[Arnav Srivastava is a fourth-year law student at Rajiv Gandhi National University of Law, Punjab]
Introduction
Imagine a marketplace where the best-quality product is available at the most affordable price. The situation symbolizes an ideal market structure, the heart of which lies in the synergy of innovation and competition. While the former ensures the unflinching upgradement of resources to fetch the best products and services in the market, the latter provides a level playing field for all the market participants for fair accessibility of resources, ensuring the market is not tipped in favour of a single player. In such a market structure, the pathways of laws governing competition and innovation crossing each other are inevitable. While there is no dearth of literature on how the symbiotic relationship between competition and innovation is the cornerstone of effective market functioning, the friction created by their jurisdictional overlaps is less discussed.
Last year, in September, the case of Rocep-Lusol Holdings Limited v. Lindal Dispenser GmbH highlighted the complex relationship competition law and intellectual property rights. The dispute in its pith and substance dealt with a contract for the exclusive license patents connected to aerosol cans in exchange for royalty payments. One notable issue that proliferated in the case was a need for clear demarcation of power between regulatory authorities, ensuring that no authority, while exercising its rights, undermines the jurisdictional power of the other authority. Moving a step further, iIn this context, the Delhi High Court judgment in Ericsson and Mosanto v. Competition Commission of India (CCI) case comes under fire, underscoring the complexities involved in the intersection of the Competition Act 2002 with the Patents Act 1970. Post-judgment, significant concerns arose, sparking debates on the possible repercussions of restricting the CCI’s jurisdiction in patent-related matters having anti-competitive effects.
This article will unearth the intricacies of the Ericsson v. CCI judgment, critically analyzing its reasoning and potential consequences. Following the introduction, the article will delve deeper into the jurisdictional tussle where the CCI is at odds with the Controller of Patents. The article would give a comparative analysis of the Electricity Act 2003 vis-a-vis the Competition Act 2002, showcasing the justification of waiving the CCI’s jurisdiction in electricity pertaining issues and how those factors are absent in the CCI v. Controller of Patents power dynamics. The author, in the end, maintains that the CCI, as a market regulator, is not just an appropriate body to deal with anti-competitive concerns, but also the competent body having extensive provisions to overhaul any irregularities detected by unfair market conduct.
The Clash of Giants: Patent Rights or Market Fairness?
The judgment in Ericsson v. CCI marks a watershed moment in the intersectionality of competition law and patent law, triggering debates within the legal circles in India. The dispute stemmed from the multiple complaints filed before the CCI by mobile phone companies like Intex and Micromax, alleging that the Swedish telecom giant Ericsson abused its dominant position by imposing unreasonable and discriminatory conditions for licensing patents, coupled with exploiting its Standard Essential Patents (SEPs) by demanding usurious royalties. Ericsson, referring to Chapter XVI, specifically Sections 84(6), 84(7), 90(1)(ix), 140(1)(iii)(C), and 140(3), contended that issues pertaining to anti-competitive licensing agreements and abuse of dominant position by a patentee fall squarely within the ambit of the Patents Act 1970 and thereby exclude the jurisdiction of the CCI. The Delhi High Court, after hearing both parties, concurred with Ericsson’s stance by keeping the anti-competitive patent conduct outside the bounds of CCI’s jurisdiction. This judgment is currently appealed before the Apex Court. Let’s unleash this jurisdictional conflict by comparing the provisions of the Competition Act 2002 with the Electricity Act 2003.
Prior to delving into the insights from the intersectionality of Competition Act 2002 with Electricity Act 2003, a discussion on Section 60 of the Competition Act 2002 is pertinent. Section 60 of the Competition Act is a non-obstante clause that stipulates that the provisions of the Competition Act 2002 will outweigh the provisions mentioned in other laws for the time being in force. Additionally, Section 61 forecloses the jurisdiction of civil courts in matters relating to Competition Act infringement. Section 63 provides that former laws are surmised to work in harmony with the existing laws. Concomitantly, Section 60, with its subsequent provisions, tips the jurisdiction in CCI’s favour. Nevertheless, the Competition Appellate Tribunal COMPAT in 2016 circumscribed the jurisdiction of the CCI and bestowed it to the sector regulator established under the Electricity Act 2003. In the coming section, the authors will shed light on the reasons that aversely obliged the CCI to cede its jurisdiction.
