Intex vs. ericsson

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IntexVs. ERICSSON
SHILPA
SUBRAMANIAN

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
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INTRODUCTION
 An Indian mobile handset maker, Intex Technologies (India) Limited
(“Intex”) filed a complaint (“Complaint”) with the Competition
Commission of India (“CCI”) against the Swedish company,
Telefonaktiebolaget LM Ericsson (“Ericsson”) in 2013 alleging abuse
of dominance by Ericsson while negotiating a licensing agreement
with Intex. CCI, in its order dated 16.01.2014 (“CCI Order”), made a
prima facie determination of abuse of dominant position and ordered
an investigation under section 26 of the Competition Act, 2002
(“Act”). However, before the investigation was completed, Ericsson
filed a writ petition (WP No. 464/2014) at the Delhi High Court
(“DHC”) challenging this order of CCI.

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
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FACTS
 Ericsson holds 33,000 granted patents and is the largest holder of
Standard Essential Patents (SEPs) for mobile communication and its
unrivalled patent portfolio covered 2G, 3G and 4G technologies,
with more then 100 patent licensing agreements. Ericsson also got
patented many of its technologies in India. It is pertinent to note
that a Standard Essential Patent (“SEP”) is one for which there
are no non-infringing alternatives.

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
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STANDARDISATIONANDSEP
 Standardisation is a voluntary process wherein a number of market
players reach a consensus for setting “common technology standards‟
under the support of a Standard Setting organisation, which in the
present case is European Telecommunications Standard Institute
(ETSI). In simple terms, standardisation is the process of developing
and implementing technical standards. Once a patent is declared as
Standard Essential Patent, it faces no competition from other patents
until that patent becomes obsolete due to new technology/inventions.
 A SEP holder is therefore under an obligation to license the SEPs to
every party under Fair, Reasonable and Non-Discriminatory
(FRAND) terms, in terms of the irrevocable commitment made to
standard setting organization, such as ETSI.

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
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royaltystackingandpatentholdupissues
 According to the Complaint filed by Intex before the CCI, Ericsson was
liable for royalty stacking and patent hold up issues in the following :
 Demanding exorbitant royalty fees from Intex, by way of Term
Sheet to a Global Patent Licensing Agreement (“GPLA”)
 Despite its purported commitment to the FRAND terms under the
ETSI IPR Policy, Ericsson failed to share with Intex, the
commercial terms and royalty payment arrangements with other
such similar Licensees, on the grounds of Non-Disclosure
Agreements (“NDAs”) executed between Ericsson and such
licensees.
 Requiring Intex to enter into an NDA as a necessary pre-condition
for letting the Intex know about the details of the alleged
infringement and that Intex was compelled to sign the NDA before
Ericsson provided details of infringement to Intex.

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 – 6552921
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WEBSITE
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Issuesforconsideration
 In adjudicating the Complaint, the following issues demand
consideration:
 Standardisation of the Patents owned by Ericsson
 Role of Standard Setting Organisation (SSO), in this case ETSI
and the effect of its IPR policy
 Test to see if the terms negotiated with Intex are in line with the
requirements of FRAND terms in Global Patent Licensing
Agreements

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
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Tel: +91 - 80 - 6546 2400
COIMBATORE
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Standardisation
 The World Intellectual Property Organisation (WIPO), in the
thirteenth session of the Standing Committee of the Law of
Patents (“SCP”) held in 2009, discusses inter alia, the standards
of patents.
 In doing so, the SCP categorizes the standards into two, viz., de
facto standards and de jure standards.
 De jure standards are set by standard setting organizations (SSOs),
which coordinate and facilitate a standard setting process with the
involvement of various stakeholders. The SCP further
contemplates that the SSOs may be international, regional or
national, and that in certain cases, companies of their own accord
form a consortium to establish technical standards in a particular
field or industry.

