On 13th July 2023, the Delhi High Court passed a verdict that stripped the Competition Commission of India (CCI) of its jurisdiction to investigate and rule on complaints of alleged anti-competitive behaviour by patent holders in India. The Court decided that it was the Controller of Patents instead, who alone has the authority to look into such issues.
This move is nothing short of a tectonic shift, for all stakeholders in the competition and the patent law space. This decision results from complaints filed before the CCI against Ericsson, claiming that the licensing terms imposed by these patent holders on prospective or existing licensees were burdensome and were targeted at stifling free and fair competition.
The present landmark decision of a two-judge bench of the Delhi High Court, while reversing the earlier single bench decision, used a fundamental and age-old principle of law. When two legislations overlap, the one specifically created to address the issue in question will trump the one that happens to address it generally. This is enshrined in the Latin maxim generalia specialibus non derogant.
The Court held that the Competition Act, 2002 was a general law that was meant to address all sorts of anti-competitive conduct, while the Patents Act, 1970 had provisions which were specifically created in 2003 to check unfair patent licensing practices, i.e., after the Competition Act was enacted in 2002.
The Court also held that all the questions on anti-competitive conduct and abuse of dominant behaviour by a patent holder (Section 19, Competition Act, 2002), were already covered under Section 84 (6), (7) of the Patents Act, 1970, and in fact, were more precise and targeted.
Different opinions have been voiced by different stakeholders regarding this landmark judgement. However, what favours the decision is a rationale that the Patents Act, 1970 is a comprehensive legislation which is created for the benefit of the Indian society as well as patent holders, equally. It doesn’t discriminate between small, medium, or large-scale players. Instead, it emphasizes that patents, once granted, must be used for the public good. If a patent holders use their patents to choke competition, or if a prospective licensee or a member of the public with vested interests files a frivolous complaint to harass a patent holder – both situations are adequately dealt with through checks and balances under the Patents Act, 1970. Additionally, the patents which are a subset of technology and intangible assets of a company, need to be dealt as per the IP rationale rather than looking through a market competition lens.
However, to understand the implications of the Court decision, it is also important to understand the more significant economic issues. Innovation, technology and entrepreneurship are key objectives for the Government. Almost on every platform, India’s robust start-up ecosystem and a young and dynamic talent pool are being showcased whether domestically or globally, and the Government is keen “to make India into an innovation hub”.
The present era is about collaboration and cooperation to innovate for India. For this, we need a functional IP subsystem that is empowered to take decisions in a national perspective. The present decision is a step in this direction and will ensure that the general provision of law does not dilute the objective of strengthening Indian IP offices to upgrade themselves to global standards.
The High Court judgement is also in line with India’s vision to be at the forefront of 6G technology leadership. Further, India is among the early adopters of 5G technology and has a growing number of Indian smart-phones manufacturers and users, and patented technologies are important towards India’s push for self-reliance in electronic manufacturing. Every time our smart phones allow us to chat, message or share pictures with a friend on a different network, with a different brand of handset, we benefit from the use of cutting-edge patented technologies – making interoperability and high performance in our inter-connected life possible.
It is to India’s benefit to follow global standards on technology. However, to ensure that such standardized technologies remain accessible to all, technology contributors are typically required to confirm whether they would be offering access to their technology on ‘fair, reasonable, and non-discriminatory’ (FRAND) terms.
Today, India is at an inflexion point where we can leapfrog, provided we understand the rationale of a trusted value chain in its true spirit. Astech startups spawn the latest business revolution towards providing new innovative solutions, Intellectual Property, especially Patents, are essential for such to compete successfully on a global scale. Patent protection also fosters a virtuous cycle of innovation and creation. It ensures that rewards typically flow to those who improve upon previous inventions and that these new ideas, in turn, can still be used by others. This continuous process lies at the heart of a long-term economic growth. The present decision is a step in the right direction, as it clarifies the correct jurisdiction of authorities to handle patent related disputes.
The writer is Arjan Kumar Sikri – Former Director, Union Ministry of Electronics & IT