Navigating Conflicts: CCI's Powers in the Realm of Indian Patents Act

AUTHOR: JIGEESHA SRIVASTAVA, Shri Ram murti Smarak College of Law, Bareilly

This article seeks to explore the jurisdictional conflict involving the Competition Commission of India (hereinafter CCI) in the realm of Intellectual property Rights, in particular patents. Numerous articles and research paper have examined CCI’s jurisdiction in the matters where there has been consistent effort by the patent holders to oust the authority of CCI in adjudicating whether there is a violation of Section 3 and Section 4 of the Competition Act, 2002 (hereinafter the Competition Act) which pertain to anti-competitive agreement and abuse of dominant position, respectively by resorting to the argument that some other authority has power to look into the matter. However, the legal position remains unclear when CCI’s broad powers as conferred by Section 27 of the Competition Act (more specifically section 27(g)) comes in conflict with the exclusive powers granted to the Controller of Patents. This remains a question of law. 

Competition Commission of India, Section 27(g), jurisdiction, powers, conflict and compulsory license.

The aim of intellectual property laws is to provide exclusive rights to the innovator for a limited time period and exploit it, while also balancing public access and competition considerations. There are various branches of Intellectual Property Rights each designed to protect different forms of intellectual creations and innovations like patents, copyrights, trademarks, designs, geographical indications, trade secrets, plant variety protection etc. These subject specific legislations have established special authorities to deal with the matters related to it. For instance, The Controller General of Patents, Designs and Trade to deal with the patent licensing, copyright board to deal with copyright matters and so on. However, the conflict may arise when CCI’s exercise of its jurisdiction overlaps with the exclusive jurisdiction of the Controller General of Patents, Designs and Trade. The Competition Commission of India is conferred with the powers under The Competition Act, 2002 to adjudicate such matters as it is entrusted with the duty to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India. Though competition law operated in tandem with other laws, the scheme of the Competition Act, 2002 makes it abundantly clear that the powers of CCI cannot be divested by other authorities or laws. The Competition Act has an overriding effect over other laws. It also provides for exclusion of jurisdiction of civil courts in respect of matters which the Commission or the Appellate Tribunal is empowered to determine under the Act. There may be several instances where such conflict may arise over various subject matters, for now we’re considering and instance where the CCI while exercising its power to issue such order or issue direction  as it may deem fit under Section 27(g) has issues a compulsory license to the applicant in a case where it determined that there was a violation of Section 3 and Section 4 of The Competition Act, 2002 in order to ensure fair competition in the market, such power has been expressly conferred upon the controller under Section 88 r/w Section 84 of the Patents Act, 1970. 

Following arguments can be made in favour of validating the jurisdiction of CCI under Section 27(g) in issuing a compulsory license. The direct power regarding Compulsory licence rests with the Controller under the Patents Act, 1970. However, when Section 27(g) of the Competition Act is interpreted in a wider perspective The CCI possesses such jurisdiction . Overriding power of Competition Act, 2002 over any other act. Section 90(1)(ix) requires the adjudication of the Competition Commission.

1.  IMPLIED POWER UNDER SECTION 27(G)-

Section27 of the Competition Act, 2002- Where after inquiry the Commission finds that any agreement referred to in section 3 or action of an enterprise in a dominant position, is in contravention of section 3 or section 4, as the case may be, it may pass all or any of the following orders, namely: (g)- pass such other orders or issue such directions as it may deem fit. 

The term “such other order or issue such directions as it may deem fit” in the Section 27(g), is a very wide term which may include within its purview the power to pass an order relating to compulsory licence as well. Since the establishment of the CCI, and even during the existence of its predecessor, the MRTP, parties have been raising oyster arguments to divest the jurisdiction of the Commission. Though the lack of jurisdiction argument can be raised on its own, stating that the CCI does not have powers to look into a particular matter, Many times the jurisdiction argument is raised under the pretext that some other authority has the power to look into the matter and hence the CCI should be divested of its powers to look into the same. Though competition law operated in tandem with other laws, the scheme of the Competition Act, 2002 makes it abundantly clear that the powers of CCI cannot be divested by other authorities or laws. The Competition Act has an overriding effect over other laws. It also provides for exclusion of jurisdiction of civil courts in respect of matters which the Commission or the Appellate Tribunal is empowered to determine under the Act.

