TY - JOUR
AU - Buch,, Sannidhi
AB - Abstract Monsanto Holdings Pvt Ltd v Competition Commission of India, WP(C) Nos 1776/2016 and 3556/2017, High Court of Delhi, New Delhi, judgment of 20 May 2020 by Mr Justice Vibhu Bakhru The Delhi High Court, in the case of Monsanto Holdings Pvt Ltd v Competition Commission of India, held that the Competition Commission of India has jurisdiction to examine and investigate any perceived anti-competitive practice or abuse of dominant position by any undertaking in matters relating to the rights of patentees under the Indian Patent Act 1970. Legal context In the recent past, scholars across the world have actively discussed the interplay between competition law and intellectual property rights (IPR) as they strive for opposite objectives. In India, one of the earliest cases that focused the attention of legal scholars on this interplay was Aamir Khan Productions Pvt Ltd v Union of India [(2010) 112 Bom LR 3378], where it was challenged that the Competition Commission of India (CCI) does not have jurisdiction to initiate proceedings under the Competition Act 2002 in respect of films for which there are exhaustive provisions provided in the Copyright Act 1957. In this case, the Bombay High Court held that the CCI has jurisdiction to interfere in matters dealing with competition law and IPR. There are several other judgments which highlight that the CCI has jurisdiction on cases where IPRs are being utilized for anti-competitive purposes. However, the debate regarding the jurisdiction of the CCI has not yet been completely resolved. The present judgment of the Delhi High Court is significant as the petitioner advanced novel and interesting arguments for supporting its contention that the CCI should have no jurisdiction to examine and investigate matters concerning agreements dealing with the rights of patentees granted under the Patent Act. Facts Monsanto Holdings Pvt Ltd (‘Monsanto’) is a Fortune 500 company engaged in the development and commercialization of genetically modified seeds. It holds a portfolio of patents, trade marks and licences and was the first company to develop and commercialize Bt. Cotton Technology (Bollgard-I). Originally, Monsanto had developed a single-gene technology that produced seeds that were immune to bollworms. Subsequently, Monsanto developed a second-generation two-gene technology, which made hybrid seeds resistant to bollworms (Bollgard-II). Monsanto licensed Bt. Cotton Technology to Mahyco Monsanto Biotech (India) Pvt Ltd (‘MMBL’), which is a part of the Monsanto group. MMBL further sub-licensed the products, by charging a non-refundable fee (to be paid upfront) as well as a recurring fee based upon the Maximum Retail Price (‘MRP’) of Bt. Cotton Seed (known as ‘Trait Fee’). The informants approached the CCI alleging that Monsanto and MMBL violated provisions of the Competition Act, abusing their dominant position in the market by charging excessive and unfair prices. It was further alleged that by imposing unfair conditions in the sub-licence agreement(s), Monsanto and MMBL have violated the Competition Act. The CCI prima facie found merit in the allegations by the informants and directed the Director-General to conduct an investigation in the matter. However, the CCI’s interference in the dispute was challenged before the Delhi High Court on the grounds of lack of jurisdiction. Analysis Arguments before the court The argument advanced by the petitioner was that the CCI has no jurisdiction to examine the issues raised before it as they concerned the exercise of rights granted under the Patent Act, thus pre-empting the applicability of the Competition Act. The petitioner contended that the Delhi High Court’s judgment in Telefonaktiebolaget LM Ericsson v Competition Commission of India [2016 (66) PTC 58 (Del)], wherein the court had accepted the view that the jurisdiction of the CCI is not excluded in matters relating to the rights granted under Patent Act, was bad law after the Supreme Court’s judgment in Competition Commission of India v Bharti Airtel Ltd [AIR 2019 SC 113]. The petitioner also contended that section 140 of the Patent Act disciplines cases in which the exercise of patent rights would lead to an anti-competitive conduct. Further, sections 66 and 85 of the Patent Act allow the Controller of Patents to revoke a patent in the public interest (which involves the promotion of healthy competition). Thus, the Patent Act grants enough power to the Controller to look into cases where the patentee is abusing his position of dominance, and the CCI should not have jurisdiction over it, as the objective of the Competition Act is already fulfilled. The judgment The High Court primarily relied on its earlier judgment in Ericsson, where the jurisdiction of the CCI in examining the abuse of rights granted under the Patent Act had been upheld. The court then referred to sections 60 and 62 of the Competition Act and noted that the non-obstante clause in these sections means that, notwithstanding anything in any other law in force, the Competition Act would remain applicable. The court inferred the legislative intent that the Competition Act is in addition to other statutes and not a substitute thereof. The court then moved to examining whether a harmonious construction of the Competition Act and the Patent Act is possible or not. It concluded that both statutes provide a different set of remedies which can be simultaneously exercised; therefore, a prospective