Micromax was called upon to sign the licence agreement based on the
attached term sheets failing which Ericsson had threatened to pursue other available
options.
Intex's Information under Section 19(1)(a) before the CCI
19. Intex also filed information under Section 19(1)(a) of the Competition Act, inter
alia, alleging that Ericsson and its subsidiary in India, Ericsson India Pvt. Ltd., had
abused its dominant position. The specific allegations made by Intex are summarized as
under:--
"19.1. That Ericsson was operating in India through its subsidiary Intex India
Pvt. Ltd.
19.2. That Ericsson had abused its position of dominance by insisting on Intex
obtaining licences without disclosing the patents that were alleged to have been
infringed by Intex.
19.3. That Ericsson had insisted on execution of a NDA as a necessary pre-
condition for informing Intex of the specifics of the alleged infringement. Intex
further complained that Ericsson had compelled Intex to sign a NDA which
contained several onerous clauses including one that compelled Intex to accept
the jurisdiction and governing laws of Singapore as applicable in respect of the
NDA. This, according to Intex, exposed it to potentially onerous legal costs.
Further, the terms of the NDA also prevented Intex from sharing the information
with the vendors, who had supplied the products to Intex on an express
representation that the products supplied by them did not infringe Intellectual
Property Rights (IPRs) of any third party.
19.4. That Ericsson exerted pressure on Intex to conclude a PLA without
providing complete details of the patents and on terms which were alleged to
be "grossly onerous, oppressive, unfair, unreasonable and discriminatory".
19.5. That the royalty rates demanded by Ericsson were exorbitant and
excessive.
19.6. That the royalty rates were based at the end value of the mobile device
rather than the components of the device using the patented technology. It was
alleged that in this manner, Ericsson had sought to unfairly appropriate the
value created by others in respect of the end-product.

22-08-2024 (Page 15 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 19.7. That Ericsson was not only charging separate rates from SEP holding
companies and non-SEP holding companies but was also offering different
royalty rates and commercial terms to potential licensees from the same
category. And, it was doing so with a view to make unreasonable gains. It was
alleged that this had the effect of altering the conditions of competition.
19.8. That Ericsson had failed to offer any objective basis for its royalty
demands.
19.9. That Ericsson had offered its entire pool of patents as a bouquet and had
refused to offer specific royalty rates in respect of each of the SEPs allegedly
infringed by Intex. Thus, Ericsson was endeavoring to compel Intex to acquire
licence for all its patents relating to 2G and 3G technologies without giving any
choice to Intex to acquire the rights in respect of only some of the specific
patents. This, according to Intex would amount to a practice of bundling and
tying, which is proscribed under the Competition Act.
19.10. That the conduct of Ericsson was opaque and non-transparent and, in
effect, sought to impose unfair and discriminatory terms/prices and restrict the
provisions of goods and services."
The impugned orders dated 12th November, 2013 in Case No. 50/2013 and 16th
January, 2014 in Case No. 76/2013
2 0 . The CCI passed the impugned order dated 12th November, 2013 under Section
26(1) of the Competition Act pursuant to an information filed by Micromax. The CCI
took note of the fact that Ericsson was a member of ETSI and held several SEPs which
were recognized as standard by ETSI. The CCI also noted that as per clause 6 of ETSI
IPR policy, the IPR holder/owner is required to give an irrevocable written undertaking
that it would grant irrevocable licence on FRAND Terms to be applied fairly and
uniformly to similarly placed parties. The CCI noted that Ericsson had declared that it
had standard patents in respect of 2G, 3G and EDGE technologies, which were also
accepted by the Department of Telecommunications, Ministry of Communications and
Information Technology, Government of India. The 'Unified Access Service License'
granted by the Government of India also required all GSM/CDMA network and
equipments imported into India to meet the international standards of international
telecommunication technology. In view of the fact that in case of SEPs, there is no
possibility of using a non-infringing technology, CCI formed a prima facie view that
Ericsson enjoyed complete dominance over its present and prospective licensees in the
relevant product market.
21. CCI further concluded that the information provided by Micromax indicated that the
practices adopted by Ericsson were discriminatory and contrary to FRAND terms. In
particular, CCI noted that the royalty rates charged by Ericsson had no link to the
patented product and that was contrary to what was expected of a patentee holding
SEPs; CCI was of the prima facie view that royalties linked with the cost of the end
product were contrary to the FRAND obligations.
22. Insofar as the Ericsson's suit against Micromax was concerned, CCI held that the
same was in respect of infringement of Ericsson's IPR rights and the pendency of the
civil suit did not prevent the CCI from proceeding under the Competition Act and
consequently, directed the DG to investigate any violation of the provisions of the
Competition Act.

22-08-2024 (Page 16 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

23. The impugned order dated 16th January, 2014 passed pursuant to the information
filed by Intex is more or less similar to the impugned order dated 12th November, 2013
in Case No. 50/2013. CCI specifically noted that it had already formed a prima facie
opinion under Section 26(1) of the Competition Act on the information submitted by
Micromax and had directed the DG to conduct an investigation. CCI was of the view that
Intex's Case (Case No. 76/2013) be also clubbed with Case No. 50/2013 for causing an
investigation under proviso to Section 26(1) of the Competition Act. Accordingly, the
DG was also directed to investigate the matter by looking into the allegations made by
Intex within the specified period.
Submissions on behalf of Ericsson
2 4 . Mr. C.S. Vaidyanathan, learned Senior Advocate appearing for Ericsson in Intex
Petition (W.P (C) 1006 of 2014) contended that whereas the Patents Act is a special act
and contains comprehensive provisions for addressing all the matters including
protecting the interest of consumers and general public, the Competition Act has been
enacted as a general law to promote and sustain competition in the market and to
prevent practices having an adverse effect on competition. He referred to various
provisions of the Patents Act - in particular Sections 83-90, 92 & 92A - to emphasize
that the Patents Act contains provisions to adequately redress the grievances of any
person in respect of non-availability of rights to use a patent on reasonable terms. He
contended that the Controller General of Patents, Designs and Trade Marks (hereafter
'Controller' or 'Controller of Patents') and/or a Civil Court were vested with the function
and the power to remedy any grievance relating to a patentee's demand for excessive or
unreasonable royalty by grant of compulsory licence and the CCI, on the other hand,
had no jurisdiction to grant such relief. He argued that the Patents Act being a special
act also occupied the field in relation to anticompetitive practices by a patentee in
relation to patents and, thus, the same would be outside the scope of the Competition
Act.
25. Mr. Vaidyanathan next contended that Section 4 of the Act was not applicable in
respect of licensing of patents for the following reasons:--
"(a) That a patentee insofar as grant of patent license is concerned, is not an
'enterprise' within the meaning of Section 2(h) of the Act.
(b) That the patentee insofar as licensing of patent is concerned, is not engaged
in purchase or sale of goods or services.
(c) A patents are not a goods or services and a licence for a patent is also not
goods or services. Thus, licensing of patent would also not fall within the scope
of sale of goods or sale of services."
2 6 . Mr. Vaidyanathan then referred to various legislative amendments made in laws
applicable in United Kingdom and in India. He contended that various provisions to
address the anti-competitive practices were incorporated in the antitrust laws applicable
in United Kingdom. However, in India, similar provisions were introduced in the Patents
Act and not in the Competition Act. On the strength of the aforesaid legislative
amendments, he contended that the intention of the Parliament was that the issues
regarding abuse of dominance by a patentee in respect of patent licensing be addressed
under the Patents Act and not under the Competition Act.
27. Mr. Vaidyanathan further contended that that in any event CCI was not competent
to effectively redress the grievance voiced by Intex as CCI would have no power to

22-08-2024 (Page 17 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

direct grant of licence for a patent but could only pass a cease and desist order or levy
penalty; neither of which were effective remedies. He then referred to Section 60 & 61
of the Competition Act which indicated that no Civil Court would have the jurisdiction to
entertain any suit or proceedings in respect of which CCI was empowered to determine
under the Competition Act. On the strength of the aforesaid provisions, he contended
that the jurisdiction of the Civil Court was not ousted in respect of various matters
relating to patent and in particular, grant of injunction under Section 48 of the Patents
Act; determination of fair terms for licensing of a patent; and determination of
damages. He contended that since the principal grievance of Intex related to non-grant
of licence and/or Ericsson's threat to enforce its right as a patentee, the same were
expressly covered within the scope of the Patents Act. This, in turn, implied that CCI
would have no jurisdiction to determine those issues as by virtue of Section 61 of the
Competition Act, the jurisdiction of Civil Courts was ousted in respect of matters falling
within the domain of CCI under the Competition Act.
28. He next submitted that Ericsson had already filed a suit for enforcement of its rights
and referred to the interim orders passed in the suit by this court for payment of
royalty. He also referred to the issues framed by the High Court in Civil Suit No.
442/2013 and the interim orders passed therein, which clearly indicated that the Court
was in seisen of the dispute regarding fixing of licence fee and, therefore, any grievance
in respect of the rates of royalty or terms of licence was squarely covered under the
proceedings before the High Court. He submitted that in the circumstances, CCI would
have no jurisdiction to entertain any proceedings in regard to the very same issues that
were under consideration of this Court. He further submitted that the exercise of rights
by Ericsson under the Patents Act could by no stretch be considered an abuse of
dominance so as to warrant any investigation under the Competition Act.
29. Mr. T.R. Andhyarujina, Learned Senior Advocate, appearing on behalf of Ericsson in
Micromax Petition (W.P.(C) No. 464 of 2014) also contended that the Patents Act was a
special statute which allowed monopoly by granting a patent and at the same time also
contained provisions for controlling the abuse of such monopoly. He then referred to
Sections 27 and 28 of the Competition Act, which provides for the relief that can be
granted in cases where it is found that an enterprise has abused its dominant position,
and submitted that none of these provisions would apply for grant of a licence on
reasonable terms; thus, the grievance raised by Micromax could not be addressed under
the Competition Act. Mr. T.R. Andhyarujina referred to the complaint filed by Micromax
and drew the attention of this Court to para 5.25 of the said complaint whereby
Micromax had specifically contended that the licence terms must be 'reasonably
affordable' under Section 84(1)(b) of the Patents Act. He then drew the attention of this
Court to the reliefs sought by Micromax which included referring the issue to the
Controller General of Patents to fix reasonable royalty rates for patents applicable to
Indian handset manufacturers. He contended that the expression 'reasonably affordable'
would require the patentee to be sensitive and responsible to the commercial realities of
the market and the issues sought to be agitated by Micromax as well as the reliefs
sought fell squarely within the scope of the Patents Act and were, thus, outside the
jurisdiction of CCI. He also contended that the High Court has the jurisdiction to decide
all issues pertaining to patents, which included, the issue of grant or non-grant of
injunctions to prevent infringement of a patent; the terms on which such injunctions
could be granted, if any; enforcement of other remedies such as customs inspections
etc.; and issues regarding validity and fixing of reasonable fees and damages. He
submitted that the Competition Act did not provide any remedy to prevent anti-
competitive practices in relation to patent rights and, therefore, the only recourse for
redressal of grievances regarding demand of excessive licence fee would be under the

22-08-2024 (Page 18 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

Patents Act and not under the Competition Act.
30. He next contended that the test of abuse of dominant position as set out under
Section 4 of the Competition Act could not be applied to exercise of rights under the
Patents Act which conferred a monopoly to a patentee for exploitation of the patented
technology and prevented competition for a limited period of 20 years.
31. He referred to the decision of the Supreme Court in General Manager Telecom v. M.
Krishnan & Anr.: MANU/SC/1597/2009 : JT (2009) 11 SC 690 and Chairman,
Thiruvalluvar Transport Corporation v. Consumer Protection Council :
MANU/SC/0263/1995 : (1995) 2 SCC 479 in support of his contention that the Patents
Act was a specific law and a complainant could not resort to provisions of the
Competition Act for any alleged abuse of dominant position by a patentee.
32. Mr. T.R. Andhyarujina referred to Section 60 of the Competition Act which provided
that the Act would apply notwithstanding anything inconsistent contained in any other
law. On the strength of the aforesaid Section, he submitted that since the Competition
Act did not provide for grant of a compulsory licence or for determination of a royalty,
there was no inconsistency between the Competition Act and the Patents Act. He
referred to the decision of the Supreme Court in Basti Sugar Mills Co. Ltd. v. State of
U.P. & Anr.: MANU/SC/0258/1978 : AIR (1979) SC 262 in support of his contention that
'inconsistency would mean mutual repugnancy where acceptance of one would imply
abrogation or abundance of the other'. He next contended that since CCI had no
jurisdiction to determine the reasonableness of the royalties in respect of the patented
technologies, it would not have the jurisdiction to entertain any complaint in that regard
particularly when a suit in regard to the same subject matter was pending before this
Court.
3 3 . Lastly, Mr. T.R. Andhyarujina contended that the impugned order dated 12th
November, 2013 passed by CCI was also invalid inasmuch as it made observations
which were adjudicatory and determinative in nature even prior to the conduct of
investigation by the DG. He submitted that the order passed by CCI had been modified
after it was uploaded on the website, which according to him also indicated that the
impugned order was arbitrary.
3 4 . Ms Singh, learned Senior Advocate appearing for Ericsson supplemented the
submissions made by Mr. C.S. Vaidyanathan and Mr. T.R. Andhyarujina. She submitted
that the abuse of dominance and anticompetitive behavior as alleged by Micromax and
Intex related solely to the royalty sought by Ericsson for use of its patented technology.
According to her, this issue was outside the jurisdiction of CCI as the Patents Act
provided an adequate mechanism to address all issues/reliefs. She further submitted
that the order passed by CCI was without application of mind. CCI had failed to
consider any of the contentions regarding the challenge to its jurisdiction while passing
the impugned orders. She further submitted that the relevant market described by CCI
in the impugned order dated 12th November, 2013 as initially uploaded on the website
indicated the relevant market to be "market of GSM and CDMA technology in India",
This was palpably erroneous and also clearly indicated that the CCI had not understood
the subject of the SEPs for which royalty was claimed by Ericsson.
35. Ms Singh further contended that the allegations made by Micromax and Intex did
not by any stretch indicate abuse of dominance as Ericsson had only exercised its
statutory right and therefore, the orders passed by CCI were wholly without jurisdiction.
Submissions on behalf CCI

22-08-2024 (Page 19 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

3 6 . Mr. Haksar, learned Senior Advocate, appearing for CCI submitted that the
impugned orders were not amenable to judicial review under Article 226 of the
Constitution of India as the said orders did not amount to a final expression of opinion
on merit. He drew the attention of this Court to paragraph 19 and 20 of the impugned
order dated 16th January, 2014 which expressly recorded the above and further directed
the DG to conduct the investigation uninfluenced by any observations made in the
impugned orders. He strongly relied on the decision of the Supreme Court in
Competition Commission of India v. Steel Authority of India Ltd. & Anr.:
MANU/SC/0690/2010 : (2010) 10 SCC 744 in support of his contention. In particular,
he drew the attention of this Court to paragraph 37 & 38 of the said decision wherein
the Supreme Court had held an order under Section 26(1) of the Competition Act to be
an administrative direction akin to an interdepartmental communication which did not
involve entering into an adjudicatory process. The Supreme Court had also observed
that an order under Section 26(1) of the Competition Act did not entail any civil
consequences in light of the strict confidentiality required to be maintained by CCI in
terms of Section 57 of the Competition Act and Regulation 35 of the Competition
Commission of India (General) Regulations, 2009.
37. Mr. Haksar next contended that the function of CCI is inquisitorial and regulatory.
He referred to the decision of the Supreme Court in M. Krishna Swami v. Union of India
& Ors.: MANU/SC/0222/1993 : (1992) 4 SCC 605 for the meaning of the expression
"inquisitorial". He next contended that CCI was not required to give any notice or hear
the parties before passing an order under Section 26(1) of the Competition Act as an
order under Section 26(1) only required formation of a prima facie opinion and the
Competition Act provided sufficient safeguards by affording the parties an opportunity
to be heard at a subsequent stage. He next referred to the decision of the Allahabad
High Court in Namrata Marketing Pvt. Ltd. v. Competition Commission of India:
MANU/UP/2018/2013 : AIR 2014 (All.) 11, wherein the Court had, following the
decision of the Supreme Court in Steel Authority of India (supra), held that an order
under Section 26(1) of the Competition Act was in the nature of a show cause notice
against which a writ petition was not maintainable. Mr. Haksar then referred to the
decision of Bombay High Court in Aamir Khan Production Pvt. Ltd. v. Union of India:
MANU/MH/1025/2010 : 2011(1) Bom. C.R. 802 in support of his contention that CCI
had the power to determine whether a preliminary state of facts exists on which further
exercise of jurisdiction depends.
3 8 . Countering the arguments that CCI did not have the jurisdiction to investigate
issues regarding payment of royalty in respect of patents registered under the Patents
Act or in respect of any allegation relating thereto, Mr. Haksar submitted that the
provisions of the Competition Act were in addition to and not in derogation of any other
law. He further referred to Section 60 of the Competition Act which expressly provided
the provisions of the Competition Act to have effect notwithstanding anything
inconsistent contained in any other law. On the strength of the aforesaid provisions, he
contended that the CCI was not concerned with any other aspect regarding grant or
exercise of any right pertaining to a patent except to ensure the compliance with
Section 3 and 4 of the Competition Act. He referred to the decision of this Court in the
Union of India v. Competition Commission of India & Anr.: MANU/DE/0594/2012 : AIR
2012 (Del.) 66 in support of its contention that the functions and powers of CCI were
for addressing specific contraventions as mentioned under the Competition Act. He then
referred to the decision of the Supreme Court in M/s. Fair Air Engineers Pvt. Ltd. v. N.K.
Modi : MANU/SC/0141/1997 : (1996) 6 SCC 385 wherein the Supreme Court had
interpreted the provision similar to Section 62 of the Competition Act in the context of
the Consumer Protection Act, 1986 and held that recourse to the provisions of the said

