edition iinnovation as an incentive to research and development protected by ip laws and the...

Quarterly Law Journal | Published by Agradoot Web Technologies LLP

EDITION I

April 2018

Ankita Aseri .

Editor-in-Chief .

Sameer Avasarala

Publishing Editor

PUBLISHED BY

CITATION

1 JICIL 2018 (01)

Journal of Innovation, Competition and Information Law 1 JICIL 2018 (01)

Published by Agradoot Web Technologies LLP 12

LICENSING OF STANDARD ESSENTIAL PATENTS AND

COMPETITION LAW: A PERUSAL OF ISSUES AT CONJUNCTURE

Anviti Mishra58

Abstract

With the upsurge of legal battles involving FRAND-encumbered SEP holders due to the lacunae and

ambiguities in the IPR and Competition law, an immediate concern of revisiting these two laws is felt

around the globe. On a bare glance, Competition and IPR law may seem to be at a crossroad but

examining it closely will lead us to the conclusion that the convergence between Competition law and

IPR is not due to the fact, that Competition law is affected by IPR’s existence but due to its exercise.

Competition Act of 2002 inculcated the protection of intellectual property rights aptly while framing

its provisions by enumerating only abuse of dominant position as prohibitory and not making a

dominant position prohibitory per se. Although these considerations were taken into account while

drafting the Competition Act, we find ambiguities in both the laws particularly in relation to the

competing jurisdictional claims in SEP cases.

The principal concern at stake is how to govern licensing of SEPs in order to create a balance between

innovation as an incentive to research and development protected by IP laws and the outrival

Competition law. The foremost question that is to be projected is whether the revised competition

law and policies free of their current pragmatic nature can offer an appropriate legal framework to

address the issue of licensing of SEPs in entirety. The paper will attempt to address the above legal

questions by primarily using secondary resources with the aim of appraising the ongoing judicial

development relating to SEPs and Competition law followed by a thorough comparative analysis of

how the antitrust laws of other common law countries approaching the licensing of SEPs operate.

The paper will suggest modifications in tackling the lacunae in Competition and IP laws which is

preventing a harmonious governance of licensing SEPs in India.

Keywords: SEPs, FRAND, Competition Law, IP law, Licensing, Competing Jurisdiction.

58 Student, NUSRL Ranchi



Introduction

A holder of any Intellectual Property acquires a monopolistic right over his intellectual properties.

These rights are awarded by the state and the user can exercise these rights to restrain others

from using them without his consent and any violation of such rights leads to an infringement.59

Antitrust laws, in turn, ensure that new proprietary technologies, products, and services are

bought, sold, traded, and licensed in a competitive environment. In today’s marketplace, new

technological advancements are constantly replacing those that came before, as competitors are

driven to improve their existing products or introduce new products in order to maintain their

market share.60 The competition law aims to prevent the misuse of dominant position while patent

law grants monopoly rights with certain exceptions to prevent abuse of such rights.

However parallel, policy of Antitrust Laws and Intellectual Property Rights intersect at a point,

which invokes public interest. This intersection point is reached when a patented technology

becomes essential to achieving a standard. Thus, the elementary idea behind the Standard

Essential Patents (SEPs) system is to resolve the interaction between patents which are primarily

private and exclusive as against standards which are meant to be public and non-exclusive.61

A standard can be defined as 'a set of technical specifications that seeks to provide a common design

for a product or process'.62An Essential Patent or Standard Essential Patent is a patent that claims

an invention that must be used to comply with a standard.63 Washington District Court in Microsoft

Corp. v. Motorola Mobility, Inc.64defined SEP as "A given patent is ‘essential’ to a standard if use of

the standard requires infringement of the patent, even if acceptable alternatives of that patent could

59Shippey, Karla C, "A Short Course In International Intellectual Property Right", World Trade Press, n.d. Page 5 of 28. 60 U.S. Department of Justice & Federal Trade Commission, Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition (2007). 61Narula, Ranjan, "Standard Essential Patents", Rouse the Magazine, 2015. Available at: http://www.rouse.com/magazine/news/standard-essential-patents/?tag=india (Last accessed June 25, 2017 10:00 P.M.) 62Hovenkamp H, Janis M & Lemley M, IP and Antitrust: An Analysis of Antitrust Principles applied to Intellectual Property Law (Aspen Law & Business, NY). 2003-04, Supplement p. 35.1. 63 Shapiro, Carl, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting, Forthcoming Innovation Policy and the Economy, MIT Press, Volume I, 2001. 64Microsoft Corp. v. Motorola, Inc., Motorola Mobility, Inc., and gen. Instrument Corp., 104 u.s.p.q.2d 2000.



