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TMI Blog2024 (11) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 'JCB') on one hand and Respondent No.2- M/S Bull Machines Private Ltd. (BMPL) on the other. Both the companies are manufacturers of `backhoe loaders' - the Petitioners' loader being '3DX BHL' and BMPL's loader being 'Bull Smart'. The Respondent No.1 herein, is the Competition Commission of India (hereinafter, 'the CCI'). i. W.P.(C) 2244/2014- JCB India Limited & Anr. v. The Competition Commission of India & Anr. 3. The genesis of the dispute between the parties in these petitions, is a suit filed by JCB against BMPL seeking an injunction restraining infringement of copyright, piracy of registered design, passing off etc. The said suit being CS(OS) 2934/2011 was filed on 24th November, 2011 before the Original Side of this Court and an ex-parte ad interim injunction was granted in favour of JCB on 25th November, 2011. Vide the said order dated 25th November, 2011, local commissioners were also appointed to visit various premises of BMPL in Bangalore, Coimbatore and Noida for seizure of products. 4. Considering that the suit was based on the registered designs of JCB, the Defendant therein i.e., BMPL chose to challenge the validity of the said designs. BMPL then filed cancella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... predation through abuse of judicial processes presents an increasingly threat to competition, particularly due to its relatively low antitrust visibility. 16. In view of the allegations projected in the information and as detailed hereinabove, the Commission is of prima facie opinion that JCB by abusing their dominant position in the relevant market sought to stifle competition in the relevant market by denying market access and foreclosing entry of 'Bull Smart' in contravention of the provisions of Section 4 of the Act. 17. Accordingly, the Commission directs the Director General (DG) to cause an investigation into the matter and to complete the investigation within a period of 60 days from receipt of this order." 7. Aggrieved by the above order, the Petitioners' filed the present civil writ being W.P.(C) 2244/2014 seeking quashing of the order dated 11th March, 2014. Reply affidavits were filed by the Respondents i.e., CCI and BMPL in the present writ emphasising the malafides of JCB and stated that JCB sought to amend the original suit C.S.(OS) 2934/2011 through an amendment application dated 12th May, 2014 due to lack of due diligence. BMPL alleged in the counter-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the proceedings" and directed that order passed in Telefonaktiebolaget LM Ericsson (Publ) Vs. Competition Commission of India and Anr.: W.P.(C) 464/2014 on 21.01.2014 as modified by Division Bench in LPA 182/2014 would continue to operate till further hearing. In terms of the order, this Court had directed that "while the petitioner may give information as called upon by the Director General of Competition Commission of India, no final order/report shall be passed either by the Competition Commission of India or by its Director General." In light of the aforesaid order and given the manner in which the action has been taken by the respondent, I am prima facie, of the view that further proceedings in the matter before the respondent be stayed. It is, accordingly, so directed. Ali hardware seized by the respondent shall be placed in a sealed cover and kept in safe custody by respondent No.1." 12. Vide order dated 26th September, 2014 further proceedings before the CCI were stayed by the High Court and all the hardware, which was seized, was to be retained in the safe custody of CCI. The said order was challenged by CCI before the Division Bench in LPA 715/2014 titled Competition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the impugned search and seizure conducted by the DG CCI is invalid due to multiple legal violations. Firstly, it was averred that the search and seizure were claimed to be in direct contravention of an order dated 4th April, 2014 passed by this High Court in W.P. (C) 2244/2014, which allowed the DG only to summon local officers of the Petitioners for information and not to conduct any searches. Secondly, the Petitioners assert that no summons or requisition for information was issued before the search, and employees were interrogated without legal representation, violating the High Court's directives. Thirdly, it was averred that the search was carried out by unauthorized personnel, and documents irrelevant to the investigation were seized, demonstrating a disregard for legal procedures and judicial orders. 16. It was further stated that the search and seizure breached the statutory provisions under the Companies Act, 1956, and the Indian Evidence Act, 1872. The Petitioners averred that the DG's application for the search lacked reasonable grounds to believe that documents would be destroyed or altered, a necessary criterion under Section 240A of the Companies Act, 1956. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed by BMPL seeking summary dismissal of the original suit. The said application was rejected and dismissed by this Court on 20th December, 2017. The said order dated 20th December, 2017 rejecting the application was challenged before the Supreme Court in SLP No(s).7518-7519/2018 titled Bull Machines Pvt. Ltd. v. J C Bomford Excavators Limited. 19. On 9th December, 2019 the Supreme Court referred the matter to mediation during the pendency of the two writs. The disputes between the parties were then resolved before the Mediation Centre of the Delhi High Court and the settlement was taken on record vide order dated 26th August, 2021. The said order of the Supreme Court, reads as under: "Delay condoned. These matters were sent for mediation before the Mediation centre at Delhi High court. Fortunately, the matters have been settled between the parties before the Mediation Centre and now an application (I.A. No. 87472 of 2021) has been filed with the following prayers:- "a. Direct that the Settlement Agreement dated 22.07.2021 arrived between the parties in Mediation to be taken on record and accordingly disposed of: (i) Dispose of present SLP bearing SLP No. 7518-7519 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Delhi High Court and we hope and trust that the High Court will decide the same as expeditiously as possible."" 