Patent Act Prevails Over Competition Act, 2002 on the Issue of Exercise of Rights by a Patentee: HC

Case Details: Telefonaktiebolaget LM Ericsson (Publ) v. Competition Commission of India - [2023] 152 taxmann.com 317 (HC-Delhi)

Judiciary and Counsel Details

• • Najmi Waziri & Vikas Mahajan, JJ.
  • C.S. Vaidyanathan, Sr. Adv. Ms Saya Choudhary Kapur, Ashutosh Kumar, Vivek Ranjan Tiwary, Vinod Chauhan, Ms Vrinda Bagaria, Palash Maheshwari, Radhika Pareva, Munesh Sharma, Anand S. Pathak, Shashank Gautam, Ms Sreemoyee Deb, Rajat Moudgil, Ravishekhar Nair, Sahil Khanna & Vinayak Goel, Advs. for the Appellant. & Others
  • Balbir Singh, ASG Avinash Sharma, Ms Monica Benjimin, Ms Anu Sura, Ms Akanksha Kapoor, Siddhant Choudhary, J. Sai Deepak & Avinash K. Sharma, Advs. for the Respondent. & Others

Facts of the Case

In the instant case, the Delhi High Court ruled that the Patents Act, 1970 shall prevail over the Competition Act, 2002 on the issue of exercise of rights by a patentee.

The High Court made the observations while dealing with a bunch of appeals moved by multinational entities i.e. LM Ericsson and Monsanto challenging the proceedings initiated against them by the CCI. An appeal was also moved by the CCI.

The appeals raised a common question i.e. when a patent is issued in India and the patentee asserts such rights, can CCI inquire into the actions of such patentee in the exercise of its powers under the Competition Act.

It was submitted on behalf of the two entities that the Patents Act is a special law dealing with patents and that issues of imposition of conditions for licensing patents are provided for under Chapter XVI, which includes anti-competitive agreements and abuse of dominant position explicitly.

On the other hand, the CCI took a stand that the Competition Act is a special law dealing with anti-competitive agreements and abuse of dominant position and thus some stray provisions in the Patents Act, which deals otherwise with patents, cannot be understood as overriding the Competition Act, which is a subsequent statute.

The Bench observed that the legislative intent is apparent in the Patents Act especially as amended by the 2003 Amendment that introduced Chapter XVI after the Competition Act was enacted. It is especially for the field pertaining to patents, unreasonable conditions in agreements of licensing, abuse of status as a patentee, inquiry in respect thereof and relief that is to be granted therefor are all to be governed by the Patents Act.

The High Court observed that once there is a clear legislative intent that the Patents Act will override the Competition Act, the same cannot be saved by the provisions of Section 21A of the Competition Act, which deals with reference by the CCI to the statutory authority.

High Court Held

The High Court held that Chapter XVI of the Patents Act is a complete code in itself on all issues pertaining to unreasonable conditions in agreements of licensing of patents, abuse of status as a patentee, inquiry and relief that is to be granted.

The High Court, further held that there is no scope of doubt beyond the pale of doubt that the Patents Act is the special statute, and not the Competition Act. It is also a fact that Chapter XVI of the Patents Act is a subsequent legislation as compared to the Competition Act.

Therefore, when assessed, by the maxim generalia specialibus non derogant or by the maxim lex posterior derogat priori, the Patents Act must prevail over the Competition Act on the issue of the exercise of rights by a patentee under the Patents Act.