Case Law Details
Cryogas Equipment Private Limited Vs. Inox India Private Limited (Competition Commission of India)
The Commission, at the outset, notes that the allegations in the instant matter emanates from a suit instituted by Inox against CEPL for infringement of its copyright in the drawings of LNG semi-trailer by CEPL, which CEPL alleges is in the nature of sham litigation, coupled with actions resorted by Inox, in writing various threatening communications to the customers/potential customers of CEPL, as well as to a regulatory authority, with a view to jeopardize the business interests of CEPL, a competitor of Inox in the supply of LNG semi-trailers in India. This conduct, according to CEPL, is an abuse of dominant position by Inox in contravention of provisions of Section 4 of the Act.
The Commission, based on its previous orders, observes that a litigation from a competition perspective may be termed as a sham when it is initiated by a dominant undertaking to cause anti-competitive harm, via, the inappropriate use of adjudicatory/government processes or legal rights. Usually, the aim behind any ‘sham’ litigation is to either subdue a competitor by increasing operational costs or delay the entry of a competitor in the market by resorting to the invocation of governmental process.
The Commission notes that, to determine whether a litigation or legal recourse is an abusive strategy of a dominant player, firstly, it needs to establish that a case filed against an enterprise on an objective view is baseless and appears to be an instrument to harass the enterprise. Secondly, what needs to be examined is whether the legal action appears to be conceived with an anti-competitive intent/plan to eliminate/thwart competition in the market. The lawsuit must be objectively baseless that no reasonable litigant could realistically expect success on the merits and be filed and prosecuted, not with a view to protect a legitimate right but to prevent a competitor from effectively competing or thwarting a potential entrant into the market.
Having considered the facts and circumstances of the above case, the Commission observes that the test, from an alleged IPR infringement perspective, requires an examination of whether there is substantial copying or copying of material features, which is based on the appreciation of evidence. This is a thicket which should be left untouched by the competition authority for want of subject matter competence, save to the extent specifically provided under the Act. Further, as per the established jurisprudence worldwide, in matters relating to sham litigation resulting in alleged abuse of dominance, the competition authority is to look into the matter objectively as to whether the litigation resorted to by the dominant entity is ex facie baseless, i.e., no reasonable litigant could realistically expect success on the merits, and it is filed with the intent to prevent competition.
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