Delhi High Court Upholds Prevalence Of Patents Act Over Competition Act In The Exercise Of Rights By Patentee

Summary

In a significant ruling,[1] the Delhi High Court clarified the interplay between the Competition Act, 2002, and the Patents Act in cases where a patentee exercises their rights under the Patents Act, 1970. The Court held that the Patents Act must prevail over the general provisions of the Competition Act concerning anti-competitive agreements and abuse of dominant position. As a result, the Court quashed the proceedings initiated by the Competition Commission of India (CCI) against patentees, Ericsson and Monsanto, for exercising their rights under the Patents Act.

Case Timeline

The case involved appeals filed by multinational entities, Ericsson and Monsanto, challenging proceedings initiated by the Competition Commission of India (CCI) against them.

Issue Raised

The primary issue raised in the case was the conflict between the Patents Act and the Competition Act regarding the exercise of rights by a patentee. The question was whether the Competition Act, which deals with anti-competitive agreements and abuse of dominant position generally, overrides the provisions of the Patents Act, which specifically addresses patent-related matters.

Judgment

The Delhi High Court, comprising a division bench of Justice Najmi Waziri and Justice Vikas Mahajan, ruled in favour of the appellants, and held that the Patents Act is indeed a special law specifically pertaining to patents and the exercise of rights by patentees, including the imposition of licensing conditions. On the other hand, the Competition Act is general legislation addressing anti-competitive agreements and abuse of dominant position generally.

The Court emphasized that the legislative intent is clear in the Patents Act focusing on patents, licensing conditions, and the remedies for abuse of dominant position. Furthermore, the inclusion of Section 84(6)(iv) 11 in the Patents Act, after the enactment of the Competition Act with Section 3(5)(i)(b)12 supports the legislative intent concerning anti-competitive agreements. The Court, therefore, concluded that the Patents Act must prevail over the Competition Act when it comes to the issue of a patentee exercising their rights under the Patents Act.

Analysis

The Delhi High Court’s ruling was based on the principle of generalia specialibus non derogant (special law prevails over general law) providing much-needed clarity on the hierarchy of laws when it comes to patents and competition issues in India. By holding that the Patents Act is the special statute in this context, the Court has reinforced the importance of the Patents Act specific provisions concerning licensing conditions and the actions of patentees. This decision is likely to have far-reaching implications for future cases involving patentees’ conduct under the Patents Act and would prevent potential conflicts between the Competition Act and the Patents Act.

The Court also considered the legislative intent behind the enactment of the Patents Act, which made it clear that matters concerning patents are to be exclusively governed by the Patents Act, and the exercise of powers by CCI in this regard would be contrary to such intent. However, it is essential to note that the Court’s ruling does not determine the merits of the claims against Ericsson and Monsanto specifically. Instead, it clarifies the broader legal framework governing competition issues concerning patents.

[1] Telefonaktiebolaget LM Ericson v. Competition Commission of India, 2023 SCC OnLine Del 4078, decided on 13-07-2023