CHENNAI
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Tel: +91 - 44 - 2498 4821
BANGALORE
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COIMBATORE
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 According to WIPO, the possible areas for improvement in SSOs patent
policies, relate to the transparency, clarity and certainty of patent
policies, including the following:
 clarification of terms used in the patent policies;
 ex-ante disclosure of licensing terms, which go beyond the unspecific RAND or
FRAND terms, by the patentees of essential patents, on a voluntary basis, before the
adoption of the standard under discussion;
 effective identification of potentially essential patents at an early stage of the standard-
setting process;
 effective enforcement of SSOs’ patent policies;
 areas of interaction between an SSO’s patent policy, in particular, RAND or FRAND
licensing terms, and open source software licenses.

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
ETSIIPRPolicy
 ETSI produces globally applicable standards for information and
communication technologies i.e. fixed, mobile, radio, converged,
broadcast and internet technologies, some of which are covered by
patents held by ETSI or ETSI members like Ericsson. ETSI has in
place, a comprehensive IPR policy (“ETSI IPR Policy”), as part of
its Rules of Procedure.
 As per sub-clause 6 to Clause 15, "ESSENTIAL" as applied to IPR
means that it is not possible on technical (but not commercial)
grounds, taking into account normal technical practice and the state
of the art generally available at the time of standardization, to make,
sell, lease, otherwise dispose of, repair, use or operate EQUIPMENT
or METHODS which comply with a STANDARD without
infringing that IPR. For the avoidance of doubt in exceptional cases
where a STANDARD can only be implemented by technical
solutions, all of which are infringements of IPRs, all such IPRs shall
be considered ESSENTIAL.

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
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Further, sub-clause 11 to Clause 15 of the ETSI IPR Policy defines
‘STANDARD’ as any standard adopted by ETSI including options
therein or amended versions, including European Standards (ENs), ETSI
Standards (ESs), Common Technical Regulations (CTRs) which are taken
from ENs and further including drafts of any of the foregoing, and
documents made under the previous nomenclature, including ETSs, I-ETSs,
parts of NETs and TBRs, the technical specifications of which are available
to all MEMBERS, but not including any standards, or parts thereof, not
made by ETSI.

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
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 According to Clause 6.1 of the ETSI IPR Policy, 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.

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
CCI’sfindings
 Upon a conjoint consideration of the ETSI IPR Policy and the
fact situation that Ericsson’s SEPs being adopted in India and
was being used by a large number of telecom service providers
who have entered into Unified Access Service License
agreement with the Department of Telecommunications, the
CCI made the following findings:
 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.
 since Ericsson holds SEPs and there was no other alternate technology in
the market in India, it enjoyed complete dominance over its present and
prospective licensees in the relevant product market
Contd..

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
 Refusal of Ericsson to share commercial terms of FRAND licences with licensees
similarly placed to the informant, strengthens the case regarding alleged
discriminatory commercial terms imposed by Ericsson.
 Charging of two different license fees per unit phone for use of the same technology
prima facie is discriminatory and also reflects excessive pricing vis-à-vis high cost
phones.
 Both forcing a party to execute NDA and imposing excessive and unfair royalty rates
prima facie was abuse of dominance and violation of section 4 of the Act.
 It is a matter of record that the practice of Ericsson of imposing discriminatory royalty
rates contrary to FRAND terms, was previously considered by the Commission in
Case no. 50/2013, In Re: Micromax Informatics Limited vs. Telefonaktiebolaget LM
Ericsson (Publ), wherein the Commission had already formed a prima facie opinion
under section 26(1) of the Act and directed the Director General to conduct an
investigation
 In finding the above, the CCI had ordered for investigation by the
Director General, in the above allegations made by Intex.
 As mentioned supra, the CCI Order is now under challenge before the
Hon’ble Delhi High Court in W.P No. 464/2014. However, no stay has
been granted on the CCI Order by the Delhi High Court.

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Conclusion
 Whilst Ericsson seeks to maintain technical arguments
on jurisdiction, drawing support under Section 3(5)(i) of
the Act (dealing with the coextensive remedies available
for IPR), in its challenge to the CCI Order, the fact that
the High Court has refused to grant a stay on the
investigation but further study the subject, opens up
avenues for the growth in the discussion on ensuring
FRAND terms in patent license agreements and
protection of licensee interest therein.

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Thank you

Intex vs. ericsson

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