SC agrees to consider CCI plea against Ericsson for abuse of dominance

The Supreme Court on March 1 issued a notice and agreed to consider the Competition Commission of India’s (CCI) appeal against a Delhi High Court order setting aside anti-trust proceedings against telecom giant Ericsson and agrochemical company Monsanto.

The court has asked the multinationals to response to the plea within four weeks. During the course of the hearing, senior advocate Abhishek Manu Singhvi, who appeared for Monsanto, argued that the issue is dead now as the patent has run its course. However, additional solicitor general Venkatraman, who appeared for the fair trade watchdog argued that the case has larger implications on the interplay between the Competition Act, 2002 and intellectual property laws.

Ericsson sued mobile phone manufacturer Micromax, stating that its phones infringed upon its patent and demanded that it pay a royalty. Micromax and Intex filed complaints before the CCI, alleging abuse of dominant position by Ericsson, stating that the company was demanding unfair royalty from them for the use of its technology.

In the Delhi High Court, the CCI took a primary view that Ericsson was abusing its dominant position because it owns the patents and ordered an investigation into the company’s conduct.

Monsanto held the patent for a technology to produce genetically modified cotton seeds. It had licensed the technology to certain manufacturers in India such as Nuziveedu Seeds Ltd. These Indian companies had to pay a non-refundable fee and a recurring fee to use its technology.

The companies approached the CCI arguing that Monsanto was abusing its dominant position by virtue of holding the patent for this technology.

A single-judge bench of the high court refused to stay the investigation against these companies and held that the CCI was not wrong in ordering this investigation as it has only taken a prima facie view, permitting the anti-trust regulator to continue investigating them. The companies then approached the division bench against this order.

A division bench held that the Patents Act of 1970 is a special law, and any issue related to a party’s exercise of its patent rights should be addressed exclusively under the patents law, rather than the Competition Act of 2002. Additionally, the court ruled that the CCI lacks the jurisdiction to investigate whether a company, in the exercise of its patent rights, has abused its dominant position. Moneycontrol