Since becoming fully operational in October of 2009, the CCI has brought two public investigations involving SEPs, both against Ericsson and both based upon allegations that the company violated its FRAND commitments by imposing discriminatory and “excessive” royalty rates and using NDAs. According to the CCI, “forcing a party to execute [an] NDA” and “imposing excessive and unfair royalty rates” is“ prima facie” abuse of dominance in violation of Section 4 of the Competition Act, as does“[i]mposing a jurisdiction clause debarring [complainants] from getting disputes adjudicated in the country where both parties were in business.”2In both matters, the CCI stated that “prima facie the relevant product market” is “the provision of SEP(s) for 2G, 3G and 4G technologies in GSM standard compliant mobile communication devices,” in India, in which “prima facie it is apparent that Ericsson was dominant”. The investigations allege that Ericsson “seem[s] to be acting contrary to the FRAND terms by imposing royalties linked with cost of product of user for its patents.” Thus,“[f]or the use of [a] GSM chip in a phone costing Rs. 100, [the]royalty would be Rs. 1.25 but if this GSM chip is used in a phone of Rs. 1000, [the]royalty would be Rs. 12.5.” According to the CCI, “[c]harging of two different license fees per unit phone for use of the same technology prima facie is discriminatory and also reflects excessive pricing vis-a-vis high cost phones.” Furthermore, contends the CCI, “[t]ransparency is the hallmark of fairness,” alleging that, Ericsson’s use of NDAs “is contrary to the spirit of applying FRANDterms fairly and uniformly to similarly placed players.”In the second investigation the CCI further alleged that, although Ericsson publicly claims that it offers a broadly uniform rate to all similarly placed potential licensees, its refusal to share commercial terms and royalty payments based upon the NDAs is “strongly suggestive of the fact that different royalty rates/commercial terms were being offered to the potential licensees belonging to the same category.” The CCI has also expressed concern about hold-up and royalty stacking, stating that “FRAND licenses are primarily intended to prevent Patent Hold-up and Royalty Stacking...[F]rom the perspective of the firm making the product, all the different claims for royalties must be added or ‘stacked’ together to determine the total burden of royalty to be borne by the manufacturer.”In March 2016, the DIPP issued a Discussion Paper on SEPs that, among other things, emphasizes concerns about hold-up by patent holders, while omitting any concerns about hold-up and hold-out by implementers. The chapter also contains a troubling summary of U.S. and EU law, erroneously suggesting that United States and European Union apply a per se rule or presumption against injunctive relief on a FRAND-assured SEP. The chapter poses a number of questions, including:(1) whether Indian patent and antitrust laws are adequate to address issues relating to FRAND-assured SEPs; (2)“what should be the IPR policy of Indian ”SDOs and whether government guidelines for SDOs are necessary; (3) whether royalty payments for SEPs should be capped and limited to the “smallest salable patent practicing component”; (4) whether the use of NDAs constitutes an abuse of dominance and is contrary to a commitment to license on FRAND terms; (5) how to create transparency in cross-licensing and patent pooling; and (6) what are appropriate ways and remedies for settling SEP-related disputes and whether an independent expert body should be created to determine FRAND terms.The remainder of this chapter discusses these issues, providing guidance for policy makers and regulators in India
