Harmonizing The Jurisdictional Conundrums - The Intersection Of Competition & Patent Law
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HARMONIZING THE JURISDICTIONAL CONUNDRUMS:
THE INTERSECTION OF COMPETITION & PATENT LAW
Ansh Aditya, Symbiosis International University, Pune
ABSTRACT
In many countries, particularly India, the relationship between intellectual property rights & competition law continues to be ambiguous. Divergent opinions exist over the Competition Commission's authority to implement its jurisdiction over a patentee's ability to prevent rivals from using its patented technology. The Hon'ble High Court of Delhi was asked this issue once again in the Monsanto & Ericsson v. CCI case. There were a number of factors that the court ignored, despite its best efforts to elucidate the matter of the position struggle among the Indian Competition Commission & the Controllers of the Indian Patent Office. The problems are resolved by the courts on a case-to-case foundation as there are no clear rules for handling the intersection across competition law & patent law. This has been appealed further by CCI before the Hon’ble Supreme Court of India.
The author of this work investigates the interplay & jurisdictional overlaps between the two imminent statutes. The author gives a comprehensive case anatomy & its repercussions followed by intricate statutory analysis and the intent of such luminaries who contributed to drafts of such acts. Given, the increasing antitrust issues surrounding the exercise of patent rights, it has become crucial to shed light on the legal stance on the interaction between these two entities. The results drawn by the author in this study are based on the application of classic methods of legislative interpretation & judicial commentaries of applicable sections of the Patents Act, 1970 & the Competition Act, 2002. Expert Committee Reports have been used to provide further support for these findings.
The author of this article makes the case for the provision of such guidelines in order to permit & preserve the fragile equilibrium between competition law & patent law.
INTRODUCTION
Special laws supersede general laws, as is a well-established legal premise. But when there is a disagreement between two special statutes in different fields, the legislature will consider a number of factors before deciding which will take precedence. These include the subject matter of the dispute, the statutes' intended purposes, & whether there are any indications in the scheme or pertinent clauses in the two laws that the lawmakers felt should take precedence over the other, particularly if both have a non-obstante clause. Given their ostensibly opposing objectives, intellectual property rights & competition law are often seen as having an uncomfortable interrelation. But comparing them head-to-head without considering their backgrounds & riding styles may not do their unique personalities, responsibilities, & objectives justice.
The groundwork of the IPR system is the idea that granting exclusive rights for a certain period of time is desired to encourage the constantly changing competition domain, which stretches the boundaries of innovation &, in turn, helps to increase the range of options accessible to customers. Put another way, contrary to the adversarial view of IPRs & competition law, the philosophy behind encouraging innovation via IPRs raises the degree of competition from stationary to dynamic. However, in reality, even the strictest rights are vulnerable to misuse by a determined & driven right owner, which would be detrimental to healthy competition. Competition law serves as a necessary safety valve in light of this.
To put it simply, the goal of antitrust law concerning IPRs is to guarantee that these rights are used within legally established boundaries & in a way that benefits customers and foster competition. As a result, an intellectual property owner only violates competition law when acting in his official role & when such action results in a distortion of the market. In the sections that follow, this article will specifically analyse & assess the validity of this broad notion in connection to patent rights in the Indian arena. The goal is to determine whether & to what extent the Competition Act, 2002 (henceforth referred to as "the Competition Act") has the authority to monitor trade practices that are abusive & prohibitive when used by a patent holder. I. CASE ANATOMY & COMMENTARY ERICSSON & MONSANTO V.
CCI1 A disagreement concerning the authority of the Competition Commission of India ("CCI") & the Controller of Patents ("Controller"), as well as the application of the "Competition Act, 2002," in assessing royalties according to FRAND guarantees, was recently heard by the Delhi High Court's Division Bench. FACTUAL MATRIX OF THE CASE "Ericsson" & "Monsanto" filed separate writ applications in opposition to the Competition Commission of India ("CCI") & other parties, including Micromax Informatics Limited along with Intex Technologies Ltd. The petitions contested the CCI's authority to begin an investigation into the company's operations on the basis of accusations from third parties of anti-competitive arrangements & misuse of dominant position by "Ericsson" & "Monsanto.
" The Delhi High Court's 2016 Single Judge rejected Ericsson's writ petition2, noting that there was no legal obstacle to the proceedings brought by the CCI against the company was found violating § 3 & 4 of the Competition Act. 3 A similar ruling was rendered in 2020 by the Delhi High Court's Single Judge in a writ case brought by Monsanto contesting the CCI's authority to look into claims of both § 3 & 4 of the Competition Act violations (2020 judgement). 4 Consequently, the patent holders, "Ericsson" & "Monsanto" appealed the 2016 & 2020 rulings to the Delhi High Court Division Bench. Ericsson & Monsanto jointly filed the current appeals & writ petitions, which contest the CCI's authority & jurisdiction.
