2025 (12) TMI 106 - AT - Law of Competition

Patent rights trump competition claims as appeal over FCM injection conduct rejected under Section 3(5) Competition Act

Mr. Swapan Dey Versus Competition Commission of India and Vifor International (AG)

NCLAT dismissed the appeal challenging CCI's closure of an information alleging anti-competitive and abusive conduct in relation to FCM injections. It ... Anti-competitive and abusive conduct of Respondent No. 2 herein - FCM injections are neither accessible nor affordable by patients/consumers at large - abuse of dominant position - HELD THAT:- The CCI has examined the complaint of the appellant on merits and has held that primafacie there is no case and has closed the matter vide impugned order dated 25.10.2022. It is also noted that the Patent on drug FCM has expired and it is now available in public domain for manufacturing. Whether the CCI has power to examine the case, where the subject matter, being drug FCM was protected by the Patent Act? - HELD THAT:- The Competition Act, in Section 3(5) has laid down that the Competition Act will not restrict the right of any person in protecting his rights under the Patent Act. In any case, the Division Bench of the Hon’ble Delhi High Court in the case of Telefonaktiebolaget LM Ericsson (PUBL) v. Competition Commission of India, [2023 (7) TMI 1614 - DELHI HIGH COURT] has held that the Patent Act will prevail over the Competition Act. Thus, it is apparent that the CCI lacks the power to examine the allegations made against Vifor International (AG). The Patent Act will prevail over the Competition Act in the facts of this case, as the subject matter of contention is FCM, which was developed and patented by Respondent No. 2. There is no dispute that Respondent No. 2 held the said patent at the relevant time. Further, we have noted that Section 3(5) of the Competition Act provides protection to a person holding patent to restrain any infringement of or to impose reasonable conditions, as may be necessary for protecting its rights. There is no merit in this appeal - Appeal dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether, in respect of alleged anti-competitive conduct by a patentee relating to a patented drug, the Competition Commission of India has jurisdiction to inquire under Sections 3 and 4 of the Competition Act in view of the Patents Act and Section 3(5) of the Competition Act. 1.2 Whether, on the facts of this case concerning Ferric Carboxymaltose (FCM), the Patents Act prevails over the Competition Act, thereby excluding the jurisdiction of the Competition Commission of India to entertain the allegations. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Jurisdiction of the Competition Commission of India in relation to patented inventions; interplay between the Patents Act and the Competition Act Legal framework (as discussed) 2.1 The Tribunal noted the relevance of Section 3(5) of the Competition Act, which provides that nothing in Section 3 shall restrict the right of any person to restrain infringement of, or to impose reasonable conditions necessary for protecting, rights conferred under the Patents Act. 2.2 The Tribunal referred to and reproduced provisions of the Patents Act, 1970, particularly Sections 83, 84 and 90, outlining: (a) general principles for working of patented inventions; (b) grounds and conditions for compulsory licences, including where inventions are not available at reasonably affordable prices or do not satisfy reasonable requirements of the public; and (c) specific reference in Section 90 to compulsory licences granted to remedy anti-competitive practices. 2.3 The Tribunal relied upon the judgment of the Division Bench of the High Court in Telefonaktiebolaget LM Ericsson (PUBL) v. Competition Commission of India (2023 SCC OnLine Del 4078), which considered the relationship between the Patents Act and the Competition Act in matters involving exercise of patent rights, and held, inter alia, that: (a) inquiries by the Competition Commission of India into anti-competitive agreements or abuse of dominance in exercise of patent rights substantially overlap with inquiries and remedial powers provided under Chapter XVI of the Patents Act; (b) Chapter XVI of the Patents Act constitutes a complete code governing unreasonable licensing conditions, abuse of status as patentee, inquiries and relief in relation to patents; (c) in matters of anti-competitive agreements and abuse of dominance by a patentee under the Patents Act, the Patents Act is a special and subsequent statute which must prevail over the Competition Act, applying the maxims generalia specialibus non derogant and lex posterior derogat priori. 2.4 The Tribunal further noted that the above Division Bench judgment set aside earlier contrary views, quashed proceedings initiated by the Competition Commission of India in similar contexts for want of power, and that the Competition Commission of India's challenge to that judgment in SLP No. 25026 of 2023 had been dismissed by the Supreme Court, with questions of law kept open for an appropriate case but with no interference in the High Court's conclusion that CCI had no power to conduct the investigation in that matter. Interpretation and reasoning 2.5 The Tribunal observed that the Competition Commission of India had in fact examined the appellant's information on merits and closed it under Section 26(2) of the Competition Act for lack of prima facie contravention of Sections 3 and 4. However, in view of later binding judicial pronouncements, the Tribunal considered it necessary first to determine whether the Competition Commission of India had jurisdiction at all given that the subject matter concerned a patented drug. 2.6 The Tribunal noted that the subject of controversy was Ferric Carboxymaltose (FCM), a molecule developed and patented by the respondent, and that there was no dispute that the respondent held a valid patent over FCM at the relevant time. The complaints essentially related to licensing, production, and pricing of FCM while it was under patent protection. 2.7 Referring to Section 3(5) of the Competition Act, the Tribunal held that the statute itself recognises and protects the rights of a patentee to restrain infringement and to impose reasonable conditions necessary to protect patent rights, thereby carving out a domain of conduct in exercise of patent rights that is not subject to Section 3 scrutiny. 2.8 Applying the reasoning of the Division Bench in Telefonaktiebolaget LM Ericsson (PUBL), the Tribunal accepted that, in matters involving alleged anti-competitive conduct or abuse of dominant position by a patentee in the exercise of patent rights, the Patents Act is the special legislation and Chapter XVI thereof is a complete code for addressing unreasonable licensing terms and abuses of patent status, including through compulsory licensing and related remedies. 2.9 The Tribunal further accepted that, in such situations, the Patents Act, being both special and subsequent vis-à-vis the Competition Act, must prevail in case of overlap or conflict, and that the Competition Commission of India lacks power to investigate and adjudicate alleged anti-competitive conduct that is essentially an incident of the patentee's exercise of rights under the Patents Act. 2.10 The Tribunal noted that the Supreme Court, in dismissing the Competition Commission of India's SLP against the Telefonaktiebolaget LM Ericsson (PUBL) decision, declined to interfere with the High Court's conclusion that the Competition Commission of India had no power to conduct the impugned investigation, and thus, for present purposes, that position on lack of power must be followed. 2.11 In light of these binding authorities, and given that the controversy in the appeal centred on conduct relating to a patented drug (FCM) while the patent was subsisting, the Tribunal concluded that jurisdiction to deal with the alleged abuse or unreasonable conditions lay under the Patents Act framework, not under the Competition Act. 2.12 The Tribunal also recorded that the FCM patent had expired and the molecule had passed into the public domain, but treated this primarily as a factual backdrop; the decisive factor for jurisdiction was the subsistence and exercise of patent rights during the relevant period. Conclusions 2.13 The Tribunal held that, in the facts of the case, the Patents Act prevails over the Competition Act with respect to alleged anti-competitive conduct arising out of the exercise of patent rights in relation to FCM. 2.14 It was concluded that the Competition Commission of India lacks the power to examine the allegations made against the patentee in this matter, having regard to the scheme of Section 3(5) of the Competition Act, Chapter XVI of the Patents Act, and the binding interpretation rendered in Telefonaktiebolaget LM Ericsson (PUBL) as affirmed (for present purposes) by the Supreme Court's refusal to interfere. 2.15 On that jurisdictional ground, the appeal was found to be devoid of merit and was dismissed, with no order as to costs and all pending applications closed.