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Patents rights disputes to be examined under Patents Act: Delhi HC

This order has now barred the jurisdiction of CCI in examining patent-related disputes

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Bhavini Mishra New Delhi

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The Delhi High Court on Thursday quashed the proceedings initiated by the Competition Commission of India(CCI) against agrotech company Monsanto and telecommunications company Ericsson, saying that disputes relating to patent rights will be examined under the Patents Act and not under the Competition Act.

This order has now barred the jurisdiction of CCI in examining patent-related disputes.

A Division Bench of Justices Najmi Waziri and Vikas Mahajan of Delhi High Court set aside the single-judge order of the same court and said that disputes relating to alleged anti-competitive conduct in the licensing of intellectual property rights (specifically patent rights) will be examined under the Patents Act, 1970 (Patents Act) and not under the Competition Act, 2002 (Competition Act).
 

The court said that in the case, In the present matter, the subject matter is an inquiry being conducted by a statutory authority, into allegations of anti-competitive agreements and allegations of abuse of dominant position.

“While the Competition Act deals with these subjects generally, the Patents Act deals with these subjects specifically in the context of patents. The legislature, in its wisdom, after enacting the Competition Act, amended the Patents Act to introduce Chapter XVI and has chosen to keep the effect of the orders of the Controller in personam. It is not for this Court to comment on the propriety thereof, nor does this persuade us to permit the exercise of powers by CCI contrary to legislative intent,” the court said.

In personam means designating an action or judgment against a person, as distinguished from one against a thing, as property (in rem). 

A few licensee seed companies and some other parties had filed complaints before the Indian competition regulator, the CCI, alleging that Monsanto (which was subsequently acquired by Bayer AG) was engaging in anticompetitive conduct in the licensing of its Bt. cotton technology. These seed companies were separately in contractual and patent-related disputes with Monsanto.

On the other hand, Micromax and Intex had complained that Ericsson was imposing conditions for licensing certain standard essential patents in the field of telecommunications that are not fair, reasonable, or nondiscriminatory, and thus in violation of sections 3 and/or 4 of the Competition Act.

The CCI, on the basis of these complaints, ordered an investigation into the companies’ conduct. Monsanto and Ericsson initially approached the court in 2015 and 2020 against the antitrust proceedings against them.

The contention of both Ericsson and Monsanto before the court was that rights under the Patents Act cannot be overridden by the CCI under the Competition Act. “The Patents Act itself has detailed provisions by way of Chapter XVI to ensure that there is an adequate safeguard against anti-competitive agreements and abuse of dominant position,” they told the court.

Partner Naval Satarawala Chopra of Shardul Amarchand Mangaldas, who was one of the advocates appearing for Monsanto, said, “The debate on whether the CCI or other sectoral regulators should hold the field while examining allegations of anti-competitive conduct has been heavily litigated in India. Today’s ruling by the Division Bench of the High Court is a significant departure from some of the past decisions where the Courts would rule in the CCI’s favour. This would result in parallel proceedings and risk conflicting findings on the same set of facts. We are happy that after lengthy arguments, the Delhi High Court has ultimately followed a pragmatic approach. This decision is likely to give respite to licensors and holders of intellectual property who have been embroiled in competition litigation.”

Monsanto challenged the CCI’s jurisdiction in examining its commercial disputes and licensing practices before the High Court. A single judge of the High Court ruled in favour of the CCI exercising jurisdiction over such matters. Monsanto appealed the decision of the single judge before the Division Bench of the High Court. Ericsson separately appealed a similar decision in cases relating to its telecom Standard Essential Patents licensing practices

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First Published: Jul 15 2023 | 12:28 AM IST

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