22-08-2024 (Page 20 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

Act were available even though an arbitration agreement existed between the parties
thereto.
39. Mr. Haksar further submitted that there was no conflict between the Competition Act
and the Patents Act as both the said legislations were independent in their respective
spheres. He referred to the decision of the Supreme Court in Gujarat Urja Vikash Nigam
Ltd. v. Essar Power Ltd: MANU/SC/1055/2008 : (2008) 4 SCC 755 in support of its
contention that both, the Competition Act as well as the Patents Act must be interpreted
harmoniously and it is only in cases where there is irreconcilable inconsistency that the
question of which act or provision had an overriding effect would have to be
considered.
40. Mr. Haksar controverted the submission advanced on behalf of Ericsson that it was
not an enterprise within the meaning of Section 2(h) of the Competition Act. He
submitted that the said definition was wide enough to include any person engaged in
any activity relating to production and supply of articles or goods. He stressed on the
expression 'relating to' and submitted that Ericsson's SEPs had a co-relation with
production, distribution and control of articles or goods. He contended that it was not
necessary that an enterprise be directly engaged in production of goods and an
enterprise engaged in controlling the technology for production of goods would also fall
within the scope of Section 2(h) of the Competition Act.
Submissions on behalf of Intex
41. Mr. Arun Kathpalia, learned Advocate appearing for Intex, at the outset, challenged
the maintainability of the present petition on the strength of the decision of the
Supreme Court in Steel Authority of India (supra). He submitted that a High Court
would exercise its supervisory jurisdiction in respect of orders passed by the Tribunals
only where an order suffered from a serious error of law manifest on the face of the
record. He further submitted that a Tribunal would also have the jurisdiction to
determine questions regarding its own jurisdiction. If such questions involved
contentious issues and if the complaint was not self evident and required long drawn
arguments, it could not be said to be an error apparent on the face of the record and a
writ of certiorari would not ordinarily be issued. He contended that in the present case,
none of the conditions for issuing a writ of certiorari existed as there was no lack of
inherent jurisdiction with the CCI to issue the impugned orders.
42. He next contended that the question regarding the jurisdiction of CCI would have to
be considered in the light of the information disclosed by Intex. He then referred to the
information filed by Intex under Section 19(1)(a) of the Competition Act and submitted
that the same clearly alleged that Ericsson was placed in a position of dominance by
virtue of being a patentee in respect of SEPs. The complaint further disclosed that (a)
Ericsson had abused its position of dominance as Ericsson had attempted to bundle
SEPs held by Ericsson which were not required by Intex; (b) royalty demanded was
unfair, unreasonable and discriminatory; (c) necessary information was sought to be
obfuscated; and (d) that royalty was demanded on the price of the end product and not
on the basis of the value of the component that used or housed the relevant SEP. It is
contended that the aforesaid allegations prima facie disclosed violation of Section 4 of
the Competition Act and, therefore, fell within the exclusive jurisdiction of CCI.
43. Mr. Kathpalia also countered the submissions made on behalf of Ericsson that the
Patents Act was a special act and the Competition Act was a general enactment and,
therefore, the provisions of the Patents Act would prevail in case of any repugnancy

22-08-2024 (Page 21 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

between the two enactments. He submitted that this contention was erroneous as (a)
Section 60 of the Competition Act expressly stated that the Act would have effect
notwithstanding anything inconsistent therewith in other laws; (b) there was nothing in
the Patents Act which would either impliedly or expressly oust the jurisdiction of CCI;
(c) the Competition Act was a later enactment; and (d) the scope and substance of the
Competition Act and the Patents Act was different. He then referred to the decision of
the Supreme Court in Union of India v. G.M. Kokil: MANU/SC/0210/1984 : AIR 1984 SC
1022 in support of his contention that a non-obstante clause was a well recognized
device for giving the overriding effect to certain legislative provisions.
44. Mr. Kathpalia also drew the attention of this Court to Section 84(6) and Section
90(1)(ix) of the Patents Act and submitted that the said provisions clearly indicated that
the CCI would have the jurisdiction in respect of anti-competitive practices or abuse of
dominance by patentees.
4 5 . Insofar as the contention that CCI lacked the technical competence to examine
issues relating to patents, Mr. Kathpalia referred to Section 21A of the Competition Act
and on the strength of the provisions, argued that in cases where CCI required any
inputs from the Controller of Patents, it could always make a reference to the Controller
of Patents and seek its opinion.
46. Mr. Kathpalia next submitted that the reliance placed by Ericsson on the provisions
of Section 3(5) of the Competition Act was misplaced as the complaint made by Intex
did not relate to anti-competitive agreements under Section 3 of the Competition Act
but alleged abuse of dominance which fell within the scope of Section 4 of the
Competition Act. He also contended that the plain language of Section 3(5) of the
Competition Act could also not be read to mean that jurisdiction of CCI was ousted.
47. Mr. Kathpalia referred to the report of February 2007 of the 'Working Group on
Competition Law, Planning Commission, Government of India' which indicated that
while exclusions from the applicability of Section 3 had been provided in certain cases,
CCI would be empowered to look into the reasonableness of the restraints while
exercising Intellectual Property Rights. Mr. Kathpalia also controverted the contention
that the SEPs were not 'goods'. He submitted that intellectual property rights also fell
within the expression 'goods' under the Sales of Goods Act and referred to the decision
in the case of Tata Consultancy Services v. State of AP MANU/SC/0950/2004 : AIR 2005
SC 371 in support of his contention.
48. Mr. Salman Khurshid, learned Senior Advocate appearing on behalf of Micromax
also contested the submissions made on behalf of Ericsson on by advancing arguments
similar to those advanced by Mr. Haksar and Mr. Kathpalia.
49. Mr. Aditya Narain, Amicus Curiae, submitted that the subject matter of disputes
related to negotiation of licences for SEPs. Thus, CCI, at the threshold, had to consider
whether Ericsson could be considered as an 'enterprise' within the meaning of Section
2(h) of the Competition Act; but, CCI had failed to consider the aforesaid issue while
passing the order under Section 26(1) of the Competition Act. According to him, the
expression 'any activity' as used in Section 2(h) of the Competition Act would not
include negotiation of patent licences and, therefore, Ericsson could not be considered
as an enterprise for the purposes of Section 4 of the Competition Act. He further
submitted that the impugned orders also did not indicate whether Micromax and/or
Intex could be considered as consumers within the meaning of Section 2(f) of the
Competition Act and; apparently, CCI had also failed to consider the same.

22-08-2024 (Page 22 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

5 0 . Mr. Narain further submitted that in the present case, CCI had issued notice to
Ericsson and had further taken the written submissions of Ericsson on record. However,
CCI had failed to address the issue as to its jurisdiction; thus rendering the permission
granted to Ericsson to intervene and file written submissions illusory. He contended that
it was necessary for the CCI to have considered the challenge laid by Ericsson to its
jurisdiction while passing the impugned orders.
Submissions made on behalf of Ericsson in Rejoinder
5 1 . In rejoinder, Mr. C.S. Vaidyanathan and Ms Pratibha M. Singh, learned Senior
Advocates submitted that the jurisdiction of the High Court under Article 226 of the
Constitution of India could not be curtailed and, therefore, any order, whether
administrative or judicial, passed by any authority without jurisdiction would be
amenable to the judicial review under Article 226/227 of the Constitution of India. They
relied upon the decision of the Supreme Court in S.P. Sampath Kumar & Ors. v. Union
of India & Ors.:MANU/SC/0851/1987 : (1987) 1 SCC 124 and L. Chandra Kumar v.
Union of India and Ors.: MANU/SC/0261/1997 : (1997) 3 SCC 261. It was further
submitted that it was the exclusive function of the Supreme Court and High Court to
interpret statutes to determine the limits of jurisdiction of any Tribunal or statutory
authority.
52. Ms Pratibha M. Singh and Mr. C.S. Vaidyanathan reiterated their submission that the
impugned order passed by the CCI was without jurisdiction. It was next argued that the
orders passed by CCI though termed as, prima facie, had a determinative flavor and
were prejudicial to Ericsson. It was submitted that the impugned orders were being
used not only in India but also in litigations in other jurisdictions. The impugned orders
had been widely published, causing enormous damage to the goodwill and reputation of
Ericsson. It was contended that various other licensees were also seeking to avoid
payment of royalty on the basis of the proceedings commenced by CCI. Ms Singh then
referred to various observations and findings made in the impugned orders, which she
contended were ex-facie incorrect and baseless. Ms Singh thereafter referred to the two
impugned orders and contended that the relevant market had been defined differently.
She pointed out that the order passed in the Micromax's case, which was first uploaded
on the website on 27th November, 2013, defined relevant market as "market of GSM
and CDMA technology in India". This was modified and the certified copy subsequently
received described the relevant market to be "the SEPs in GSM compliant mobile
communication devices in India". In the case of Intex, the impugned order dated 16th
January 2014, described the relevant market as "market of SEPs for 2G, 3G and 4G
technologies in the GSMs Standard compliant mobile communication devices".
According to Ms. Singh, these varying description indicated CCI's complete lack of
understanding of the subject prior to directing investigation against Ericsson.
53. Ms Singh also sought to dispute Mr. Kathpalia's interpretation of proviso of clause
(iv) to Section 86 of the Patents Act. She submitted that a bare reading of the said
proviso would indicate that the Controller of Patents would have the power to award a
compulsory licence in case where the patentee had indulged in an anti-competitive
practice without insisting on the condition of the applicant making reasonable attempts
to obtain a licence from the patentee. Ms Singh thereafter listed out various alleged
acts, which were alleged as an abuse of Ericsson's dominant position and reiterated that
the remedies for the same were available under the Patents Act.
54. Ms Singh, emphatically, reiterated her contention that none of the allegations made
by Micromax/Intex could remotely be considered as abuse of dominance as Ericsson

22-08-2024 (Page 23 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

was only exercising its statutory rights. She urged that filing suits/or warning of legal
action against infringement could not be construed as abuse of dominance.
55. Insofar as the contention that the Controller of Patents did not have the power to
grant a compulsory licence prior to the expiry for a period of three years from the grant
of patent, Ms Singh contended that such condition was not absolute and in certain cases
- such as indicated in Section 92 of the Patents Act - compulsory licence could be
granted even prior to the expiry of the period of three years. She further contended that
the period of three years had been provided by the legislature to enable a patentee to
work its patent and such legislative intent could not be defeated by resorting to the
provisions of the Competition Act.
Whether the petition is maintainable - Scope of judicial review
56. First and foremost, it is necessary to examine the challenge to the maintainability of
the present petition and the scope of judicial review of orders passed under Section
26(1) of the Competition Act.
57. The Supreme Court in the case of Steel Authority of India (supra) had examined the
scheme of the Competition Act and had concluded that a direction under Section 26(1)
of the said Act to conduct an investigation is an administrative direction issued by CCI
to one of its own wings without entering upon any adjudicatory process. The Court
reasoned that such direction did not determine the rights and obligations of any party,
and therefore, no appeal against the said direction was provided under the Competition
Act. The court was of the view that such a direction is akin to departmental proceedings
which did not entail any civil consequences for any person. Further, the Court was of
the view that since the procedure did not contemplate any adjudicatory function at that
stage, CCI was not expected to give any notice to either the informant or the affected
parties or hear them at length before forming its opinion. The Court held that the
function at the stage of issuing a direction for investigation is of a preliminary nature
and did not at that stage condemn any person so as to warrant the application of the
rule of audi alteram partem.
58. In view of the decision of the Supreme Court in Steel Authority of India Limited
(supra), the nature of a direction issued by CCI to the DG to conduct an investigation, is
beyond the pail of controversy. The question whether a direction passed under Section
26(1) of the Competition Act is appealable is also no longer res integra. However, the
decision in the case of Steel Authority of India Limited (supra) cannot be read as an
authority for the proposition that a direction passed under Section 26(1) of the
Competition Act is outside the scope of judicial scrutiny under Article 226 of the
Constitution of India.
59. CCI is a body established under Section 7 of the Competition Act and performs the
functions as mandated under Chapter IV of the Competition Act. CCI being a creature of
the statute has to perform its functions and exercise its powers within the confines of
the statute. Clearly, any function performed or any order or direction passed by CCI
must be in accordance with the provisions of the Competition Act. It also follows that
any direction or order issued by CCI that is not in accordance with the provisions of the
Competition Act or is outside the scope of its function and authority as specifically
enacted, would be unsustainable.
60. I have reservations as to merits of the contention that a direction under Section
26(1) of the Competition Act to conduct an investigation does not prejudice the party
being investigated in any manner, as it does not amount to a final determination of the

22-08-2024 (Page 24 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

allegations made. Indisputably, a direction to conduct an investigation may not involve
an adjudicatory process and does not foreclose or in any manner affect the defence that
is available to the party being investigated. But, nonetheless, it does have the effect of
subjecting a party to an inquisitorial process at the hands of DG. The DG is obliged to
carry out the directions of CCI and conduct an investigation into any contravention
regarding provisions of the Competition Act. By virtue of Section 42(2) of Competition
the Act, the DG has the same powers as conferred upon the CCI under Section 36(2) of
the Act. Section 36(2) of the Competition Act expressly enacts that CCI will have the
same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908
while trying a suit, in respect of matters of, (a) summoning and enforcing the
attendance of any person and examining him on oath; (b) requiring discovery and
production of documents; (c) receiving evidence on affidavits; (d) issuing commission
for the examination of witnesses or documents; and (e) requisitioning any public record
or document or copy of such record or document from any office. It is apparent that
such powers are extensive.
61. Section 43 of the Competition Act also provides for imposition of penalty upon any
person who fails to comply with the directions issued by the DG under Section 41(2) of
the Competition Act. Any person subjected to an investigation would also have to
endure the attendant inconvenience and, depending on the extent of investigation,
would probably have to commit significant resources for complying with the demands
for supply of information as well as for production of evidence including examination of
persons employed or associated with the enterprise being investigated.
62. By virtue of Section 41(3) of the Competition Act, the provisions of Sections 240
and 240A of the Companies Act, 1956 would also apply to an investigation made by the
DG, or any person investigating under his authority, as they apply to an Inspector
appointed under the Companies Act, 1956. Section 240 of the Companies Act, 1956
enjoins all officers and other employees and agents of a company being investigated (a)
to preserve and produce to an inspector, all books and papers of, or relating to, the
company or as the case may be relating to the other body corporate, which are in their
custody or power; and (b) otherwise give to the inspector all assistance in connection
with the investigation which they are reasonably able to give. By virtue of Sub-section
(1B) of Section 240 of the Companies Act, 1956, the Inspector also has the power to
retain any book and paper produced for a period of six months.
63. Section 240A empowers an Inspector to apply for an order of seizure of books and
papers relating to a company or managing director or manager of such company which
he has reasonable grounds to believe would be destroyed, mutated, altered falsified or
secreted. Inspector has the power to retain the books and papers seized till the
conclusion of the investigation. It is also relevant to refer to Section 2(8) of the
Companies Act, 1956 which provides an expansive definition for the expression 'book
and paper' or 'book or paper'. In terms of the said definition 'book or paper' includes
"acts, deeds, voucher, writings and documents". Thus, the DG or any person acting
under his authority would have an unmitigated access to any document available with
the enterprise being investigated. Obviously, such documents may also include
confidential and sensitive information and even though the DG may keep the same as
confidential, it can hardly be disputed that an enterprise furnishing sensitive information
to DG would run the risk of the information being leaked or disclosed. It also cannot be
overlooked that the fact that an enterprise is being investigated in respect of allegations
of its anti-competitive conduct may also result in loss of reputation and goodwill.
64. In the facts of the present case, the Ericsson has produced communications from

22-08-2024 (Page 25 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

the DG which require Ericsson to produce "(i) certified copies of all email
communication during the period January 2011 to March 2013 by the executives or
Ericsson who are or have been related to the discussion/negotiation with Indian
companies. The executives include Sh. Harish Sharma, Mr. Max Olofsson, Mr. Alex
Fasell, Mr. Chris Houghton and other senior executives from Ericsson global". Ericsson
had also placed letter dated 15th June, 2015 addressed to the Additional Director
General, CCI which indicates that the Ericsson had received four probe notices (till 15th
June, 2015) and was called upon to submit the detailed facts regarding Ownership and
Shareholding pattern of Ericsson; copies of audited statements of accounts; details of
patents relating to mobile telecom standardisation held by Ericsson; claim-chart
mapping with Standards, list of SEPs of Ericsson, basis for charging licence fees as
percentage of final product, illustrative rate charged to similarly placed parties; cost
incurred etc. Further, certain senior employees of Ericsson have also been summoned to
record their statement on oath before the DG.
65. The submission made on behalf of Ericsson that impugned orders were being used
in litigations by various parties not only in India but also in other jurisdictions was not
controverted. Mr. Haksar also did not controvert Ms. Singh's contention that CCI had
published the impugned orders in official newsletters and its officers had further
publically spoken about such orders in several domestic and international seminars and
the same was liable to adversely affect Ericsson's reputation.
66. In the aforesaid circumstances, it could hardly be disputed that the commencement
of investigation against Ericsson would certainly prejudice Ericsson. In the given facts, I
am unable to accept that Ericsson's challenge to the impugned orders should be
rejected at this stage solely on the ground that it does not affect Ericsson's right and,
therefore, Ericsson cannot agitate any grievance in that regard.
67. A Division Bench of this Court in the case of Google Inc. & Ors. v. Competition
Commission of India & Anr.: MANU/DE/1271/2015 : 2015 (150) DRJ 192 had also
examined the sweeping powers of DG under the Competition Act and concluded that the
investigation by a DG ordered by CCI stand on a different pedestal from a show cause
notice or from an investigation/enquiry conducted pursuant to an FIR.
68. In the aforesaid view, it is next to be examined as to whether the impugned orders
passed under Section 26(1) of the Competition Act can be subjected to judicial review
under Article 226 of the Constitution of India. Indisputably, scope of Article 226 of the
Constitution of India is very wide.
69. In Dwarka Nath v. Income Tax Officer: MANU/SC/0166/1965 : 1965 57 ITR 349
(SC) had explained the scope of Article 226 of the Constitution of India as under:--
"This article is couched in comprehensive phraseology and it ex-facie confers a
wide power on the High Courts to reach injustice wherever it is found. The
Constitution designedly used a wide language in describing the nature of the
power, the purpose for which and the person or authority against whom it can
be exercised. It can issue writs in the nature of prerogative writs as understood
in England; but the use of the expression 'nature" for the said expression does
not equate the writs that can be issued in India with those in England, but only
draws analogy from them. That apart, High Courts can also issue directions,
orders or writs other than the prerogative writs. It enables the High Courts to
mould the reliefs to set the peculiar and complicated requirements of this
country. Any attempt to equate the scope of the power of the High Court under