20. In view of the settlement and the above decision of the Supreme Court, the parties i.e., Petitioners and Respondent No.2 - BMPL, jointly moved an application being CM APPL.31397/2021 with the following prayers: "a. bring on record the fact of the successful conclusion of the mediation directed by the Hon'ble Supreme Court and in light thereof, quash, set aside the Impugned Order dated 11 March 2014 passed by Respondent No. 1 under the provisions of Section 26(1) of the Competition Act, 2002 in Case 105 of 2013, and terminate the proceedings/actions emanating from the said Impugned Order;" Both the writ petitions are now listed before this Court for hearing and disposal. iv. Submissions: 21. Mr. Sandeep Sethi, ld. Sr. Counsel appearing on behalf of the Petitioners primarily relied upon the decision of the ld. Division Bench of this Court in Telefonaktiebolaget LM Ericsson (PUBL) v. Competition Commission of India & Anr. [2023:DHC:4783-DB] to argue that under similar circumstances, ld. Division Bench of this Court has held that once a settlement has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her by coercion or by consent is unknown. In the Ericsson (supra) decision, the conflict between the Competition Act, 2002 and the Patents Act, 1970 was considered and the conclusion was that the CCI did not have subject matter jurisdiction. It is his submission that even filing of a vexatious litigation by a dominant player against a small player could also be anti-competitive under certain circumstances and hence a settlement can also be anti-competitive as in the case of reverse payment settlement agreements. 27. He further submitted that in the US, the FTC has enquired into such matters, wherein vexatious litigations were filed for harnessing monetary profits. He referred to foreign decisions to elaborate that the Eleventh Circuit Court in the US supports a legal policy favouring settlements, acknowledging the practical concerns that antitrust scrutiny of reverse payment agreements could necessitate in patent validity litigation. However, it was submitted that the potential for reverse payments to harm competition outweighs these concerns, as such payments often indicate that a patentee seeks to maintain monopoly profits by preventing competition. Therefore, reverse payments n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 and the matter remained pending. 31. The issues that have been raised in the present petitions are multifarious and ld. Counsels have, accordingly, addressed submissions. 32. In the opinion of the Court, however, none of the issues which have been raised in the writ petitions need to be adjudicated at this stage in these matters. The design infringement action instituted in CS(OS) 2934/2011 has admittedly come to an end owing to the settlement which has been arrived at and recorded vide order dated 26th August, 2021 in SLP Nos. 7518-7519/ 2018 before the Supreme Court. 33. The clauses of the settlement agreement dated 22nd July, 2021 as extracted above in the order passed by the Supreme Court dated 26th August, 2021 have resulted in the disposal of the following proceedings: * SLP No.7518-7519 of 2018 and SLP bearing Diary No.13878 of 2018. * Original Civil Suit numbered CS(OS) 2934/2011. * An appeal i.e. before the High Court of Calcutta, challenging the Order of the Controller of Patents dated 30th January 2017 with respect to the JCB India's Design Registrations bearing number 200017, and * An appeal i.e. before the High Court of Calcutta challenging the Order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 19(1) of the Act in the present matter itself is clearly based on the filing of the infringement suit CS(OS) 2934/2011 by JCB against BMPL. A perusal of the Information would show that the first and foremost paragraph in the Information relating to the dispute reads as under: "10. The present case involves a clear and deliberate abuse of judicial process by JCB to deny market access to Bull Machines; an indigenous, cheaper and a more efficient competitor. The present case also involves an abuse of the regulatory process by JCB, by attempting to "evergreen" its fraudulently obtained intellectual property rights. xxx xxx xxx 12. A cursory view of the designs in question will demonstrate the mischief perpetrated by JCB. First, the images relied upon by JCB to obtain the injunction clearly demonstrate the misrepresentations on various counts that were made by JCB before the Hon'ble Delhi High Court in order to obtain the ex parte ad interim injunction. For instance: (i) Annexure 12 demonstrates how JCB took images of its own product, misrepresented to the Hon'ble Delhi High Court one of the said images as a part belonging to Bull Smart, and placed it before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn judgments to argue that sham litigation can be the basis of anti-trust laws. The further argument was that the intellectual property i.e., designs were obtained by fraud. BMPL also contended that not only does sham litigation violate antitrust laws, but it also leverages fraudulently obtained IP rights, thereby compounding the anti-competitive impact. 41. On the basis of such Information, the order under Section 26(1) of the Act was passed by the CCI. In the impugned order dated 11th March, 2014, under Section 26(1) of the Act, the CCI itself captures the allegations as under: "14. The entire case of abuse as laid and made by the Informant is predicated upon the alleged bad faith litigation filed by JCB before the Hon'ble High Court of Delhi. It is the case of the Informant that the bad faith litigation initiated by JCB against it alleging infringement of its design rights was totally false and that the said legal proceedings before the Hon'ble High Court of Delhi were only initiated to harass it and prevent the launch of 'Bull Smart', which in effect would have competed with backhoe loaders of JCB in the relevant market. Furthermore, it is the case of the Inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... srupt the harmony and finality that mediation seeks to achieve, undermining trust in both the mediation process and the regulatory body itself. Competition authorities ought to respect the boundaries of their jurisdiction, ensuring that their role complements rather than conflicts with the resolution of disputes, thereby maintaining a fair competitive market environment without overstepping their mandate. 