"When a patent is granted in India, & the applicant asserts such rights, can “Competition Commission of India” inquire into the behaviour of such patentee in execution of its powers under the Competition Act, 2002” was the primary issue that the Court had to decide. 1 Telefonaktiebolaget LM Ericsson (PUBL) v Competition Commission of India & Anr, LPA 247/2016; Monsanto Holdings Private Limited & Ors v Competition Commission Of India & Ors, LPA 150/2020.
2 Telefonaktiebolaget LM Ericsson v Competition Commission of India & Anr, W.P.(C) 464/2014 & CM
Nos.911/2014 & 915/2014.
3 Competition Act 2002 (India) (Acts of Parliament, 2002) (hereafter 'Competition Act').
4 Monsanto Holdings Pvt. Ltd. & Ors v CCI & Ors, W.P. (C) 1776/2016 & 3556/2017, 272(2020) DLT 61.
ARGUMENTS PUT FORTH BY PATENTEES:
The patent holders contested the 2016 as well as 2020 rulings, arguing that the CCI lacked competence over their use of their Patents Act privileges. The patentees additionally contended that the Patents Act's Chapter XVI sets out specific guidelines & solutions against anticompetitive agreements & patentee exploitation of dominant position. 5 Consequently, the Patents Act does not owe anything to the Competition Act, & it further argued: • Since CCI is authorised by § 2(f)(ii) of the Competition Act to look into complaints regarding consumer hiring of services, it does not possess the authority to look into patent licencing. 6 Patent licencing leads to the conveyance of title in the patent while does not involve a sale or purchase of products & services.
• According to the third-party sources, § 4 of the Competition Act only addresses the sale & acquisition of products & services; patent licencing is not encompassed by the identical provision. The Patents Act's § 84(7)(c)7 examined with § 140(1)(iii)(c)8 gives the Controller or the Civil Court the authority to determine whether patent licencing is anti-competitive. These sections handle complaints regarding claims of portfolios licencing & unjust rates. • The Fair, Reasonable, & Non-Discriminatory ("FRAND") prices must be established before Civil Courts may decide whether a patent owner misused their dominant position by requesting unjust charges. 9 The CCI lacks the authority, knowledge, & equipment necessary to establish the FRAND rates. Furthermore, the patentees' FRAND guarantees do not provide the CCI the authority to grant a licence or determine a fee.
• Chapter XVI of the Patents Act addresses patent licencing & forced licences, as well as patentees' anti-competitive actions. The Controller & the Civil Court have the authority to make decisions on these matters. As a result, the CCI lacks the authority to look into or inquire into patent licencing.
5 Patents Act, 2002, No. 39, Acts of Parliament, 1970 (India) (hereafter, “Patents Act”).
6 Competition Act, § 2(f)(ii).
7 Patents Act, § 84.
8 Patents Act, § 140.
9 Dewatripont, M, and Legros, P, "ESSENTIAL" PATENTS, FRAND ROYALTIES AND TECHNOLOGICAL
STANDARDS' (2013) 61(4) The Journal of Industrial Economics 913–937.
Chapter XVI of the Patents Act is a comprehensive law that addresses anti-competitive acts & patent utilisation. The Patents Act eliminates the dominion of the Competition Commission by granting the authority to decide whether or not patentees have engaged in anti-competitive behaviour.10 The Legislature consistently envisioned for the Patents Act to regulate the patentee's anti-competitive & abusive actions while incorporating the legislative history into consideration.
ARGUMENTS PUT FORTH BY CCI:
The mere fact that the Competition Act & the Patents Act overlap does not detract from CCI's authority under the former. While the Patents Act has a restricted scope & offers remedies to a patent licensee, anybody harmed by the patentee's anti-competitive & abusive actions may pursue their legal rights under the Competition Act. • The Patents Act offers an inadequate process for evaluating claims of anti-competitive & abusive behaviour by the patent holder. The Legislature consistently directed the
CCI to be given the authority to decide whether or not the patentee's actions are abusive or anti-competitive. • § 60 of the Antitrust Legislation further forbids filing grievances before any court or statutory body other than the CCI regarding anti-competitive arrangements & abuse of dominant state. 11 • While the Controller of Patents only has the power to efficiently carry out the Patents Act, the CCI regulates the market. The purpose of § 86(4) of the Patents Act was to allow the Controller to investigate claims of abusive & anti-competitive behaviour only once the CCI had rendered a decision on them. 12 • The Patents Act will be superseded with the Competition Act, a unique legislation designed to resolve cases involving anti-competitive agreements including abuses of dominant position.
10Bagchi, A K, Parthasarathi Banerjee, and Uttam Kumar Bhattacharya, 'Indian Patents Act and Its Relation to Technological Development in India: A Preliminary Investigation' (1984) 19(7) Economic and Political Weekly 287–304.