Competition Act 2002 v. Electricity Act 2003: Why CCI Conceded Jurisdiction this Time?
The jurisdictional tussle between the Competition Act 2002 and the Electricity Act 2003 can be traced back to the case of Anand Prakash Aggarwal v. Dakshin Haryana Bijlu Vitran Nigam, where the COMPACT categorically highlighted that in the cases where two non obstante clauses are in conflict with each other, the latter enactment will prevail the former one. In this case, Section 60 of the Electricity Act 2003 outstripped the jurisdiction granted to the CCI under the Competition Act 2002, which was precursor to the Electricity Act 2003. Additionally, Section 60 was concretely crafted to establish an appropriate commission empowered by the Act to grapple with the abuse of dominance concerns in the electricity sector.
Therefore, the Anand Prakash Aggarwal case highlights three requirements to be fulfilled for the CCI to cede its jurisdiction. Firstly, the existence of a non obstante clause clashing with Section 60 of the Competition Act. Secondly, the enactment defying CCI’s jurisdiction should be a later statute and thirdly, the Commission outcasting CCI’s jurisdiction should be well-equipped and competent as a sector regulator to tackle any competition concerns in the respective sector. The fulfillment of the above requirements will undeniably oblige the CCI to pull its hands out from the investigation of anti-competitive conduct in a specific sector.
Upon the application of the above conditions to the jurisdictional conflict between Competition Act 2002 and the Patents Act 1970, it can be witnessed that firstly, the Patents Act does not embody any non-obstante clause, thus unambiguously defying the authority to override CCI’s jurisdiction. Secondly, the Competition Act 2002 was a subsequent legislation to the Patents Act 1970, making the Patents Act 1970 a latter statute. The third reason that the CCI is a well-equipped and competent body to address any competition concerns in the patent sector is highlighted from the observations made by the Ayyangar Committee Report, which is the pioneer committee behind the establishment of the Patents Act 1970.
Final Word: Ayyangar Committee’s Observation
The Parliament in 1949 bestowed the responsibility of revisiting the existing patent law policy in the hands of the Bakshi Tek Chand Committee. The Committee, while intensifying its commitments towards a sweeping patent policy, often encountered a conflict of balancing a country's social goals with its economic objectives. With this objective on board, the Parliament turned over a new leaf by enacting the Ayyangar Committee to ameliorate the recommendations proposed by the Bakshi Chand Committee.
The Ayyangar Committee admitted that while the patents rights acts as a catalyst for oiling the wheels of monopolistic combinations, an amendment to the Patents Act 1970 is not adequate enough to address the anti-competitive concerns. Studying global practices regulating monopolistic combinations, the Committee observed that an independent commission is imperative to address potential existence of monopolies. This observation gives a clear picture on the intention of the Ayyangar Committee by highlighting the need for an independent commission to address monopolistic concerns despite the existence of the Office of the Controller of Patents.
Conclusion & Way Forward
The jurisdictional tension between the Controller of Patents and the Competition Commission of India has cast a long shadow over India’s regulatory landscape. The Delhi High Court ruling in the Ericsson v. CCI judgment once again opened the debate on the controller’s competency in addressing anti-competitive conducts in the market. The onus now lies on the Apex Court to put a full stop to this conflict. If the Apex Court endorses the High Court’s ruling, it could have a cascading effect on market competition and innovation. By giving a clean check from CCI’s intervention, the Apex Court may widen the doors for such patent holders to engage in anti-competitive conduct with impunity.
On the other hand, a complete free hand given to the CCI can also raise significant concerns. An unfettered jurisdiction to the CCI can deter patent holders from introducing their innovation in the market, which over a period of time could discourage innovation. The Apex Court has the responsibility to strike a delicate balance between ensuring fair market competition and protecting innovation. The Apex Court must be pensive in contemplating the possible repercussions of excessive CCI’s intervention on patent holders and the future of innovations at large. Taking a more nuanced approach is the need of the hour. The court could consider demarcating clear boundaries on the scope and limitations of both the CCI and the Controller of Patents. The stakes are high, and the Apex Court decision will not merely decide a jurisdictional conflict but also set the stage for the future of competition law enforcement in the years to come.
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