The Supreme Court of India has signaled it will decide whether the Competition Commission of India can probe anti-competitive conduct linked to patent rights, while staying parts of an NCLAT ruling excluding Competition Act scrutiny over patent-based dominance claims.
NEW DELHI: The Supreme Court of India signaled that it will determine whether the Competition Commission of India (CCI) has the authority to investigate alleged anti-competitive behavior arising from the use of patent rights.
A Bench comprising Justices JB Pardiwala and Vijay Bishnoi has put a hold on certain aspects of a National Company Law Appellate Tribunal (NCLAT) decision, which stated that the Competition Act, 2002 does not apply where claims of abuse of dominance originate from the exercise of patent rights.
The NCLAT maintained that such matters are exclusively governed by the Patents Act, 1970. The Supreme Court clarified that it will only address the question of jurisdiction.
ALSO READ: Supreme Court Rejects JioStar Plea, Allows CCI Probe into Kerala Cable Market
This appeal stems from an NCLAT ruling that dismissed a challenge to a 2022 CCI decision that had closed a complaint against Swiss pharmaceutical firm Vifor International AG concerning its patented medication Ferric Carboxymaltose (FCM). Although the CCI concluded the case on merit-based grounds, the NCLAT extended its ruling further, asserting that the CCI entirely lacked jurisdiction, reasoning that the Patents Act is a specialized statute that takes precedence over the Competition Act in matters involving patent rights.
To support its conclusion, the NCLAT referenced Section 3(5) of the Competition Act, which safeguards reasonable conditions imposed by intellectual property holders. It also cited a 2023 Division Bench ruling of the Delhi High Court related to the Ericsson–Monsanto cases. The Appellate Tribunal mentioned that the Supreme Court had previously refrained from interfering with the Delhi High Court’s decision.
The Ericsson–Monsanto matters stem from a protracted dispute regarding whether the CCI can investigate claims of abuse of dominance linked to patent rights.
In the case involving Telefonaktiebolaget LM Ericsson, mobile handset manufacturers Micromax and Intex approached the CCI, alleging that Ericsson abused its dominant standing by demanding excessive royalties to use its standard essential patents (SEPs). The CCI found a prima facie indication of abuse and ordered an investigation. Ericsson contested this before the Delhi High Court, arguing that issues concerning patent licensing and royalties fall exclusively under the Patents Act, 1970.
Initially, a single judge of the Delhi High Court allowed the CCI’s investigations to proceed at the prima facie stage. However, a division bench reversed this decision in 2023, stating that the Patents Act is a specialized law and a complete framework for addressing topics such as unreasonable licensing conditions, abuse of patent rights, and compulsory licensing.
The bench ruled that the Competition Act, 2002 should not be invoked to assess such behavior and determined that the CCI lacks jurisdiction in cases of abuse of dominance claims that arise from the exercise of patent rights.
The Supreme Court subsequently chose not to intervene in the Delhi High Court’s decision while leaving broader legal questions open. This reasoning has been adopted by the NCLAT to conclude that the CCI lacks jurisdiction over competition disputes based on patents.
Before the Supreme Court, the challenge is focused solely on the correctness of the NCLAT’s jurisdictional ruling, rather than on the results of the competition proceedings themselves. The Court has emphasized that its stay pertains only to the legal aspects of jurisdiction and that the underlying dispute’s merits will not be reconsidered.
The CCI was represented by Additional Solicitor General N Venkataraman, while Vifor was defended by Senior Advocates Shyam Divan and Vaibhav Gaggar, supported by a team from Anand & Anand.
Case Title: CCI v. Swapna Dey