Competition scrutiny of standard essential patent licensing can proceed despite patent-law remedies and limited writ review

A Section 26(1) direction under the Competition Act is a preliminary administrative step, but it remains open to limited writ review where jurisdictional error, absence of a prima facie opinion, or perversity is alleged. The Patents Act does not oust competition-law scrutiny of standard essential patent licensing conduct; the two statutes operate in their own fields and can be harmonised, so allegations of unfair, discriminatory or exclusionary royalty and licensing practices may still be examined under the Competition Act. Pleadings alleging excessive royalty, tying, bundling, opaque FRAND negotiations and litigation pressure may disclose prima facie abuse of dominance and justify investigation.

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Issues: (i) Whether a direction under Section 26(1) of the Competition Act, 2002 could be challenged in writ jurisdiction on the ground of lack of jurisdiction or perversity; (ii) Whether complaints concerning royalty demands and licensing terms for standard essential patents were outside the scope of the Competition Act, 2002 because of the Patents Act, 1970; (iii) Whether the allegations made by the informants were capable of disclosing abuse of dominant position warranting investigation.

Issue (i): Whether a direction under Section 26(1) of the Competition Act, 2002 could be challenged in writ jurisdiction on the ground of lack of jurisdiction or perversity.

Analysis: A direction to investigate under Section 26(1) is a preliminary administrative direction and not an adjudication on merits, but it remains open to judicial review if the Commission acts without jurisdiction, fails to form a prima facie opinion, or acts perversely. The existence of an alternative statutory remedy at a later stage does not oust writ jurisdiction where the very authority to initiate investigation is challenged. The scope of review is, however, limited and does not permit reappreciation of the allegations on merits.

Conclusion: The writ challenge was maintainable in principle, but only within the narrow limits of jurisdictional review.

Issue (ii): Whether complaints concerning royalty demands and licensing terms for standard essential patents were outside the scope of the Competition Act, 2002 because of the Patents Act, 1970.

Analysis: The Patents Act, 1970 confers patent rights and also provides remedies such as compulsory licensing, revocation and restrictions on certain licence conditions. The Competition Act, 2002, however, separately prohibits abuse of dominance and contains an express non-derogation clause. The two statutes were held to operate in their respective fields and to be capable of harmonious construction. The patent regime does not oust competition law scrutiny of conduct alleged to be anti-competitive, including licensing practices said to be unfair, discriminatory or exclusionary. The Commission can therefore examine such conduct under the Competition Act even though parallel remedies may exist under the Patents Act.

Conclusion: The complaints were not barred by the Patents Act, 1970, and the Commission had jurisdiction to examine them under the Competition Act, 2002.

Issue (iii): Whether the allegations made by the informants were capable of disclosing abuse of dominant position warranting investigation.

Analysis: A patentee holding standard essential patents may, on the pleaded facts, be in a position of dominance because implementers have no practical non-infringing alternative. Allegations of excessive royalty, royalty based on end-product value, bundling, tying, opaque FRAND negotiations, and use of litigation threats to coerce acceptance of terms were capable of disclosing conduct falling within Section 4 of the Competition Act, 2002. At the prima facie stage, the Commission was not required to determine the truth of the allegations or the ultimate merits of the dispute.

Conclusion: The allegations were sufficient to justify a prima facie direction for investigation.

Final Conclusion: The Commission's orders directing investigation were upheld, and the petitions were dismissed without any adjudication on the merits of the alleged competition law violations.

Ratio Decidendi: A direction under Section 26(1) of the Competition Act, 2002 is amenable to limited judicial review for jurisdictional error or perversity, and the existence of patent-law remedies does not exclude competition-law scrutiny of allegedly abusive licensing conduct by a standard essential patent holder.

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