licensee can approach the Controller of Patents for the grant of a compulsory licence under section 84 of the Patent Act, while the CCI has parallel jurisdiction to pass orders under section 27 of the Competition Act for abuse of dominance by the patent holder where a prima facie case of anti-competitive practice is made out. The court concluded that the intention of the legislature by enacting the Competition Act was not to repeal any other statute, but rather to ensure the implementation of the provisions of the Competition Act in addition to those of other statutes. The court, relying on the judgment in Ericsson, held that there is no irreconcilable divergence between the provisions of both statutes and that the CCI has jurisdiction on matters regarding abuse of dominance in relation to the rights of the patentee under the Patent Act. The court distinguished the instant matter from the Supreme Court judgment in Bharti Airtel, where the jurisdictional conflict between CCI and Telecom Regulatory Authority of India (‘TRAI’), the telecom sector regulator, was reconciled by maintaining a balance and subjecting the CCI investigation to the findings of TRAI. The court elaborated on the difference in the respective regulatory roles of TRAI and the Controller of Patents and stated that the Controller does not regulate the exercise of patent rights and licensing agreements in a pervasive manner like TRAI for the obvious reason that patent is not an industry. The court, therefore, defined the function performed by the Controller of Patents as primarily examining patent applications and held that there existed a difference in the respective domain expertise of the Controller and TRAI. Practical significance The issue of jurisdiction in similar cases appeared to be settled in Bharti Airtel: it seems that the Delhi High Court has now reopened the debate. The High Court delved into a controversial aspect by stating that the apex court’s judgment in Bharti Airtel is not an authority for reconciling every jurisdictional conflict between sector-specific regulators and the CCI. It should be noted that the court failed to consider material aspects of the apex court’s judgment which deliberated on the need for maintaining a balance between sector-specific regulators and the CCI in respect of sections 21 and 21A of the Competition Act. The court should have devised a mechanism for the CCI to utilize the expertise and specialized knowledge of the Controller of Patents for curbing the anti-competitive practices of patent holders. Another point which makes the present judgment more controversial is that the court propounds that a case-by-case analysis should be conducted in disputes involving jurisdictional conflicts between regulators and therefore distinguished the instant case from that of Bharti Airtel. However, the judgment ultimately provides CCI jurisdiction over disputes involving anti-competitive practices with respect to the exercise of patent rights, irrespective of the case at hand and, consequently, dismisses the need for the expertise of the Controller of Patents. This opens a Pandora box of questions regarding the respective domain expertise of the various regulators under the Copyright Act, Trade Marks Act and other statutes. The Bharti Airtel’s case appeared to have addressed the controversy, but the Delhi High Court has reopened the matter and, thus, the imperative need for a clear legislative mandate to remove the ambiguity created by a complementary provision in different legislations has been reemphasized. The jurisdictional debate, if it remained unresolved, might lead to some serious implications for patent holders. For example, a prospective licensee might seek a remedy before the CCI as well as the Controller for the alleged anti-competitive practice of a patent holder and exploit the dual remedy mechanism. This would be detrimental to patent holders, as they would be under a great deal of scrutiny before both regulatory bodies. These overlapping jurisdictional conflicts arise due to poor legislative drafting and the courts are thus burdened with the task of traversing through complex, vaguely worded and conflicting provisions present in these statutes. The issue has nevertheless been discussed and debated in various international fora, and there exist a multitude of solutions for establishing a relationship between the antitrust authority and sectoral regulators. For example, in the antitrust regime of the UK, there exists a concurrency model for resolving such disputes where both authorities enjoy competency and reach a decision on the exercise of the same through a consultative process [The Competition Act 1998 (Concurrency) Regulations 2000]. Thus, by taking inspiration from the solutions proposed by other jurisdictions, the legislature could solve these jurisdictional problems, ensuring that patent holders are not being unnecessarily scrutinized by multiple authorities for the same issue. © The Author(s) 2020. Published by Oxford University Press. All rights reserved. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model)
TI - Marrying innovative bride with competitive groom: Delhi High Court accepts jurisdiction of CCI on abuse of dominance
JO - Journal of Intellectual Property Law & Practice
DO - 10.1093/jiplp/jpaa144
DA - 2020-12-25
UR - https://www.deepdyve.com/lp/oxford-university-press/marrying-innovative-bride-with-competitive-groom-delhi-high-court-d9XBoPvENE
SP - 862
EP - 864
VL - 15
IS - 11
DP - DeepDyve
ER -