have been written into the standard." It has become impossible to manufacture standard-compliant

products without using technologies covered by one or more SEPs.65

SEP’s and Frand Negotiations

A lot many standard setting organizations (SSOs) require their members to undertake that they

will grant binding licenses to companies that wish to use the standard in question. To promote

homogenous application of the standard and to evade any competition concerns, such licenses

must be made available under Fair, Reasonable and Non-Discriminatory (FRAND) terms.66

Licensing of Standards Essential Patents (SEPs) on Fair, reasonable and Non-Discriminatory

(FRAND) terms is a foundation of the standards development process.67 The underlying principle

behind FRAND is that it benefits the inclusion of patented technology in technical standards while

ensuring that the holder of SEPs should not abuse the dominant market position it gains from

widespread adoption of a voluntary technical standard.68Patents that are considered essential to

implement a chosen industry standard cannot be exploited like any other patent, and certainly not

to the exclusion of other market participants.69 ETSI’s and IEEE’s IPR policies include that patent

holders should license their SEP on fair, reasonable and non-discriminatory (FRAND) terms and

conditions.70 Bureau of Indian Standards, the national technical standard setting authority of India,

has no mention of an IPR policy or linkage between patents and standards.71 When a SSO chooses

a particular technology, standard implementers are locked in to using that technology, and thus

65European Commission Memo, Antitrust Decisions on Standard Essential Patents (SEPs)- Motorola Mobility and Samsung Electronics, Frequently asked questions, Available at http://europa.eu/rapid/press-release_memo-14-322_en.html.(Last accessed June 25, 2017 10:00 P.M.) 66Bernd Allekotte and Ulrich Blumenröder Grünecker Kinkeldey Stockmair & Schwanhäusser, Europe: When Patents become Standards & Litigation for Essential Patent, Available at http://www.iam-magazine.com/issues/article.ashx?g=42b52360-6080-4d09-b92a-122caa87da21.(Last accessed June 25, 2017 10:00 P.M.) 67Understanding Patents, Competition and Standardization in an Interconnected World, ITU, 2014 Available at: http://www.itu.int/en/itu-t/ipr/pages/understanding-patents,-competition-and-standardization-in-an-interconnected-world.aspx.(Last accessed June 25, 2017 10:00 P.M.) 68Ibid. 69India- Competition Law and FRAND Commitments, Conventus Law, January 27th, 2014 Available at http://www.conventuslaw.com/archive/india-competition-law-and-frand-commitments/(Last accessed June 25, 2017 10:00 P.M.) 70Discussion Paper on Standard Essential Patents and Their Availability on FRAND Terms, Government of India Department of Industrial Policy and Promotion Ministry of Commerce & Industry, 1st March 2016.

71 R Saha, Our product standards lack an IPR context- the Hindu Business Line, The Hindu (Business Line) (Mar 7, 2016) http://www.thehindubusinessline.com/opinion/our-product-standards-lack-an-ipr-context/article8324280.ece (Last accessed June 25, 2017 10:00 P.M.)

http://europa.eu/rapid/press-release_memo-14-322_en.html

http://europa.eu/rapid/press-release_memo-14-322_en.html

http://www.iam-magazine.com/issues/article.ashx?g=42b52360-6080-4d09-b92a-122caa87da21

http://www.iam-magazine.com/issues/article.ashx?g=42b52360-6080-4d09-b92a-122caa87da21

http://www.itu.int/en/itu-t/ipr/pages/understanding-patents,-competition-and-standardization-in-an-interconnected-world.aspx

http://www.itu.int/en/itu-t/ipr/pages/understanding-patents,-competition-and-standardization-in-an-interconnected-world.aspx

http://www.conventuslaw.com/archive/india-competition-law-and-frand-commitments/

http://www.conventuslaw.com/archive/india-competition-law-and-frand-commitments/



SEP holder’s “bargaining power surges because a prospective licensee has no alternative to

licensing the patent; he is at the patentee’s mercy.”72

SEP and Anti-Trust Laws Clash

Patent Hold-Up

A patent holdup arises73 when companies that own the SEPs for the adopted standard effectively

block others from using the standard through various means- including obtaining injunctive relief

or imposing royalties high enough74 to act as a barrier to the use of the standard in question75,

ironically, the very same practices that the development of FRAND licensing sought to prevent.

