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The long standing battle between Swedish telecom giant Ericsson and the Competition Commission of India (CCI) took an interesting turn on 30th March when the honorable Delhi High Court, ruling in favour of the CCI upheld the Commission’s right to probe allegations of the abuse of dominance against Ericsson.

One argument that is surely going to attract a major debate in the academia as well as the industry circle is whether a patent can be classified as a good or a service and furthermore, whether licensing of a patent falls under the category of goods or services. Senior advocate C.S. Vaidyanathan, appearing for Ericsson had questioned the applicability of Section 4 of the Competition Act, 2002 in respect of the licensing of patents. The reasoning advanced for the same was, “that a patentee in so far as the grant of a patent license is concerned, is not an ‘enterprise’ within the meaning of Section 2(h) of the Act”, “that that patentee in so far as licensing of patent is concerned, is not engaged in purchase or sale of goods or services” and that “patents are not goods or services and a license for a patent is also not goods or services”. Thus, the question of Ericsson being an enterprise within the meaning of Section 2(h) of the Competition Act was to be ascertained by examining whether or not it was engaged in the production, supply, distribution, acquisition or control of articles or goods, the court held. It was further stated that only if patents were held to be goods, would Ericsson be termed as an enterprise under Section 2(h) of the Competition Act, since it was already engaged in the acquisition and control of patents.

It is quite strange that this argument was advanced in the first place, considering that it has been quite conclusively stated by the courts in India as well as the United States that patents are indeed goods. While citing the US Supreme Court’s decision in the case of Kaiser Aetna v. United States, Justice Vibhu Bakhru stated that, “In the United States, the status of patents as a property is now well established by a number of decisions.” The US Supreme Court in that case had labelled the right to exclude as “one of the most essential sticks in the bundle of rights that are commonly characterized as property.” Not just the US courts but the Indian courts too have in the past, held intellectual property to be “property” for the purpose of defining the scope of movable property as ‘goods’ under the Sale of Goods Act, 1963. Justice Bakhru in his 161-page long judgment did not leave a single stone unturned in interpreting the scope of ‘property’ and in addition to several Indian and US cases, cited multiple examples from the Black’s Law Dictionary, Dictionary of Commercial Law and the Jowitt’s Dictionary of English Law, while conclusively holding patents as goods, which meant that Ericsson would fall under the ambit of the word ‘enterprise’ under Section 2(h) of the Competition Act. As for the issue of patent licenses being categorized as goods, while choosing not to delve into the question, the honorable court held that since the rights of a patentee still remained intact despite licenses being granted, perhaps there was a possibility of it not amounting to sale of goods.

The case seems poised to go in for appeal but it remains to be seen whether Ericsson will continue to persist with the questioning of patent being a good or a service. Nonetheless, these are interesting times for the Indian ICT sector with telecom wars taking center stage.

- The author is an Assistant Professor and Assistant Director of Centre for Intellectual Property and Technology Law at Jindal Global Law School.

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