11 Competition Act, § 2(f)(ii).
12 Patents Act, § 86(4).
JUDGMENT & REASONS FOR DETERMINATION
The decision rendered by the court was based on a combination of opining factors. The appeals & writ applications lodged by the Patentees were granted by the Court. The court determined that the CCI lacks the authority & jurisdiction in order to conduct investigations into actions of patent holders when they exercise their rights under the Patents Act. The dispute presented beforehand the Court was of significant concern. The Patents Act is a legislation specifically addressing patents, whereas the Competition Act is a specialized statute specifically addressing competition. Stipulations of the Competition Act will be superseded by Chapter 16 of the Patents Act, that had been adopted in 2003 after to the passing of the Competition Act. The Delhi HC made an observation that a legislation should not be deemed exceptional solely based on its treatment of a particular subject matter.
In contrast, the Court delineated the following considerations that have to be taken into account when determining the exceptional nature of a legislation or law: The topic under consideration, the purpose of the legislation pertaining to it, & if the structure & pertinent clauses of the two acts include any evidence that the legislature deemed necessary to take precedence over the other, particularly where either of the codes contain a non-obstante clause.
The Judges employed all of these variables while assessing the regulations & treatments offered according to the Patents Act & Competition Act in addition to evaluating the authority provided to the Controller & CCI under each law & determined that whilst the Competition Act examines anti-competitiveness & misuse of dominance in relevant markets typically, Chapter XVI of the Patents Act pertains to anti-competitiveness of agreements & abuse of dominance by a patentee & utilising his rights through Patents Act too. 13 Hence, the Patents Act is a distinct legislative enactment that addresses the issue of anticompetitive agreements & the misconduct of a patent holder in the exercise of their rights under the Patents Act, rather than the Competition Act.
The Court accordingly stated that “the Patents Act must take precedence while overriding the Competition Act on this matter of assertion of entitlements by a patentee under the Patents Act. ” 13 Chaudhuri, S, 'TRIPS Agreement and Amendment of Patents Act in India' (2002) 37(32) Economic and Political Weekly 3354–3360.
EFFECT & PROBABLE REPERCUSSIONS OF RULING
The Division Bench's ruling stands in stark contrast to the procedures followed by competition authorities in developed nations, where they frequently look into patent-related competitionrelated issues like patent bundling, pay to delay, & non-compliance with agreements to fair, reasonable, as well as non-discriminatory rates. However, one distinctive aspect of the patent laws of India & other specific developing nations is the necessity that patents be licenced in order to satisfy public interest standards. That being said, the remedies available provided via Competition Act are significantly extensive than the obligatory licencing option. The Competition Act gives the CCI the authority to enforce behavioural standards in addition to financial penalties. In addition, a party that has been wronged may pursue claims for compensation in order to get damages.
It's also quintessential to address that the Patents Act does not provide the Controller the dominion to issue compulsory licences pertaining to patents that, while meeting the reasonable necessities of the public' criteria under the Act, may still contravene Competition Act through abusing a dominating position. Due to this, the ruling seems to have left a gap, as different remedies under competition law for anticompetitive behaviour related to patents could no longer be available. Independently, the Supreme Court had to decide whether the Telecom Regulatory Authority of India & the CCI had conflicting authority in the matter of CCI vs. Bharti Airtel. 14 The Apex Court noted that all while TRAI is a specialised agency for gathering information on telecom-related issues, the CCI's jurisdiction is intact & would commence as soon as TRAI's fact-finding process is over.
Strangely, the Delhi High Court gave no explanation for why its rulings differed from those of Bharti Airtel. A few conditions of the Competition Act run the risk of becoming moot, therefore the CCI has appealed this outcome before the Apex Court in order to harmonise the scope of application of various laws, given the seismic shift in the place & the potential impact the ruling might have
14 Competition Commission of India v Bharti Airtel (2019) 2 SCC 521.
on additional anti-competitive issues arising from patent & various other intellectual property law. II. BACKDROP & LANDMARK JUDICIAL DECISIONS The CCI alongside patent holders have been embroiled in a protracted judicial tussle about how patent holders may utilize their privileges. Super Cassettes Industries Ltd. v. UOI & Ors.15 was the initial matter in which a contradictions among IPR & Antitrust Laws were examined. The Court scrutinized the discrepancies pertaining to § 4 of the Competition Act,
2002 & the Copyright Act, 1957.16 The Competition Commission & Copyright Board have
separate legal jurisdiction, according to the Court, which dismissed the writ petition. In the matter of Telefonaktiabolaget LM Ericsson (Ericsson) v. CCI & Anr. 17, the second significant challenge to CCI's adjudicatory powers was made. The main point of contention was the CCI's authority to examine & inquire the patentee's alleged anti-competitive behaviour & abuse of dominant position. On behalf of Ericsson, it was contended that the Patents Act, instead of the Competition Act, should handle disputes involving patentee’s actions amounting to misuse of dominance or dominant stature with regard to patent licences, since the former offers effective remedies in the form of the granting of compulsory licences.