Patent hold-up can subvert the competitive process of choosing among technologies and undermine

the integrity of standard-setting activities. Ultimately, the high costs of such patents get transferred

to the final consumers.76Microsoft Corp. v. Motorola Mobility, Inc. (Supra) explained that the “ability

of a holder of a SEP to demand more than the value of its patented technology and to attempt to

capture the value of the standard itself is referred to as patent ‘hold-up’." European Commission

identified the concern that injunctions could be used anti-competitively to exclude competing

products from the market or to impose onerous licensing terms, even if licensees are willing to

take a license on FRAND terms.77

Seeking Injunction Against Willing Licensee

72Apple, Inc. v. Motorola, Inc., 869 F. Supp. 2d 901, 913 (N.D. Ill. 2012); see also Case 85/76 Hoffmann-La Roche v. Commission [1979] ECR 461.

73Intellectual Property and Standard Setting, OECD (2004), http://www.oecd.org/daf/competition/competition-intellectual-property-standard-setting.html.(Last accessed June 25, 2017 10:00 P.M.)

74 Mark A. Lemley & Carl Shapiro, A Simple Approach to Setting Reasonable Royalties for Standard Essential Patents, 28 Berkeley Tech. L. J. 1136-1137 (2013) (Last accessed Mar 13, 2017 10:00 A.M.); Mark A. Lemley & Carl Shapiro, Patent Holdup and Royalty Stacking, 85 Tex. L. Rev. 1991-2050 (2007) (Last accessed June 25, 2017 10:00 P.M.)

75Phillipe Baechtold, IPRs and Standards Setting: Some Issues, 1, (http://www.wipo.int/ edocs/mdocs/sme/en/wipo_smes_ge_07/wipo_smes_ge_07_www_81604.ppt(Last accessed June 25, 2017 10:00 P.M.); Lemley & Shapiro, Patent Holdup and Royalty Stacking, supra note 18.

76 Micromax v Ericsson, Case No. 50/2013, Competition Commission of India, (November 12, 2013)

77Case COMP/M.6381 Google/Motorola Mobility of 13 February 2012, paragraph 107.



Injunctive relief is a remedy available to patent holders who can show that another product

infringes their patent.78 SEP holders counter that the benefits of the laying negotiations and

licensing costs often outweigh the expected costs of litigation for a prospective licensee, making

the threat of injunctive relief a necessary tool to bring unwilling licensees to the bargaining table.79

The definition of “unwilling licensee” was given by FTC in Robert Bosch80 as implementer who-

(i) “states in writing that it will not license the SEP” or

(ii) when the implementer refuses to enter into a license on terms that either the parties

or the courts have confirmed to comply with a FRAND commitment.

The EC’s Samsung and MMI decisions establish that SEP holders will be restricted to seek

injunctions against willing licensees.81 In the case of Huawei Technologies Co. Ltd v ZTE Corp. and

ZTE Deutschland GmbH,82 that a holder of a FRAND-encumbered SEP may not seek injunctive

reliefs. In Saint Lawrence Communications v. Deutsche Telekom83, it was held that a holder of a

FRAND-encumbered SEP may seek injunctive relief if it first informs the alleged infringer in

writing of the specific infringement, offers to license the SEP on FRAND terms, and negotiates

with the potential licensee if the latter rejects the initial terms in good faith.

Royalty Stacking

When multiple patent holders set royalties on the same product independently of each other

without regard to the aggregate royalty burden. Royalty stacking results in higher aggregate

royalties compared to the royalty burden that would be imposed by a single licensor that owned

all of the licensed patents.84 For this reason the law has consistently required that FRAND

assessments be made on an ex ante basis, i.e. that royalties are determined based on the

78Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1149 (Fed. Cir. 2011).