The paradox also arises in a FRAND licensing situation when the relief of applying for a compulsory licence under the Patents Act is cited to oust the jurisdiction under the Competition Act to modify existing licensing agreements. The striking feature of FRAND cases in India is the jurisdiction argument that SEP holders make against the power of the CCI to decide cases involving FRAND licenses. By questioning the jurisdiction of the CCI, the SEP holders not only circumscribe the available reliefs under competition laws but also attenuate the recourse those affected by stronger IP rights have, i.e., to seek a response in competition law. Though the aforementioned citations are in reference to CCI’s power to adjudicate and conclude that a certain practice of a patentee is anti-competitive or amounts to abuse of the patentee’s position of dominance, one noteworthy aspect is the patent holders’ constant efforts to ouster CCI’s jurisdiction by citing a relief of applying for a compulsory licence under the Patents Act.

1.2 OVERRIDING EFFECT OF COMPETITION ACT, 2002 OVER ANY OTHER ACT

Section 60 of the Competition Act, 2002(hereinafter ‘The Act’) gives an overriding effect to it over any other act. This implies that the powers conferred to the Competition Commission of Titan as long as they are exercised in confirmation with Competition Act would have an overriding effect in case it conflicts with the power of any other authority.

The Competition Commission possesses the authority to “pass all or any of the orders” provided in Section 27 of the Competition Act. Among these orders, by virtue of clause (g) of Section 27 of the Act, the commission “may pass such an order or issue such directions as it may deem fit.” The authority after establishing a violation of section 3 and 4 of the Act, may deem it necessary to issue an order mandating the patentee to grant permission to applicant under reasonable terms and conditions. This order aims to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India.  The Commission’s order falls squarely within its jurisdiction.

Now, CCI’s exercise of this power may overlap with the Controller’s power as envisaged under Section 88(1) r/w section 84 of the Patents Act. However, given that the provisions of The Act have an overriding effect, they would prevail over the power conferred upon the Controller under the Patents Act.

1.3 SECTION 90(1)(IX) REQUIRES THE ADJUDICATION OF COMPETITION COMMISSION. 

The anti-competitive practices enumerated in section 84 are explained further in section 90(1)(ix) wherein it is stated: 

(ix) that in case the licence is granted to remedy a practice determined after judicial or administrative process to be anti-competitive, the licensee shall be permitted to export the patented product, if need be.

It is important to note that the aforementioned provisions of Chapter XVI only go so far to state that in granting a compulsory licence, the Controller shall have regard to anti-competitive practices resorted by the patentee and may grant license to remedy the same. However, none of the provisions specify as to who has the power to adjudicate and conclude that a certain practice of a patentee is anti-competitive or amounts to abuse of the patentee’s position of dominance. Section 90(1)(ix) of the Patents Act, which was amended in 2005, envisages the grant of a compulsory licences to remedy a practice determined ‘after judicial or administrative process’ to be anti-competitive. Hence, the Patents Act acknowledges the jurisdiction of the Competition Act, 2002 by referring to “a practice determined after judicial or administrative process to be anti-competitive”. The determination of anti-competitive practice by administrative process refers to the powers of the CCI. The remedies under the Patents Act and Competition Act are different. The scope of the compulsory licences is limited, whereby any person interested may make an application to the Controller for grant of compulsory license on patent, at any time after the expiration of three years from the date of grant of a patent on specific grounds such as, reasonable requirements of public with respect to patented invention have not been satisfied, patented invention is not available to public at reasonably affordable price, or the patented invention is not worked in the territory of India.