The Delhi HC noted that even though the Patents Act, 1970 offers efficacious remedies, including the granting of compulsory licences, the jurisdiction of CCI under the Act to investigate claims of anti-competitive operations & abuse of dominant positions resulting from the exclusivity offered via patent rights. In another matter, Delhi HC addressed the conflict of dominion & power between the Competition Commission & the Controller of Patents in the case of Monsanto holding Pvt. Ltd. v. Competition Commission of India18. Under the Patents Act of 1970, Monsanto (the petitioners) had patented Bt. Cotton Technology in this case. The patented technique was then sublicensed, in exchange for payment of a royalty or fee, to a number of Indian seed producers.
15 Super Cassettes Industries Ltd. v. UOI & Ors ,W.P.(C) 1119/2012.
16 Copyright Act 1957.
17 Telefonaktiabolaget LM Ericsson (Ericsson) v. CCI & Anr W.P.(C) 464/2014.
18 W.P.(C) Nos. 1776/2016 & 3556/2017.
S. 19 (1) (a)19 & 19 (1) (b)20 of the Competition Act, 2002 were used to submit the evidence against Monsanto, which claimed that the company had violated S. 3 & S. 4 of the Act. Orders issued by the CCI were contested, & the main question on the court's agenda was the extent to which the Competition Commission was authorised to consider a complaint concerning a patentee's method of exercising rights under the Patents Act, 1970. As a result, the question of the Competition Commission of India's authority to limit an intellectual property owner's ability to use rights given by different intellectual property laws has repeatedly plagued Indian courts. The question of how far the Competition Commission may extend its authority without violating the rights of individuals who own intellectual property rights is one that has to be resolved.
The goal of IP legislation is to encourage innovation & to facilitate inventors incentives. The protection of consumer welfare & economic prosperity is the goal of competition law. While it is true that Indian courts have adopted a case-by-case approach, authorities can nonetheless take specific actions & establish guidelines or laws that might act as a guide when dealing with these kinds of issues. 21 A business company that receives a grant of intellectual property rights has the exclusive right to create patented goods or to use the ownership rights over the protected technique for a certain amount of time i. e. two decades. It seems that the company has some kind of advantage over its rivals in the industry.
Due to this competitive advantage, any corporation that participates in what are seen to be abusive business practices—such as stifling rivalry, limiting competition, or excluding new competitors from entering the market—invites criticism. Intellectual property rights holders are free to specify various levels & types of exclusivity. These exclusive agreements might result in market foreclosure & perhaps raise issues with competition. Therefore, it would seem at first glance that the purportedly abusive use of IPR is completely at odds with the objectives of antitrust law & policy, which include open markets, free market access, & open usage. Conversely, usage of IP rights promotes development of novel goods & methods, which creates new markets. Consequently, there is a delicate relationship between patents & intellectual property rights. Trade distortion may result from
19 Competition Act, § 19(1)(a).
20 Competition Act, § 19(1)(b).
21 Mehta, P S, Kumar, U, and Ghuman, P S, 'Interface between Competition Policy and Intellectual Property Rights: Select Case Studies from India' in S S Aneel, U T Haroon, and I Niazi (eds), Corridors of Knowledge for Peace and Development (Sustainable Development Policy Institute, 2020) 136–162. the application of patent or competition rules too strictly or too loosely. Therefore, it is necessary to strike a balance between patent rights & competition policy that will guarantee the achievement of both laws' goals. The key to ending the conflict involving competition & intellectual property authorities over jurisdiction is to properly adjust legislative structures & execute relevant legislation.
It is important to highlight that the Competition Commission & the Intellectual Property Office have not been the only parties involved in this jurisdiction battle; other sectoral regulatory bodies have also been involved. A case in point is the one between the Competition Commission & the Electricity Boards. The Electrical Act of 2003 gave the regulator the authority to handle mergers that hinder competition in the electrical market, abuses of dominant position, & anti-competitive agreements. 22 This terminology is comparable to that found in §
3 & 4 of the Competition Act of 2002, that accords to the regulation of combinations,
exploitation through dominance, & anticompetitive agreements. The energy distribution corporations were accused of engaging in anticompetitive activity in the proceeding of Shri Neeraj Malhotra v. North Delhi Power Ltd. 23 Additionally, a jurisdictional question was raised. The Competition Commission would be the appropriate body to handle any disputes pertaining to misuse of dominant position, the court further said. In addition, the recent focus was on the dispute between the Competition Commission & the telecom industry. The TRAI Act, 1997 established the Telecom Regulatory Authority of India to oversee India’s telecom industry. The aforementioned Act aims to foster the circumstances necessary for the development of the telecom sector.
"Facilitate competitiveness & encourage effectiveness in the functioning of telecommunication services so as to foster growth in such services" is the mandate given to the Telecom Regulatory Authority of India ("TRAI") under § 11 of the TRAI Act. When examining the goals of the Competition Act of 2002 with those of the other legislation, it is possible to conclude that, when taken as a whole, the goals of both laws aim to foster an atmosphere that may support fair competition. It seems that the TRAI & the CCI have overlapping authority when it comes to addressing competition-related problems in matters pertaining to the telecom sector in order to achieve the relevant purpose.
