Patent rights and competition law: NCLAT treated the Patents Act as the governing special regime for licensing disputes.

NCLAT considered whether the Competition Commission could examine licensing and exploitation issues relating to a patented pharmaceutical product. It treated disputes arising from the exercise of patent rights, including the reasonableness of licensing conditions, as governed by the special regime of the Patents Act, 1970. The Tribunal also relied on Section 3(5) of the Competition Act, 2002, which protects reasonable conditions necessary to protect patent rights, and noted that the patent had expired and the subject matter had entered the public domain. On that basis, it found the patent-law framework prevailed over the general competition-law framework and that the Commission lacked jurisdiction on the facts presented.

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Issues: (i) Whether the Competition Commission had jurisdiction to examine allegations concerning licensing and exploitation of a patented pharmaceutical product in view of the Patents Act, 1970 and the protection under Section 3(5) of the Competition Act, 2002.

Analysis: The appeal turned on the relationship between the Competition Act and the Patents Act in the context of patent-based licensing arrangements. The Tribunal relied on the view that disputes concerning the exercise of patent rights, the reasonableness of licensing conditions, and reliefs connected with patented inventions are governed by the special regime under the Patents Act. It also noticed that the patent had expired and that the subject matter had entered the public domain, while placing emphasis on the statutory protection for reasonable conditions necessary to protect patent rights under Section 3(5) of the Competition Act. The Tribunal treated the later and special patent law framework as prevailing over the general competition law framework for the controversy before it.

Conclusion: The Competition Commission lacked power to proceed against the patent-holder on the facts presented, and the jurisdictional challenge succeeded against the assessee.

Ratio Decidendi: Where the alleged anti-competitive conduct arises from exercise of patent rights, the Patents Act operates as the special and later statute and governs the inquiry, while reasonable conditions protecting patent rights remain outside the mischief of Section 3 of the Competition Act, 2002.

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