FRAND in India: The Delhi High Court’s emerging jurisprudence on royalties for standard-essential patents

Indian jurisprudence on fair, reasonable, and nondiscriminatory (FRAND) licensing practices for standard-essential patents (SEPs) is at a relatively nascent stage. Unlike U.S. and EU courts, which have dealt with cases concerning calculating a FRAND royalty for a considerable time, Indian courts and the Indian antitrust authority — the Competition Commission of India (CCI) — have only just begun to decide such cases. In its initial orders in the first two antitrust complaints concerning SEPs, the CCI seemed to favor using the smallest salable patent-practicing component (SSPPC) as the royalty base to determine a FRAND royalty. However, in the short time since the CCI’s orders, the Delhi High Court has rendered contrary decisions in two SEP infringement suits. The Delhi High Court’s decisions use the value of the downstream product as a royalty base and rely on comparable licenses to determine a FRAND royalty. The Delhi High Court’s decisions are not only consistent with sound economic principles, but also indicate that the court is responding to the judicial and industry trends in the rest of the world. Because the CCI is still investigating the antitrust complaints with respect to the same SEPs, the CCI could benefit from considering the legal and economic arguments in the Delhi High Court’s decisions. It would be counterproductive for the emerging FRAND jurisprudence in India if the judiciary and the competition authority take opposing views toward the rights of SEP holders and SEP implementers.

† Because the CCI is still investigating the antitrust complaints with respect to the same SEPs, the CCI could benefit from considering the legal and economic arguments in the Delhi High Court's decisions.It would be counterproductive for the emerging FRAND jurisprudence in India if the judiciary and the competition authority take opposing views toward the rights of SEP holders and SEP implementers.

FRAND proceedings in India
Ericsson has sued several indigenous and several Chinese telecommunications device manufacturers for infringement of its 2G and 3G SEPs.In turn, some of those indigenous manufacturers have filed complaints against Ericsson with the Indian antirust authority, the CCI, alleging that Ericsson's SEP licensing practices are anticompetitive and violate Ericsson's FRAND commitments.I shall now analyse six of those proceedings to which Ericsson is a party.

Micromax's complaint against Ericsson with the CCI
In 2013, Micromax Informatics Limited filed a complaint with the CCI, alleging that Ericsson abused its allegedly dominant position by imposing exorbitant royalties for the use of its SEPs, thereby violating the Competition Act 2002. 4Micromax argued that the royalty rates that Ericsson demanded should have been based on the value of the chipset technology in the phone and that Ericsson should not 'arbitrarily' calculate the royalty as a percentage of the sales price of the licensed, downstream product (typically, a mobile phone handset). 5Further, using the sales price of the downstream product as the royalty base constitutes 'misuse of SEPs' that 'would ultimately harm consumers' . 6icromax added that Ericsson was able to impose exorbitant royalties because it was aware that 'there was no alternative technology available' and it was 'the sole licensor for the SEPs' necessarily implemented in 2G and 3G wireless telecommunication standards. 7Micromax also asserted that Ericsson had demanded that all prospective licensees sign nondisclosure agreements (NDAs), which 'shows that royalty being charged from [Micromax] may be many times the royalty' that Ericsson charges other potential licensees.
Based on those arguments, the CCI passed its preliminary order on 12 November 2013, in which it first defined the relevant product market as the market for the GSM and CDMA standards, with the relevant geographic market being India. 8Second, the CCI said that, in the relevant product market, Ericsson was 'the largest holder of SEPs for mobile communications like the 2G, 3G and 4G patents used for smart phones, tablets etc.', for which there was no available alternative to existing or prospective licensees. 9The CCI thus concluded that, based on the strength and large number of its patents, Ericsson had a dominant position in the market for devices that implement the GSM or CDMA standards.Third, the CCI expressed that 'FRAND licenses are primarily intended to prevent patent hold-up and royalty stacking' and observed that patent holdup undermines 'the competitive process of choosing among technologies' and threatens 'the integrity of standard-setting activities'. 10It also said that Ericsson's royalty rates were excessive and discriminatory, given that they were set as a percentage of the price of downstream products instead of as a percentage of the price of the GSM or CDMA chip.The CCI concluded that the requested royalties 'had no linkage to the patented product'11 and were thus 'discriminatory as well as contrary to FRAND terms'.12Specifically, the CCI reasoned that a 1.25 per cent rate applied to a GSM-enabled phone whose sales price is INR 100 would yield a royalty of INR 1.25, whereas the same 1.25 per cent rate applied to a GSM-enabled phone whose sales price is INR 1000 would yield a royalty of INR 12.50, with the result that '[c]harging . . .two different licence fees per unit phone for use of the same technology is prima facie discriminatory and also reflects excessive pricing vis-a `-vis high cost phones'. 13he CCI also clarified that the 'provisions of the Competition Act are in addition to and not in derogation of other laws'. 14The CCI therefore initially ruled that Micromax was within its right to bring those antitrust issues before the CCI and that pendency of infringement suits before the Delhi High Court did not preclude the CCI's jurisdiction to hear the complaint under the Competition Act.
The CCI concluded that, because Micromax had established a prima facie case that Ericsson had abused its dominant position in seeking excessive royalties for its SEP portfolio from Micromax, those allegations warranted further investigation (and hearings, if necessary) by the Director General (DG). 15Moreover, the CCI directed the DG to 'conduct the investigation without being swayed in any manner whatsoever' by the observations that the CCI made in the order. 16

