Competition Commission of India -Patent Rights

Back in the year 2016, the Hon’ble Delhi High Court in Telefonaktiebolaget L.M. Ericsson v Competition Commission of India & Another had upheld the jurisdiction of CCI (the fair trade regulator in India) to investigate matters where the patentee or any persons authorized by the patentee is alleged to be abusing its dominance in the relevant technology market in respect of charging excessive and unfair prices or by including discriminatory conditions in the license or sub-license agreements.

In a recent judgment pronounced by the same court on May 20, 2020 in the matter of Monsanto vs CCI, the court reaffirmed the jurisdiction of CCI to investigate and intervene if there is a complaint alleging inclusion of onerous conditions by the patentee in the licensing or sub-licensing agreements which is likely to cause an appreciable adverse effect on competition within India.

The High court although clarified that the alleged anti-competitive practices were not reviewed on merits and the ratio was limited to the conclusion that CCI has a valid jurisdiction to investigate any alleged abuse of dominance by a patent rights holder. The court made the observation with respect to a provision of the competition act [S. 3(5)] intended to allow the IPR/patent holder to take actions or to impose reasonable restrictions necessary for protecting his rights. As regards, the provision, the court held that the exceptions provided under the provision were not unqualified.

The court further went on to observe that ‘Only such agreements that are necessary for protecting any of his rights which have been or may be conferred upon him under the specified statutes are provided the safe harbor under Sub-section (5) of Section 3 of the Competition Act and only to such extent. Plainly, the exclusionary provision to restrain infringement cannot be read to mean a right to include unreasonable conditions that far exceed those that are necessary, for the aforesaid purpose.’

Therefore, reasonable measures taken to avoid infringement of IPR/patent and any agreement executed to give effect to the above purpose would fall outside the purview of section 3(5), however, any unreasonable restrictions imposed by the rights holder that may account for abusive acts under the Competition Act shall exhaust the safe harbor otherwise available to the IPR right holder under said statute.

 

Author: Mr.Sonal Mishra
Desig. : Intellectual Property Attorney