22 Competition Act, 2003, No. 36, Acts of Parliament, 2003, (India) (hereafter, “Electricity Act”).
23 Shri Neeraj Malhotra, Advocate v. North Delhi Power Ltd. & Ors, Case no. 06/2009.
The CCI v. Bharti Airtel Limited24 brought up the question of jurisdiction overlap, which was decided by Hon’ble SC of India. The court noted that the jurisdictional element must be left to TRAI's handling. The CCI's authority may be invoked after TRAI determines that the practice is an anti-competitive behaviour. The bench elucidated that in this manner, TRAI & CCI's respective authority may be kept under check. Considering the above conversation, one may argue that there is a dispute about jurisdiction between the Competition Commission & other industry regulators. It is evident from the instances that there is a strong overlap between the goals of the Competition Act & other statutes. AMBIT OF PATENT RIGHTS U/ PATENTS ACT, 1970 § 48 of the Patents Act governs the extent of a patent right, & its text makes it obvious that the right given by the act is not unqualified.
The right given by & under § 48 is, in fact, specifically stated in the provision to be "subject to other provisions" of the Patents Act including the requirements set out in § 47. 25 Such "other provisions" comprise of § 107 & 107A26, exclusions & defences against patent infringement, as well as § 100, which grants the Central Government the authority to utilise & obtain patented innovations. 27 Apart from the above mentioned clauses, § 140 lists the restrictive clauses that may make agreements pertaining to patents illegal. It is important to remember that § 140 does not identify the body or forum with the jurisdiction to declare agreements incorporating either of the prohibited restrictive covenants illegal. 28 Crucially, it doesn't provide the Controller of Patents the explicit authority to void these kinds of restrictive covenants.
29 The Patents Act's Chapter XVI, which permits the issuance of Compulsory Licences (or "CLs") in a number of situations & subject to certain requirements, is particularly relevant to the topic at hand. The broad guidelines listed in § 83, which apply to the practice & operation of patented inventions, provide insight into the rationale underlying the statute's awarding of patents & CLs. 30
24 Competition Commission of India v. Bharti Airtel Limited, (2019) 2 SCC 521.
25 Patents Act, § 47.
26 Patents Act, § 107.
27 Patents Act, § 100.
28 Patents Act, § 140.
29 'A Confusing Patent Law for India' (2005) 40(16) Economic and Political Weekly 1576–1579.
30 Patents Act, § 83.
A straightforward & literal interpretation of the § makes it clear that in addition to outlining a patentee's responsibilities, it also outlines the broad factors that the Controller takes into account when granting CLs. Importantly, as stated in sub-sections (6) & (7) of § 84, the issuance of CLs expressly takes into account the patentee's adoption of restrictive trade practices & misuse of its patent rights. Additionally, § 83 places an affirmative duty on the patent holder, mandating that the patented innovation be made accessible to the general public at "reasonably affordable prices". Nevertheless, it's crucial to remember that Chapter XVI directives are limited in scope as in, that the Controller will take the patentee's anti-competitive actions into consideration when awarding a CL.
31 Stated differently, the Controller may award a CL to address a patentee's anticompetitive behaviour. None of these clauses, however, outline who has the authority to decide whether a patent holder's behaviour is anti-competitive and abuse of the patent holder's dominance. § 90(1)(ix) lays some insight into the jurisdictional element of this matter. It allows for the issuance of CL "to rectify a practice established after judicial or administrative review to be anti-competitive. "32 It’s important to note that such clause needn’t specifically state that the Controller will have the authority to decide whether the patentee's actions are competitive or anti-competitive. Actually, it seems to be referring to a different authority or organisation other than the Controller of Patents.
Put another way, one could argue that the provision's reference to a "judicial or administrative process" refers to a decision made by the CCI in accordance with either § 3 or § 4 of the Competition Act, that addresses abuse of dominance & anti-competitive agreements, accordingly. 33 Crucially, this construction would align with the suggestions made by Justice N. R. Ayyangar in the 1959 Report; based on the Revision of the Patents Law34 which served as the foundation 31 Plahe, J K, 'The Implications of India’s Amended Patent Regime' (2009) 30(6) Third World Quarterly 1197– 1213.
32 Patents Act, § 90(1)(ix).
33 Sethi, R, and Dhir, S, 'Anti-Competitive Agreements Under the Competition Act, 2002' (2013) 24(2) National Law School of India Review 32–49. 34 Ministry of Commerce & Industry, Government of India, Report on The Revision of The Patents Law, 1959 (India). for the 1970 Patents Act. Judge Ayyangar has outlined three categories of patent abuse on the report. These categories include: (a) infringing on patent rights by non-working & importation; (b) using patent rights to create conditions for the sale, lease, or licence of patented processes or products; & (c) using patents or a group of patents to create monopolistic cartels & combinations that control fabrication & dissemination. The best course of action to combat the first kind of misuse has been determined to be the granting of compulsory licences. It was suggested to include a clause similar to the present §
140 to address the second kind of misuse. But Justice Ayyangar suggested separate laws &
commission formation for the 3rd kind of abuse, which was correctly identified as arising from an unsustainable consolidation of economic strength. The pertinent sections of the report are extracted below: "200. I have set out these facts to emphasise that monopolistic combinations and restrictive trade practices are a universal feature of capitalistic economy and that special legislation is needed to protect the public from these practices. The rule enacted in Section 27 of the Indian Contract Act regarding contracts in restraint of trade is much too weak to touch even the fringe of the problem.