22-08-2024 (Page 26 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 Article 226 of the Constitution with that of the English Courts to issue
prerogative writs is to introduce the unnecessary procedural restrictions grown
over the years in a comparatively small country like England with a unitary form
of Government into a vast country like India functioning under a federal
structure. Such a construction defeats the purpose of the article itself."
70. It is also well settled that although, the High Court does not sit as an Appellate
Court to correct every error but in cases where an authority has acted outside the scope
of its jurisdiction, the High Court would interfere under exercise of its jurisdiction under
Article 226 of the Constitution of India. It is well recognised that the High Court would
interfere in orders passed by any authority or subordinate court where "(1) there is an
error manifest and apparent on the fact of the proceedings such as when it is based on
clear misreading or utter disregard of the provisions of law and (2) a grave injustice or
gross failure of justice has occasioned thereby." (See: State of Andhra Pradesh v. P.V.
Hanumantha Rao (D) thr. and Anr.: MANU/SC/0822/2003 : (2003) 10 SCC 121).
7 1 . In Reliance Airport Developers Pvt. Ltd. v. Airport Authority of India and Ors:
MANU/SC/4912/2006 : (2006) 10 SCC 1, the Supreme Court referring to an earlier
decision in State of UP and Ors v. Renusagar Power Co. and Ors: MANU/SC/0505/1988
: AIR 1988 SC 1737, reiterated the aforesaid view and observed that "It is trite law that
exercise of power, whether legislative or administrative, will be set aside if there is
manifest error in exercise of such power or the exercise of power is manifestly
arbitrary".
7 2 . The Supreme Court in the case of Chandigarh Administration and Anr. Etc. v.
Manpreet Singh and Ors.: MANU/SC/0074/1992 : (1992) 1 SCC 380 had explained that
although Article 226 of the Constitution of India does not contain any restrictive words,
the courts have evolved certain self-constraints over the years. The Court further
observed that:--
"21. While this is not the place to delve into or detail the self-constraints to be
observed by the Courts while exercising the jurisdiction under Article 226, one
of them, which is relevant herein, is beyond dispute viz., while acting under
Article 226, the High Court does not sit and/or act as an Appellate Authority
over the orders/actions of the Subordinate Authorities/Tribunals. Its'
jurisdiction is supervisory in nature. One of the main objectives of this
jurisdiction is to keep the government and several other authorities and
Tribunals within the bounds of their respective jurisdiction. The High Court
must ensure that while performing this function it does not overstep the well-
recognized bounds of its own jurisdiction."
7 3 . In State of Tamilnadu v. State of Karnataka: MANU/SC/0643/1991 : 1991
Supplement 1 SCC 240, the Supreme Court was called upon to consider controversy
whether in view of Section 11 of the Interstate Water Disputes Act, 1956, it had the
jurisdiction to entertain an appeal against an order passed by the Cauvery Water
Dispute Tribunal constituted under that Act. Section 11 of said Act expressly provided
that "notwithstanding anything contained in any other law, neither the Supreme Court
nor any other Court shall have or exercise jurisdiction in respect of any water dispute
which may be referred to a Tribunal under this Act". In the aforesaid context, the
Supreme Court held as under:--
"The Tribunal is a statutory authority constituted under an Act made by the
Parliament and this Court has jurisdiction to decide the judiciary i.e. the courts

22-08-2024 (Page 27 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 alone that have the function of determining authoritatively the meaning of a
statutory enactment and to lay down the frontiers of jurisdiction of any body or
Tribunal constituted under the statute."
74. Having stated the above, it is also necessary to state that the scope of judicial
review of the directions issued under Section 26(1) of the Competition Act is limited
and does not extend to examining the merits of the allegations.
75. As stated hereinbefore, this Court cannot sit as an Appellate Court in exercise of its
powers under Article 226 of the Constitution of India. The Supreme Court in the case of
Veerappa Pillai v. Raman & Raman Ltd. And Others: MANU/SC/0057/1952 : (1952) 1
SCR 583 had observed that "However extensive the jurisdiction may be, it seems to us
that it is not so wide or large as to enable the High Court to convert itself into a Court
of appeal and examine for itself the correctness of the decision impugned and decide
what is the proper view to be taken or the order to be made."
76. In Tata Cellular v. Union of India: MANU/SC/0002/1996 : AIR 1996 SC 11, the
Supreme Court held that:
"The duty of the court is to confine itself to the question of legality. Its concern
should be:
1. Whether a decision-making authority exceeded its powers,
2. Committed an error of law,
3. Committed a breach of the rules of natural justice,
4 . Reached a decision which no reasonable tribunal would have
reached or,
5. Abused its powers."
7 7 . The question, whether in the given facts the CCI has the jurisdiction to pass
directions under Section 26(1) of the Competition Act for causing an investigation and
whether such directions are in terms of the statute would clearly fall within the scope of
judicial review under Article 226 of the Constitution of India.
7 8 . In terms of Section 26(1) of the Competition Act, a direction to cause an
investigation can be made by CCI only if it is of the opinion that there exists a prima
facie case. Formation of such opinion is sine qua non for exercise of any jurisdiction
under Section 26(1) of the Competition Act. Thus, in cases where the commission has
not formed such an opinion or the opinion so formed is ex- facie perverse in the sense
that no reasonable person could possibly form such an opinion on the basis of the
allegations made, any directions issued under Section 26(1) of the Competition Act
would be without jurisdiction and would be liable to be set aside.
79. Any direction under Section 26(1) of the Competition Act could also be challenged
on the ground - as is sought to be contended in the present case - that the subject
matter is outside the pail of the Competition Act. However, it must be added that a
challenge to the jurisdiction of the CCI to pass such directions under Section 26(1) of
the Competition Act must be examined on a demurrer; that is, the information received
under Section 19 must be considered as correct; any dispute as to the correctness or
the merits of the allegations - unless the falsity of the allegations is writ large and ex
facie apparent from the record - cannot be entertained in proceedings under Article 226

22-08-2024 (Page 28 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

of the Constitution of India. Equally, in cases where the direction passed is found to be
malafide or capricious, interference by this Court under Article 226 of the Constitution
of India would be warranted.
80. In the present case, Ericsson has contested the jurisdiction of CCI to entertain any
complaint regarding the rates of royalty in respect of SEPs as according to Ericsson, the
same is outside the scope of the Competition Act. Since this issue relates to the
jurisdiction of CCI, it would clearly fall within the limited scope of judicial review as
available in respect of directions passed by the CCI under Section 26(1) of the
Competition Act. In addition, Ericsson has also contested the impugned directions as
being perverse and without application of mind. It is trite law that no authority has the
jurisdiction to pass perverse orders and, therefore, this challenge would also fall within
the limited scope of judicial review.
8 1 . As I see it, the decision of Supreme Court in Steel Authority of India Limited
(supra) must be read in reference to its context. In that case, the Supreme Court was
considering the question whether an order passed under Section 26(1) of the
Competition Act directing investigation was an appealable order. The Supreme Court
explained the scheme of the Competition Act and held that a direction to the DG to
investigate was not appealable at that stage. The party concerned would have to await
the final determination - that is, an order appealable under Section 53A(a) of the Act -
before filing an appeal before the Competition Appellate Tribunal (COMPAT). However,
if the CCI refused to direct an investigation, an appeal would lie against the said order.
It is, thus, amply clear that Ericsson does have an alternative remedy of preferring an
appeal but that remedy would be available only on a final determination. However, the
fact that an alternate remedy by way of appeal is available to a party would not denude
the jurisdiction of this Court under Article 226 of the Constitution of India. There are
several instances - particularly when the jurisdiction of an authority or a Tribunal to
pass any directions or orders is challenged -where Courts have exercised their
jurisdiction under Article 226 of the Constitution of India despite availability of an
alternate remedy. In The State of Uttar Pradesh v. Mohammad Nooh:
MANU/SC/0125/1957 : AIR 1958 SC 86, the Supreme Court referred to various
authorities and held that:
"If an inferior court or tribunal of first instance acts wholly without jurisdiction
or patently in excess of jurisdiction or manifestly conducts the proceedings
before it in a manner which is contrary to the rules of natural justice and all
accepted rules of procedure and which offends the superior court's sense of fair
play the superior court may, we think, quite properly exercise its power to issue
the prerogative writ of certiorari to correct the error of the court or tribunal of
first instance, even if an appeal to another inferior court or tribunal was
available and recourse was not had to it or if recourse was had to it, it
confirmed what ex facie was a nullity for reasons aforementioned."
82. In view of the aforesaid, the fact that Ericsson had an alternative remedy, albeit at
a later stage, would not in any manner disable this court from entertaining the present
petition.
83. In view of the above, the contention that the present petition is not maintainable, is
without merit. However, the validity of the impugned orders can be examined only from
the perspective of: (a) whether allegations made by Intex and Micromax could form the
subject matter of proceedings under the Competition Act; and (b) whether the
impugned orders are perverse?

22-08-2024 (Page 29 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

Jurisdiction of CCI to entertain the complaints of Micromax and Intex under the
Competition Act, 2002
84. The central challenge in these petitions is to the jurisdiction of the CCI to entertain
complaints filed by Micromax and Intex in relation to what is described as Ericsson's
exercise of rights granted under the Patents Act. It is Ericsson's case that by virtue of
being granted the subject patents under Section 48 of the Competition Act, it has the
exclusive right to prevent third parties from making, using, offering for sale, selling or
importing the products using Ericsson's patents without its consent. Ericsson asserts
that the patents in question are SEPs and in accordance with its obligations to the SSO's
it has offered licences for its SEPs to Intex and Micromax on FRAND terms. It is urged
that having so complied with its commitments to SSO, Ericsson was well within its
rights to seek injunctions restraining Ericsson and Intex from infringing its SEPs.
85. It is further claimed that the allegations made could not possibly constitute abuse
or misuse of dominance and, therefore, the impugned orders passed by the CCI are
wholly without jurisdiction.
86. It is also Ericsson's case that the Patents Act not only provides for the rights of a
patentee but also the framework within which such rights may be exercised as well as
provisions to remedy any abuse of the rights granted. According to Ericsson, the
substratum of the complaints in question are to be addressed under the provisions of
the Patents Act and not under the Competition Act. Essentially, Ericsson asserts that
since the Patents Act is a special Act and provides for redressal of the grievances
agitated by Intex and Micromax, a recourse to the Competition Act would be barred.
Micromax and Intex on the other hand assert that the provisions of the Competition Act
are in addition to and not in derogation of the Patents Act and, therefore, CCI would
have jurisdiction to entertain their complaint notwithstanding the remedies available to
Micromax and Intex under the Patents Act.
87. Ericsson's challenge to the jurisdiction can - as is apparent from the submissions
made by the counsel - be considered under the following broad heads:
"(i) Ericsson is not an enterprise within the meaning of Section 2(h) of the
Competition Act and, therefore, Section 4 of the Competition Act is wholly
inapplicable in any matter relating to its exercise of its rights as a proprietor of
its SEPs.
(ii) The Patents Act is a special Act vis-Ã -vis the Competition Act and therefore
it shall prevail over the provisions of the Competition Act; consequently, insofar
as exercise of patent rights are concerned, proceedings under the Competition
Act would not be competent and outside the scope of that Act.
(iii) The allegations made by Micromax and Intex in their complaints cannot by
any stretch constitute abuse of dominance under the Competition Act and,
therefore, impugned orders passed by CCI are without jurisdiction.
(iv) The disputes between parties - alleged demand for excessive royalty,
breach of FRAND assurances, imposition of unreasonable terms for licencing
etc. - are subject matter of proceedings in the suits filed by Ericsson and,
therefore, outside the scope of the Competition Act.
(v) The complaints made by Micromax and Intex are not maintainable as they
have denied Ericsson's claim for infringement and Intex has also initiated

22-08-2024 (Page 30 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 proceedings for revocation of Ericsson's SEPs and, therefore cannot allege
abuse of dominance by Ericsson as the same is premised on Ericsson being the
proprietor of the subject SEPs. Micromax and Intex are unwilling licensees and
therefore, their complaints with regard to licensing terms could not be
entertained.
(vi) In the given facts and circumstances of the case, CCI's view that a prima
facie case is made out is perverse and thus the impugned order is wholly
without jurisdiction."
(i) Ericsson is not an 'enterprise' within the meaning of Section 2(h) of the Competition
Act:
88. The next issue to be examined is whether Section 4(1) of the Competition Act -
which is alleged to have been violated by Ericsson -could have any application
inasmuch as it is contended that Ericsson is not an 'enterprise' within the meaning of
Section 2(h) of the Competition Act. Section 4(1) of the Competition Act expressly
mandates that "no enterprise or group shall abuse its dominant position".
8 9 . Mr. Vaidyanathan contended that a patentee is not an 'enterprise' within the
meaning of Section 2(h) of the Competition Act in respect of licensing of a patent. It
was further asserted that neither patents nor licences for such patents are 'goods or
services'. The implication of Mr. Vaidyanathan's contention is that the question whether
an entity is an enterprise or not for the purposes of Section 4(1) of the Competition Act,
must be ascertained only in the context of the activity which is sought to be made the
subject matter of Section 4(2) of the Competition Act. And, since according to Ericsson
neither patents nor licences for patents are 'goods or services', a patent holder cannot
not be considered as an enterprise in the context of any allegation of demand of
excessive royalty or imposition of unfair and unreasonable terms for grant of patent
licences.
90. A plain reading of Section 4(1) of the Competition Act indicates that it proscribes
any enterprise from abusing its dominant position. Thus, for the purposes of Section
4(1) of the Act, an enterprise must be the one which is in a 'dominant position'. The
expression 'dominant position' is defined under Explanation (a) to Section 4 of the
Competition Act to mean "a position of strength, enjoyed by an enterprise, in the
relevant market, in India, which enables it to (i) operate independently of competitive
forces prevailing in the relevant market; or (ii) affect its competitors or consumers or
the relevant market in its favour;" It, plainly, follows that alleged abuse of dominance
would have to be considered in the context of the relevant market in which an
enterprise is found to be in a dominant position. The alleged acts or activities which
constitute abuse, will not be dispositive of the issue whether a person is an 'enterprise'
or not. That question would depend entirely on whether the person or entity falls within
the scope of Section 2(h) of the Competition Act, which defines the expression
'enterprise' and reads as under:--
"2(h) "enterprise" means a person or a department of the Government, who or
which is, or has been, engaged in any activity, relating to the production,
storage, supply, distribution, acquisition or control of articles or goods, or the
provision of services, of any kind, or in investment, or in the business of
acquiring, holding, underwriting or dealing with shares, debentures or other
securities of any other body corporate, either directly or through one or more of
its units or divisions or subsidiaries, whether such unit or division or subsidiary

22-08-2024 (Page 31 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 is located at the same place where the enterprise is located or at a different
place or at different places, but does not include any activity of the Government
relatable to the sovereign functions of the Government including all activities
carried on by the departments of the Central Government dealing with atomic
energy, currency, defence and space.
Explanation.--For the purposes of this clause-
(a) "activity" includes profession or occupation;
(b) "article" includes a new article and "service" includes a new
service;
(c) "unit" or "division", in relation to an enterprise, includes-
(i) a plant or factory established for the production, storage,
supply, distribution, acquisition or control of any article or
goods;
(ii) any branch or office established for the provision of any
service;"
91. It is apparent from the plain reading of the definition of 'enterprise' that it would
include any person engaged in any activity, relating to production, storage, supply,
distribution, acquisition or control of articles or goods.
92. Section 2(i) of the Competition Act defines 'goods' as under:--
"(i) "goods" means goods as defined in the Sale of Goods Act, 1930 (8 of
1930) and includes-
(A) products manufactured, processed or mined;
(B) debentures, stocks and shares after allotment;
(C) in relation to goods supplied, distributed or controlled in India,
goods imported into India;"
93. The question whether Ericsson is an enterprise within the meaning of Section 2(h)
of the Competition Act would, thus, have to be answered by ascertaining whether it is
engaged in any activity relating to production, supply, distribution, acquisition or
control of articles or goods. Admittedly, Ericsson has a large portfolio of patents and is,
inter alia, engaged in developing technologies and acquiring patents. Thus, if patents
are held to be goods, Ericsson would indisputably fall within the definition of
'enterprise' within the meaning of Section 2(h) of the Competition Act, since it is
admittedly engaged in activities which entail acquisition and control of patents.
94. This brings us to the question whether patents are 'goods' as defined in the Sale of
Goods Act, 1930. Sub-section 7 of Section 2 of the Sale of Goods Act, 1930 defines
'goods' as under:
"(7) "goods" means every kind of movable property other than actionable
claims and money; and includes stock and shares, growing crops, grass, and
things attached to or forming part of the land which are agreed to be severed
before sale or under the contract of sale;"

22-08-2024 (Page 32 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

95. As is apparent from the above, the definition of goods is extremely wide and takes
within its fold every kind of movable property. The word 'property' is defined by virtue
of Section 2(11) of the Sale of Goods Act to mean "the general property in goods, and
not merely a special property;".
96. The expression 'movable property' has not been defined under the Sale of Goods
Act, 1930. Thus, in absence of such definition, one would have to turn to the General
Clauses Act, 1897 which defines 'movable property' to mean "property of every
description, except immovable property". Section 3(26) of the General Clauses Act,
1897 defines 'immovable property' to "include land, benefits to arise out of land, and
things attached to the earth, or permanently fastened to anything attached to the earth".
Thus, plainly, the word 'goods' would encompass all kinds of property other than land,
benefits to arise out of land and things attached to the earth, or permanently fastened
to anything attached to the earth.
9 7 . Next, it is necessary to examine the nature of patent rights. Grant of a patent,
essentially, provides the grantee, the right to exclude others from using the patented
invention for the specified period; it does not provide the grantee (patentee) the right
to use the patent but merely a right to restrain others from doing so.
9 8 . In Bayer Corporation and Ors. v. Cipla, Union of India (UOI) and Ors.:
MANU/DE/1756/2009 : 162 (2009) DLT 371, this Court had described "patents" as
under:--
"Patents are monopoly rights granted to those who invent or discover new and
useful processes, products, articles or machine of manufacture, or composition
of matter, or any new and useful improvement of any of those. It is not an
affirmative right to practice or use the invention; it is a right to exclude others
from making, using, importing, or selling patented invention, during its term.
They are property rights granted by states, to inventors in exchange with their
covenant to share its details with the public."
(underlining for emphasis)
9 9 . The US Supreme Court has described the right to exclude as "one of the most
essential sticks in the bundle of rights that are commonly characterized as property"
(Kaiser Aetna v. United States: MANU/USSC/0099/1979 : 444 U.S. 164, 176 (1979). In
United States, the status of patents as a property is now well established by a number
of decisions. The US Patents Act now expressly states that "patents shall have the
attributes of personal property" (35 U.S. Code ​ 261).
100. Insofar as tangible property is concerned, the ownership carries with it, the right
to use that property and to that extent, patent rights are different inasmuch as they only
grant a right to exclude without further right to use. In the case of real or personal
property, the right to exclude others essentially follows from the proprietor's right to
fully enjoy that property, but in case of a patent, the right to exclude is the only
substantive right that is granted to the patentee. However, this distinction between real
property and patents does not detract from the fact that patents are property. Adam
Mossoff, Associate Professor of Law at George Mason University, School of Law, in an
article captioned "Exclusion and Exclusive Use in Patent Law" published in Harvard
Journal of Law & Technology Volume 22, Number 2 Spring 2009 states the above in the
following words:--

22-08-2024 (Page 33 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 "In other words, patents are conceptually differentiated from land, not due to
any supposed categorical imperative about the alleged uniqueness of
propertized inventions, but because of seemingly important doctrinal
differences between the enforcement of tangible and intangible property
entitlements."
1 0 1 . In Vikas Sales Corporation v. Commissioner of Commercial Taxes:
MANU/SC/0519/1996 : (1996) 4 SCC 433, the Supreme Court while considering the
issue whether import licences (replenishment licences/export-import licences) issued
under the relevant export policy would be goods under the Sales Tax enactments of the
States of Tamil Nadu, Karnataka and Kerala noticed that whereas the definition of
'goods' under the Sale of Goods Act, 1930, used the expression "every kinds of movable
property", the definition of 'goods' under the Tamil Nadu General Sales Tax Act, 1956,
the Karnataka Sales Tax Act, 1957 and Kerala General Sales Tax Act, 1963, used the
expression "all kinds of movable property". The Court then proceeded to examine the
meaning of 'property' as well as 'movable property'. The Court referred to the definition
of 'property' in Black's Law Dictionary, Sixth Edition; Dictionary of Commercial Law by
A.H. Hudson (published by Butterworths) and noticed the expansive meaning in which
the expression 'property' is understood. The Supreme Court also referred to the Law of
Property, in Salmond's Jurisprudence (Twelfth Edition, 1956) and observed that the
expression 'property' would include immaterial things such as patents, copyrights and
trademarks which along with leases, servitudes and securities were described as
'incorporeal property' and the expression 'movable property' included corporeal as well
as incorporeal property. The Court then proceeded to hold that import licences were
'goods'. The relevant extract from the said judgment is quoted below:--
"19. In Black's Law Dictionary (6th Edition, 1990), the expression 'property' has
been given the following meanings:
"Property.--That which peculiar or proper to any person; that which
belongs exclusively to one. In the strict legal sense, an aggregate of
rights which are guaranteed and protected by the government. Fulton
Light, Heat & Power Co. v. State, 65 Misc. Rep 263, 121 NYS 536. The
term is said to extend to every species of valuable right and interest.
More specifically, ownership; the unrestricted and exclusive right to a
thing; the right to dispose of a thing in every legal way, to possess it,
to use it, and to exclude every one else from interfering with it. That
dominion or indefinite right of use or disposition which one may
lawfully exercise over particular things or subjects. The exclusive right
of possessing, enjoying, and disposing of a thing. The highest right a
man can have to anything; being used to refer to that right which one
has to lands or tenements, goods or chattels, which in no way depends
on another man's courtesy.
The word is also commonly used to denote everything which is the
subject of ownership, corporeal or incorporeal, tangible or intangible,
visible or invisible, real or personal; everything that has an
exchangeable value or which goes to make up wealth or estate. It
extends to every species of valuable right and interest, and includes
real and personal property, easements, franchises, and incorporeal
hereditaments, and includes every invasion of one's property rights by
actionable wrong. Labberton v. General Cas. Co. of America, 53 Wash
2d 180, 332 P 2d 250, 252, 254.