4
For the specific allegations that Micromax made, as recorded by the

Intex's complaint against Ericsson with the CCI
In 2013, Intex Technologies (India) Limited filed a complaint against Ericsson with the CCI. 17Intex alleged that Ericsson's licensing terms in its 'Term Sheet for Global Patent License Agreement' were exorbitant and unfair and thus constituted an abuse of its allegedly dominant position in India's telecommunications market. 18Intex also argued that Ericsson's demand that potential licensees (including Intex) sign an NDA was restrictive and violated Ericsson's FRAND commitment. 19First, Intex argued that the NDA was 'strongly suggestive' that 'different royalty rates/commercial terms were being offered to potential licensees of the same category'. 20Second, Intex alleged that Ericsson had abused its position to compel Intex to sign the NDA by refusing to share the details of Intex's patent infringement unless Intex signed the NDA. 21Third, Intex stated that the NDA precluded Intex from discussing with its vendors the infringement of Ericsson's patents.Because Intex required its vendors to make representations with respect to non-infringement of a third party's intellectual property, Intex alleged that the NDA unreasonably restricted Intex from making those representations. 22Fourth, Intex argued that, through the NDA, Ericsson forced Intex to agree to address its grievances in an inconvenient foreign forum (Singapore), thereby preventing Intex from addressing potential disputes in local courts. 23n the basis of Intex's assertions, the CCI concluded that Intex had established a prima facie case that Ericsson had abused its dominant position.Several of the CCI's conclusions in the Intex complaint resembled the conclusions that the CCI had drawn in the Micromax complaint.For example, the CCI concluded that (1) the relevant geographic market would be India and the relevant product markets would be the GSM and CDMA standards; 24 (2) Ericsson had a dominant position in the markets for GSM and CDMA technologies in India, based on the strength and large number of its GSM and CDMA patents; 25 and (3) the royalties that Ericsson demanded for the use of its SEPs 'had no linkage to the patented product' and were thus 'discriminatory as well as contrary to FRAND terms'. 26The CCI further said that a refusal to share the commercial terms of the FRAND licence 'fortifie[d] the accusation . . .regarding alleged discriminatory commercial terms' . 27The CCI also said that charging 'different licensing fees for the use of the same technology' also reflected 'excessive pricing vis-a `-vis high cost phones' . 28In addition, the CCI said that imposing a jurisdiction clause that prevented Intex from adjudicating its disputes in a 'country where both parties were in business' also provided prima facie evidence of an abuse of a dominant position. 29Finally, the CCI noted that there was an ongoing investigation by the DG against Ericsson on similar grounds. 30Therefore, having formed a prima facie opinion that Ericsson had abused its dominant position by imposing excessive royalties and a restrictive NDA, the CCI ordered that the DG combine the investigation with the claims that Micromax and Intex had brought against Ericsson. 31The CCI also directed the DG (as the CCI directed in the Micromax complaint) that the CCI's observations in the order not impede or affect the DG's investigation. 32icsson's suit against Micromax in the Delhi High Court In March 2013, Ericsson sued Micromax for infringement of Ericsson's eight patents registered in India that were essential to the 2G and 3G standards. 33Ericsson sought damages and a permanent injunction against Micromax. 34Ericsson and Micromax initially agreed to negotiate a FRAND licence, and, pending the negotiation, Micromax agreed to make interim royalty payments to Ericsson at the rates that Ericsson had proposed to Micromax in November 2012. 35Table 1 lists the royalty rate that Micromax agreed to pay Ericsson.In addition, Micromax agreed to pay Ericsson $2.50 for each data card that Micromax sold that incorporated the allegedly infringed patents. 36he Delhi High Court allowed Micromax to make payments, as reported in Table 1, pending the outcome of Ericsson's and Micromax's negotiation.
Ericsson and Micromax did not however reach an amicable arrangement, and Micromax never entered into an agreement to license Ericsson's SEPs.Consequently, the Delhi High Court directed Ericsson to produce 26 licences that Ericsson had signed with other Indian parties.After examining the royalty rates in those licences, on 12 November 2014 the court directed Micromax to pay royalty amounts to Ericsson based on the percentages of the net selling prices of the devices incorporating the 2G and 3G standards. 37The court also clarified that the rates that it determined were 'not a determination of the FRAND rates for the Ericsson portfolio' but were merely an interim arrangement pending the final outcome of the trial. 38Table 2 reports the royalty rates that the Delhi High Court directed Micromax to pay to Ericsson.
The court relied on comparable licences to determine a FRAND royalty.The court also used the net sales price of the downstream device as a royalty base, which comports with recent judicial trends and sound economic reasoning.I analyse both points in detail below.