79 J. Gregory Sidak, The Meaning of FRAND, PART II: Injunctions, Journal of Competition Law & Economics, 11(1), 201–269 doi:10.1093/joclec/nhv005; (Last accessed June 25, 2017 10:00 P.M.)

80Decision and Order, Robert Bosch GmbH, No. C- 4377 (F.T.C. Nov. 26, 2012), § IV.E.2.

81Competition Policy Brief: Standard-Essential Patents, European Commission, (June 5, 2014),http://ec.europa.eu/competition/publications/cpb/2014/008_en.pdf. (Last accessed June 25, 2017 10:00 P.M.)

82 Case number = C-170/13.

83Case No. 2 O 106/14, Regional Court of Mannheim.

84Lemley & Shapiro, Patent Holdup and Royalty Stacking, 85 Tex. L. Rev. at 2015.



competitive landscape that existed before the standard was set and prior to alternatives falling

away.85

SEP Litigation Game Across the Globe

United States: In the case of eBay v Merc Exchange86, Supreme Court issued an opinion, which set

the standards under which a court should evaluate requests for injunctions, in which, a patent

owner must show the court: “1). That it has suffered an irreparable injury; 2). That other possible

legal remedies, including the payment of royalties, are inadequate to compensate for that injury; 3).

That considering the balance of hardships between the plaintiff and defendant, a remedy in equity is

warranted; and 4) That the public interest would not be disserved by a permanent injunction.”

Lawsuits brought as part of an anticompetitive scheme to breach FRAND commitments need not

constitute sham litigation to be deemed monopolizing acts87. The patent infringement could

provide an anticompetitive conduct basis for an antitrust claim of monopolization.88

United Kingdom: The Higher Court ruled that the boundaries of FRAND and competition law are

not the same. The FRAND rate is a ceiling and not a floor, and is not necessarily dispositive in a

competition law analysis. Moreover, under this ruling, SEP holders are prohibited from engaging

in “hold out” or “reverse hold up” tactics. Judge Briss held that an implementer’s commitment

(either qualified or not) to take a license under FRAND terms precludes a SEP holder from seeking

a final injunction.89

Germany: German courts have applied German competition law to develop the so-called Orange

Book Standard for assertion of a FRAND defense. In Orange Book Standard of May 6, 2009, the

German Federal Supreme Court (FSC) allowed, for the first time, a patent user to defend itself

against an injunction claim by arguing that it is entitled to a FRAND license according to antitrust

law.90

85 Article 101 Guidelines, § 289; Microsoft, 2013 U.S. Dist. LEXIS 60233. 86 547 U.S. 388 (2006) 87Microsoft Mobile Inc. v. Inter-Digital, Inc., Civil Action No. 15-723-RGA. 88Retractable Technologies, Inc. v. Becton, Dickinson and Co., Civ. A. No. 2:08-CV-16, Dkt. No. 577 (E.D. Tex. Sept. 19, 2013).

89Unwired Planet International v. Huawei Technologies [2017] EWHC 711 (Pat). 90Orange Book Standard (German Federal Supreme Court, May 6, 2009, Doc. No.KZR 39/06).



Netherlands: In contrast to German approach, approach of courts in The Netherlands is tilting

more towards Patents than antitrust law.91 The District Court of The Hague held that the existence

of an obligation to grant a FRAND license does not necessarily prevent the holder of an essential

patent from enforcing its patent, including through a suit seeking injunctive relief.92 Court in this

case held that seeking an injunction during negotiation of the FRAND license must be considered

as an abuse of law or a breach of pre-contractual good faith.93

Japan: A Japanese court considered a FRAND defense for the first time in Apple Japan Godo Kaisha

v. Samsung Electronics Co.94, where Samsung filed a request for a preliminary injunction against

Apple in Tokyo District Court and established a FRAND royalty for patents as not exceeding 5%

maximum royalty stacking.