22-08-2024 (Page 34 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 Property embraces everything which is or may be the subject of
ownership, whether a legal ownership, or whether beneficial, or a
private ownership. Davis v. Davis, Tax Civ. App. 495 S W 2d 607, 611.
Term includes not only ownership and possession but also the right of
use and enjoyment of lawful purposes. Hoffmann v. Kinealy, Mo, 389 S
W 2d 745, 752.
Property, within constitutional protection, denotes group of rights
inhering in citizen's relation to physical thing, as right to possess, use
and dispose of it. Cereghino v. State by and Through State Highway
Commission, 230 Or., 439 370 P 2d 694, 697.
Goodwill is property, Howell v. Bowden, Tex Civ App, 368 S W 2d 842,
848; as is an insurance policy and rights incident thereto, including a
right to the proceeds, Harris v. Harris, 83 N M 441, 493 P 2d 407, 408."
The Dictionary further says "property is either: real or immovable; or, personal
or movable". It then proceeds to give the meaning of the expression "absolute
property", "common property", "intangible property", movable property",
"personal property" "private property" and "public property" among others. The
above definition shows the wide meaning attached to the expression. It is said
to extend to every species of valuable right and interest. It denotes everything
which is the subject of ownership, corporeal or incorporeal, tangible or
intangible, visible or invisible, real or personal it includes "everything that has
an extendable value". It extends to every species of valuable right and interest.
20. To the same effect is the definition in the Dictionary of Commercial Law by
A.H. Hudson (published by Butterworths, 1983). It reads:
"Property.--In commercial law this may carry its ordinary meaning of
the subject-matter of ownership, e.g. in bankruptcy referring to the
property of the debtor divisible amongst creditors. But elsewhere as in
sale of goods it may be used as a synonym for ownership and lesser
rights in goods. The Sale of Goods Act, 1979, Section 2 (1) makes
transfer of property central to sale. Section 61(1) provides that
'property' means the general property in goods, and not merely a
special property. 'General Property' is tantamount to ownership; bailees
who have possession and not ownership and others with limited
interests are said to have a 'special property' as their interest,"
21. Jowitt's Dictionary of English Law (Sweet & Maxwell Limited, 1977) Vol. I
also sets out the meaning of the expression 'property' as well as the meaning of
the expression "general property" and "special property". We may set them out:
"property (Norm. Fr. Proprete; Lat. Proprietas; proprius, one's own),
the highest right a man can have to anything, being that right which
one has to lands or tenements, goods or chattel which does not depend
on another's courtesy.
In its largest sense property signifies things and right considered as
having a money value, especially with reference to transfer or
succession, and to their capacity of being injured. Property includes not
only ownership, estates, and interest in corporeal things, but also
rights such as trade marks, copyrights, patents, and rights in personam

22-08-2024 (Page 35 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 capable of transfer or transmission such as debts.
Property is of two kinds, real property (q.v.) and personal property
(q.v.).
Property in reality is acquired by entry, conveyance, or devise; and in
personality, by many ways, but most usually by gift, bequest, or sale.
Under the Law of Property Act, 1925, Section 205, 'property' includes
anything in action and any interest in real or personal property. There
must be a definite interest; a mere expectancy as distinguished from a
conditional interest is not a subject of property.
'Property' also signifies a beneficial right in or to a thing. Sometimes
the term is used as equivalent to ownership; as where we speak of the
right of property as opposed to the right of possession (q.v.) or where
we speak of the property in the goods of a deceased person being
vested in his executor. The term was chiefly used in this sense with
reference to chattels (Finch, Law 176).
Property in this sense is divided into general and special or qualified.
General property is that which every absolute owner has (Co. Litt 145-
b.), See OWNERSHIP.
Special property has two meanings. First, it may mean that the subject-
matter is incapable of being in the absolute ownership of any person.
Thus a man may have a property is deer in a park, hares or rabbits in a
warren, fish in a pond, etc.; but it is only a special or qualified
property, for if at any time they regain their natural liberty his property
instantly ceases, unless they have animus revertendi (2 Bl. Comm.
391). See ANIMALS FERAE NATURAE...."
This definition also shows that the expression signifies "things and rights
considered as having a money value". Even incorporeal rights like trade marks,
copyrights, patents and rights in personam capable of transfer or transmission,
such as debts, are also included in its ambit. The meaning given to "general
property" and "special property" are self-explanatory and need no emphasis at
our hands. It is worth recalling that movable property means "property of every
description except immovable property" - the definition in all the General
Clauses Acts.
22. The above material uniformly emphasises the expansive manner in which
the expression "property'' is understood. The learned counsel for the petitioners
brought to our notice the meanings of the term "property" set out in Chapter
13, "The Law of Property", in Salmond's Jurisprudence (12th Edition, 1966). In
this chapter, several meanings attributed to 'property' are discussed in extenso,
to all of which it may not be necessary to refer. Suffice to say that property is
defined to include material things and immaterial things (jura in re propria) and
leases, servitudes and securities etc. (jura in re aliena). The material things are
said to comprise land and chattels while immaterial things include patents,
copyrights and trade marks, which along with leases, servitudes and securities
are described as incorporeal property. The expression "movable property" is
stated to include (p. 421) corporeal as well as incorporeal property. Debts,
contracts and other choses-in-action are said to be chattels, no less than

22-08-2024 (Page 36 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 furniture or stock-in-trade. Similarly, patents, copyrights and other rights in
rem which are not rights over land are also included within the meaning of
movable property. We are unable to see anything in the said Chapter 13, which
militates against the meanings ascribed to the said expression in the judicial
dictionaries referred have above. Indeed, they are consistent with each other."
102. In Rustom Cavasjee Cooper v. Union of India: MANU/SC/0011/1970 : (1970) 1
SCC 248, the Supreme Court, while considering the scope of the expression "property"
as appearing in Entry 42 of List III of the Seventh Schedule of the Constitution of India,
observed as under:
"Under that entry "property" can be compulsorily acquired. In its normal
connotation "property" means "highest right a man can have to anything, being
that right which depend on another's courtesy: it includes ownership, estates
and interests in corporeal things, and also rights such as trade-marks,
copyrights, patents and even rights in personam capable of transfer or
transmission, such as debts; and signifies a beneficial right to or a thing
considered as having a money value, especially with injured". The expression
"undertaking" in s. 4 of Act 22 of 1969 clearly means a going concern with all
its rights, liabilities and assets-as distinct from the various rights and assets
which compose it. In Halsbury's Laws of England, 3rd Edn. Vol. 6, Art. 75 at p.
43, it is stated that "Although various ingredients go to make up an
undertaking, the term describes not the ingredients but the completed work
from which the earnings arise.
......... The expression "property" in Entry 42 List III has a wide connotation
and it includes not only assets, but the Organisation, liabilities and obligations
of a going concern as a unit."
(underlining for emphasis)
103. As noted above, the nature of patent rights - right to exclude without the right to
use - does not in any manner exclude patent rights from the scope of 'goods' as defined
under the Sale of Goods Act, 1930. All kinds of property (other than actionable claims,
money and immovable property) would fall within the definition of 'goods' and this
would also include intangible and incorporeal property such as patents.
104. In view of the above, the issue whether patents are goods is no longer res integra
and Mr. Vaidyanathan's contention that patents are not goods cannot be accepted.
Consequently, Ericsson would fall within the definition of 'enterprise' under Section 2(h)
of the Competition Act.
105. The question whether licences for patents are goods is a contentious one. Since
grant of licence does not extinguish the rights of a patent holder in the subject matter,
it may not amount to sale of goods. There may be some merit in the contention that a
case for abuse of dominant position under clause (a) of Section 4(2) of the Competition
Act has not been made out. However, I do not propose to examine that question in
these proceedings. The disputes as to whether Ericsson has fallen foul of any of the
clauses of Section 4(2) of the Competition Act are as yet open and have not been finally
adjudicated. Suffice it to say that the proceedings initiated by the CCI for violation of
Section 4(1) of the Act cannot, at the threshold, be held to be without jurisdiction on
account of Ericsson not being an enterprise within the meaning of Section 2(h) of the
Competition Act.

22-08-2024 (Page 37 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

(ii) Whether the Patents Act as a special Act would prevail over the Competition Act.
106. The next issue to be addressed is whether the CCI would have the jurisdiction to
entertain complaints regarding abuse of dominance in view of the specific provisions
under the Patents Act enacted to address the issue of abuse of dominance by a patent
holder. It is contended on behalf of Ericsson that the Patents Act provides for an
adequate mechanism to prevent any abuse of patent rights granted under that Act. It is
urged that any issues regarding abuse of patent rights including abuse of dominance as
contemplated under Section 4 of the Competition Act, are required to be addressed
under the provisions of the Patents Act and, thus, the applicability of the Competition
Act in certain matters regarding patents is ousted. It is contended that the Patents Act is
a special Act which contains comprehensive provisions relating to grant of patents
rights as well as for remedying any abuse thereof; and, on the other hand, the
Competition Act is a general law enacted with a view to ensure freedom of trade and to
promote and sustain competition in the market. It is, thus, urged that the Patents Act
would prevail over the Competition Act and the CCI would have no jurisdiction to
entertain the complaints in question.
107. The key question is whether provisions of the Patents Act exhausts all remedies
that are available in respect of abusive conduct by a patentee or whether an abuse of
dominant position by a patentee could also be subject matter of proceedings and orders
under the Competition Act. The aforesaid issue has to be addressed bearing in mind the
objective, express provisions and the operative legislative fields of the two enactments.
108. As discussed earlier, patent rights are, essentially, statutory grants that make it
unlawful for any person to exploit or use the patent without the consent of its proprietor
(the patentee). These rights are property rights and granted to inventors in exchange of
their covenant to share its details with the public [see Bayer Corporation (supra)]. The
entire purpose and object of granting patents is based on the rationale of rewarding
invention to promote and encourage advancement in technology and industry.
109. On the other hand, the focus of the Competition Act is "to ensure fair competition
in India by prohibiting trade practices which cause appreciable adverse effect on
competition in markets within India".
110. Thus, whereas patent laws are concerned with grants of rights enabling the patent
holder to exclude others from exploiting the invention, and in that sense promoting
rights akin to a monopoly; the competition law is essentially aimed to promote
competition and, thus, fundamentally opposed to monopolization as well as unfair and
anticompetitive practices that are associated with monopolies.
111. At this stage, in order to address the controversy whether the provisions of the
Patents Act oust the applicability of the Competition Act, it is necessary to briefly,
examine the legislative history and scheme of the two enactments - particularly in the
context of anti abuse provisions.
Competition Act
112. The Monopolies and Restrictive Trade Practices Act, 1969, was enacted to curb
monopolies and restrictive trade practices. On 25th October, 1999, the Government of
India constituted a High Level Committee to examine the then existing provisions of the
Monopolies and Restrictive Trade Practices Act, 1969 for shifting the focus of the law
from curbing monopolies to promoting competition. The Committee was requested "to
suggest a modern competition law in line with international developments to suit Indian

22-08-2024 (Page 38 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

conditions". The terms of reference required the Committee to recommend as under:--
"(a) a suitable legislative framework, in the light of international economic
developments and the need to promote competition, relating to competition
law, including law relating to mergers and demergers. Such a legislative
framework could entail a new law or appropriate amendments to the MRTP Act,
1969:--
(b) changes relating to legal provisions in respect of restrictive trade practices
after reviewing the existing provisions and ensuring clear demarcation between
the jurisdiction of the MRTP Commission and the Consumer Courts under the
Consumer Protection Act, 1986 so as to avoid any overlapping of jurisdiction;
and
(c) suitable administrative measures required in order to implement the
proposed recommendations including restructuring the MRTP Commission and
the location of Benches outside Delhi for expeditious disposal of cases pending
before the Commission."
1 1 3 . The High Level Committee, under the Chairmanship of Sh. S.V.S. Raghavan,
submitted its report to the Central Government on 22nd May, 2000. Based on the
recommendations as well as the other suggestions, the Competition Bill, 2001 was
introduced in the Parliament and the Competition Act, 2002 was enacted. The
Competition Act received the assent of the President on 13th January, 2003 and the
provisions of the Act came into force on different dates as notified. The first such set of
provisions came into force on 31st March, 2003. The Competition Act has been
subsequently amended by the Competition (Amendment) Act, 2007 and the Competition
(Amendment) Act, 2009.
114. The Preamble of the Competition Act reads as under:--
"An Act to provide, keeping in view of the economic development of the
country, for the establishment of a Commission to prevent practices having
adverse effect on competition, to promote and sustain competition in markets,
to protect the interests of consumers and to ensure freedom of trade carried on
by other participants in markets, in India, and for matters connected therewith
or incidental thereto.
BE it enacted by Parliament in the Fifty-third Year of the Republic of India as
follows:--"
115. The Statement of the Objects and Reasons for introducing the Competition Bill,
2001 indicates that the Competition Act was enacted to ensure fair competition in India
by prohibiting trade practices which cause appreciable adverse effect on competition in
the markets in India and the CCI was established as a quasi-judicial body for the said
purpose. The Statement of Objects and Reasons further indicates that the CCI would
also undertake competition advocacy for creating awareness and imparting training on
competition issues.
116. Chapter II of the Competition Act contains provisions for prohibition of certain
agreements, abuse of dominant position and regulation of combinations. Section 3 of
the Competition Act prohibits any enterprise or any association of enterprises or person
or association of persons to enter into any agreement in respect of production, supply,
distribution, storage, acquisition or control of goods or provision of services, which

22-08-2024 (Page 39 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

causes or is likely to cause an appreciable adverse effect on competition within India.
Section 4 of the Competition Act prohibits any enterprise or group from abusing its
dominant position. Section 5 of the Competition Act outlines the scope of a
'combination' and Section 6 of the Competition Act prohibits any person or enterprise
from entering into a combination, which causes or is likely to cause an appreciable
adverse effect on competition within the relevant market in India and expressly declares
such combinations to be void.
117. Section 7 of the Competition Act provides for establishment of CCI and Section 8
provides for its composition. Section 16 of the Competition Act provides for
appointment of Director General for the purposes of assisting CCI and Section 17 of the
Act provides for appointment of Secretary, experts, professionals and officers and other
employees of CCI.
118. Section 18 of the Competition Act provides that the duty of CCI would be to
"eliminate practices having adverse effect on competition, promote and sustain
competition, protect the interest of consumers, and ensure freedom of trade carried on
by other participants, in markets in India". The function to administer and execute the
Act vests predominantly with the CCI and it has a pivotal role under the Competition
Act.
Patents Act
119. The Indian Patents and Designs Act, 1911 was enacted for the grant of patents
and for protection of inventors. After independence, a need was felt to review this law.
By a Resolution of the Government of India passed on 1st October, 1948, a Committee
was constituted to review the patent laws in India to ensure that patent laws are more
conducive to national interest. This Committee presided by Dr. Bakshi Tek Chand, a
Retired Judge of the High Court of Lahore, submitted an interim report suggesting
amendments in the then existing law with a view to counteract misuse or abuse of
patent rights and recommended enacting provisions for providing compulsory licences.
These recommendations were accepted and the Patents and Designs Act, 1911 was
amended by Act 32 of 1950. Subsequently, the Patents Bill, 1953, which was based on
the United Kingdom Patents Act, 1949, was introduced in the Parliament. However, the
same was not proceeded with and it lapsed. Thereafter, the Government of India
appointed Justice N. Rajagopala Ayyangar for making recommendations for revision of
the Patent laws. Justice Ayyangar submitted his report on the revision of the patents law
in September, 1959 and notably, he flagged the issue regarding monopoly abuses,
restrictive trade practices and monopolistic combinations in relation to patents. He
stated that while making his recommendations on the topic of compulsory working of a
patent, he had kept the following three factors in mind, namely, "(1) the reward to the
inventor so as to stimulate and accelerate invention, (2) ensuring of freedom from
competition so that venture capital would be forthcoming to exploit the invention and
(3) the interest of the community that inventions are worked in the country within as
short a time as possible after the grant, and on as full and ample a scale as practicable-
and that if they are not so worked, but are utilised to secure a monopoly of importation,
they are promptly enabled to be revoked.". In addition, he further pointed out various
types of abuse of patent rights and pointed out that Indian Patents and Designs Act,
1911 did not contain provisions for countering various such misuses. A bill based on
the recommendations made by Justice Ayyangar was moved in the Parliament, but could
not be proceeded with and eventually lapsed with the dissolution of the Third Lok Sabha
on 3rd March, 1967.