Ericsson's suit against Intex in the Delhi High Court
In April 2014, Ericsson sued Intex in the Delhi High Court for the infringement of Ericsson's eight patents essential to the 2G and 3G standards registered in India. 39ricsson sought a permanent injunction and damages against Intex. 40On 13 March 2015, the Delhi High Court issued an interim decision granting an injunction against Intex and directed Intex to pay Ericsson royalty amounts as determined in the judgment.
Ericsson argued that, because the patents in suit were essential to the 2G and 3G standards, any entity that imports, makes, sells, or offers to sell any device (including handsets and tablets) complying with the 2G or 3G standards would necessarily need to obtain a licence from Ericsson. 41Ericsson contended that it offered to Intex, a manufacturer and seller of telecommunications devices, 42 'a licence for its entire portfolio of patents (including the suit patents)' consistent with the FRAND commitment that Ericsson gave to various standard-setting organizations (SSOs), 43 but Intex failed to secure a licence for Ericsson's portfolio. 44Intex, on the other hand, argued that it was 'not aware about any significant portfolio of [Ericsson's] patents in India that are essential for compliance by [Intex]' . 45Ericsson countered that Intex initiated several proceedings against Ericsson, including filing complaints before the CCI and the Intellectual Property Appellate Board (IPAB). 46Ericsson alleged that those proceedings represented an inherent admission that Ericsson's patents were essential to the 2G and 3G standards and that Intex's products had incorporated and infringed Ericsson's SEPs. 47ricsson argued that section 48 of The Patents Act, 1970 entitled Ericsson to prevent an unauthorized third party from making, using, selling, or importing an infringing product until the validity of the patents in suit had been established, and Ericsson thus demanded that the court issue an injunction against Intex.48 Ericsson further alleged that Intex's sale of infringing products ran into 'Crores of Rupees as millions of units would have been sold by [Intex]' , 49 and therefore claimed damages of INR 560 000 000 (approximately equivalent to US $9 000 000).50 Intex objected to Ericsson's request for an injunction, emphasizing that the Indian Supreme Court had interpreted section 13(4) of the Patent Act to mean that 'no patent which is granted in India enjoys presumptive validity owing to the mere factum of grant' , and that 'the validity of a patent must be established before the issue of infringement is considered by the Court' . 51It alleged that Ericsson had not disclosed all information regarding its foreign patents when filing patent applications in India, thus violating section 8 of the Patent Act 52 and further alleged that Ericsson had not disclosed to the court that, in similar suits litigated in Italy and France between Ericsson and other multinational companies, courts had rejected Ericsson's demand for an injunction and had not expressly determined whether Ericsson's patents were essential to the standards. 