On the other hand, there is no limitation for seeking remedy under the Competition Act, 2002. The locus of a person seeking a remedy under the Patents Act for a compulsory licence and an order by the CCI pursuant to investigation is also different. Every time the argument is made that the existence of remedies in the form of compulsory licences for patents and copyright, the right holders indicate the possibility of a third-party settlement to the issues pending between them. It does not, in principle, matter whether the compulsory licence is granted by the Patent Office or by the CCI.

The argument that the Controller has a specialized knowledge in the field of providing a compulsory license would become immaterial so far as the anti-competitive agreement or abuse of dominant position, earlier discussed, that in case of Section 90(1)(ix) the adjudication of the CCI would be required which implies that CCI itself has specialized knowledge in this field, and following this adjudication the Controller would be issuing the compulsory licence, hence here, issuing of the compulsory license is not the bigger task. Also, when CCI possesses the jurisdiction to issue an order relating to compulsory license, it would only save the time of the parties as well as the authority and help in better and efficient management of fair competition throughout the state.  

The above arguments justify why and how the CCI may issue an order regarding compulsory license and it seems fair for the CCI to exercise its jurisdiction to such an extent that it overlaps with the jurisdiction of the authority that has been vested with an exclusive power to issue a compulsory license. However, now let’s take into consideration as to why CCI should not exercise its power in a way that overlaps with the jurisdiction of a Controller. The intent of the legislature while granting such power to issue a compulsory license has been exclusively vested in the Controller can be clearly inferred from the provisions of the Patent Act, 1970 itself.

2.1 EXCLUSIVE POWER OF CONTROLLER

Compulsory license is an authorization which allows a third party to use, make or sell an invention for which a patent has already been granted, without the consent of the owner of the patent as against the exclusive rights that are conferred on a patentee to use, make or sell a patented invention and stop unauthorized and illegal use by third parties. CCI’s jurisdiction under section 27(g) of 2002 act should be interpreted in a way that it should not be inconsistent   with the powers of a sector specific authority. The best way to understand a law is to know the reason for it. In Utkal Contractors and Joinery Pvt. Ltd. and others v. State of Orissa and others, Justice Chinnappa Reddy, speaking for the Court, said:

“9. … A statute is best understood if we know the reason for it. The reason for a statute is the safest guide to its interpretation. The words of a statute take their colour from the reason for it. How do we discover the reason for a statute? There are external and internal aids. The external aids are statements of Objects and Reasons when the Bill is presented to Parliament, the reports of committees which preceded the Bill and the reports of Parliamentary Committees. Occasional excursions into the debates of Parliament are permitted. Internal aids are the preamble, the scheme and the provisions of the Act. Having discovered the reason for the statute and so having set the sail to the wind, the interpreter may proceed ahead…”

The report of the committee headed by Shri Justice N. Rajagopala Ayyangar, nowhere mentioned that any other authority, in this the CCI, would also have the jurisdiction to pass an order issuing a compulsory license. The intent, therefore, is quite clearly be inferred as that the Controller has the sole authority when the matter pertaining to a compulsory license arises (expressio unius est exclusio alterius). 

The Patents Act, 1970 also makes this quite clear:

1. Section 88(1): Powers of Controller in granting compulsory licenses.

 Where the Controller is satisfied on an application made under section 84 that the manufacture, use or sale of materials not protected by the patent is prejudiced by reason of conditions imposed by the patentee upon the grant of licenses under the patent, or upon the purchase, hire or use of the patented article or process, he may, subject to the provisions of that section, order the grant of licenses under the patent to such customers of the applicant as he thinks fit as well as to the applicant.

Hence this Section explicitly states the controller’s power to grant a compulsory license.

2. Section 84(1) of the Patents Act, clearly mentions that the application for a compulsory license must be made to the Controller and hence is not vague at any point so as to infer that any other authority may exercise such power.

3. Section 84(4): mentions that The Controller, if satisfied that any of the grounds mentioned in clause 1 of Section 84 have not been met by the patentee, may grant a license upon such terms as he may deem fit.