22-08-2024 (Page 40 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

120. Thereafter, the Patents Act, 1970 was enacted to consolidate the patents laws in
India and, apart from certain provisions, came into force on 20th July, 1972.
1 2 1 . After its enactment, the Patents Act, has been subjected to three sets of
substantial amendments by three Acts: The Patents (Amendment) Act, 1999 (17 of
1999); The Patents (Amendment) Act, 2002 (38 of 2002); and The Patents
(Amendment) Act, 2005 (15 of 2005). These sets of amendments - apart from seeking
to simplify and make the Patents Act a modern legislation - were enacted to comply
with India's obligations as a signatory to the Agreement on Trade-Related Aspects of
Intellectual Property Rights (hereafter 'TRIPS').
122. By virtue of the Patents (Amendment) Act 2002, Section 48 of the Act, which
specifies the rights granted to a patentee, was substituted to read as under:
"48. Rights of patentees.--Subject to the other provisions contained in this Act
and the conditions specified in section 47, a patent granted under this Act shall
confer upon the patentee-
(a) where the subject matter of the patent is a product, the exclusive
right to prevent third parties, who do not have his consent, from the
act of making, using, offering for sale, selling or importing for those
purposes that product in India;
(b) where the subject matter of the patent is a process, the exclusive
right to prevent third parties, who do not have his consent, from the
act of using that process, and from the act of using, offering for sale,
selling or importing for those purposes the product obtained directly by
that process in India:
Provided that the product obtained is not a product in respect
of which no patent shall be granted under this Act."
The proviso was subsequently deleted by Act 15 of 2005. Section 48 of the Act, as is in
force today is worded similar to Article 28 of the TRIPS Agreement.
123. India is also a signatory to the Paris Convention and both Paris Convention as well
as the TRIPS Agreement enable the signatory countries to provide for measures to
prevent abuse of intellectual property rights.
124. Article 5(A)(2) of the Paris Convention provides as under:--
"Each country of the Union shall have the right to take legislative measures
providing for the grant of compulsory licenses to prevent the abuses which
might result from the exercise of the exclusive rights conferred by the patent,
for example, failure to work."
125. Similarly, Article 8.2 of the TRIPS Agreement reads as under:--
"Appropriate measures, provided that they are consistent with the provisions of
this Agreement, may be needed to prevent the abuse of intellectual property
rights by right holders."
126. Article 31 of the TRIPS Agreement also enables a signatory country to enact laws
to permit use of the patent without authorisation and reads as under:--

22-08-2024 (Page 41 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 "Article 31
Other Use Without Authorization of the Right Holder
Where the law of a Member allows for other use of the subject matter of a
patent without the authorization of the right holder, including use by the
government or third parties authorized by the government, the following
provisions shall be respected:
(a) authorization of such use shall be considered on its individual
merits;
(b) such use may only be permitted if, prior to such use, the proposed
user has made efforts to obtain authorization from the right holder on
reasonable commercial terms and conditions and that such efforts have
not been successful within a reasonable period of time. This
requirement may be waived by a Member in the case of a national
emergency or other circumstances of extreme urgency or in cases of
public non-commercial use. In situations of national emergency or
other circumstances of extreme urgency, the right holder shall,
nevertheless, be notified as soon as reasonably practicable. In the case
of public non-commercial use, where the government or contractor,
without making a patent search, knows or has demonstrable grounds to
know that a valid patent is or will be used by or for the government,
the right holder shall be informed promptly;
(c) the scope and duration of such use shall be limited to the purpose
for which it was authorized, and in the case of semi-conductor
technology shall only be for public noncommercial use or to remedy a
practice determined after judicial or administrative process to be anti-
competitive;
(d) such use shall be non-exclusive;
(e) such use shall be non-assignable, except with that part of the
enterprise or goodwill which enjoys such use;
(f) any such use shall be authorized predominantly for the supply of
the domestic market of the Member authorizing such use;
(g) authorization for such use shall be liable, subject to adequate
protection of the legitimate interests of the persons so authorized, to
be terminated if and when the circumstances which led to it cease to
exist and are unlikely to recur. The competent authority shall have the
authority to review, upon motivated request, the continued existence of
these circumstances;
(h) the right holder shall be paid adequate remuneration in the
circumstances of each case, taking into account the economic value of
the authorization;
(i) the legal validity of any decision relating to the authorization of
such use shall be subject to judicial review or other independent review
by a distinct higher authority in that Member;

22-08-2024 (Page 42 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 (j) any decision relating to the remuneration provided in respect of
such use shall be subject to judicial review or other independent review
by a distinct higher authority in that Member;
(k) Members are not obliged to apply the conditions set forth in
subparagraphs (b) and (f) where such use is permitted to remedy a
practice determined after judicial or administrative process to be anti-
competitive. The need to correct anti-competitive practices may be
taken into account in determining the amount of remuneration in such
cases. Competent authorities shall have the authority to refuse
termination of authorization if and when the conditions which led to
such authorization are likely to recur;
(l) where such use is authorized to permit the exploitation of a patent
("the second patent") which cannot be exploited without infringing
another patent ("the first patent"), the following additional conditions
shall apply:
(i) the invention claimed in the second patent shall involve an
important technical advance of considerable economic
significance in relation to the invention claimed in the first
patent;
(ii) the owner of the first patent shall be entitled to a cross-
licence on reasonable terms to use the invention claimed in the
second patent; and
(iii) the use authorized in respect of the first patent shall be
non-assignable except with the assignment of the second
patent."
127. In conformity with the TRIPS Agreement, the Patents Act now contains provisions
for grant of compulsory licences in certain cases. Chapter XVI of the Patents Act, as its
caption indicates, provides for working of patents, compulsory licence and revocation.
Section 84(1) of the Act provides that any person interested may, at any time after
expiry of three years from the date of the grant of patent, apply to the Controller of
Patents for grant of a compulsory licence on the following grounds:--
"(a) that the reasonable requirements of the public with respect to the patented
invention have not been satisfied, or
(b) that the patented invention is not available to the public at a reasonably
affordable price, or
(c) that the patented invention is not worked in the territory of India."
128. Section 83 of the Patents Act specifies the following principles that are required to
be considered while exercising powers conferred under Chapter XVI of the Patents Act:-
-
"83. General principles applicable to working of patented inventions. - Without
prejudice to the other provisions contained in this Act, in exercising the powers
conferred by this Chapter, regard shall be had to the following general
considerations, namely;-

22-08-2024 (Page 43 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 (a) that patents are granted to encourage inventions and to secure that
the inventions are worked in India on a commercial scale and to the
fullest extent that is reasonably practicable without undue delay;
(b) that they are not granted merely to enable patentees to enjoy a
monopoly for the importation of the patented article;
(c) that the protection and enforcement of patent rights contribute to
the promotion of technological innovation and to the transfer and
dissemination of technology, to the mutual advantage of producers and
users of technological knowledge and in a manner conducive to social
and economic welfare, and to a balance of rights and obligations;
(d) that patents granted do not impede protection of public health and
nutrition and should act as instrument to promote public interest
specially in sectors of vital importance for socio-economic and
technological development of India;
(e) that patents granted do not in any way prohibit Central Government
in taking measures to protect public health;
(f) that the patent right is not abused by the patentee or person
deriving title or interest on patent from the patentee, and the patentee
or a person deriving title or interest on patent from the patentee does
not resort to practices which unreasonably restrain trade or adversely
affect the international transfer of technology; and
(g) that patents are granted to make the benefit of the patented
invention available at reasonably affordable prices to the public."
It is seen that the aforementioned general considerations - in particular clause (b), (c)
and (f) - are directed to prevent what could be described as an abuse of patent rights.
129. Sub-section (7) of Section 84 of the Patents Act lists out situations where the
reasonable requirements of public are deemed not to have been satisfied. The said Sub-
section reads as under:--
"(7) For the purposes of this Chapter, the reasonable requirements of the public
shall be deemed not to have been satisfied-
(a) if, by reason of the refusal of the patentee to grant a licence or
licences on reasonable terms,-
(i) an existing trade or industry or the development thereof or
the establishment of any new trade or industry in India or the
trade or industry in India or the trade or industry of any person
or class of persons trading or manufacturing in India is
prejudiced; or
(ii) the demand for the patented article has not been met to an
adequate extent or on reasonable terms; or
(iii) a market for export of the patented article manufactured in
India is not being supplied or developed; or

22-08-2024 (Page 44 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 (iv) the establishment or development of commercial activities
in India is prejudiced; or
(b) if, by reason of conditions imposed by the patentee upon the grant
of licences under the patent or upon the purchase, hire or use of the
patented article or process, the manufacture, use or sale of materials
not protected by the patent, or the establishment or development of
any trade or industry in India, is prejudiced; or
(c) if the patentee imposes a condition upon the grant of licences under
the patent to provide exclusive grant back, prevention to challenges to
the validity of patent or coercive package licensing; or
(d) if the patented invention is not being worked in the territory of
India on a commercial scale to an adequate extent or is not being so
worked to the fullest extent that is reasonably practicable; or
(e) if the working of the patented invention in the territory of India on
a commercial scale is being prevented or hindered by the importation
from abroad of the patented article by-
(i) the patentee or persons claiming under him; or
(ii) persons directly or indirectly purchasing from him; or
(iii) other persons against whom the patentee is not taking or
has not taken proceedings for infringement."
130. A plain reading of various clauses of Sub-section 7 of Section 84 of the Patents
Act also indicates that the Legislature was cognizant that in certain cases, patents rights
may be misused - such as where the patentee refuses to grant licences on reasonable
terms to the prejudice of trade and/or industry - and, therefore, in conformity with the
TRIPS Agreement, it enacted provisions for remedying the same by issuance of
compulsory licences.
131. However, the provisions of Section 84 of the Patents Act would not be applicable
where a period of three years from the grant of licence has not elapsed. In other words,
the proprietors of patents enjoy a larger degree of protection during the first three years
of the grant of the patent. The Parliament in its wisdom thought it fit to grant this
minimum period for a patentee to reasonably ensure that its patent is worked in India
and the patented invention is available at reasonable and affordable prices. This
protection is further diluted by virtue of Section 92 of the Patents Act which provides
that in case of national emergency or in circumstances of extreme emergency or in case
of public non-commercial use, the Central Government, if satisfied that it is necessary
to grant a compulsory licence, is empowered to make a declaration to that effect and on
such declaration, the Controller of Patents would be empowered to entertain
applications for grant of compulsory licence, notwithstanding that a period of three
years has not elapsed from the grant of patent.
132. Section 85 of the Patents Act provides for revocation of patents, if even after two
years of the grant of compulsory licence, the patent invention has not been worked in
the territory of India or that reasonable requirement of the public with respect to the
patented invention has not been satisfied or that patented invention is not available to
the public at a reasonably affordable price.

22-08-2024 (Page 45 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

133. Section 140 of the Patents Act expressly proscribes that it shall not be lawful to
insert certain restrictive conditions in a contract in relation to a sale or lease of a
patented article or in a licence to manufacture a patented article or to work any
patented process. Sub-section (1) of Section 140 of the Patents Act reads as under:--
"140 Avoidance of certain restrictive conditions.--(1) It shall not be lawful to
insert-
(i) in any contract for or in relation to the sale or lease of a patented
article or an article made by a patented process; or
(ii) in license to manufacture or use a patented article; or
(iii) in a licence to work any process protected by a patent, a condition
the effect of which may be-
(a) to require the purchaser, lessee, or licensee to acquire from
the vendor, lessor, or licensor or his nominees, or to prohibit
him from acquiring or to restrict in any manner or to any
extent his right to acquire from any person or to prohibit him
from acquiring except from the vendor, lessor, or licensor or
his nominees any article other than the patented article or an
article other than that made by the patented process; or
(b) to prohibit the purchaser, lessee or licensee from using or
to restrict in any manner or to any extent the right of the
purchaser, lessee or licensee, to use an article other than the
patented article or an article other than that made by the
patented process, which is not supplied by the vendor, lessor
or licensor or his nominee; or
(c) to prohibit the purchaser, lessee or licensee from using or
to restrict in any manner or to any extent the right of the
purchaser, lessee or licensee to use any process other than the
patented process,
(d) to provide exclusive grant back, prevention to challenges to
validity of Patent & Coercive package licensing, and any such
condition shall be void."
1 3 4 . Chapter XVIII of the Patents Act contains provisions regarding suits for
infringement of patents. Section 106 of the Patents Act enables any person, aggrieved
by threats of proceedings for infringement of a patent, to file a suit for seeking; "(a) a
declaration to the effect that the threats are unjustifiable; (b) an injunction against the
continuance of the threats; and (c) such damages, if any, as he has sustained thereby."
Section 108 of the Patents Act provides for the reliefs that may be granted in a suit for
infringement. Sub-section (1) of Section 108 provides that the reliefs would include
injunction and, at the option of the plaintiff, either damages or an account of profits;
Sub-section (2) of Section 108 further provides that the court may also pass orders that
infringing goods shall be seized, forfeited or destroyed, as the court deems fit without
payment of any compensation.
135. Section 107 of the Act provides for the defences that may be taken in a suit for
infringement. Sub-section (1) of Section 107 expressly provides that every ground for

22-08-2024 (Page 46 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

revocation of a patent as available under Section 64 of the Act would be available as a
ground for defence in a suit for infringement.
136. It is clear from the above that certain specific remedies have been provided under
the Patents Act in respect of certain practices that may constitute abuse of dominance or
may be considered as anti-competitive. In certain cases, as indicated above, the
compulsory licences can be granted by the Controller of Patents. Thus, enabling the
manufacturer to manufacture patented articles or use of patented process without the
consent of the proprietor of the patent. Further restrictive conditions as specified under
Section 140(1) of the Patents Act are expressly declared to be void and, thus,
unenforceable.
137. Insofar as the allegations contained in the complaints are concerned -that is,
demand of excessive licence fee, unreasonable and anti-competitive licensing terms,
and breach of FRAND obligations - the Patents Act does provide a remedy by way of
compulsory grant of licences. The question is whether provision of such remedies
excludes the applicability of the Competition Act to certain abuse of patent rights - such
as demand for excessive royalty and imposition of unreasonable terms for grant of
patent licences.
138. As mentioned earlier the Patents Act was amended to make it TRIPS compliant.
The TRIPS Agreement, as mentioned above, obliges the signatory countries to recognise
intellectual property rights but does not disable member countries to enact laws,
consistent with the TRIPS Agreement, for restricting and curbing its use in certain cases.
Article 8.2 of the TRIPS Agreement expressly permits measures required to prevent
abuse of intellectual property rights by right holders. Similarly, Article 31 of the TRIPS
Agreement recognises that laws of member states could permit use of patents without
authorisation by the rights holder, however, it enjoins the member states to respect
certain parameters which are articulated in Article 31 of the TRIPS Agreement.
139. The High Level Committee constituted by the Government for recommending the
legal framework for competition law (Sh. S.V.S. Raghvan Committee) was also
cognizant that with the opening of the economy and with India implementing the WTO
Agreements certain competition law issues would arise in respect to intellectual
property rights. Paras 5.1.6, 5.1.7 and 5.1.8 of their report as accepted by the
Government are relevant and are quoted below:--
"5.1.6 Intellectual Property Rights
India is a signatory to the Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS). TRIPS Agreement covers nine categories of Intellectual
Property:
• Copyright and related rights
• Trade marks including service marks
• Geographical indications
• Industrial designs
• Lay-out designs of integrated circuits
• Trade secrets

22-08-2024 (Page 47 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 • Patents
• Patenting of micro-organisms and
• New plant varieties (seeds and other propagating material)
5.1.7 All forms of Intellectual Property have the potential to raise Competition
Policy/Law problems. Intellectual Property provides exclusive rights to the
holders to perform a productive or commercial activity, but this does not
include the right to exert restrictive or monopoly power in a market or society.
Undoubtedly, it is desirable that in the interest of human creativity, which
needs to be encouraged and rewarded, Intellectual Property Right needs to be
provided. This right enables the holder (creator) to prevent others from using
his/her inventions, designs or other creations. But at the same time, there is a
need to curb and prevent anti-competition behavior that may surface in the
exercise of the Intellectual Property Rights.
5.1.8 There is, in some cases, a dichotomy between Intellectual Property Rights
and Competition Policy/Law. The former endangers competition while the latter
engenders competition. There is a need to appreciate the distinction between
the existence of a right and its exercise. During the exercise of a right, if any
anti-competitive trade practice or conduct is visible to the detriment of
consumer interest or public interest, it ought to be assailed under the
Competition Policy/Law."
1 4 0 . Even though the High Level Committee had flagged the issue of intellectual
property rights being used to the detriment of consumer interest or public interest, no
specific provisions were enacted in the Competition Act to address such issues. On the
other hand, the Government of India, fully mindful of implementing its WTO
obligations, substituted chapter XVI of the Patents Act to redress non-use and certain
misuse of patent rights. The Parliament also introduced sub clause (d) to Clause (iii) of
Subsection (1) of Section 140 of the Patents Act to declare clauses in licences and
contracts the effect of which may be "to provide exclusive grant back, prevention to
challenges to validity of Patent and Coercive package licensing", as void. These
provisions for safeguarding national and public interest from any adverse effect of grant
of patent rights are permissible under the TRIPS agreement and were enacted inter alia
to avoid any ambiguity as to India's obligations there under. This is also apparent from
the opening remarks of the Minister of Commerce and Industry made while introducing
the Patents (Amendment) Bill, 2002. The relevant extract of which is quoted below:--
"Hon. Chairman, Sir, my brief introduction of this Bill to further amend the
Patent Act, 1970 must begin with an acknowledgement of the uniquely
constructive debate and support during the passage of the Bill in the Upper
House. The Government's sensitivity to all issues and its responsiveness to
suggestions for improvement was equally matched by an appreciation of the
need to honour international obligations and chart a clear path for R&D driven
economic development.
The Members are aware that the agreement on TRIPS is an integral part of the
"take-it-or-leave-it" package finalised in the GATT Uruguay Round and the Draft
Final Act signed in December 1993. The Pact itself was signed in Marrakesh on
15th April, 1994. The text of the TRIPS has been described as a masterpiece of
ambiguity, couched in the language of diplomatic compromise, resulting in a
verbal tight-rope walk, with a prose remarkably elastic and capable of being

22-08-2024 (Page 48 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 stretched all the way to Geneva.
Be that as it may, we are required to meet some time-bound obligations in the
area of intellectual property protection. The proposed changes in patent law are
overdue by nearly two and half years.
In order to do this we must, firstly, carve out a law without permitting any
ambiguity under the TRIPS agreement to come in our way so as to safeguard
our national security, national interests, public health as also ensure availability
of medicines at affordable prices, which is one of the human rights.
Secondly, we need to design a system for a new era of explosions of state-of-
the-art technologies, since internationally approved patent protection regime
has become the measuring rod of a country's technological and industrial
progress and the protective shield for a knowledge driven economy.
Thirdly, we must take note of the awakening of the conscience of the humanity,
which was helplessly watching while millions died and while millions more
continued to suffer in silence because of HIV/AIDS. In mobilising this
international public opinion, India, along with Brazil and about 55 African
countries, took the lead and the result was the path-breaking Doha Declaration
on TRIPS and Public Health. This Declaration provides flexibilities and there is a
need to make use of them to the fullest possible extent in our law.
And lastly, we have to make the administrative system more user-friendly to
facilitate knowledge and creativity driven wealth-creation, economic progress
and betterment of life.
I am happy to say that the Bill before the House seeks to meet these
objectives.......
xxxx xxxx xxxx xxxx
The Committee has reinforced the flexibilities already provided in the legislation
with a view to address national and public interest requirements/concerns,
especially those relating to public health and nutrition. More importantly, the
Committee has fully restructured the existing provisions relating to public
interest, compulsory licensing, Government use, national security, protection of
traditional knowledge and protection of public health and nutrition as contained
in Chapter XVI (Working of Patents, Compulsory Licences and Revocation) of
the Patents Act.
xxxx xxxx xxxx xxxx
There are provisions in the Bill providing a wide-ranging and powerful weapon
to the Government to extinguish the patentee's exclusive right immediately and
acquire it if the occasion warrants. Let any crisis situation be visualised; the
present Bill covers all contingencies.
xxxx xxxx xxxx xxxx
Critics have asserted that vis-Ã -vis TRIPS the Bill does too much; others have
observed that it does too little. If anything, these criticisms confirm the fine
balance which the Bill strikes between meeting our international obligations and
all of our national concerns. I would categorically state that all aspects and