53Intex also rejected Ericsson's allegation that, by filing complaints against Ericsson before several forums, it had admitted the validity, essentiality, or infringement of any patents in suit. 54In addition, Intex challenged the expertise of Mr Vijay Ghate, Ericsson's technical expert, alleging that the expert had been tutored and arguing that no value or credibility be placed on his report, 55 and alleged that Ericsson's conduct and negotiation strategies did not comply with the obligations arising from Erics-son's FRAND commitment, and that Intex could not be considered an unwilling licensee. 56Thus, Intex maintained, the court should not grant an injunction against Intex because (1) there was no clear evidence regarding validity or essentiality of Ericsson's patents, and (2) damages were an adequate remedy to redress Ericsson's claim. 57ntex also claimed that Ericsson had violated its FRAND obligation in that the rates that Ericsson offered Intex exceeded the rates that Ericsson offered Micromax and Gionee.This, in Intex's view, violated Ericsson's FRAND obligation.58 Intex also challenged Ericsson's practice of 'charging royalties on the basis of the sale price of the mobile phone as opposed to the profit margin on the sale price of the baseband processor/ chipset' and quoted the American judgments in Microsoft v Motorola 59 and Innovatio IP Ventures 60 to support its contention.61 Intex also cited another US decision, Realtek v LSI, 62 to support its assertion that the 'use of ex- 13 November 2016 to 12 November 2020 (or end of trial, whichever is earlier) 13 November 2016 to 12 November 2020 (or end of trial, whichever is earlier) WCDMA/HSPA 1.3% clusionary remedies by owners of alleged SEPs has been frowned upon by US courts as well which are usually perceived as being pro-patentees' , thus arguing that the court should not grant an injunction against Intex. 63n response, Ericsson contended that '[t]he [US Department of Justice] and [US Patent and Trademark Office] recognize that the right of a patent holder to exclude others from practicing patented inventions is fundamental to obtaining these benefits' . 64Ericsson also argued that an exclusion order (such as the injunction sought against Intex) is appropriate when a licensee (1) refuses to accept a FRAND licence, (2) demands terms outside an SEP holder's FRAND commitment, (3) does not engage in a negotiation to determine FRAND terms, or (4) is not subject to the jurisdiction of a court that could award damages. 65icsson's disclosure of information regarding its foreign patents The Delhi High Court explained that section 8 of the Patent Act imposed an obligation on a prospective patentee to disclose foreign prosecution details about corresponding patents. 66However, claims granted in different countries need not be exactly identical.Thus, the court explained, as long as a prospective patentee informs the Indian Patent Office of all the major jurisdictions in which a patent has been granted and submits substantial details regarding the same, the prospective patentee fulfills the requirement of section 8. 67 The court said that section 8 of the Patent Act does not imply that 'every shred of paper filed in every foreign country has to be filed in the Indian Patent Office' . 68The court concluded that Ericsson had disclosed substantial details regarding its patents and had therefore complied with the requirements of section 8. 69