India: In the case of Intex Techs. (India) Ltd v Telefonaktiebolaget LM Ericsson95, CCI held that a

refusal to share the commercial terms of the FRAND license may lead to discriminatory

commercial terms. CCI also said that charging different licensing fees for the use of the same

technology from different users is against FRAND terms. CCI further said that imposing a

jurisdiction clause of the agreement that prevented Intex Tech. (India) Ltd. from adjudicating its

disputes in a country where both parties were in business also provided prima facie evidence of

an abuse of a dominant position. CCI while forming prima-facie opinion that Ericsson had abused

its dominant position ordered that the Director General to combine the investigation with the

claims that Micromax and Intex had brought against Ericsson.96 In the case of Best IT World (India)

Private Ltd. v Telefonaktiebolaget LM Ericsson97 CCI opined that practice of forcing a party to

execute NDA and imposing excessive and unfair royalty rates, prima facie, amount to abuse of

dominance in violation of Section 4 of the Act.

91Jones Day, Standards-Essential Patents and Injunctive Relief, April 2013. pp. 11. 92Philips v. SK-Kassetten (District Court of The Hague, March 17, 2010, Doc. No. 316533/ha za 08-2522). 93Samsung v. Apple (District Court of The Hague, March 14, 2012, Doc. no. 400367/ha za 11-2212). 94 (ne) 10043, Tokyo IP High Court (2013).

95Intex Techs. (India) Ltd v Telefonaktiebolaget LM Ericsson, Case No. 76 of 2013. 96Intex Techs. (India) Ltd v Telefonaktiebolaget LM Ericsson, Case No. 76 of 2013, pg. 7-8. 97Best It World (India) Private Ltd. v. Telefonaktiebolaget LM Ericsson, Case no. 4 of 2015.



In the case of Telefonaktiebolaget LM Ericsson (PUBL) vs. Competition Commission of India98, Delhi

High Court upheld the order of CCI after Ericson’s contention that issue of royalty rate falls within

the scope of Patents Act and CCI does not have jurisdiction to adjudicate this subject matter.

Jurisprudential Tug of War Between CCI and High Court: Indian Context

The Competition Commission of India (CCI) is empowered to take cognizance of such anti-

competitive effects in the Indian market. The objective of CCI is to play an overarching role as a

market regulator across all sectors with the focus on anti-competitive behaviour of enterprises

that may distort competition.99

Justice Bakhru, reiterated the point that lies between the two parties will not preclude CCI’s

jurisdiction to investigate100 in anticompetitive practices and abuse of dominant position. “…

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.”

The Patents Act not only provides for a statutory grant of Patent rights but also contains provisions

relating to the exercise 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, with reference to, the

Competition Act in so far as patents are concerned.

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

98W.P.(C) 464/2014 & CM Nos.911/2014 & 915/2014; MANU/DE/0762/2016.

99Anupama Sanghi, The Significance of the Competition Commission of India, Livemint, (Jun 16, 2014; 11:33PM IST) http://www.livemint.com/Opinion/nKY6PoaDeUi9NP2aOhECYL/The-significance-of-the-Competition-Commission-of-India.html. (Last accessed June 25, 2017 10:00 P.M.)

100 Sec 19, Competition Act, 2002



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.101

In the case of JCB v. Competition Commission of India & Ors.,102 where injunction was passed by the

Delhi High Court, and where CCI took cognizance of the case, the High Court restrained the CCI from

passing any order.

Article 227 of the Constitution confers on every High Court the power of superintendence over all

courts and tribunals throughout the territories in relation to which it exercises jurisdiction

excepting any court or tribunal constituted by or under any law relating to the armed forces.103 It

is well established that the power of superintendence so conferred on the High Court is

administrative as well as judicial, and is capable of being invoked at the instance of any person

aggrieved or may even be exercised suo motu.104 The paramount consideration behind vesting such

wide power of superintendence in the High Court is paving the path of justice and removing any

obstacles therein.

Gujarat Urja Vikash Nigam Ltd. v. Essar Power Ltd,105 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.

In the case of CCI v. SAIL106, the CCI under the scheme of the Act was held to be vested with

inquisitorial, investigative, regulatory, and adjudicatory and to a limited extent even advisory

jurisdiction. The same was affirmed in the case of Shamsher Kataria Informantv. Honda Siel Cars

India Ltd.107

Aamir Khan Productions Pvt. Ltd. v. Union of India108 is a landmark judgment delivered by the

Bombay High Court wherein the Hon’ble Court, while dealing with a matter pertaining to the issue

101Erricson v. CCI.