22-08-2024 (Page 49 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 relevant provisions of TRIPS, the Paris convention and other Conventions, post-
TRIPS patent laws of different countries and the Doha Declaration have been
taken on board. All ambiguities have been removed and available flexibilities
are made use of to the maximum to protect the varied interests of our nation."
141. If one now views the amendments to the Patents Act as introduced in 2002 and
2005, in the above perspective, it would be clear that the amendments made were not
only for recognizing the rights of patent holders in terms of Article 28 of the TRIPS
Agreement but also to restrict the rights granted to the patents holders to inter alia curb
any misuse of those rights.
142. The Patents (Amendment) Act, 2002 received the Presidents' assent on 20th May,
2003. Thus, in so far as the Amendments to the Patents Act introduced by the aforesaid
Amendment Acts of 2002 and 2005 are concerned, the same would be construed as
later enactments. This rationale was also applied by the Supreme Court in Shri Ram
Narain v. The Simla banking & Industrial Co. Limited: MANU/SC/0003/1956 : AIR 1956
SC 614 wherein the Court while applying the principle that a later Act would override
the earlier Act, held that the Banking Companies (Amendment) Act 1953 must be
treated as a later Act and that would override the provisions of the earlier Displaced
Persons (Debts Adjustments) Act, 1951.
143. Thus, the provisions of Chapter XVI of the Patents Act which were substituted with
effect from 20th May, 2003 would be considered as a later enactment. As discussed
earlier, Chapter XVI of the Patents Act provides for grant of compulsory licences as well
as revocation of patents in certain cases including in cases where the reasonable
requirements of the public as specified under Section 84(7) of the Patents Act have not
been satisfied. Section 84(7) of the Patents Act as pointed out earlier, is couched in
wide terms and takes within its sweep instances where a refusal by a patentee to grant
licence on reasonable terms results in prejudicing the existing trade or industry or any
person or class of persons trading or manufacturing in India. Plainly, Section 84(7)
would also include instances of abuse that are proscribed under Section 4 of the
Competition Act. Section 140 of the Patents Act also postulates certain restrictive
conditions to be void.
144. As discussed above, the Patents Act not only provides for a statutory grant of
Patent rights but also contains provisions relating to the exercise of and enforcement of
those rights. Further, the Patents Act also includes provisions for redressal in the event
of abuse of Patents rights. On the other hand, the Competition Act proscribes certain
anti-competitive agreements and abuse of dominance in addition to regulating
combinations to avoid concentration of market power in general. Undoubtedly, the
Competition Act and Patents Act are special acts operating in their respective fields,
however, viewed in the aforesaid perspective the Patents Act would be a Special Act,
vis-Ã -vis, the Competition Act in so far as patents are concerned. The Patents Act is a
self contained code.
145. It is now well settled that an enactment may be considered as special in relation
to one Act and yet be considered as general enactment in relation to another statute. In
Life Insurance Corporation of India v. D.J. Bahadur: MANU/SC/0305/1980 : (1981) 1
SCC 315, the Supreme Court had observed:--
".....for certain cases, an Act may be general and for certain other purposes, it
may be special and the court cannot blur a distinction when dealing with the
finer points of law."

22-08-2024 (Page 50 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

In a later judgment - Allahabad Bank v. Canara bank and Another: MANU/SC/0262/2000
: (2000) 4 SCC 406 - the Supreme Court has explained the above principle by giving an
example of Rent Control Acts which may be special statutes as compared to the Civil
Procedure Code but would be construed as a general statute vis-Ã -vis an Act permitting
eviction from public premises or some special class of buildings.
146. It is also relevant to notice Section 62 of the Competition Act which reads as
under:--
"The provisions of this Act shall be in addition to, and not in derogation of, the
provisions of any other law for the time being in force."
147. It is evident from the above provision that the intention of the Parliament in
enacting the Competition Act was not to curtail or whittle down the full scope of any
other law and, therefore, it is expressly stated that the Competition Act would be in
addition to, and not in derogation of any other Act. Notably, while it has been argued
on behalf of the Respondents that the proceedings initiated under the Competition Act
are maintainable, none of the counsels even remotely suggested that the Provisions of
the Patents Act must yield to the provisions of the Competition Act. Although, counsel
for the Respondents referred to the non-obstante provision of Section 60 of the
Competition Act, the same was only in support of their arguments that the jurisdiction
of the CCI must not be curtailed.
1 4 8 . Thus, in my view Section 60 of the Competition Act, which provides for the
provisions of the said Act to have an effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in force, must be read
harmoniously with Section 62 of the Competition Act and in the context of the subject
matter of the Competition Act. As discussed earlier, the Competition Act is directed to
prohibit certain anti-competitive agreements, abuse of dominant position and formation
of combinations which cause or are likely to cause appreciable adverse effect on
competition. Plainly, agreements which may otherwise be lawful and enforceable under
the general law - such as the Indian Contract Act, 1872 -may still be anti-competitive
and fall foul of Section 3 of the Competition Act. Similarly, a practice or conduct which
may be considered as an abuse under Section 4 of the Competition Act may otherwise
but for the said provision be legitimate under the general law. Equally, mergers and
amalgamations that are permissible under the general law may result in aggregation of
market power that may not be permitted under the Competition Act. Section 60 of the
Competition Act must be read in the aforesaid context.
149. It is well settled that the provision of any statute must be read in the context of
the statute as a whole. A non-obstante clause is a well known legislative device used to
give an overriding effect to certain provisions over the others which are inconsistent
with those provisions; in the present case, Section 60 of the Competition Act expressly
provides that the provisions of the Competition Act shall have effect notwithstanding
anything inconsistent in any other law. However, the said provision must be read in the
context of the Competition Act as a whole and the mischief that is sought to be
addressed by the Competition Act. Thus, in my view, Section 60 is enacted only to
restate and emphasize that notwithstanding agreements, arrangements, practices and
conduct which may otherwise be legitimate under the general laws would nonetheless
be subject to the rigors of the Competition Act. Section 60 cannot be read to curtail or
whittle down the provisions of other statutes; this interpretation would also be in sync
with provisions of Section 62 of the Competition Act as indicated above.

22-08-2024 (Page 51 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

150. In any case, in the event of any irreconcilable inconsistency between the two
legislations, the later special statute would override the prior general statute, even
though the earlier general statute contains a non-obstante clause. In Damji Valji Shah
and Another v. Life Insurance Corporation of India & Ors.: MANU/SC/0230/1965 : AIR
1966 SC 135, the Supreme Court considered the question whether the provisions of Life
Insurance Corporation Act, 1956 would override certain provisions of the Companies
Act, 1956. Under Section 446(2) of the Companies Act, 1956, the Company Court would
have jurisdiction to entertain any suit or proceeding or claim against a company which
is being would up. Section 446 of the Companies Act, 1956 contains a non-obstante
clause and its provisions would, thus, override other laws. The Life Insurance
Corporation Act, 1956, on the other hand, did not contain a non-obstante clause.
However, the Supreme Court held that the Life Insurance Corporation Act being a
special Act would override the provisions of the Companies Act and the Tribunal
constituted under the Life Insurance Corporation Act, would have the jurisdiction to
entertain any claim of Life Insurance Corporation against erstwhile life insurance
companies.
1 5 1 . Thus, if there are irreconcilable differences between the Patents Act and the
Competition Act in so far as anti-abuse provisions are concerned, the Patents Act being
a special act shall prevail notwithstanding the provision of Section 60 of the
Competition Act.
152. This brings up the next issue, that is, whether there is any irreconcilable conflict
between the Competition Act and the Patents Act and whether both the Acts could be
construed harmoniously in the context of the Patents Act.
153. It is well established that an inconsistency or repugnancy in statutes cannot be
readily inferred and any interpretation that leads to such conflict must, as far as
possible, be avoided. In Municipal Council, Palai v. T.J. Joseph: MANU/SC/0032/1963 :
(1964) 2 SCR 87, the Supreme Court observed that there is a presumption against
repeal by implication. The Court reasoned that legislature while enacting a law has
complete knowledge of the existing laws and, therefore, where an express provision for
repeal of an earlier statute is not provided, it must be presumed that the legislature did
not intend to repeal the existing statute. Unless it is concluded that the provisions of the
two of legislations cannot co-exist, the question of reading the provisions of a statute to
have been impliedly repealed does not arise.
154. In Kunter v. Phillips: (1891) 2 Q.B. 267, it was observed as under:--
"It is only when the provisions of a later enactment are so inconsistent with or
repugnant to the provisions of an earlier one then only the two cannot stand
together and the earlier stands abrogated by the later".
155. The above principle was reiterated by the Supreme Court in R.S. Raghunath v.
State of Karnataka and Anr.: MANU/SC/0012/1992 : (1992) 1 SCC 335, in the following
words:--
"30. It is further observed that such a presumption can be rebutted and repeal
by necessary implication can be inferred only when the provisions of the later
Act are so inconsistent with or repugnant to the provisions of the earlier Act,
that the two cannot stand together."
156. The provisions of the Patents Act which can be construed as dealing with a subject
matter which is common with the Competition Act are essentially provisions of Chapter

22-08-2024 (Page 52 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

XVI and Section 140 of the Patents Act. Section 84 of the Patents Act provides for grant
of compulsory licences in certain cases where reasonable requirement of public with
respect to the patented inventions have not been satisfied or where the patented
invention is not available to the public at a reasonably affordable price or where the
patented invention is not worked in the territory of India.
157. Sub-section (7) of Section 84 lists out different instances where the requirements
of public shall be deemed not to have been satisfied. Section 85 of the Patents Act
provides for Revocation of patents where even after expiry to two years from the date of
grant of compulsory licence the patented invention has not been worked in the territory
of India or where reasonable requirements of public with respect to the patented
invention have not been satisfied. In addition, Section 92 of the Patents Act also
provides grant of compulsory licences.
1 5 8 . Undisputedly, several of the instances listed out in Section 84 (7) could be
construed, in certain circumstances, as an abuse of dominance if grant of patent rights
places the right holder in a position of dominance. Remedy in cases as specified under
Section 84(7) of the Patents Act is grant of compulsory licences and a possible
revocation of licence thereafter. Section 89 of the Patents Act specifies the general
purposes for granting compulsory licences and provides that the powers under Section
84 shall be exercised with a view to secure:
"(a) that patented inventions are worked on a commercial scale in the territory
of India without undue delay and to the fullest extent that is reasonably
practicable;
(b) that the interests of any person for the time being working or developing an
invention in the territory of India under the protection of a patent are not
unfairly prejudiced."
159. It is relevant to note that in terms of Section 84 (4) of the Patents Act, the
Controller is empowered to settle the terms on which the compulsory licence is to be
granted. Section 90 of the Patents Act provides guidelines to the Controller for settling
the terms of a compulsory licence. It is apparent that the only remedy that is available
under the Patents Act, to a willing prospective licensee who has been denied a licence
on reasonable terms is a compulsory licence under Section 84 of the Act on such terms
as may be settled by the Controller.
160. Although, it has been argued that such defence - that is, the patent holder has
refused to grant licence on reasonable terms or has violated the FRAND assurances - is
also available to willing licensee to defend a suit for infringement, I have some
reservations regarding this proposition. However, in the present case, Micromax and
Intex have taken such defence in the infringement suits filed by Ericsson and issues
have been struck by the court; therefore, I am refraining from dilating on this aspect
any further as this aspect would be best debated in the suits filed by Ericsson.
161. Section 4 of the Competition Act, which is relevant for the purposes of these
petitions, concerns abuse of dominant position. Sub Section (1) of Section (4) prohibits
such abuse and Sub-section (2) of Section 4 provides for what constitutes an abuse of
dominant position. In certain cases, denial of market access by an enterprise placed in a
position of strength in the relevant market may constitute an abuse of dominant
position. If an enterprise falls foul of Section 4 and it is so established after due
investigation, the CCI is empowered to pass all or any of the orders as indicated under
Section 27, which reads as under:--

22-08-2024 (Page 53 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 "(a) direct any enterprise or association of enterprises or person or association
of persons, as the case may be, involved in such agreement, or abuse of
dominant position, to discontinue and not to re-enter such agreement or
discontinue such abuse of dominant position, as the case may be;
(b) impose such penalty, as it may deem fit which shall be not more than ten
per cent of the average of the turnover for the last three preceding financial
years, upon each of such person or enterprises which are parties to such
agreements or abuse:
Provided that in case any agreement referred to in section 3 has been
entered into by a cartel, the Commission may impose upon each
producer, seller, distributor, trader or service provider included in that
cartel, a penalty of up to three times of its profit for each year of the
continuance of such agreement or ten per cent of its turnover for each
year of the continuance of such agreement, whichever is higher.
(d) direct that the agreements shall stand modified to the extent and in the
manner as may be specified in the order by the Commission;
(e) direct the enterprises concerned to abide by such other orders as the
Commission may pass and comply with the directions, including payment of
costs, if any;
(f) [***]
(g) pass such other order or issue such directions as it may deem fit:
Provided that while passing orders under this section, if the
Commission comes to a finding, that an enterprise in contravention to
section 3 or section 4 of the Act is a member of a group as defined in
clause (b) of the Explanation to section 5 of the Act, and other
members of such a group are also responsible for, or have contributed
to, such a contravention, then it may pass orders, under this section,
against such members of the group."
162. It is clear from the above that the remedies as provided under Section 27 of the
Competition Act for abuse of dominant position are materially different from the remedy
as available under Section 84 of the Patents Act. It is also apparent that the remedies
under the two enactments are not mutually exclusive; in other words grant of one is not
destructive of the other. Thus, it may be open for a prospective licensee to approach the
Controller of Patents for grant of compulsory licence in certain cases. The same is not
inconsistent with the CCI passing an appropriate order under Section 27 of the
Competition Act.
1 6 3 . It is also relevant to refer to Section 21A of the Competition Act which was
introduced by the Competition (Amendment) Act, 2007 with effect from 20th May, 2009.
The said Section enables CCI to make a reference to any statutory authority, which is
charged with implementation of any Act, if it proposes to make any decision contrary to
the provisions of the Act and an issue in this regard is raised by any party. Section 21A
of the Competition Act reads as under:--
"21A. Reference by Commission.--(1) Where in the course of a proceeding
before the Commission an issue is raised by any party that any decision which,

22-08-2024 (Page 54 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 the Commission has taken during such proceeding or proposes to take, is or
would be contrary to any provision of this (sic any) Act whose implementation
is entrusted to a statutory authority, then the Commission may make a
reference in respect of such issue to the statutory authority:
Provided that the Commission, may, suo motu, make such a reference
to the statutory authority.
(2) On receipt of a reference under sub-section (1), the statutory authority shall
give its opinion, within sixty days of receipt of such reference, to the
Commission which shall consider the opinion of the statutory authority, and
thereafter give its findings recording reasons therefore on the issues referred to
in the said opinion."
1 6 4 . It is apparent from the above that the Competition Act also contemplates a
situation where an order by CCI may be contrary to another statute being administered
by another authority. Similarly, Section 21 of the Competition Act provides for a
statutory authority to make a reference to the CCI if it proposes to take a decision which
may be contrary to the provisions of the Competition Act. Section 21 of the Competition
Act is reproduced as under:
"Reference by statutory authority
21. (1) Where in the course of a proceeding before any statutory authority an
issue is raised by any party that any decision which such statutory authority has
taken or proposes to take is or would be, contrary to any of the provisions of
this Act, then such statutory authority may make a reference in respect of such
issue to the Commission:
Provided that any statutory authority, may, suo motu, make such a
reference to the Commission.
(2) On receipt of a reference under sub-section (1), the Commission shall give
its opinion, within sixty days of receipt of such reference, to such statutory
authority which shall consider the opinion of the Commission and thereafter,
give its findings recording reasons therefor on the issues referred to in the said
opinion."
165. The above provisions also indicate that the intention of the Parliament is not that
the Competition Act impliedly repeal other statutes or stand repealed by other statues
that present any inconsistency; but that it be worked and implemented in addition to
and in not in derogation of other statues. Therefore, the Competition Act expressly
contemplates that statutory orders passed - either by CCI under the Competition Act or
by any other statutory authority under any other statute, - be made after the concerned
authority has taken into account the opinion of the other statutory authority.
1 6 6 . In the aforesaid context, clause (ix) of Sub-section (1) of Section 90 of the
Patents Act may also be noticed. The said clause provides that the Controller General of
Patents may also permit export of the patented product under a compulsory licence in
cases where the licence is issued to remedy a practice that has been determined to be
anti-competitive after a judicial or an administrative process. The relevant clause reads
as under:--
"(1) In settling the terms and conditions of a licence under section 84, the

22-08-2024 (Page 55 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 Controller shall endeavour to secure-
xxxx xxxxx xxxx xxxx
(ix) that in case the licence is granted to remedy a practice determined after
judicial or administrative process to be anti-competitive, the licensee shall be
permitted to export the patented product, if need be."
The above clause also indicates the legislative intention that the Competition Act and
the Patents Act be worked harmoniously. Thus, it is mandated that the Controller take
into account any finding of anticompetitive practice, that is returned after a judicial or
administrative process including by the CCI under the Competition Act, while settling
the terms of a compulsory licence issued to remedy such practice.
167. It is important to reiterate that an order inconsistent with other enactments does
not necessarily imply a repeal or abrogation of other enactments. It merely implies that
the order shall be given effect to and to that extent the provisions of other statutes that
are inconsistent shall be bypassed. In Harishankar Bagla and Anr. v State of Madhya
Pradesh: MANU/SC/0063/1954 : (1955) 1 SCR 380, a Constitution Bench of the
Supreme Court, while considering a challenge to the provisions of the Essential
Supplies (Temporary Powers) Act, 1946 and an order passed under Section 3 of the said
Act, considered the effect of Section 6 of the said Act, which expressly provided that
"any order made under Section 3 of the said Act shall have effect notwithstanding
anything inconsistent therewith contained in any enactment other that this Act or in any
instrument having effect by virtue of any enactment other that this Act." The Court held
that:
"the effect of Section 6 certainly is not to repeal any one of those laws or
abrogate them. The object is simply to by-pass them where they are
inconsistent with the provisions of the Essential Supplies (Temporary Powers)
Act, 1946 or the orders made thereunder. In other words, the orders made
under Section 3 would be in operation in regard to essential commodity
covered by the Textile Control order where ever there is repugnancy in this
Order with the existing laws and to that extent, the existing laws with regard to
those commodities will not operate. By-passing a certain law does not
necessarily amount to repeal or abrogation of that law."
1 6 8 . The provisions of Sections 21 and 21A of the Competition Act, read in the
aforesaid context, indicate that the intention of the Parliament was not to abrogate any
other law but to ensure that even in cases where CCI or other statutory authorities
contemplate passing orders, which may be inconsistent with other statutes, the opinion
of the concerned authority is taken into account while passing the such orders. The
plain intention being that none of the statutory provisions are abrogated but only bi-
passed in certain cases. These provisions - Sections 21 and 21A of the Competition Act
- clearly indicates that the intention of the Parliament was that the Competition Act co-
exist with other regulatory statues and be harmoniously worked in tandem with those
statues and as far as possible, statutory orders be passed which are consistent with the
concerned statutory enactments including the Competition Act.
169. It is also necessary to bear in mind that whereas Section 84 of the Patents Act
provides specific remedy to the person seeking relief, the orders passed by CCI are in
rem. Thus, the operative width of the two enactments is different.
170. It is not necessary that any particular relief be granted to the person who provides

