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India – CCI Directs Second Investigation Against Ericsson For Violating FRAND Terms.

24 March, 2014

 


On January 16, 2014, CCI directed DG to investigate into the allegations made by Intex Technologies (India) Limited (‘Intex’) against Telefonaktiebolaget LM Ericsson (Publ) (‘Ericsson’).


Specifically, Intex alleged that Ericsson, by way of its “Term Sheet for A Global Patent License Agreement”, demanded exorbitant royalty rates and unfair terms for licensing its patents. Intex also stated that it was compelled to sign the Non-Disclosure Agreements (‘NDA’) before Ericsson provided details of infringement. Moreover, Ericsson refused to share any details of commercial terms and royalty payments with other parties on grounds of the NDAs. Further, Intex alleged that the linkage of royalty to final cost of the goods to the user, as done by Ericsson, was unfair and an abuse of dominance.


CCI held that on examination of the information and documents provided by Intex, Ericsson was dominant in the relevant market of GSM and CDMA technologies in India as it held a large number of GSM and CDMA patents. Ericsson has 33,000 patents to its credit, 400 of which are granted in India, and is the largest holder of Standard Essential Patents (‘SEPs’) for mobile communications like 2G, 3G and 4G patents used for smart phones, tablets etc. Further, since Ericsson holds SEPs, and there was no other alternate technology in the Indian market, it enjoyed complete dominance over its present and prospective licensees in the relevant product market. CCI observed that the practices adopted by Ericsson, such as linking royalty to the cost of the product for the user, were prima facie discriminatory, as well as contrary to Fair, Reasonable and Non-Discriminatory Terms (‘FRAND Terms’). Refusal to share commercial terms of FRAND licenses with similarly situated licensees strengthened the accusations of Intex. CCI held that this case may be clubbed with an earlier allegation against Ericsson for abuse of dominance by Micromax Informatics Limted (‘Micromax’), wherein CCI had also directed DG to investigate into Ericsson’s operations.


Ericsson approached the Delhi High Court (‘DHC’) by way of a writ petition seeking to quash the investigation initiated on the basis of Micromax’s complaint. DHC, by way of its order dated January 21, 2014, has restrained CCI and DG from passing any orders till the next date of hearing, i.e. May 26, 2014. However, DG may direct Ericsson to provide information for the purposes of the investigation.

 

AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com


Shuva Mandal, AZB & Partners 

shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com


Percy Billimoria, AZB & Partners 

percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

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