102 JCB v. Competition Commission of India & Ors., W.P.(C) 2244/2014 (arising from Case No. 105 of 2013).

103Surya Dev Rai v. Ram Chander Rai & Ors, CASE NO.: Appeal (civil) 6110 of 2003. 104Ibid. 105MANU/SC/1055/2008 : (2008) 4 SCC 755.

106MANU/SC/0690/2010 : (2010) 10 SCC 744.

107MANU/CO/0066/2014.

1082010 (112) Bom L R 3778.



of IPR, held that the CCI has the jurisdiction to deal with all the cases concerning competition law

and IPR.

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 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.109

Bargaining powers of a dealer/manufacturer implementing the standard be protected and

preserved.110 The threat that a patent holder will obtain an injunction that will force the

downstream producer to pull its product from the market can be very powerful. These threats can

greatly affect licensing negotiations, especially in cases where the injunction is based on a patent

covering one small component of a complex, profitable, and popular product. Injunction threats

often involve a strong element of holdup in the common circumstance in which the defendant has

already invested heavily to design, manufacture, market, and sell the product with the allegedly

infringing feature.111

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

amount to a 'patent holdup' and, thus, prevents supply of products to the consumers. Competition

Commission act as a market regulator and that it has the jurisdiction to look at all issues affecting

competition in the market.112

The expression “other order” and “as it deems fit” in Section 27 (g) of Competition Act, 2002 allude

to the Commission ample power with regard to anti-competitive agreement and abuse of

dominance. “Other order” means any order different from the already mentioned order. The

expression “as it deems fit” conveys that the Commission enjoys ample and flexible powers to pass

such orders as it deems fit.113 The expression defines the jurisdiction of the Commission to deal

with and determine matters relating to the information or reference in the light of evidence and

consistently with the justice of the case. A power to make order as the authority thinks fit

109Huawei Technologies Co. Ltd. v. ZTE Corp., ZTE Deutschland GmbH Case C-170/13; EU:C:2015:477.

110Supra note 25

111Mark Lemley & Carl Shapiro, Patent Holdup and Royalty Stacking, Texas Law Review, [Vol. 85:1991-2045] (2007) http://faculty.haas.berkeley.edu/shapiro/stacking.pdf, (Last accessed June 25, 2017 10:00 P.M.).

112HT Media Limited v. Super Cassettes Industries Limited; 2014CompLR129(CCI).

113V.C. Rangachari v. D. Gopalan; 1979 AIR 289.

http://faculty.haas.berkeley.edu/shapiro/stacking.pdf



necessarily comprises within it the power to make an order which is just and equitable in the

circumstances of the case.114The fixation of royalty rate would ultimately decide the end price of

products which will then affect the purchasing capacity of public. The Competition act seeks to

provide for115:

i) The establishment of the Competition Commission of India,

ii) To prevent practices having adverse effect on competition,

iii) To promote and sustain competition in markets,

iv) To protect interests of consumers, and

v) To ensure freedom of trade in markets.

Hence CCI should be given the power to fix royalty rate along with High Court.

Suggestions

❖ The national standard setting organization BIS should implement its own IPR policies and

inculcate FRAND terms in its policies.

❖ Higher judiciary of India, preferably, Hon’ble Supreme Court should stress upon and

resolve the anti-competitiveness involved in SEP licensing.

❖ CCI should be empowered to fix royalty rate under Sec 27(g), in furtherance of its power

to act as a market regulator.

❖ There should be a harmonious reconstruction of Competition and IPR laws in India.

Conclusion

SEP licensing involves a lot of anti-competitive practices such as patent hold-up and royalty

stacking. For this, we have to broaden the scope of CCI for taking up anti-competitive claims

involved in SEPs as well as fix the reasonable royalty rate as per FRAND terms, in furtherance of

its power to act as a market regulator. Moreover, the SEP litigation of India which is still in its

nascent stage, can take into consideration the judgments of EU, US and other countries who have

successfully tackled the problem of SEP licensing. Hence, there is a need for harmonious

reconstruction of Competition and IPR laws in India for tackling the SEP problem which has to be

handled by the Apex Court of India.

114Rakshra Sports Pvt. Ltd. v. Khairati Lal Rakhra [1993] 76 Comp. Cas. 545 (Mad.).

115Statement of Objects and Reasons accompanying the Competition Bill, 2001.

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