22-08-2024 (Page 56 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

information under Section 19 of the Competition Act; the focus of the Competition Act is
to ensure that the offending anti competitive agreements, conduct and combinations are
terminated and such conduct is not repeated.
1 7 1 . At this stage, one may also refer to Section 3 of the Competition Act which
prohibits a person, enterprise or association of persons/enterprises from entering into
certain anti-competitive agreements which cause or are likely to cause appreciable
adverse effect on competition within India. There does not appear to be any
provision(s) of such wide import under the Patents Act. Sub-section (5) of Section 3 of
the Competition Act expressly provides that Section 3 would not restrict the right of any
person to impose reasonable conditions for protecting its right, inter alia, under the
Patents Act. The relevant extract of sub-section (5) of Section 3 of the Competition Act
is reproduced below:--
"(5) Nothing contained in this section shall restrict--
(i) the right of any person to restrain any infringement of, or to impose
reasonable conditions, as may be necessary for protecting any of his
rights which have been or may be conferred upon him under:
(a) xxx xxx xxxx
(b) the Patents Act, 1970 (39 of 1970);
(c) xxxx xxx xxxx"
172. It follows from the above that whilst an agreement which imposes reasonable
condition for protecting Patent Rights is permissible, an anti competitive agreement
which imposes unreasonable conditions would not be afforded the safe harbor of
Section 3(5) of the Competition Act and would fall foul of Section 3 of the Competition
Act. The question as to whether a condition imposed under the agreement is reasonable
or not would be a matter which could only be decided by the CCI under the provisions
of the Competition Act. Neither the Controller of Patents discharging his functions in
terms of the Patents Act, nor a Civil Court would have any jurisdiction to adjudicate
whether an agreement falls foul of Section 3 of the Competition Act. This is so because
the Controller of Patents cannot exercise any powers which are not specifically
conferred by the Patents Act and by virtue of Section 61 of the Competition Act, the
jurisdiction of Civil Courts to entertain any suit or proceedings in respect of any matter
which the CCI or the COMPAT is empowered to determine, stands expressly excluded.
Thus, in so far as the scope of Section 3 of the Competition Act is concerned, there
does not appear to be any overlap or inconsistency with the Patents Act.
173. Facially, it may appear that the gravamen of the two enactments are intrinsically
conflicting; however, when one views the same in the perspective that patent laws
define the contours of certain rights, and the anti-trust laws are essentially to prevent
abuse of rights, the prospect of an irreconcilable conflict seems to reduce considerably.
1 7 4 . In my view, there is no irreconcilable repugnancy or conflict between the
Competition Act and the Patents Act. And, in absence of any irreconcilable conflict
between the two legislations, the jurisdiction of CCI to entertain complaints for abuse of
dominance in respect of Patent rights cannot be ousted.
1 7 5 . The decision of the Supreme Court in Chairman, Thiruvalluvar Transport
Corporation v. Consumer Protection Council (supra), which was relied upon by the

22-08-2024 (Page 57 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

learned counsel for Ericsson has no application in the facts of the present case. In that
case, the question involved before the Supreme Court was whether a claim for
compensation in respect of motor vehicle accidents could be entertained under the
Consumer Protection Act, 1986. In that context, the Court had noted that the Motor
Vehicles Act, 1988 contains specific provisions for adjudicating claims of compensation
in respect of motor vehicles accidents. Clearly, the claims for compensation under both
the Acts could not be made simultaneously and, therefore, the inconsistency between
the two Acts was apparent. The Supreme Court further noted that the Motor Vehicles Act
was a special Act while the Consumer Protection Act which dealt with extending
protection to consumers in general was a general Act. The Court then proceeded to
examine the provisions of both the Motor Vehicles Act, 1988 and Consumer Protection
Act, 1986 and concluded that a claim for compensation for a fatal injury resulting from
a motor vehicle accident would fall squarely within the ambit of Section 165 of the
Motor Vehicles Act, 1988 and not within the scope of the Consumer Protection Act,
1986. The Court held that "ordinarily the general law must yield to the special law" and
the Motor Vehicles Act, 1988 being a special law would prevail over a general law but
further observed that having come to a conclusion that the disputes in question did not
fall within the scope of Consumer Protection Act, 1986 that question did not arise for
consideration. As discussed hereinbefore, in the present case, the provisions of the
Competition Act do not abrogate the provisions of the Patents Act and in absence of any
irreconcilable repugnancy, the question of applying the principle of an implied repeal
would not be apposite.
176. Before parting with this issue, a reference must be made to the proviso to clause
(iv) of Sub-section (6) of Section 84 of the Patents Act which was subject of much
debate during the proceedings before this court. Sub-section (6) of Section 84 of the
Patents Act further specifies certain considerations required to be taken into account by
the Controller while considering an application for compulsory licence. Clause (iv) of
Subsection (6) of Section 84 reads as under:--
"(iv) as to whether the applicant has made efforts to obtain a licence from the
patentee on reasonable terms and conditions and such efforts have not been
successful within a reasonable period as the Controller may deem fit:
Provided that this clause shall not be applicable in case of national
emergency or other circumstances of extreme urgency or in case of
public non-commercial use or on establishment of a ground of
anticompetitive practices adopted by the patentee, but shall not be
required to take into account matters subsequent to the making of the
application."
1 7 7 . It is apparent from the above that a prospective licensee who applies for a
compulsory licence is expected to have made, prior to his application, efforts to obtain
a licence on reasonable terms. However, it further specifies that this consideration
would not be relevant where the conduct of a patentee is found to be anti-competitive.
Mr. Katpalia had contended that the above-quoted proviso to Section 84(6)(iv) also
refers to anticompetitive practices adopted by a patentee and such practices could only
be established under the provisions of the Competition Act. In my view, the aforesaid
proviso to Section 84(6)(iv) cannot be read to mean that a patentee's anti-competitive
conduct would have to be first established in proceedings under the Competition Act
before the Controller could take that into account. Sub-section (6) of Section 84 only
indicates certain factors that would be required to be taken into account by the
Controller and the question whether a patentee had adopted anti-competitive practices

22-08-2024 (Page 58 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

could also be considered by the Controller. However, if CCI has finally found a
patentee's conduct to be anti-competitive and its finding has attained finality, the
Controller would also proceed on the said basis and -on the principle akin to issue
estoppel - the patentee would be estopped from contending to the contrary.
178. In view of the aforesaid discussion, the contention that the jurisdiction of CCI
under the Competition Act is ousted in matters relating to patents cannot be accepted.
(iii) Whether the allegations made could be construed as an abuse of d ominance
1 7 9 . At the outset, it must be mentioned that since the disputes relate to the
jurisdiction of CCI to entertain the complaints made by Micromax and Intex, the same
must be addressed on a demurrer. In other words, all allegations made in the
complaints be accepted as true to determine whether Micromax/Intex are entitled to any
relief on that basis.
180. A perusal of the complaints in question indicate that both Micromax and Intex
allege that Ericsson demanded exorbitant royalty rates and sought to impose unfair
terms for licensing its patents. Intex has further claimed that Ericsson's demand for
payment of royalty at an ad valorem rate based on the value of the product instead of
the component that uses the said technology is patently unfair as it amounts to Ericsson
claiming part of the value of the product that is attributable to other features and
innovations which are unconnected with the technology claimed to be patented by
Ericsson. It is further alleged that the products in question use several patented
technologies and unreasonable demand of royalties by patent holders would result in
'royalty stacking'. It is alleged that excessive demands of royalty by Ericsson amounts
to a 'patent holdup' and, thus, prevents supply of products to the consumers.
181. In addition, both Micromax and Intex have complained that Ericsson's conduct and
demands were an abuse of Ericsson's dominant position as SEP holder and violate
Ericsson's FRAND assurances. It is further alleged that Ericsson has attempted to
conduct FRAND negotiations in an opaque, non-transparent and a high handed manner.
It has used threat of litigation to coerce the complainants to agreeing to Ericsson's
terms for licensing. This, it is alleged, is the most egregious violations of FRAND
obligations. In addition, Micromax complains that Ericsson has also used threats of
complaints to SEBI to effectively derail Micromax's public offering and thereby harm its
business interest. It is contended that Ericsson has issued the threats solely with the
object to coerce Micromax to succumb to Ericsson's demand for excessive royalty in
respect of its patents. This according to Micromax constitutes Ericsson's violation of its
FRAND obligations. Further Intex has also complained that Ericsson had indulged in
"bundling and tying licensing" which according to Intex is anticompetitive and
proscribed under the Competition Act.
182. Ericsson, on the other hand, not only contests the above allegations but also
disputes the jurisdiction of CCI in what is described as its legitimate exercise of rights
granted under the Patents Act. As stated earlier, for the purpose of determining whether
the CCI would have the jurisdiction to entertain such allegations, the same must be
accepted as true and correct.
183. Ericsson is a member of various Standard Setting Organizations (SSOs) including
European Telecommunications Standards Institute (ETSI) which is responsible for
setting standards and specifications in the field of telecommunications. Setting such
industry-wise standards is necessary in the field of communications as all market
participants involved in the industry must necessarily work on technologies that are

22-08-2024 (Page 59 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

compatible for seamless communication. Products and equipments used in the
telecommunication industry must conform to the standard set to ensure inter-
operability. This is to ensure that information is transmitted through various products
(such as handsets and networks) used by various industry participants and customers.
184. Universal Mobile Telecommunication System (hereafter 'UMTS') standard which
has been set by ETSI, has also been accepted in various other countries including by
TRAI in India. Clearly, an inclusion of a patented technology in a standard such as
UMTS could place the patent holder in a position of substantial market power. Clearly,
an SEP holder such as Ericsson would be in a position to demand supra-competitive
royalties from all implementers of the standard (entities dealing in products using the
patented technology accepted as SEP). Ericsson claims to hold a large number of SEPs
including the eight, which are the subject matter of litigation between Ericsson and
Micromax/Intex. It is indisputable that as an SEP holder, Ericsson is in a position of
dominance and significant bargaining power in relation to the other implementers of
that technology who have no other option but to conform to the standards which
include technologies patented by Ericsson. It is also well recognised that a patent
holder of a technology accepted in a standard would be in a position to hold up the
other market participants implementing the said technology. It is to mitigate against the
possibility of such conduct that an SEP holder is normally required to commit to licence
their patents on FRAND terms. This requires the SEP holder to licence technologies on
fair, reasonable and non-discriminatory terms. Concededly, in terms of Rule 6 of ETSI
policy, the proprietor of a patented technology, which is included as a part of a
standard is obliged to licence its technologies on FRAND terms.
1 8 5 . Concededly, Ericsson being a member of ETSI is bound to offer its SEPs on
FRAND terms. It has been argued on behalf of Ericsson at length that it has acted in
accordance with its FRAND assurances and had sought injunctive reliefs only after
exhausting all possible avenues for licensing its SEPs on negotiated FRAND terms.
According to Ericsson, both Micromax and Intex are unwilling licensees and have
effectively declined to accept the licences on FRAND terms. This is seriously disputed by
both Micromax and Intex, as a brief narration of the complaints filed by Micromax and
Intex indicates.
186. In the aforesaid backdrop, one of the principal issues to be addressed is whether
the allegations made in the complaint indicate an abuse of Ericsson's dominant position.
A patent holder is granted a statutory right to prevent third parties from making, using,
offering for sale, selling or importing the patented products and if the patent is a
process then the patent holder would have the right to prevent the third parties from
using or in any manner dealing with the said patent. The only manner in which a patent
holder can exercise his rights is by refusing a licence permitting a third party to exploit
its patent and it would be quite legitimate for a patentee to seek injunctive relief to
enforce such rights. However, on the other hand, a refusal by a patentee to grant a
licence may result in adverse effect on competition.
187. Given the nature of the right that a patentee enjoys, it is not easy to reconcile a
patent holder's refusal to grant a licence to use his patent as a violation of antitrust
laws. The interface between IPR rights and antitrust laws have been a subject matter of
debate in various jurisdictions and more particularly in cases where a patentee holds an
SEP.
188. In Broadcom Corporation v. Qualcomm Incorporated: MANU/FETC/1913/2007 501
F.3d 297, the United States Court of Appeals considered Broadcom Corporation's

22-08-2024 (Page 60 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

(hereafter 'Broadcom') appeal against a decision of the District Court dismissing
Broadcom's action against Qualcomm alleging monopolisation in Wideband Code
Division Multiple Access (WCDMA) technology in the UMTS Standards and anti-
competitive conduct of tying and exclusive dealing. Broadcom had alleged that
Qualcomm had falsely promised to licence its patent on FRAND terms and had induced
SSOs to include its technology as an essential part of UMTS Standard. Qualcomm had
thereafter reneged on its promises to offer and use of its technology on FRAND terms. It
was alleged that Qualcomm was abusing its monopoly status by charging higher fees
from those implementers who did not use Qualcomm's chipsets and also demanding
royalties on parts of UMTS Chipsets for which it did not own patents. The District Court
rejected the complaint made by Broadcom for various reasons including that Broadcom
enjoyed a legally sanctioned monopoly in respect of its patented technology and
Broadcom had failed to provide information on the composition of dynamics of the
market for UMTS chipsets for the Court to infer that Qualcomm's conduct was anti-
competitive. Broadcom's complaint of unlawful tying and exclusive dealing was also
rejected.
189. On an appeal preferred by Broadcom, the Appellate Court proceeded to examine
the issues on the assumption that the allegations made in the complaint were true. It
observed that "when a patented technology is incorporated in a standard, adoption of
the standard eliminates alternative to the patented technology". In such circumstances,
the patent holder may be in a position to demand supra-competitive royalties. The Court
proceeded to hold that "in a consensus-oriented private standard-setting environment, a
patent holder's intentionally false promise to license essential proprietary technology on
FRAND terms, coupled with an SDO's reliance on that promise when including the
technology in a standard, and the patent holder's subsequent breach of that promise, is
actionable anticompetitive conduct".
190. The aforesaid judgment was rendered in the context of Sherman Act. The Court
held that the allegations satisfied the claim for monopolization under Section 2 of the
Sherman Act, which required willful acquisition or maintenance of monopoly power
accompanied by some anti-competitive conduct on the part of the possessor.
191. In the Matter of Rambus, Inc., No. 9302, at 4 (F.T.C. Aug.2, 2006), the Federal
Trade Commission found that Rambus Inc., a developer of computer memory
technologies had deceived the SSO by failing to disclose its IPRs in the technology that
was accepted as essential to the implementation of computer memory standards.
Rambus had participated in the standard setting process and had misled other members
of the SSO that it was not seeking any new patents relevant to the standard but had
amended its patent applications to cover the standard. The Federal Trade Commission
found that Rambus had distorted the standard setting process and engaged in anti-
competitive hold up.
192. The question whether the demand of excessive royalties and certain terms of
licensing could be considered as an abuse by an SEP holder has also been considered
by authorities in the European Union under Article 101 and 102 of the Treaty on the
Functioning of the European Union (hereafter 'TFEU'). In the case of Eurofix-Bauco v.
Hilti, the European Commission held that it was an abuse to demand excessive royalty
with the sole object of blocking or unreasonably delaying a licence. This decision of the
commission was upheld on appeal (Case T-30/89 Hilti AG v. Commission: [1991] ECR
II-1439).
193. The issue whether the action of an SEP holder in seeking injunctive reliefs against

22-08-2024 (Page 61 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

a potential licensee offends Article 102 of TFEU has also been a subject matter of
debate in various cases. In what is known as the "Orange book case", a court in
Germany considered the defence that seeking an injunction against infringement of
patent would amount to an abuse of dominant position. The case concerned a de facto
standard for CD-Rs which were required to comply with the specifications as set out in a
document known as the "Orange book". In that case, the patent holder, Phillips, claimed
that all manufacturers or persons selling CD-Rs were required to obtain a licence from
Philips in respect of licence for use of its patents. Philips also initiated an action for
infringement of its patent against a number of manufacturers engaged in manufacturing
CD-Rs and sought injunctive reliefs as well as damages. In their defence, the
manufacturers claimed that Philips was in a dominant position in respect of markets for
CD-Rs and its conduct of seeking injunction reliefs constituted abuse of its dominant
position and offended Article 102 of TFEU. The German Federal Court in its judgment
delivered on 6th May, 2009 in KZR 39/06, (Orange-Book Standard) held that a potential
licensee could claim such defence only in limited circumstances where the defendants
could establish that (i) they had made an unconditional offer for obtaining a licence
which could not be refused by the patent holder without abusing its dominant position
and (ii) such terms included the defendants waiving their right to challenge the patent.
This view was followed in a number of cases.
1 9 4 . In recent times, there has been much advancement in the telecommunication
sector and technology. Companies - such as Ericsson -have acquired a large portfolio of
patents which have been accepted as a part of the standards established by various
SSOs. Enforcement of these SEPs has become a major area of dispute between the
technology company holding the SEPs and mobile phone manufacturers. Two such
cases, one initiated by Motorola for enforcement of GPRS Standard Essential Patents and
the other initiated by Samsung for enforcement of UMTS Standard Essential Patents are
significant. Both these cases were initiated against Apple in German Courts. In both the
cases, negotiations for licences with Apple had broken down and this caused both
Samsung and Motorola to initiate action for infringement of their SEPs against Apple.
Both Motorola and Samsung sought injunctive reliefs against Apple for infringement of
their patents. Apparently, this led the European Commission to initiate investigations
against alleged anti-competitive conduct against Samsung and Motorola. In their
decision, in the case of Motorola, the European Commission held that Motorola has
abused its dominant position by seeking injunctive reliefs against Apple. The
Commission reasoned that even though the parties could not agree on FRAND terms,
Apple had agreed to submit the FRAND disputes to a binding resolution of a German
Court. Importantly, the Commission noted that any such resolution should also contain
a commitment on the part of Apple not to challenge Motorola's patent. In the case of
Samsung, the Commission did not proceed to make any decision with regard to
infringement and accepted the binding commitments offered by Samsung not to seek
injunctions in relation to any of its present or future SEPs for mobile devices for a
period of five years against any potential licensee who accepted the specified licensing
framework which provided for (a) a negotiation period of 12 months; and (b) in
absence of a consensus, a determination by Court or an arbitrator of FRAND terms.
195. A mention must also be made on a recent decision rendered by the Court of
Justice of the European Union delivered on 16th July, 2015 in Huawei Technologies Co.
Ltd. v. ZTE Corp., ZTE Deutschland GmbH: (Case C-170/13). The aforesaid case related
to a claim made by Huawei, a Chinese company against ZTE Corp. It was Huawei's case
that ZTE Corp. was marketing mobile network products in Germany that incorporated
software linked to 4G and "Long Term Evolution" (LTE) standard. Although, the said
parties attempted to negotiate a licensing arrangement on FRAND terms but the

