Oct 27, 2023

Delhi HC Rules That Patents Act Must Prevail Over Competition Act in Exercise of Rights by Patentee

On July 13, 2023, the DHC disposed the appeals and a writ petition filed by Telefonaktiebolaget LM Ericsson (‘Ericsson’) on the grounds that the CCI lacked jurisdiction in the case as proceedings in relation to a claim of royalty of a patent would fall within the scope of the Patents Act, 1970 (‘Patents Act’). The present case arose out of the orders passed by the CCI directing investigation against Ericsson, based on complaints filed by Micromax Informatics Ltd. and Intex Technologies (India) Ltd. alleging abuse of dominance by Ericsson with its Standard Essential Patents (‘SEPs’). [1]

Ericsson’s Submissions: Ericsson contended that the CCI does not have jurisdiction to inquire into businesses of licensing of patents as there is no sale or purchase of goods/services involved. The power to inquire into licensing of patents – including whether it relates to anti-competitive practices – is to be dealt with under the Patents Act. The Appellant further argued that the CCI does not possess necessary machinery and expertise to deal with the fair rates of patented products. Chapter XVI of the Patents Act explicitly deals with various aspects of patents, and the power of inquiry is vested with the Controller under Section 84(4) of the Patents Act. The legislative intent of the Patents Act is to also govern anti-competitive practices and abuse of patent rights. The Appellants relied on the Airtel Decision[2] where it was held that the first authority that ought to exercise jurisdiction in matters pertaining to telecommunication, is the Telecom Regulatory Authority of India until when the CCI cannot exercise jurisdiction.

Respondents’ Submissions: The respondents argued that the mechanism under the Patents Act is insufficient and the CCI should be permitted to inquire in this matter. They relied on ‘Aspects Doctrine’ to establish that the overlap between the Patents Act and the Competition Act does not oust the CCI powers under the Competition Act. Additionally, Section 60 of the Competition Act provides specialised powers only to the CCI to deal with cases concerning anti-competitive conduct. With regards to the Airtel Decision they argued that even relying on this case, CCI is the only authority to inquire into anti-competitive agreements and abuse of dominance.

DHC’s observations: In this instance, the DHC examined the constituents of a ‘special act.’ The Court observed that the elements are: (i) the subject matter in question; (ii) the scheme and relevant provisions of the two statutes; and (iii) intendment of the statutes. The Court observed that both the Competition Act and the Patents Act are special acts.

The Court observed that the subject matter of agreements related to patent licenses is not reserved for CCI as both the Competition Act and the Patents Act have similar powers to grant compulsory licenses. The Court arrived at this observation by comparing Sections 19(3), 19(4), and 3(5) of the Competition Act with Sections 84(6) and 84(7) of the Patents Act.

The DHC held that the legislative intent of the legislature was clear when they amended the Patents Act in 2003 (regarding Chapter XVI) which was subsequent to the enactment of the Competition Act. The intent was making Patents Act a special legislation for dealing with matters relating to anti-competitive agreement by patent holders. The Court also observed that Chapter XVI of the Patents Act is in itself a complete code, and it is a subsequent legislation as compared to the Competition Act.

The DHC relying on the maxim generalia specialibus non derogant or the maxim lex posterior derogat priori held that the Patents Act should prevail over the Competition Act with regard to the issue of rights of a patentee. Accordingly, the DHC dismissed the petition and held that the CCI does not have jurisdiction in this case.

[1]       Telefonaktiebolaget LM Ericsson v. Competition Commission of India (LPA 246/2016, LPA 150/2020, LPA 550/2016, LP 246/2016, W.P.(C) 8379/2015.

[2]        Competition Commission of India v. Bharti Airtel, (2019) 2 SCC 521.




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