India's antitrust agency is investigating allegations that Ericsson is demanding exorbitant royalty rates from an Indian mobile phone vendor for its standard-essential GSM patents.
A "hold-up" by the patent owner, in terms of a demand for higher royalties or more costly or burdensome licensing terms than could have been obtained before the standard was chosen, can subvert the competitive process of choosing among technologies and undermine the integrity of standard-setting activities, the Competition Commission of India said in its order.
Ultimately, the high costs of such patents get transferred to consumers, the CCI order said. Ericsson appears to be dominant in the GSM and CDMA markets in India and holds large number of patents in both mobile technologies, it added.
The Indian mobile phone company, Micromax Informatics, has alleged that Ericsson has sought royalty on the cost of the phones rather than on the value of the technology and chipset used in the phone, which seems to be contrary to guidelines for licensing patents covered under fair, reasonable and non-discriminatory (FRAND) terms, CCI said. Ericsson has also declined to share with Micromax commercial terms of FRAND licenses with licensees similarly placed as the Indian company, it added.
Ericsson filed in March a lawsuit in the Delhi High Court that alleged that Micromax had infringed eight of its patents without payment of any consideration.
The CCI said the pending civil suit in the court did not take away the agency's jurisdiction as it has the "obligation and jurisdiction to visit the issues of competition law."
Ericsson no longer sells mobile phones, only network infrastructure, having transferred its handset business into a joint venture now wholly owned by Sony. It claims over 30,000 patents worldwide, including many in the area of cellular telephony. The company has recently pursued revenue from patent licensing more aggressively, including through lawsuits.
The Swedish company said in a statement Thursday that it had made numerous attempts to sign a license agreement with Micromax on FRAND terms. "As this is on-going litigation we cannot comment any further," it added.