22-08-2024 (Page 62 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

negotiations were not successful. This led Huawei to initiate proceedings before the
German Federal Court of Justice (Landgericht Dusseldorf) for infringement of its patent.
This action was defended by ZTE who claimed that Huawei's action for seeking
injunctive relief was an abuse of its dominant position and violated Article 102 of TFEU.
ZTE contended that it was a willing licensee. In view of the controversial issues
involved and considering that there may be differences in the approach of the German
Courts and the EU Commission, the Court stayed the proceedings and referred five
questions to the European Court of Justice. In those proceedings, Advocate General
Wathelet delivered an opinion to the Court of Justice - as is required under the process
of the Court of Justice - recommending what is described as a "middle-path" between
protection available to an SEP holder and the implementer. The aforesaid opinion was
endorsed by the Court of Justice. The Court of Justice held that a refusal of a proprietor
of an SEP to grant a licence on FRAND terms may, in principle, constitute an abuse
within the meaning of Article 102 of TFEU. Accordingly, the abusive nature of such
refusal may in principle be raised as a defence to the actions for prohibitory injunctions.
The Court of Justice further held that the irrevocable undertaking to grant licences on
FRAND terms given to a SSO by a SEP holder cannot negate the substance of his patent
rights. But, nonetheless, it justifies imposition on the proprietor of an SEP, an
obligation to comply with certain specific requirements when bringing actions against
alleged infringer for injunctive reliefs or for recall of the infringing products. The Court
of Justice proceeded to lay down a set of specific obligations that a SEP holder is
required to discharge before bringing an action for alleged infringement. The relevant
extract from the judgment indicating the said set of specific requirements is quoted
below:--
"Accordingly, the proprietor of an SEP which considers that that SEP is the
subject of an infringement cannot, without infringing Article 102 TFEU, bring an
action for a prohibitory injunction or for the recall of products against the
alleged infringer without notice or prior consultation with the alleged infringer,
even if the SEP has already been used by the alleged infringer.
Prior to such proceedings, it is thus for the proprietor of the SEP in question,
first, to alert the alleged infringer of the infringement complained about by
designating that SEP and specifying the way in which it has been infringed.
As the Advocate General has observed in point 81 of his Opinion, in view of the
large number of SEPs composing a standard such as that at issue in the main
proceedings, it is not certain that the infringer of one of those SEPs will
necessarily be aware that it is using the teaching of an SEP that is both valid
and essential to a standard.
Secondly, after the alleged infringer has expressed its willingness to conclude a
licensing agreement on FRAND terms, it is for the proprietor of the SEP to
present to that alleged infringer a specific, written offer for a licence on FRAND
terms, in accordance with the undertaking given to the standardisation body,
specifying, in particular, the amount of the royalty and the way in which that
royalty is to be calculated.
As the Advocate General has observed in point 86 of his Opinion, where the
proprietor of an SEP has given an undertaking to the standardisation body to
grant licences on FRAND terms, it can be expected that it will make such an
offer. Furthermore, in the absence of a public standard licensing agreement,
and where licensing agreements already concluded with other competitors are

22-08-2024 (Page 63 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 not made public, the proprietor of the SEP is better placed to check whether its
offer complies with the condition of non-discrimination than is the alleged
infringer.
By contrast, it is for the alleged infringer diligently to respond to that offer, in
accordance with recognised commercial practices in the field and in good faith,
a point which must be established on the basis of objective factors and which
implies, in particular, that there are no delaying tactics.
Should the alleged infringer not accept the offer made to it, it may rely on the
abusive nature of an action for a prohibitory injunction or for the recall of
products only if it has submitted to the proprietor of the SEP in question,
promptly and in writing, a specific counter-offer that corresponds to FRAND
terms.
Furthermore, where the alleged infringer is using the teachings of the SEP
before a licensing agreement has been concluded, it is for that alleged
infringer, from the point at which its counter-offer is rejected, to provide
appropriate security, in accordance with recognised commercial practices in the
field, for example by providing a bank guarantee or by placing the amounts
necessary on deposit. The calculation of that security must include, inter alia,
the number of the past acts of use of the SEP, and the alleged infringer must be
able to render an account in respect of those acts of use.
In addition, where no agreement is reached on the details of the FRAND terms
following the counter-offer by the alleged infringer, the parties may, by
common agreement, request that the amount of the royalty be determined by
an independent third party, by decision without delay.
Lastly, having regard, first, to the fact that a standardisation body such as that
which developed the standard at issue in the main proceedings does not check
whether patents are valid or essential to the standard in which they are
included during the standardisation procedure, and, secondly, to the right to
effective judicial protection guaranteed by Article 47 of the Charter, an alleged
infringer cannot be criticised either for challenging, in parallel to the
negotiations relating to the grant of licences, the validity of those patents
and/or the essential nature of those patents to the standard in which they are
included and/or their actual use, or for reserving the right to do so in the
future."
196. It is relevant to note that the aforesaid judgment was rendered in the context of
Article 102 of TFEU which reads as under:--
"Any abuse by one or more undertakings of a dominant position within the
internal market or in a substantial part of it shall be prohibited as incompatible
with the internal market in so far as it may affect trade between Member States.
Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or
other unfair trading conditions;
(b) limiting production, markets or technical development to the
prejudice of consumers;

22-08-2024 (Page 64 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 (c) applying dissimilar conditions to equivalent transactions with other
trading parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the
other parties of supplementary obligations which, by their nature or
according to commercial usage, have no connection with the subject of
such contracts."
197. Section 4 of the Competition Act contains the anti-abuse provisions and reads as
under:--
"4. Abuse of dominant position -
(1) No enterprise shall abuse its dominant position.
(2) There shall be an abuse of dominant position under sub-section (1), if an
enterprise,-
(a) directly or indirectly, imposes unfair or discriminatory-
(i) condition in purchase or sale of goods or services; or
(ii) price in purchase or sale (including predatory price) of
goods or service;
Explanation.--For the purposes of this clause, the unfair or
discriminatory condition in purchase or sale of goods or service
referred to in sub-clause (i) and unfair or discriminatory price
in purchase or sale of goods (including predatory price) or
service referred to in sub-clause (ii) shall not include such
discriminatory condition or price which may be adopted to
meet the competition; or
(b) limits or restricts-
(i) production of goods or provision of services or market
therefor; or
(ii) technical or scientific development relating to goods or
services to the prejudice of consumers; or
(c) indulges in practice or practices resulting in denial of market
access; or
(d) makes conclusion of contracts subject to acceptance by other
parties of supplementary obligations which, by their nature or
according to commercial usage, have no connection with the subject of
such contracts; or
(e) uses its dominant position in one relevant market to enter into, or
protect, other relevant market.
Explanation.--For the purposes of this section, the expression-
(a) "dominant position" means a position of strength, enjoyed by an enterprise,

22-08-2024 (Page 65 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

 in the relevant market, in India, which enables it to-
(i) operate independently of competitive forces prevailing in the
relevant market; or
(ii) affect its competitors or consumers or the relevant market in its
favour;
(b) "predatory price" means the sale of goods or provision of services, at a
price which is below the cost, as may be determined by regulations, of
production of the goods or provision of services, with a view to reduce
competition or eliminate the competitors."
198. Although the language of Article 102 of TFEU is materially different from the
language of Section 4 of the Competition Act, a close examination does indicate that
Section 4 of the Competition Act would also cover abuse of a dominant position as
proscribed by Article 102 of TFEU. Clause (a) and clause (b) of Section 4(2) of the
Competition Act are similar in their import as clause (a) and (b) of Article 102 of TFEU.
Clause (c) of Article 102 of TFEU postulates that applying dissimilar conditions to
equivalent transactions with other trading parties, thereby placing them at a competitive
disadvantage, may constitute abuse of dominant position. In comparison, clause (c) of
Section 4(2) of the Competition Act is much wider and takes within its sweep any
practice or practices which results in denial of market access. Clause (d) of Article 102
of TFEU and clause (d) of Section 4(2) of the Competition Act are similarly worded.
199. In view of the aforesaid, there is good ground to hold that seeking injunctive
reliefs by an SEP holder in certain circumstances may amount to abuse of its dominant
position. The rationale for this is that the risk of suffering injunctions would in certain
circumstances, clearly exert undue pressure on an implementer and thus, place him in a
disadvantageous bargaining position vis-Ã -vis an SEP holder. A patent holder has a
statutory right to file a suit for infringement; but as stated earlier, the Competition Act
is not concerned with rights of a person or an enterprise but the exercise of such rights.
The position of a proprietor of an SEP cannot be equated with a proprietor of a patent
which is not essential to an industry standard. While in the former case, a non-
infringing patent is not available to a dealer/manufacturer; in the latter case, the
dealer/manufacturer may have other non-infringing options. It is, thus, essential that
bargaining power of a dealer/manufacturer implementing the standard be protected and
preserved.
200. In the present case, apart from instituting suits for infringement against Micromax
and Intex, Ericsson has also threatened Micromax with complaints to SEBI, apparently,
while Micromax was contemplating and/or in the process of floating a public offer of its
shares. Such threats were, undoubtedly, made with the object of influencing Micromax
to conclude a licensing agreement. It is not necessary for this Court to examine whether
in the facts of this case, such threats also constitute an abuse of Ericsson's dominant
position. Suffice it to state that in certain cases, such threats by a proprietor of a SEP,
who is found to be in a dominant position, could be held to be an abuse of dominance.
Clearly, in certain cases, such conduct, if it is found, was directed in pressuring an
implementer to accept non-FRAND terms, would amount to an abuse of dominance.
(iv) The disputes, being subject matter of suits, could not be entertained by CCI.
201. It has been contended on behalf of Ericsson that since, the disputes between the
parties were subject matter of pending suits, the same could not be entertained by CCI.

22-08-2024 (Page 66 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

In my view, the aforesaid contention is also unmerited. As explained earlier, the
proceedings under the Competition Act before the CCI are not in the nature of a private
lis. The object of the proceedings is to prevent and curb the practices which have an
adverse effect on the competition in India. The proceedings in the suits filed by Ericsson
and the proceedings before CCI are not mutually exclusive. It is also necessary to bear
in mind that it is not necessary that an adverse finding against Ericsson by CCI would
necessarily results in the grant of relief as prayed for by Intex or Micromax. The scope
of enquiry before CCI would obviously be limited to whether Ericsson has abused its
dominant position and, if so found, CCI may issue orders as contemplated under
Section 27 of the Act. Additionally, it must be noted that Ericsson had filed a suit after
Intex had made a complaint before the CCI.
202. The contention that since, by virtue of Section 61 of the Competition Act, the
jurisdiction of the Civil Courts is barred in relation to matters that CCI or COMPAT are
empowered to decide and some issues before the CCI and in the suits are common, the
subject matter would be outside the scope of the Competition Act, also cannot be
accepted. The question whether there is any abuse of dominance is solely within the
scope of the Competition Act and a civil court cannot decide whether an enterprise has
abused its dominant position and pass orders as are contemplated under Section 27 of
the Competition Act. Merely because a set of facts pleaded in a suit may also be
relevant for determination whether Section 4 of the Competition Act has been violated,
does not mean that a civil court would be adjudicating that issue. Further, merely
because certain reliefs sought by Micromax and Intex before CCI are also available in
proceedings under the Patents Act also does not exclude the subject matter of the
complaints from the scope of the Competition Act. An abuse of dominant position under
Section 4 of the Competition Act is not a cause that can be made a subject matter of a
suit or proceedings before a civil court.
(v) Whether Micromax/Intex could maintain a complaint for abuse of dominance since
they had contested Ericsson's claim for infringement
203. The complaints made by Micromax and Intex premised on the basis that Ericsson
is a proprietor of the subject SEPs. This, according to Ericsson, would militate against
their respective stands in the suits filed by Ericsson and, thus, the complaints made by
Micromax/Intex were liable to be rejected by CCI. In my view, the aforesaid contention
cannot be accepted. It is Ericsson's case that it is the proprietor of subject SEPs and,
therefore, it is not open to Ericsson to contend that its conduct in respect of those SEPs
cannot be made subject matter of enquiry by CCI on the ground that SEPs have been
denied by Micromax and Intex. As mentioned above, the proceedings under the
Competition Act are not in the nature of private lis and the scope of enquiry would be
only limited to whether there is any abuse of dominance which is proscribed under
Section 4 of the Competition Act. Of course, the conduct of Micromax and Intex would
have to be taken into account in determining whether Ericsson had violated its FRAND
obligations.
204. The issue whether a licensee/prospective licensee could enter into negotiations for
a licence on FRAND terms while reserving its right to challenge the rights of a patentee
is also a contentious issue. In the Orange Book Case (supra), the German Federal Court
had taken a view that a defence of patent abuse could be claimed by a potential licensee
only if the potential licensee has waived its right to challenge a patent. However, in a
later decision delivered by the Court of Justice of the European Union in Huawei
Technologies Co. (supra), the Court has taken a different view and held that an alleged
infringer could not be criticised for challenging the licence parallely while negotiating

22-08-2024 (Page 67 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

for grant of licence. In Vringo Infrastructure Inc. v. ZTE: (2013) EWHC 1591 (Pat.), the
High Court of England and Wales had considered the defendant's plea for a decision on
the validity of the plaintiff's claim to the patents, in a suit for infringement, before
proceeding to decide the FRAND issues. In that case, the plaintiff, Vringo Infrastructure
Inc. (Vringo), instituted actions for infringement of its SEPs by ZTE (UK) Ltd. Vringo
was prepared to offer a licence for its global SEP portfolio on FRAND terms. ZTE, on the
other hand, asserted that Vringo's patents were invalid and/or not infringed and insisted
on this issue being decided before deciding the issue as to the licence terms. In view of
the defence taken by ZTE, Vringo contended that ZTE was not a willing licensee. This
was rejected by the Court and it was held that ZTE's stand that the Vringo's patents
were invalid and/or not infringed did not mean that ZTE was not a willing licensee.
205. In my view, a potential licensee cannot be precluded from challenging the validity
of the patents in question. The expression "willing licensee" only means a potential
licensee who is willing to accept licence of valid patents on FRAND terms. This does not
mean that he is willing to accept a licence for invalid patents and he has to waive his
rights to challenge the patents in question. Any person, notwithstanding that he has
entered into a licence agreement for a patent, would have a right to challenge the
validity of the patents. This is also clear from clause (d) of Section 140(1) of the
Patents Act, which was introduced with effect from 20th May, 2003. The said clause
expressly provides that it would not be lawful to insert in any contract in relation to sale
or lease of a patented article or in a licence to manufacture or use of patented article or
in a licence to work any process protected by a patent, a condition the effect of which
may be to prevent challenges to validity of a patent. Thus, a licensee could always
reserve its right to challenge the validity of a patent and cannot be precluded from
doing so.
206. It follows from the above, that a potential licensee, could without prejudice to his
rights to challenge the validity of patents could take such steps or proceedings which
are premised on the patents being valid. The doctrine of election would have no
application in this case and it is not necessary for a potential licensee to elect to accept
the validity of patents in order to assail its abuse.
207. In view of the above, it would not be necessary for Micromax or Intex to waive
their rights to challenge a patent for instituting a complaint which is based on the
premise that Ericsson's patents are valid. The CCI, cannot be faulted for proceeding on
the basis that Ericsson holds the SEP's that it asserts it holds; at any rate, Ericsson
cannot be heard to complain against CCI proceeding on such basis.
(vi) Whether impugned orders are without jurisdiction as being perverse
208. In the given facts and circumstances, it is difficult to form an opinion that the
conduct of Ericsson indicates any abuse of dominance considering the fact that it does
appear that Ericsson had made efforts to arrive at a negotiated settlement with
Micromax and Intex, who on the other hand, appear to have been
manufacturing/dealing with products using the patented technologies without either
obtaining a licence from Ericsson or approaching the Controller of Patents for a
compulsory licence. However, it is not open for this court, in proceedings under Article
226 of the Constitution of India, to supplant its views over that of the concerned
authority; in this case the CCI. This is not a case where it can be held that no
reasonable person could have formed a view that the complaints filed by Intex and
Micromax, prima facie, disclosed abuse of dominance by Ericsson. This is also not a
case where the impugned orders can be stated to have been passed on no material at

22-08-2024 (Page 68 of 69) www.manupatra.com Indian Institute of Technology Kharagpur

all. Therefore, I am unable to accept that the impugned orders passed by CCI are
perverse and, therefore, without jurisdiction.
209. Mr. Narain had pointed out that the CCI having permitted Ericsson to file its
submission ought to have considered the various issues raised by Ericsson but the
impugned orders do not disclose that the CCI had considered the contentious issues. In
my view, there is considerable merit in the said submission. Although at the stage of
passing an order under Section 26(2) of the Act, the CCI is not required to enter into an
adjudicatory process, nonetheless, it has to form a prima facie view and this would
include a view as to its jurisdiction to entertain the information/complaint. It was thus
apposite for the CCI to at least notice the contours of the controversy raised by Ericsson
and take a prima facie view. This would also be necessary to outline the area in which
investigations were required to be undertaken by the DG. Having stated the above, I do
not consider it necessary to remand the matter to CCI for reconsidering its prima facie
view, particularly as the issues pertaining to the CCI's jurisdiction as canvassed by
Ericsson have been examined in these proceedings.
2 1 0 . Before concluding, it is also necessary to note that Ericsson had also filed
complaints relating to the high-handed and officious manner in which investigations
were being conducted. Ericsson had also expressed its apprehension as to a breach of
confidentiality in relation to the confidential information provided to the CCI. In this
regard, it must be observed that the CCI, the DG and employees of the CCI are obliged
to maintain confidentiality and secrecy of the confidential information provided by
Ericsson and must take adequate measures to maintain the same. In a given case of
negligence, the CCI/DG may not be immune from a claim of loss or damages if they fail
to maintain confidentiality/secrecy of the sensitive information provided to them. As
regards the conduct of investigation; needless to state that any arbitrary, unreasonable,
capricious or malafide actions would be subjected to judicial review and it would be
open for Ericsson to initiate fresh proceedings if the conduct of investigation or any
actions of CCI/DG are contrary to the provisions of the Competition Act or fall foul of
the constitutional standards required of an authority.
211. It is also necessary to clarify that nothing stated herein 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.
212. In view of the aforesaid, the writ petitions are dismissed. All applications also
stand disposed of. All interim orders are vacated. However, in the circumstances, the
parties are left to bear their own costs.

* Related Orders are: MANU/CO/0008/2014 and MANU/CO/0066/2013

© Manupatra Information Solutions Pvt. Ltd.

22-08-2024 (Page 69 of 69) www.manupatra.com Indian Institute of Technology Kharagpur