An extensive legal framework for handling compulsory licensing is provided under the Patent Act. By granting the authority to CCI  to issue compulsory license would be in violation of Patents Act and would result in legal dispute between Competition Law and Patents Law. According to Patents Act, 1970 the controller of Patents has the exclusive authority as enshrined under Article 88(1) to exercise this power. The CCI is empowered to deal with anti-competitive agreements related to patents and not empowered with the issuance of compulsory license.

Section 60 of the Competition Act, 2002 which gives the provisions of the act an overriding effect would not be applicable in this situation. The legal maxim "generalia specialibus non derogant" (the general does not derogate from the special) is a well-established principle of statutory interpretation. 

2.2 CONFLICT WITH PATENT HOLDER RIGHTS

If the CCI is entitled to issue compulsory licenses, it will eventually result in conflict of interest. As the Patent Act provides the exclusive legal right to the patent holder to decide whether to license their innovation to third person or not under section 48 of the Patents Act, only the controller of Patent can override the rights under conditions specified in the Patents Act. In case, CCI is also given the authority to issue a compulsory license, which would be unfair for the patent holder. The applicant would have options to choose and hence apply for a compulsory license in the form in which they would have a higher chance of the application being accepted. It also opens an alternative for the applicant in case such an application is rejected by the Controller after an extensive investigation on the matter, they may approach the CCI asking for an order issuing compulsory license. There also may be a possibility that the two authorities, controller on one hand and CCI on the other, arrive at conflicting views. 

Though this extract taken from CCI v. Bharti Airtel Ltd., (2019) 2 SCC 521, deals with the jurisdictional conflict between TRAI and CCI, the observation in this case is very relevant as regards to this conflict as well.

 “The issue can be examined from another angle as well. If CCI is allowed to intervene at this juncture, it will have to necessarily undertake an exercise of returning the findings on the aforesaid issues/aspects which are mentioned in para 102 above. Not only TRAI is better equipped as a sectoral regulator to deal with these jurisdictional aspects, there may be a possibility that the two authorities, namely, TRAI on the one hand and CCI on the other, arrive at conflicting views. Such a situation needs to be avoided. This analysis also leads to the same conclusion, namely, in the first instance it is TRAI which should decide these jurisdictional issues, which come within the domain of the TRAI Act as they not only arise out of the telecom licences granted to the service providers, the service providers are governed by the TRAI Act and are supposed to follow various regulations and directions issued by TRAI itself.”

 This article aims to explore the extent to which CCI can exercise its powers under the Competition Act when such exercise overlaps with the exclusive authority of Controller, and whether this leads to jurisdictional overreach. 

This study uses doctrinal qualitative legal research methodology to undertake analysis on both primary and secondary legal Authorities. The methodology includes:

• Statutory Analysis:

Analytical review of the Competition Act, 2002 & the Patents Act, 1970 and the specific provisions under the two statutes. This paper seeks to examine the regulations and guidelines of the CCI and the Controller of Patents with relation to related patents.

• Case Law Analysis:

Analyzing the case laws in the fast growing domain area of CCI in matters pertaining to patents. Looking at situations that have the chances of arising to conflict with the competition law and patent legal regimes.

• Comparative Legal Analysis:

In the current literature, there is a discussion on the convergence of competition law and patents in Indian legal systems compared to selected jurisdictions in the EU and the US.

• Literature Review:

Review of literature, articles, and research papers on the chosen area of study together with commentaries from professionals in the field.

Aggregation of reports on competition law and intellectual property rights from government agencies as well as international organizations.

• Policy Analysis:

Policy analysis of policy papers that relate to CCI advocacy papers as well as government papers on innovation and competition.

• Legal Interpretation:

Analysis of general rules of statutory construction to determine extent and limit of CCI’s authority under Section 27(g) of the Competition Act 2002 of India.

The study will procure almost all of its data from online databases of legal systems, peer reviewed publications and governmental documents. The approach of analysis will address issues like meaning making of legal texts, the reasoning of judicial officers and various beliefs related to the outcome of the law.

