The competition act, 2002 has been set up with a view to eliminate unnecessary competition in the relevant market, within India. In an effort to destroy monopoly and to support healthy competition, the act has established the competition commission, with an aim to control and penalize the abuse of dominant position, especially connected to the Indian Patent act, 1970. Thus the tow acts go hand in hand, thus promoting better competition in market and checking abuse of dominant position.1 But, the main position which is common to both competition act and patent act is, that they could not be brought into collusion. For instance, if a matter relating to abuse of dominant position is already applied before the Competition Commission of India, it could not be brought for settlement through any civil remedy before any court of law.
Regarding certain other components of patents, the competition act, along with the patents act provides regulation of licensing and royalty rates for the patented product.2 As far as the Indian competition laws are concerned, abuse of dominant position entails an enterprise imposing unfair market prices, licensing agreements and inequitable royalty rates in the market.
Analyzing the cases of dominant position abuse filed against Ericsson by Lava, Micromax, Xiaomi and Intex,3 it is clearly understood that Ericsson has indeed passed the qualifications of abuse of its dominant position required under section 4 of the Competition Act, 2002 4, whereby it imposed strict licensing agreements which resulted in breach of FRAND rules,5 and fixing of exorbitant royalty rates, which incontestably eliminates healthy competition in the mobile and telecom market. But, when analyzing the judgments passed in these cases by the benches in the respective courts, even after the commission’s enquiry into Ericsson’s dominant position, the courts passed an order against the respective applicants as mentioned above to pay the damages for infringement of the defendant company’s SEPs, which is not the law was designed for.6
The patents act was designed to protect the sanctity of reasonable inventions and to penalize infringement whereas the competition laws were designed to operate against abuse of dominant position by market giants in the relevant market.7
Breaching the FRAND terms and imposing unfair royalties will undoubtedly harness the reasonable competition. But when interim injunctions are passed against the willing licensees, in this case the respective applicant telecom companies, then there is surely a misconception of both the competition as well as the patent laws.8 Thus ultimately, it is in the hands of the judicial system in all countries apart from India, to suppress the dominance and nurture healthy competition without allowing infringement of patents.9 Thus the unconditional bond between competition laws and patent laws must be understood completely by the judicial systems since they are the carriers of justice, faith and trust.10
*studying BALLB (HONS) at Saveetha School of Law, Chennai
3. Sehaj Sunderlal, Competition Laws v IPR , Nov. 2011.
4. Aviral Saxena, Competition Law and Intellectual Property Rights: Confronting Paradigms, February 2013
7. Shreya Srivatsava, Abuse of Dominant Position in India