The NCLAT’s decision in Swapan Dey v. CCI marks the latest turn in the growing reluctance to let the CCI probe allegations of anti-competitive conduct stemming from the enforcement of patent rights. Yet, as Vasundra Koul points out, intellectual property and competition law are explicitly linked. Explaining the interplay between the Competition Act and the Patents Act, she argues that courts should reconcile these regimes through coordinated, domain-expert adjudication rather than an outright ouster. Vasundra is a fourth-year student at Rajiv Gandhi National University of Law, Punjab, with a keen interest in Intellectual Property and Commercial Law. She enjoys writing on the evolving intersections of law, media, and technology.
Interested readers can also tune into this discussion between Daanish Naithani, Ambika Aggarwal, and Yogesh Byadwal (from 18:30), which traces how the question of the CCI’s authority over alleged anti-competitive conduct arising from patent licensing agreements has travelled through various adjudicators up to the Supreme Court, and how, despite this journey, it remains unresolved, with the NCLAT’s ruling further complicating an already unsettled question.
Another One Bites the Dust – NCLAT Ousts CCI’s Jurisdiction in Patent Matters
By Vasundra Koul
It seems that the National Company Law Appellate Tribunal (NCLAT) has also joined forces in ousting the jurisdiction of the Competition Commission of India (CCI) in dealing with patent matters. Last week, in Swapan Dey v CCI, the NCLAT held that the CCI lacks the jurisdiction to examine anti-competitive practices when it arises from the exercise of patent rights. The Appellate Tribunal thus builds up on the Delhi’s High Court’s 2023 Division Bench (DB) judgment in Ericsson v CCI, (discussed here and here for posts by Aparajita Lath and Praharsh), and the Supreme Court’s recent dismissal of CCI’s appeal that left the question of law formally open but functionally cemented the ouster for now. (See here and here for posts by Yogesh and Ambika Aggarwal).
Background of the Case
In 2022, Swapan Dey (the Informant), the CEO of Eskag Sanjeevani Multispeciality Hospital, filed a case against the pharmaceutical giant Vifor International (AG) (Vifor) under Section 19(1)(a) of the Competition Act, 2002 (the 2002 Act). They alleged that Vifor was engaged in anti-competitive activities under Section 3(4) of the Act, to limit the production and distribution of Ferric Carboxymaltose (FCM), which is an essential injectable for patients suffering from Iron Deficiency Anaemia (IDA). The Informant had further contended that Vifor was abusing its dominant position in the pharmaceutical market by executing a de facto exclusive licensing agreement with Emcure Pharmaceutical Ltd (Emcure) and Lupin Ltd. (Lupin), thus limiting the supply of the FCM drug in India in contravention of Section 4(2)(b)(i) of the Act. The CCI, while disagreeing with Vifor’s contention about the lack of jurisdiction with the CCI, held that Vifor’s licensing agreements did not foreclose the market and were not in contravention of the provisions of the 2002 Act.
The Present Case
Following the CCI’s order, the Informant filed an appeal with the NCLAT under Section 53B of the 2002 Act. (Side note: NCLAT became the Appellate Tribunal under this section, following the dissolution of the Competition Appellate Tribunal (COMPAT) by the amendment in the Finance Act, 2017.)
The Informant’s contention, inter alia, rested on the fact that the CCI failed to deal with the issue of ‘relevant market’ and assess the dominant position of Vifor in the pharmaceutical market. Further, the Informant contended that the CCI conducted an ex-ante analysis (which includes regulations that assess potential anti-competitive behaviour before it takes place), the framework under Sections 5 and 6, instead of an ex-post analysis (which examines anti-competitive conduct after it has occurred), as under Sections 3 and 4 of the 2002 Act.
On the other hand, Vifor primarily contended that since the drug in issue is governed by the principles of working of a patent under Section 83 of the Patents Act, 1970, the CCI is barred from trying the case in light of Section 3(5) of the 2002 Act (which allows a person to restrain any infringement of, or to impose reasonable conditions to protect rights under Patents Act) and the previous judgments of the Delhi High Court.
Relying heavily on Ericsson v CCI and the Supreme Court’s dismissal of the SLP No. 25026/2023, the NCLAT sided with the Respondents and held that the CCI did not have jurisdiction to try the case and thus dismissed the appeal.
It is pertinent to note that while the Supreme Court in SLP No. 25026/2023 did not issue a notice, it chose not to deal with any question of law and kept it open, to be brought up in some other matter. Ambika discusses this in her post here. While this essentially means that the Delhi High Court’s DB judgment continues to be in force in the meantime, it seems that the Supreme Court’s order preserves the possibility of a rather different outcome when a suitable case presents a clean legal question on this particular subject.
Where do we Stand?
It cannot be disputed that there exists an inherent link between intellectual property and competition law. This link is also explicitly recognised under Section 3(5) of the 2002 Act, which reflects the Legislature’s intent to protect IP rights while also preventing their unreasonable exercise under the guise of a statutory exception. What has been the contention, however, in all the previous developments, is whether the Patents Act, 1970, is equipped enough to deal with competition-related concerns. A primary argument against this proposition is that Section 84 of the Patents Act cannot adjudicate anti-competitive patent licensing agreements, as the reliefs granted under the Act are in personam and not in rem, unlike those under the 2002 Act. Praharsh elaborated on this argument in his blog here. Nevertheless, Courts have thus far placed their confidence primarily in the chronological relationship between the two statutes, particularly holding that Section 84(6)(iv) was inserted by way of amendment a year after the 2002 Act.
What the Courts have failed to acknowledge is that while Section 3(5) of the 2002 Act exempts patentees from the purview of anti-competitive agreements, it does not state that a discussion on the patentee’s licensing agreements cannot be done within the provisions of the Act. If such were the case, then any law restricting a particular offence under the statute could not be interpreted consistently with its own exceptions. Further, Section 3(5) of the 2002 Act is a narrow and safe harbour that shields only those licensing agreements which are reasonable and necessary to protect a patentee’s right. It does not talk about unreasonable or overboard restraints that would otherwise be scrutinised under Sections 3 and 4. It is also pertinent to note that Section 62 of the 2002 Act states that the provisions of the Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force. This section essentially seems to not only preserve the concurrent application of the 2002 Act alongside Patent law, but also negates any implication that IP-related matters are beyond the scope of the Competition Act.
One Step Back for One Step Forward
Sometimes, glancing back at what has already been done can steer disputes to a more reasoned direction. The Supreme Court has previously, in CCI v. Bharti Airtel Limited, allowed domain experts to deal with issues in the particular area of law. Should not this act as a lighthouse in guiding the courts about the need to balance overlapping statutes through coordinated decision-making? This approach would strengthen the much-needed cooperation between intersectoral regulators, as it was in the past, in order to assess what truly advances consumer welfare without unduly expanding patent exclusivity or diving deep into the question of which law is more special.