Nithyakalyani Narayanan. V
The Delhi High Court remarked that the Patents Act 1970 prevails over the Competition Act 2002 for the issue of exercising rights by a patentee as per the Patents Act.
A division Bench of Justice Najmi Waziri and Justice Vikas Mahajan observed that the Competition Commission of India (CCI), constituted under the Competition Act, does not have the jurisdiction to inquire about the patent licensing by a patent holder or whether a company has abused its position while exercising its patent rights.
The Court was dealing with multiple appeals and a writ petition filed by an agrochemical company Monsanto, telecom company Ericsson and the CCI. The two companies were alleged to be indulged in anti-competitive practices and not making their patents available reasonably.
Monsanto and Ericsson claimed that the Patents Act is a special law dealing specifically with patents, and the issues of imposing conditions for licensing patents are mentioned in Chapter XVI of the Act, which includes anti-competitive agreements and abuse of dominant position explicitly. As per the chapter, the Competition Act does not prevail over the Patents Act. The companies questioned the jurisdiction of the CCI to conduct such an inquiry.
The Commission argued that the Competition Act is a special law that deals with anti-competitive agreements and abuse of dominant position, and hence some stray provisions in the Patents Act, cannot be considered as overriding the former Act. They highlighted Section 3(5)(i)(b) and Section 4 of the Competition Act which notes that the CCI can see whether a condition imposed in an agreement licensing a patent is unreasonable.
The Bench also declared that the Chapter XVI of the Patents Act is a complete code on all issues pertaining to unreasonable conditions in agreements of licensing of patents, abuse of status as a patentee, inquiry in respect of the same and relief that is to be granted. It highlighted that the Competition Act is a regulation for anti-competitive agreements and abuse of dominant position and the inclusion of Section 84(6)(iv) in the Patents Act after the Competition Act was passed with Section 3(5)(i)(b) is instructive of the legislative intent.
The High Court set aside the case passed against the companies and quashed the CCI proceedings against them.
Name of the case: Telefonaktiebolaget LM Ericsson (Publ) v. Competition Commission of India & Anr.
Bench: Justice Najmi Waziri and Justice Vikas Mahajan