Validity of Ericsson's patents
The Delhi High Court found that, although the subject matter of the patents in suit 'cannot be examined minutely or be interpreted in microscopically [sic] manner at the interim stage in a suit for infringement of patent', prima facie 'the suit patents appear to be valid'. 70In reaching its conclusion, the court referred to Intex's statements in its complaint to the CCI that Ericsson's SEPs, 'which form a part of the 2G/3G technology, are necessarily to be applied/used by any Indian telecom/mobile phone operator' , leaving Intex and other companies with no alternative other 'than to implement the SEPs owned by Ericsson in the domain of 2G/3G technology, including the suit patents' . 71The court observed that the premise of Intex's complaint was that Ericsson owns SEPs that are in fact essential to telecommunication devices. 72The court also highlighted Intex's statement in its complaint before the IPAB, in which Intex admitted that the patents in suit directly related to Intex's business. 73The court found that Intex had clearly admitted that Ericsson patents were in fact SEPs.The court said that, '[u]nless the suit patents are declared as invalid in revocation petitions filed by [Intex], the same cannot be allowed to be infringed by [Intex], who is also unwilling to execute a FRAND licence' . 74The court thus concluded that Ericsson's patents in suit were valid and infringed.

Ericsson's choice of royalty base
The Delhi High Court found that Ericsson's practice of charging a royalty based on the price of the downstream device is FRAND. 75In determining the royalty base for a FRAND royalty, the court asserted that, in CSRIO v CISCO, the US District Court for the Eastern District of Texas had 'rejected that royalty should be based on chipset price'. 76The court also referred to the direction that the Chinese Competition Authority (the National Development and Reform Commission, NDRC) gave with respect to Qualcomm's SEPs for 3G and 4G technologies, fixing the royalty rates as a percentage of the net selling price of devices incorporating 3G and 4G standards. 77The court further noted that a coordinate Delhi High Court bench, which passed an order in a similar suit concerning the same patents, had also determined royalty rates based on the net selling price of the devices. 78The Delhi High Court in Ericsson v Intex concluded that, because the facts in both cases were similar, the court was not inclined to take a different view. 79Moreover, the Delhi High Court relied on the order issued in Ericsson v Micromax on 12 November 2014 80 and adopted the same royalty rates to calculate a FRAND royalty for Intex.However, the court did not specify the time period during which the rates would apply.Therefore, the time period during which the rates will apply for Intex may differ from the time period applicable to Micromax.The court also (1) restrained Intex from manufacturing, selling, or importing mobile devices that included the patents in suit during the pendency of the suit and (2) directed the customs authority to restrict importation of Intex's mobile devices that infringed Ericsson's SEPs. 81

Ericsson's suit against Xiaomi in the Delhi High Court
In December 2014, Ericsson sued Xiaomi Technology Company Limited in the Delhi High Court for infringement of its eight patents essential to the 2G and 3G standards registered in India. 82Ericsson had asked Xiaomi to obtain a licence from Ericsson for its SEPs; however, Xiaomi launched the infringing products in India in July 2014 without obtaining a licence. 83Ericsson also argued that Xiaomi had expanded its operations in India by creating an Indian subsidiary to market the infringing products. 84Xiaomi argued that it had entered into an exclusive agreement with Flipkart Internet Private Limited that sells and markets Xiaomi's products in India. 85The court issued an interim injunction against Xiaomi, restraining it from importing or selling any infringing device, and the court also directed the customs authority not to allow Xiaomi's devices to be imported into India. 86iaomi appealed, arguing that it obtained the chipset containing Ericsson's patented technology from Qualcomm Incorporated, which in turn had licensed the patented technology from Ericsson. 87Consequently, Xiaomi argued, its products did not infringe Ericsson's patents. 88Ericsson argued that the terms of its licence with Qualcomm were confidential. 89As a temporary measure, a division bench of the Delhi High Court allowed Xiaomi to import and sell only the devices that contained the chipsets sold to Xiaomi by Qualcomm and simultaneously to deposit INR 100 per device imported with the Registrar General of the Delhi High Court. 90As of May 2015, the Delhi High Court had not determined any royalty rates for Xiaomi to pay Ericsson, unlike the cases against Intex and Micromax.

