Written by Sarthak Bhatia who is currently pursuing BBA.LLB from 4th Year law student at U.I.L.S Chandigarh University
Introduction
In a recent case of “Telefonaktiebolaget LM Ericson v. Competition Commission of India” the Delhi High Court examined the intricacies between the Competition Act, 2002 and the Patents Act, 1970 in the cases wherein the patentee exercise their right under the Patents Act, 1970. The court in lieu of this issue held that the Patent act must prevail over the general provisions of Competition act that revolves around anti-competitive agreements and abuse of dominant positions. The ruling brought up important concerns about the Competition Commission of India's (CCI) jurisdiction to investigate problems pertaining to patents under the Competition Act's more expansive provisions. But this decision has now opened the door for the Supreme Court to comment on this controversial matter, which has led to a more thorough investigation into whether the Patents Act should, in fact, take precedence over the Competition Act when it comes to the exercise of patent rights. Moreover, it is said that CCI cannot have jurisdiction since the Patents Act grants the authority to handle such agreements because it is a special statute in the domain of patents.
Delhi High Court Examination
The Delhi High Court conducted a thorough comparison of the pertinent sections found in the two statutes. It argued that the Controller's authority under sections 84(6) and (7) of the Patents Act is equivalent to that of the CCI under sections 19(3) and 19(4) of the Competition Act for the purpose of examining and entering into anti-competitive agreements. Conditions for an application to award a compulsory licence on a patent are outlined in Section 84 of the Patents Act. According to Section 84(6)(iv), the applicant must try to obtain the licence on reasonable terms. The aforementioned condition is exempted from the proviso if the patentee engages in anti-competitive behaviour. The High Court asserted that the Patents Act is a special legislation in the area of patent rights based on the comparison. Therefore, the Controller will have sole jurisdiction over any patent-related anti-competitive problems. Furthermore, post the passing of the Competition Act, the 2003 revision included mandatory licenses under Chapter XVI. The Court saw this as clear legislative purpose giving the Controller exclusive power. The Competition Act's provision 3(5)(i)(b) was cited as confirmation of the same. According to the clause, CCI's investigations are not subject to ‘reasonable constraints’ included in agreements pertaining to rights granted by the Patents Act. Thus, in cases involving patent licences that are anti-competitive, the Patents Act was found to be more significant than the Competition Act. The Court based its decision on two points of reasoning: first, the Patents Act's section 84(6)(iv) was added after the Competition Act was passed, indicating that the legislature intended for the former. Second, the Controller will have exclusive jurisdiction due to the similarity in powers between the CCI and the Controller. Both claims are refuted by a close examination of the laws and an examination of the legislative purpose.
Interplay Between Competition Law & Patent Acts
To determine the proper hierarchy between the Competition Act and the Patents Act, the Delhi High Court looked at the legislative intent that underpinned both acts. It noted that the Competition Act covers anti-competitive acts in a wider range of businesses, but the Patents Act is specifically designed to control concerns pertaining to patents, such as anti-competitive agreements and patentees' abuse of dominant positions. The court emphasised the importance of a change made to the Patents Act—more precisely, Section 84(6)(iv)—after the Competition Act was passed. The purpose of this amendment is to demonstrate the legislative desire to enhance the jurisdiction of the Patents Act with regard to anti-competitive agreements in the patent domain. The proviso to section 84(6)(iv) has a completely different purpose. Although the clause calls on a licensee to try to get a licence on reasonable terms, the proviso merely waives this obligation in the event that the patent holder engages in anti-competitive behaviour. The same does not constitute a meaningful clause that forbids anti-competitive behaviour. However, if a condition is covered by a legislative right, it is permissible in agreements restricting competition under section 3(5)(i)(b) of the Competition Act . As a result, these provisions won't be viewed as anti-competitive. It is argued that section 3(5)(i)(b) does not entirely prohibit the CCI from looking into such terms. The word "reasonable" suggests that the CCI must verify this kind of reasonability. Furthermore, ensuring fair competition was not the goal of enacting section 84 under Chapter XVI of the Patents Act. The main goal of the revision to the aforementioned Chapter, according to the Joint Parliamentary Committee Report, is to improve the affordability and suitability of patents related to the health sector and to make them more conducive. The same is made clear in the Commerce Minister's address that introduces the measure. In essence, Section 84 empowers the Controller to issue compulsory licences in order to stop the misuse of patents that serve the public good. Additionally, section 89 makes it clear that obtaining appropriate intellectual rights utilisation is the main goal of compulsory licencing. Section 90(1)(ix) introduces further complexity by requiring terms in obligatory licences that support the export of protected goods, particularly in situations where the goal is to address anti-competitive behaviour. Although some contest the Controller's express authority to evaluate anti-competitive behaviour, a more thorough examination indicates the Controller actively participates in these assessments. In awarding obligatory licences, the Controller has a crucial role in countering anti-competitive activity, as specified in Section 90(1).
Furthermore, the general welfare and market dynamics are suggested to be taken into account in addition to individual interests, given the extent of the investigation and the rights protected by Section 84(1). In order to emphasise the regulatory function of compulsory licences, Section 92 carves out unique provisions for them. It also highlights the Controller's jurisdiction in the event of a national emergency or public non-commercial usage. Section 90(1)(ix) does not explicitly delegate adjudicatory powers to outside entities, which is consistent with the legislative aim and reinforces the Controller's jurisdiction to handle anti-competitive activity. Additionally, as per the “Justice Ayyangar Committee” report's recommendations, Section 140 forbids restrictive limitations in contracts pertaining to patent items, highlighting the Controller's responsibility in identifying and preventing anti-competitive conduct.
Supreme court Examination
A notice was issued by a three-judge bench headed by the Chief justice of India (CJI) DY Chandrachud, asking all parties engaged in the case to respond. CCI launched an inquiry against Monsanto and Ericsson in lieu of the s accusations that claimed that they abused their dominating positions as a result of their patent holdings. Ericsson hold standard essential patents pertaining to telecom technologies such as 2G and 3G, whereas Monsanto held a patent for genetically modified cotton seed technology. Ericsson demanded payments from Micromax, a mobile device maker alleging patent infringement. In furtherance of it Micromax filed a case against Ericsson for making erroneous royalties claim. The Apex Courts’s upcoming review will have a significant impact on the laws regulating competition and patent rights in India. Clarity regarding the regulatory bodies’ authority over patent related proceedings and the specialised character of patent legislation would be reinforced by a decision upholding the Patent’s Act precedence over Competition Act. On the other hand, a decision that deviates from Delhi High Court’s verdict would create would create uncertainty and jeopardize the effectiveness of patent laws in the country. The subsequent reasoning of the Apex Court will be crucial in resolving this highly contentious legal topic, even though the Delhi High Court has clearly said that the Patents Act is supreme when it comes to pertaining to patent rights. Whatever the result, this legal discussion represents a major turning point in the development of India's competition and patent laws, opening the door to more consistency and clarity in this important area of the law.
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