201. I am however, not dealing with this matter in any detail for two reasons; first,
though patents might sometimes form a convenient nuclei on which monopolistic combinations (and restrictive practices which are the concomitant of combinations and to effectuate which the combination might come into existence) are based, the problem cannot be solved by any amendment of the Patents law but only by dealing with it comprehensively so as to touch the manifold forms which these combinations might assume and in which they could operate. This has been the manner in which legislation in other countries has tackled the problem and with reason. There are no materials available on the basis of which this information could be gathered. It does not need any argument to establish, that without an evaluation of the evil, its nature and extent, the remedy to counter it cannot be devised.
203. I would therefore recommend the appointment of a commission to enquire into its
existence of monopolies in the country in the sense in which the term is understood in this field of the law and the prevalence of restrictive trade practices which are detrimental to the interests of the public generally and to suggest measures to remedy the evil if found to exist. In the context of large scale industrialisation of the country that is proceeding apace, I consider that such an enquiry would be found to yield fruitful results and constitute an assurance to the general public that the economic advantages resulting from the country's advance are being diverted to individual aggrandi sement. ”35 Given that essence of the inquiry falls outside the purview of the Patents Act, Ayyanagar's findings & suggestions demonstrate that the Act does not intend to address market disfigurement.
Justice Ayyangar made a crucial difference between the misuse of economic power obtained from owning a patent or set of patents & the abuse of patent rights committed by non-working parties. The Competition agency is the obvious choice for the latter, since it was intended to be investigated by a different agency with the authority & resources to address anticompetitive activity, while the former is handled by the CL process. Examining how the Competition Act handles patent rights & patent-related misuse becomes essential in light of this disparity.
DECIPHERING INTERSECTIONS U/ COMPETITION ACT, 2002 Any business, association of businesses, individual, or group is specifically forbidden by § 3 of the Competition Act36 from entering into such agreements regarding the production, supplies, dispersion, storage, acquisition, or control of goods or the provision of services if they have the potential to significantly harm competition in India.
The provision in question carves out a pair of exemptions to this legal injunction: (a) the Proviso to § 3(3), that allows agreements for joint collaborations if they lead to increased efficacy in the production, supply, distribution, storage, acquisition, or control of goods or services; & (b) § 3(5), which allows steps put forth as an intellectual property owner to prevent infringement of that right or "reasonable conditions" that the IP owner imposes & which are required for the protection of 35 Ministry Of Commerce & Industry, Government of India, Report on The Revision of The Patents Law, 1959 (India).
36 Competition Act, § 3.
any of their package of legal rights that make up the IP right. This exception is pertinent to the current conversation. 37 According to one school of thinking, the exclusion provided for intellectual property rights in § 3(5) is total & completely eliminates the Antitrust law’s application to the actions of IP holders, especially patentees. Such argument, however, cannot be deemed valid given that the provision's narrow scope relates to actions performed or "reasonable conditions" placed in relation to IP rights protection. To put it another way, there has to be a legitimate & justifiable connection between the goal of avoiding IP infringement & the requirement that an IP owner, such a patentee, places on a third party.
Thus, in the case that the condition fails to meet the standards of reasonableness about the goal of avoiding infringement, it would violate § 3's proscription & come within the Competition Commission's purview. The 2000 report named "S. V. S. Raghavan Committee Report"—which included recommendations from the High Level Committee on Competition Policy & Law serves as support for this stance. The relevant committee recommendation about the applicability of competition law to IP owners' behaviour is extracted below: “ There is, in some cases, a dichotomy between Intellectual Property Rights and Competition Policy/Law. The former endangers competition while the latter engenders competition. There is a need to appreciate the distinction between the existence of a right and its exercise.
During the exercise of a right, if any anti-competitive trade practice or conduct is visible to the detriment of consumer interest or public interest, it ought to be assailed under the Competition Policy/Law. ”38 Since it achieves a balance between the protection of IP & the avoidance of anti-competitive acts carried out in the name of intellectual property protection, § 3(5) seems to embody this advice. This stance was restated in the 2007 Report of the Working Group on Competition Policy by the Former Planning Commission. The following is an excerpt of the Working Group on IP Policy's pertinent observation: “IPR laws in India have provisions to take care of these potential JPR related 37 Berwal, P, '§ 3(5)(i) OF THE COMPETITION ACT – AN ANALYSIS' (2015) 27(2) National Law School of India Review 168–184.