iBall's complaint Against Ericsson with the CCI
In May 2015, Best IT World (India) Private Limited (known as iBall) filed a complaint against Ericsson with the CCI. 91According to iBall, Ericsson wanted iBall to execute a patent-licensing agreement and an NDA to license the use of Ericsson's patents in GSM-compliant and WCDMA-compliant products. 92iBall alleged that, although it was 'willing to enter into a license agreement with Ericsson as per FRAND (fair, reasonable, and nondiscriminatory) terms', Ericsson presented strict and onerous terms through the NDA, including settling all disputes through arbitration in Stockholm, ten years' confidentiality in the disclosure agreement, and covering past as well as future sales within the ambit of the licence agreement. 93iBall alleged that Ericsson's conductincluding an alleged threat of patent infringement proceedings, demanding 'unreasonably high royalties' calculated as a percentage of the price of the standardcompliant products, and bundling 'patents irrelevant to [iBall's] products' in the licence agreement -violates section 4 of the Competition Act. 94imilar to its orders in Micromax and Intex, the CCI observed that, because there is no alternate technology available for Ericsson's patents in the 2G, 3G, and 4G standards, 'Ericsson enjoys a complete dominance over its present and prospective licensees in the relevant market'. 95The CCI also said that Ericsson's licensing practices appear to be 'discriminatory as well as contrary to FRAND terms'. 96The CCI opined that Ericsson's practice of 'forcing a party to execute NDA and imposing excessive and unfair royalty rates, prima facie, amount to abuse of dominance in violation of section 4 of the Act'. 97The CCI directed the DG to investigate further Ericsson's licensing practices and highlighted that iBall's allegations were similar to the allegations made in Micromax and Intex. 98The CCI also directed the DG that the CCI's observations in the order not impede or affect the DG's investigation. 99e Delhi High Court's decisions on FRAND licensing The Delhi High Court's decisions on FRAND licensing comport with current judicial and regulatory trends across the world.In particular, the court's approval of (1) using the net sales price of the downstream product as the royalty base and (2) relying on comparable licences to derive a FRAND royalty rest on sound economic reasoning.
I have previously explained that using the price of downstream product as a royalty base to calculate a FRAND royalty is economically sound. 100Real-world licences typically use the retail value of the downstream product as a royalty base when calculating the royalty for a multi-component product. 101Multi-component products include numerous complementary components.The combinatorial interaction of those components generates complementarity effects and enhances the value of the product, such that the value of the product transcends a simple arithmetic sum of the value of the components. 102That consideration is particularly relevant for SEPs, for which the complementarity effects and network effects arising from the interaction of the technologies implemented in the standard typically are universally believed to be significant. 103Using the retail value of the multi-component downstream product as a royalty base allows the patent holder to obtain adequate compen-sation for the contribution that its technology made to the value of the downstream product. 104For example, upgrading the baseband chip in a mobile phone from 3G to LTE will enhance the user's ability to use data-intensive apps.The complementarity effects of a patented technology may enhance existing network effects-the benefit to society that accrues as the size of the network grows. 105or example, a smartphone user might share pictures with other users and, in turn, receive messages or pictures from the recipients.In this way, the complementarity effects from bringing components together to create additional uses might enhance the network effects already present among users of smartphones.In contrast, using the price of the smallest saleable patent-practising component (SSPPC) as a royalty base (the method that the CCI seems to favour) is unmindful of the pertinent economic analysis of the consequences of such a rule. 106The market price of the individual patented components may not account for the value of the complementarity effects and the network effects that the component generates. 107In the long run, this failure of complete compensation would reduce the supply of the patented components for downstream products, all other factors remaining constant. 108It is also industry practice that voluntary licences negotiated for SEPs implemented in multi-component products use the entire market value of the downstream product as the royalty base. 109Leading technology companies in the United States, Europe and Asia routinely use the retail price of the downstream product as the royalty base for calculating royalties on a multi-component product. 110herefore, in litigation involving infringement of a component for a multi-component product, if a court seeks to approximate faithfully the practices and outcomes of realworld transactions when calculating a reasonable royalty, it should use the retail price of the downstream product as the royalty base. 111Moreover, the Delhi High Court agreed that Ericsson's 'practice of charging [r]oyalty on the device price is [n]on-[d]iscriminatory' , following decisions in the United States and China. 112omparable licences provide reliable information to calculate a FRAND royalty. 113Royalties derived from real-world licences inherently reflect the market valuation of the SEPs because they reveal how the market participants have disaggregated the value of the SEPs from the value of the non-infringing components of the final product. 