CCI and patent regulator can co-exist

For the first time in India's judicial history, a judgment has dealt head-on with the highly complex issue of Competition Act vs Patent Act. The judgment by a single judge bench of Vibhu Bakhru, in the case of Ericsson vs Micromax and Ericsson vs Intex, has clearly demarcated the boundaries between the Competition Act, 2002, and the Patents Act, 1970.

Ericsson's argument - just like any other patent holder's argument - was that there are adequate mechanisms to prevent any abuse of patent rights under the Patent Act itself. Therefore, the Competition Commission of India (CCI), which gets its powers from the Competition Act, 2002, is outside its jurisdiction when it is investigating Ericsson on the charge of abuse of dominant position in the market of technology patents.

Revoking the argument completely, Bakhru clearly stated: "There is no irreconcilable conflict between the Competition Act and the Patents Act…(Therefore) the jurisdiction of CCI to entertain complaints for abuse of dominance in respect of Patent rights cannot be ousted."

Ericsson holds several patents in India in respect of technologies relating to infrastructure equipment, including 2G, 3G and 4G networks, as well as mobile phones, tablets, and data cards, among others.

According to the apex court, under the Patents Act, the only remedy to a willing prospective licencee - like Micromax or Intex - who has been denied licence at reasonable terms is a 'compulsory licence'. This licence is granted by the controller - against the wishes of the patent holder - under section 84 of the Act.

On the other hand, the Competition Act under Section 27 gives the powers to CCI to pass orders on any case where there is an alleged abuse of dominant position by any company in a relevant market. Acknowledging the difference, Bakhru admitted that it is clear that the remedies as provided under Section 27 of the Competition Act for abuse of dominant position were materially different from the remedy as available under Section 84 of the Patents Act. "It is also apparent that the remedies under the two enactments are not mutually exclusive; in other words grant of one is not destructive of the other," the order said. Thus, it maybe open for a prospective licencee to approach the Controller of Patents - the administrative authority of Patents Act - for grant of compulsory licence in certain cases. "The same is not inconsistent with the CCI passing an appropriate order under Section 27 of the Competition Act," Justice Bakhru told the parties.

Resolving another major issue, which has been the cause of many conflicts, the court said if there is an investigation going on by CCI against a patentee, then the Controller of Patents can consider it if it is considering compulsory licence applications against the same patentee. However, if CCI has finally found a patentee's conduct to be anti-competitive, the Controller of Patents would have to compulsorily consider it while giving its own final judgment.

"The order clearly lays down the fact the CCI cannot be ousted (dispossessed) of its jurisdiction just because the case also comes into the domain of any other regulator. Other regulators have specialised fields to look into (Trai for telecom, Sebi for security market), whereas CCI has a general field of 'market competition' to consider. The judgment is balanced, and expects a harmonious working among regulators," said G R Bhatia, partner, Luthra & Luthra Law Offices.

The judgment also said that there is a need to maintain a harmonious relationship between sections 60 and 62 of the Competition Act, 2002.

While the former states that the Competition Act will overrule any provisions of the other Acts, the latter states that the provisions of Competition Act are in addition, and not in derogation, of provisions of other Acts. "In any case, in the event of any irreconcilable inconsistency between the two legislation, the later special statute would override the prior general statute, even though the earlier general statute contains a non-obstante clause (which gives CCI powers to prevail over other laws)," the court said.

Key takeaways

• In the case of conflict, other Acts - which have specific domains - prevail over the Competition Act
   
• However, the judgment finds no such conflicts between the Patent Act and the Competition Act
   
• The CCI can't be ousted from its jurisdiction just because the case comes under patent regulator
   
• If CCI has given a final order against the patentee, then the Controller of Patents will have to take note of that order while considering any compulsory licence applications against the same patentee