This research seeks to enable the evaluation of all the legal questions arising in regard to the jurisdiction of CCI on the matters that pertain to patents and to foster the conclusive and rational contemplation of legal arguments in the determination of the scope as well as the further ranges of authority of CCI concerning patents.

In this study the complex relationship between the Competition Commission of India under the Competition Act, 2002 and the Patents Act, 1970, which provides patent authorities with exclusive powers has been examined. The implication of the results is that although CCI has broad sweeping powers to prevent anti-competitive behaviour hence its constitutional remit to address the anti-competitive aspects of patents through actions against anti-competitive conduct, it is the use of this authority that may possibly lead to turf wars with the patent authorities. 

Important findings consist of: 

This balance is critical to maintaining the regulation of competitive practices without over-regulating the context where the comity between the Market regulator: Competition and Control Authority (CCI) and the sectoral regulator: the Controller exists. 

Although Section 27(g) of the Competition Act gives a broad power to CCI, these powers must not be decided without reference to provisions of the Patents Act especially in humble instances where compulsory license may be invoked. 

Though the general exemptions contain generalia specialibus non derogant, which is interpreted to mean that where there are specific provisions for dealing with a particular issue, the general power shall not override such provisions where dealing the matters of the particular patent rights are concerned.

It becomes important at this juncture to get improved definition or legislation that deals with the demarcation of delegation of powers given to CCI in the matters pertaining to patents.

Officialise the relations between CCI and patent institutions to avoid opposing interests in the future.

Recommendations include changes in legislation which would bring more definition to the task of CCI regarding issues of patents.

The creation of policies to be adopted by CCI in situations that involve patent rights.

Promote CCI members for specialized training for gaining better knowledge about the patent law to analyse the competition law.

Subsequent investigations could concentrate on:

The British law’s comparison with other legal systems of the world, as to how they handle similar conflict of patent authority and competition.

A quantitative assessment of the impact of the CCI decisions to Indian innovation and competition in matters concerning patents.

Exploring the potential structures of a cooperative approach to decision-making Amidst Static and Dynamic Overlap of Patent Authority and CCI.

In conclusion, however, if CCI is required to save fair competition, its power needs to be exercised judiciously, especially where specialised regulators like the patent agencies have initial jurisdiction. The challenge in the Indian context is to find that elusive sweet spot that is going to promote innovation but also fair competition.

1. Atul Patel & Sheetal Chopra, Interface Between Competition Law and Intellectual Property Rights: A Comparative Study of the US, EU and India, 51 INT'L REV. INTELL. PROP. & COMPETITION L. 575 (2020). 

2. D.P. Mittal, COMPETITION LAW AND PRACTICE (4th ed. 2019). 

3. Yogesh Pai, Standard Essential Patents: A Prolegomena, 19 J. INTELL. PROP. RTS. 59 (2014).

4. Kirti Gupta, Technology Standards and Competition in the Mobile Wireless Industry, 22 GEO. MASON L. REV. 865 (2015). 

5. T. Ramappa, COMPETITION LAW IN INDIA: POLICY, ISSUES, AND DEVELOPMENTS (3d ed. 2014). 

6. Aditya Bhattacharjea, India's New Competition Law: A Comparative Assessment, 4 J. COMPETITION L. & ECON. 609 (2008). 

7. Anurag K. Agarwal, Competition Law in India: Need to Go Slow and Steady, 4 NUJS L. REV. 605 (2011).

8. CCI v. Bharti Airtel Ltd., (2019) 2 SCC 521.

9. Telefonaktiebolaget LM Ericsson v. CCI, 2016 SCC OnLine Del 1951.

10. Micromax Informatics Ltd. v. Telefonaktiebolaget LM Ericsson, Case No. 50 of 2013, CCI (12 Nov. 2013).

11. Koninklijke Philips Electronics N.V. v. Rajesh Bansal, CS(COMM) 24/2016 & I.A. 2048/2016 (Delhi High Court, 12 July 2018).