114The calculation of patent damages based on comparable licences reduces the risk of errors.From an economic perspective, comparable licences reveal what the licensor and licensee consider fair compensation for the use of the patented technology.A voluntary licence agreement is mutually welfare-enhancing 115 -that is, the agreed royalty necessarily ensures that both parties expected to be better situated as a result of the licence than in its absence.If this had not been the case, the parties would never have agreed to the licence.The royalties directly observable in comparable licences for the use of the same technology will most accurately depict a licensee's willingness to pay for that technology.US courts have recognized the probative value of comparable licences for the calculation of patent damages. 116The US Court of Appeals for the Federal Circuit has emphasized that '[a]ctual licenses to the patented technology are highly probative as to what constitutes a reasonable royalty for those patent rights because such actual licenses most clearly reflect the economic value of the patented technology in the marketplace'. 117The same court has further said that the ability to analyse data from real-world licences 'removes the need to guess at the terms' to which parties would agree in a hypothetical negotiation. 118he observation of data from real-world licences thus obviates speculative lines of economic analysis and consequently reduces the risk of errors.This judicial insight about the power of empirical observation finds strong support in economic thought. 119Data from real-world licences reflect what is known as an industry norm.The legitimacy of an industry norm arises from objective knowledge indicating that the norm is superior to other known means of tailoring that specific economic relationship or transaction.The works of Nobel laureates such as Ronald Coase, 120 Douglass North, 121 George Stigler, 122 and Friedrich Hayek 123 reflect this insight about organization of industry.In sum, when available, royalties determined in comparable licences provide the most probative starting point for determining a FRAND royalty rate.
The Delhi High Court's decision also differed from the CCI's order in the case of Ericsson v Intex because Intex made contradictory arguments before the CCI and the Delhi High Court.On one hand, Intex argued before the CCI that Ericsson's patents were essential and consequently Ericsson dominated the market, and on the other hand, Intex argued before the Delhi High Court that Ericsson's patents were not essential. 124The court also noted that Intex did not seek to license Ericsson's SEPs, but Ericsson offered a FRAND licence for its patent portfolio. 125The European Commission in Google/Motorola Mobility highlighted that a potential licensee that is not willing to negotiate a FRAND licence in good faith is 'unwilling' . 126Similarly, the Delhi High Court found that Intex's conduct and repeated refusal to obtain a FRAND licence makes Intex an unwilling licensee, 127 a concern that the CCI did not seem to share.
Thus, the Delhi High Court's decision to use the price of the downstream product as a royalty base, as well as its decision to rely on comparable licences to determine a FRAND royalty rate, were economically sound and comported with the judicial and industry trends in the rest of the world.The court was also mindful of the fact that, if the indigenous manufacturers do negotiate a FRAND licence with SEP holders in good faith and avoid paying royalties, 'it would have impact of [sic] other 100 licensors who are well known companies in the world who are paying the royalty' . 128The Delhi High Court's decisions are interim arrangements and not a final FRAND determination of Ericsson's SEP portfolio in India.However, by keeping in step with the judicial and industry trends in the rest of the world, the decision is likely to improve the confidence of SEP holders who license patents in India. 129sponsive to trends, but more clarity needed As of May 2015, more than one year has passed since the CCI directed the DG to investigate the allegations that Micromax and Intex brought against Ericsson.Although the investigation proceedings are not publicly available, the recent judgments of the Delhi High Court indicate that the judicial view regarding FRAND licensing issues has undergone change between 2013 and 2015.Whereas the CCI's initial orders firmly regarded using the downstream product's sales price as a royalty base as being excessive and having no link to the value of the SEP, the Delhi High Court, relying on judgments from around the world (including the United States and China), approved the use of the net selling price of the downstream product as the royalty base.The court also relied on previous licences that Ericsson signed with other manufacturers in India to determine the FRAND royalty rates that Micromax and Intex must pay Ericsson.
With the world's second-largest telecommunications network, India is an attractive and important market for some of the largest participants in the telecommunications industry.How India chooses to shape its FRAND licensing jurisprudence will therefore be relevant to those participants.The Delhi High Court decisions illustrate that the courts in India are responsive to the judicial and industry trends in the rest of the world.One would expect that the CCI would supply clear and precise opinions when evaluating other similar complaints in the future.However, the CCI's order in iBall only increased the ambiguity of FRAND jurisprudence in India.It bears emphasis that, in its May 2015 order, the CCI referred to its previous orders in Micromax and Intex, but it failed to mention the orders of the Delhi High Court that followed the CCI's orders.The CCI's order in iBall is also strikingly similar to the CCI's previous orders, despite the Delhi High Court's having taken the contrary view in its orders, which raises a concern that the CCI is continuing to issue conflicting orders that flout the Delhi High Court's orders.The DG is in the process of investigating complaints against Ericsson to determine whether it has violated the Competition Act.The DG should consider the judgments passed by the Delhi High Court, for it would be counterproductive for the judicial system and the competition authority to take conflicting views of the respective rights of SEP holders and SEP implementers in India.

Table 1 .
Royalty rates that Micromax agreed to pay Ericsson as an interim arrangement

Table 2 .
Royalty rates that the Delhi High Court Determined in Ericsson v Micromax