46. The dispute between the parties was a design infringement action which has been settled. There is no broader impact that this settlement has over the society at large or public at large. 47. Mediation processes and settlements have to be recognised and acknowledged by all Courts/fora where disputes are pending. Regulatory authorities such as the CCI are no exception to the same. It is imperative that the CCI and similar bodies honour the outcomes of mediation and respect the settlements reached between parties. By doing so, they not only uphold the legitimacy and reliability of the mediation process but also foster a legal environment where parties are encouraged to resolve disputes amicably without fear of subsequent regulatory interference. Furthermore, when regulatory aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, in general. For parties, dispute not only strains the relationship but also destroys it. And, so far as society is concerned it affects its peace. So what is required is resolution of dispute at the earliest possible opportunity and via such a mechanism where the relationship between individual goes on in a healthy manner. Warren Burger, once said: "The obligation of the legal profession is ... to serve as healers of human conflict ... we should provide mechanisms that can produce an acceptable result in shortest possible time, with the least possible expense and with a minimum of stress on the participants. That is what justice is all about." MEDIATION is one such mechanism which has been statutorily brought into place in our justice system. It is one of the methods of alternative dispute resolution and resolves the dispute in a way that is private, fast and economical. It is a process in which a neutral intervenor assists two or more negotiating parties to identify matters of concern, develop a better understanding of their situation, and based upon that improved understanding, develop mutually acceptable proposals to resolve those concerns. It embraces the philosophy of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial Disputes Act. Such statutory settlement is binding on the parties thereto. Neither party can wriggle out of the settlement so long as the settlement is in force. In Tata Engineering and Locomotive Company, Ltd. v. Their workmen, [1982 (1) L.L.N. 28], there was a settlement between the labour and the management and that was reduced to writing. Some workmen who were not parties to the settlement had ratified the same by their individual letters. Under the settlement wage-structure was arrived at. Some of the workmen who were parties to the settlement turned back and questioned the settlement on the ground that wage-structure was not reasonable, and it could have been on the higher side, and that in any event such workmen who were not originally parties to the settlement, but later on ratified the same were not bound by the settlement. Both the said contentions found favour by the Labour Court, and accordingly, the settlement was set aside. The matter finally reached the Supreme Court, and it was held that merely because some workers have resented later, the settlement cannot be vitiated and that it was binding on all the workers, both the members of the union on the date of sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m settling disputes. The examination of settlements is a power which may exist with the CCI, but under the existing scheme of the Act, unless a settlement is alleged as being abuse of dominance, the same would not be liable to be examined under Section 4 of the Act. No allegation has been made by any party that the settlement is an abuse of dominance. A theoretical power with CCI to examine settlements cannot lead to uncertainty for the parties, and their commercial behaviour. In fact both parties jointly seek disposal of the petitions and closure of the proceedings before CCI, in view of the settlement. 51. Moreover, in the present context, if there is an allegation that a particular settlement or an agreement is anti-competitive, then the same may fall in a completely different category as may be contemplated under Section 3 of the Act. Under Section 3 there is a clear exception to disputes relating to the intellectual property. Section 3 of the Act is set out below for reference: "Anti-competitive agreements. (1) No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on competition in India. [Provided that nothing contained in this sub-section shall apply to an agreement entered into between an enterprise and an end consumer.] xxx xxx xxx (5) Nothing contained in this section shall restrict-- (i) the right of any person to restrain any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his rights which have been or may be conferred upon him under-- (a) the Copyright Act, 1957 (14 of 1957); (b) the Patents Act, 1970 (39 of 1970); (c) the Trade and Merchandise Marks Act, 1958 (43 of 1958)or the Trade Marks Act, 1999 (47 of 1999); (d) the Geographical Indications of Goods (Registration and Protection) Act, 1999 (48 of 1999); (e) the Designs Act, 2000 (16 of 2000); (f) the Semi-conductor Integrated Circuits Layout-Design Act, 2000 (37 of 2000); (g) any other law for the time being in force relating to the protection of other intellectual property rights. (ii) the right of any person to export goods from India to the extent to which the agreement relates exclusively to the production, supply, distribution or control of goods or provision of services for such export." 52. While intel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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