38 Government of India, Report of The High-Level Committee on Competition Policy & Law 2000 (India).
competition abuses, including the provision for compulsory licensing. The Competition Act, 2002 does have a specific provision to deal with anticompetitive behaviour arising out of unreasonable restraint imposed by a holder of intellectual property beside being a factor to be considered while determining 'dominance of an enterprise' attained under a statute in the relevant market. "39 The Working Group's extracted remark above aligns with the Specialized Committee's recommendations, the wording of § 3(5), & this researcher’s reading of clause. Put another way, the Competition Act still has the authority to decide whether a patentee's actions are lawful, even if Compulsory Licences via Patents Act could be awarded to address an anticompetitive activity of patentee.
Crucially, the Working Group's finding also suggests that the Competition Act should be applied on actions of such intellectual property owner that has achieved dominant stature amongst a specific market. This obviously refers to an IP owner abusing their dominance in violation of § 4 of the Act. The Competition Act's structure & the wording of § 4 both corroborate this view. According to § 4 further on, no business or organisation is allowed to exploit its dominating position. 40 The absence of any mention of a "person" in § 4 is unexpected given that, in contrast to § 3, this § allows individual right holders to enjoy a dominant position that is untouched by market pressures.
Having said that, § 19(4), that enumerates the considerations the CCI would take into account when determining whether a company has a dominant position under ambit of § 4, is relevant to the current conversation. More specifically, monopoly or dominating position is defined explicitly in Clause (g) of § 19(4) as "whether acquired as a result of any statute" or as a result of being a government corporation, a public sector operation, or "otherwise. "41 Moreover, "any other factor which the Commission may consider relevant for the inquiry"42 is included in provision (m), an omnibus provision. The argument that monopolies "gained as a consequence of any statute" include exclusionary & exclusive rights like IPRs falls under the wide definition of monopolies based on both of the preceding clauses. To put it simply, the Competition Commission is entitled to
39 Planning Commission, Report of The Working Group on Competition Policy, 2007 (India).
40 Competition Act, § 4.
41 Competition Act, § 19.
42 Competition Act, § 19.
investigate the actions of a patent holder who has a portfolio of patents or a patent that grants them a dominating position. This is a clear acknowledgment of the possibility that an abusive dominant patent holder may damage the competitive environment in the market. § 4(2)(b), addresses the limitation of technological & scientific advancement by a dominating firm, and further emphasises this point. 43 From the previous reasoning, it is evident that anti-competitive behaviours & patentee abuse of power are specifically addressed by the Competition Act. The practical division of decision-making across the Competition Act & the Patents Act is the next matter that has to be solved. III.
ALLOCATION & HARMONIZATION OF ROLES DIVISION OF ROLES B/W THE CCI & THE CoP It is essential to clearly define the separate tasks & jurisdictions of the Competition Commission & the Controller of Patents (CoP) in accordance with applicable laws when assigning roles to each other. The CoP is responsible for supervising the issuance of Compulsory Licences, which govern the patent rights exercised, in accordance with § 84 of the Patents Act. 44 But this procedure just deals with specific instances; it doesn't deal with more widespread market inefficiencies. In contrast, market competition concerns are the only ones that the Competition Commission addresses, as stated in § 18 of the Competition Act.
45 The CC's jurisdiction under § 3 & 4 of the Competition Legislation extends to examining patentees' market activities in order to preserve competitive market dynamics, whereas the Controller of Patents manages inter parties processes that result in CL awards. These two organisations' forms of investigation are not the same. Only "persons interested" may submit an application for a CL under the Patents Act in an in personam procedure conducted by the Controller of Patents. On the other hand, the Competition Commission has the authority to conduct in-rem inquiries, which may be started by the Commission itself or by any party on its own.
43 Competition Act, § 4(2)(b).
44 Patents Act, § 84.
45 Competition Act, § 18.
The Competition Act includes sections that make clear how it interacts with other laws. According to § 62, the Competition Act amends current laws rather than modifies them. 46 Therefore, parties may use the remedies provided by both Acts in situations where the Competition Act & the Patents Act intersect. This exception from the conventional rule that particular laws take precedence over general ones highlights the Competition Act's function as an extra channel of recourse. It's superseding power over incoherent legislation is established in § 60. 47 As a result, in the event of a disagreement, the Competition Act takes precedence over the Patents Act. Interestingly, the Patents Act does not include comparable provisions, suggesting that the Competition Act is more important, especially when it comes to market-related investigations into the behaviour of patentees.
From a practical standpoint, this means that the Competition Commission is the only body with authority against anticompetitive behaviour or patent holders abusing their position. 48 Unfavourable conclusions reached by the Commission may lead to further action, such as requesting relief under the Competition Act or submitting a CL application under the Patents Act. § 90(1) sub-clause ix of the Patents Act, 1970 requires the CoP to take the Commission's conclusions into account when determining CL terms. This facilitates interactive regulation between the Competition Commission & other agencies. Coordinated action is possible as parties may request findings from either body or participate in referrals. As such, to see the CCI & the CoP as independent, exclusive organisations would be to oversimplify their respective regulatory functions.
