SC To Examine Delhi HC Order Quashing Case Against Monsanto, Ericsson On Plea By CCI

Supreme Court will examine Delhi HC verdict in CCI vs Monsanto, Ericsson case which held that Patents Act prevails over Competition Act when it comes to the issue of exercise of rights by a Patentee.

The Supreme Court on Friday issued notice in petition moved against the Delhi High Court verdict which held that Patents Act of 1970 prevails over the Competition Act of 2002 when it comes to the issue of the exercise of rights by a Patentee under the Patents Act

Senior Advocate Abhishek Manu Singhvi appearing for Monsanto said that it is "dead matter" as the patent has already completed its duration. However, Senior Advocate N Venkataraman appearing for the Competition Commission of India (CCI) told the court that CCI has been ousted of jurisdiction by the Delhi High Court order.

A three-judge bench headed by Chief Justice of India (CJI) DY Chandrachud issued notice seeking response from respondents in the case.

Monsanto and Ericsson came under CCI's scanner after companies complained that these two were abusing their dominant position by virtue of holding the patent for their respective technologies. 

Monsanto had the patent for a technology to produce genetically modified cotton seeds. The companies who took license from Monsanto moved CCI complaining that they had to pay non-refundable fee as well as a recurring fee to use its technology.

Ericsson had huge portfolio of Standard Essential Patents related to telecom technologies like 2G, 3G, etc. Ericsson sued mobile phone manufacturer Micromax saying that its mobiles violated its patents and sough royalty from it. Microsoft moved CCI alleging abuse of dominant position by Ericsson, saying that the telecom giant was claiming unfair royalty from them for the use of its technology.

A division bench of the Delhi high court held that the Patents Act of 1970 is a special law intended to deal with patenting and the CCI lacks the jurisdiction to investigate whether a company has abused its dominant position while exercising its patent rights.

Delhi HC Quashed CCI Proceedings Against Ericsson, Monsanto On Following Grounds

1) The CCI is not the sole authority to decide on question of whether a patent license will cause adverse effect on competition within India or will amount to abuse of dominant position.

2)  The Competition Act exempts the CCI from looking into reasonable conditions that are part of a license granted by a patentee, which shows that law makers intended to keep that assessment within the exclusive domain of the Patents Act.

3) Patents Act provides for mechanism to determine if conditions imposed by a patentee while granting a license are unreasonable.

4) The relevant matters here is not just over abuse of dominant position by a patentee but also anti-competitive agreements.

5) And as the Patents Act is a special statute that deals with patents, its provisions will prevail over those of the Competition Act on the issue of exercise of rights by a patentee under the Patents Act.

6) In case of an inter se settlement between parties, the CCI proceedings seize immediately.