SC to rule on competition body's power to probe patent-linked disputes

While staying portions of a ruling of the National Company Law Appellate Tribunal NCLAT, the Supreme Court on Monday said it will examine whether the Competition Commission of India CCI has the authority to look into allegations of anti-competitive conduct arising from the exercise of patent rights.

While staying portions of a ruling of the National Company Law Appellate Tribunal (NCLAT), the Supreme Court on Monday said it will examine whether the Competition Commission of India (CCI) has the authority to look into allegations of anti-competitive conduct arising from the exercise of patent rights. A bench of Justices J B Pardiwala and Vijay Bishnoi stayed certain parts of the NCLAT's findings that the Competition Act, 2002 has no application where claims of abuse of dominance are rooted in the use of patent rights and that such disputes fall solely within the framework of the Patents Act, 1970. The apex court clarified that its consideration in the appeal and the interim stay would be confined to the question of jurisdiction and would not extend to the merits of the underlying competition dispute. The matter arises from an NCLAT order that upheld a 2022 decision of the CCI which closed a complaint against Swiss pharmaceutical firm Vifor International AG concerning its patented drug Ferric Carboxymaltose (FCM). Although the CCI had dismissed the complaint on merits, the appellate tribunal went a step further and held that the regulator lacked jurisdiction altogether, reasoning that the Patents Act, being a special statute, overrides the Competition Act in matters involving patent rights. To support its decision, the NCLAT relied on Section 3(5) of the Competition Act, which safeguards reasonable conditions imposed to protect intellectual property rights. It also placed reliance on a 2023 Division Bench judgment of the Delhi High Court in the Ericsson and Monsanto cases, noting that the Supreme Court had declined to interfere with that ruling. The Ericsson-Monsanto line of cases stems from disputes over whether the CCI can examine allegations of abuse of dominance when such claims arise from the exercise of patent rights. In the Ericsson matter, mobile handset makers Micromax and Intex had approached the CCI alleging excessive royalty demands for standard essential patents. While the CCI ordered a probe after forming a prima facie view, Ericsson challenged the proceedings before the Delhi High Court. In the Monsanto matter, seed companies approached CCI to examine allegations that Monsanto had engaged in anti-competitive conduct by charging excessive royalties for its genetically modified cotton seeds and failing to make its patents reasonably available. A single judge of the Delhi High Court initially allowed the investigation to continue but a division bench later set aside the CCI's proceedings in both Ericsson and Monsanto cases, holding that the Patents Act constitutes a complete code for issues such as unreasonable licensing terms, abuse of patent rights and compulsory licensing, thereby excluding the application of the Competition Act. Although the Supreme Court subsequently declined to interfere with the Delhi High Court's verdict, it kept the broader questions of law open. The NCLAT adopted this same line of reasoning while holding that the CCI lacks jurisdiction over competition complaints founded on the exercise of patent rights.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)