Delhi High Court Rules on the CCI’s Jurisdiction over Patent-related Market Abuse

This is my first post of the year and I am happy that I get to start on a positive note. Yesterday i.e. March 30, 2016, Justice Vibhu Bakhru of the Delhi High Court delivered a 161-page decision in a batch of Writ Petitions wherein the central issue before the Court was the jurisdiction of the Competition Commission of India (CCI) on abuse of dominant position flowing from ownership and exercise of patent rights. Since I was part of the team which worked on the matter, I will not comment on the facts of the case. That said, one wouldn’t be wrong in saying that the Court’s findings on certain questions of law are significant milestones in the evolution of Indian Intellectual Property and anti-trust jurisprudence.

On a personal note, I can safely say that the Court’s findings on the interplay between (a) the jurisdictions of a civil court seized of a suit for patent infringement, (b) the Controller of Patents under the compulsory licensing mechanism (Section 84 of the Patents Act) and (c) the Competition Commission of India, resonate with my analysis in several posts in this blog, which were subsequently discussed by the Centre for Internet and Society. In fact, I had undertaken a comprehensive analysis of the statutory allocation of responsibilities between civil courts, Controller of patents and Competition Commission in my paper “Patents and Competition Law: Identifying Jurisdictional Metes and Bounds in the Indian Context” which was submitted last year for publication in the National Law School of India Review (NLSIR) and will hopefully be published in the next few days. This paper is based on my talk delivered last May in the 8^th National Symposium on Competition Law at the National Law School, Bangalore.

Extracted below are a few excerpts from the paper:

“Abstract

The primary object of this article is to understand the relationship between patent rights and competition law under the existing Indian legal framework. It has become imperative to elucidate the legal position on the interplay between the two, in light of growing antitrust concerns arising out of the exercise of patent rights. The Author has employed conventional principles of statutory interpretation to the relevant provisions of the Patents Act, 1970 and the Competition Act, 2002 to arrive at his conclusions, with Expert Committee Reports playing a corroborative role, primarily because the nature of enquiry undertaken in this article is predominantly legal and not policy-related. Additionally, this is due to the fact that there is a lack of guidance on the issue from Indian Courts.

1. INTRODUCTION

Intellectual Property Rights (IPRs) and Competition law are usually perceived as sharing an uneasy relationship given their seemingly contrasting goals. However, to pit one against the other without qualifications and riders may not do justice to the nuances of their respective natures, roles and goals. The system of IPRs is premised on the assumption that grant of exclusive rights for a limited term is desirable to promote dynamic competition, which pushes the envelope of innovation and thereby contributes to enlarging the basket of choices available to consumers. In other words, in theory, incentivising innovation through IPRs elevates the level of competition from static to dynamic, which is in contrast to the adversarial perception of IPRs and competition law. That being said, in practice, even the most stringently regulated right is susceptible to abuse at the hands of a determined and motivated right owner to the detriment of healthy competition. This necessitates the existence of a safety valve in the form of competition law.

Simply put, the goal of competition law with respect to IPRs is to ensure that the said species of rights are exercised within the limits prescribed by law and in a manner which is beneficial to consumers and which promotes competition. Therefore, an IP owner runs into conflict with competition law only in the event of a transgression in his capacity as an IP owner if such transgression distorts competition. The validity of this general proposition in the Indian context will be examined and tested in specific relation to patent rights in the ensuing portions of this article. The aim is to ascertain if the Competition Act, 2002 (hereinafter referred to as “the Competition Act”) has indeed been vested with the power to check restrictive and abusive trade practices resorted to by a patentee, and if so, to what extent.

6. CONCLUSION

IP statutes, without a doubt, provide for internal corrective mechanisms to address inequities arising out of non-use or abuse of IP rights. However, the scope of analysis undertaken under these mechanisms is limited to verification/examination of achievement of the specific objectives of IP statutes. In other words, these mechanisms lack the sweep and depth of a market-based assessment of the actions of an IP owner under the Competition Act. No single IP regulator, be it the Controller of Patents or the Copyright Board, is charged with the duties of the Commission as reflected in Section 18 of the Competition Act, or is vested with the vast powers of the Commission to deal with market mischief. Therefore, given that the specific object of the Competition Act is to foster sustainable competition in the market, protect the interest of consumers and to ensure freedom of trade, the Competition Commission must be allowed to fulfil its mandate unhindered.”