Rather, their exchange emphasises a comprehensive strategy for resolving antitrust issues within the patent system. DEMARCATION OF POWERS B/W CIVIL COURT & COMPETITION COMMISSION There are significant practical implications with regards to the split of powers between the CCI & a civil court, particularly with regard to issues concerning patentee behaviour. Whether civil lawsuits alleging patent infringement or efforts to revoke patents could override the Competition Commission's authority in these situations is the fundamental concern
46 Competition Act, § 62.
47 Competition Act, § 60.
48 Bagchi, A K, and Uttam Kumar Bhattacharya, 'Indian Patents as Competitive Instruments: Dream and Reality' (1995) 30(25) Economic and Political Weekly 1501–1511. surrounding this topic. In these cases, jurisdiction is determined by the laws that apply & whether each case satisfies the jurisdictional requirements. Therefore, if the patentee's activities justify its involvement, the Competition Commission retains jurisdiction regardless of current legal procedures. The type of inquiry is very different when issues related to patent infringement are heard by ordinary courts regards to Patents Act & by the CCI under § 3 & 4 of the Competition Act. Primary duties of the civil court include determining eligibility for remedies via the Patents Act, infringement allegations, & the validity of patents.
49 The civil court is not one of the bodies empowered to investigate how a patentee's actions affect competition; only the Competition Commission is. This distinction is reinforced by § 61 that prohibits civil courts from hearing disputes relevant to the Commission's jurisdiction. 50 There may be circumstances when the civil court waits to rule on relevant issues until it has received the Commission's findings. For instance, if a licensee is sued by a patent holder for allegedly violating a contract, the licensee's response may centre on § 140(3) of the Patents Act, which says that the requirement was unlawful & hence not an infringement. Furthermore, the defendant has the option to submit an adjudication request to the Competition Commission in accordance with § 3 & 4 of the Competition Act.
Unsure of its jurisdiction under § 140(3), the civil court may, in certain circumstances, halt proceedings in accordance with § 61 while it awaits the Commission's ruling. However, the court may proceed with other cases & defer making a determination regarding infringement until after it receives the Commission's findings. 51 This case shows that, even in cases where there are overlapping concerns, the civil court must submit to the Competition Commission on matters falling under its exclusive jurisdiction. The Patents Act & the Competition Act do not distinguish between "Normal Patents" & "Standard Essential Patents" (SEPs). 52 The Competition Commission has exclusive authority over
49 Bhattacharjea, A, De, O, and Gouri, G, 'Competition Law and Competition Policy in India: How the
Competition Commission has Dealt with Anticompetitive Restraints by Government Entities' (2019) 54(2) Review of Industrial Organization 221–250.
50 Competition Act, § 61.
51 BHATTACHARJEA, A, 'Of Omissions and Commissions
India’s Competition Laws' (2010) 45(35) Economic and Political Weekly 31–37. 52 Contreras, J L, Gaessler, F, Helmers, C, and Love, B J, 'Litigation of Standards-Essential Patents: A Comparative Analysis' (2017) 32(4) Berkeley Technology Law Journal 1457–1488. matters connected to SEPs in the relevant market since they affect various stakeholders, including end consumers. IV.
CONCLUSION &
RECOMMENDATIONS
Without uncertainty, internal corrective measures are provided by Intellectual Property legislations to rectify injustices resulting from the misuse or non-use of intellectual property rights. Nonetheless, the range of research performed under these processes is restricted to confirming that the particular goals of intellectual property laws have been met. asserted alternatively, these processes are neither as comprehensive or as catholic as a marketbased evaluation of an IP owner's conduct in accordance with Competition Act, 2002. No sole IP regulatory body, including the Copyright Board & the CoP, is given extensive authority of the Commission to address market misconduct or entrusted with carrying out the Commission's responsibilities as outlined under § 18 of the Competition Act.
Consequently, the Competition Commission must be permitted to carry out its duty without interference, as the Competition Act's stated goals are to promote sustainable competition in the market, safeguard consumer interests, & guarantee trade freedom. It's also quintessential to stress that the Patents Act does not provide the Controller the authority to issue CLs for patents that, while meeting the reasonable necessities of the public' criteria under the Act, may still contravene the Competition Act through abuse of a dominating position. As a result, the Ericsson & Monsanto ruling53 seems to have left a gap, as different remedies under competition law for anticompetitive behaviour related to patents could no longer be available.
A few regulations under Competition Act run the risk of becoming obsolete therefore the CCI has appealed this decision before the Apex Court in order to harmonise the applicability of the laws, given the seismic shift in the position & the potential impact the ruling may have on other anti-competitive issues associated with patent & other intellectual property law.
53 Monsanto Holdings Pvt. Ltd. & Ors v CCI & Ors, W.P. (C) 1776/2016 & 3556/2017, 272(2020) DLT 61.