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2020 (5) TMI 747
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....mpetition Act, 2002 (hereafter the Competition Act) in Reference Case 02/2015 and Information Case 107/2015, whereby the CCI has directed the Director General (hereafter 'DG') to investigate the activities of the petitioners and Maharashtra Hybrid Seeds Company (Mahyco). The petitioners also impugn an order dated 18.02.2016, whereby CCI had issued notice to the petitioners in an application filed by the informants under Section 33 of the Competition Act. 2. In W.P.(C) 3556/2017, the petitioners impugn four separate orders-common order dated 18.02.2016 passed in Case No. 10/2016, Case No. 3/2016 and Ref Case No. 1/2016; common order dated 09.06.2016 passed in Case No. 37/2016, Case No. 38/206 and Case No. 39/2016; Order dated 21.09.2016 in Case No. 36/2016; and Order dated 14.03.2017 in Case No. 88/2016-passed by the CCI under Section 26(1) of the Competition Act read with Regulation 27 of the Competition Commission of India (General) Regulations, 2009. By the said orders the CCI had held that the substance of the allegations made in the said cases were similar to the allegations made in Case No. 107/2015 and Reference Case No. 2/2015 and directed that the matters be clubbe....
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....to) and Mahyco. Further, MHPL also holds 26% equity in Mahyco. 7. MMBL, in turn sub-licenses the technology licensed by Monsanto to various seed manufacturers in India including the Informants. It is stated that consideration for sub-licensing the said technology is in two parts. The first is a non-refundable fee, which is a required to be paid upfront. The second part is a recurring fee, which is referred to as 'trait value' and is determined on the basis of the Maximum Retail Price (MRP) fixed for Bt. Cotton Seeds. The fees/royalty charged by MMBL from the Informants has been a subject matter of disputes between them. 8. MMBL had licensed Bollgard-I and Bollgard-II technologies to NSL in terms of an agreement dated 21.02.2004 (2004 Agreement). This agreement was extended from time to time till 31.03.2013. It is stated that on 10.03.2015, MMBL entered into a fresh sub-license agreement (2015 Agreement) with NSL, whereby it sub-licensed Bollgard-II technologies to it. In terms of the 2004 Agreement, NSL was required to pay a one-time fee of Rupees Fifty Lacs (` 50,00,000/-) and in addition a running fee/trait fee, which was determined based on the annual sales volume of N....
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....f ` 1,72,83,81,567/- and ` 26,21,36,431/- respectively. These being the amounts claimed by MMBL from them. It is stated that in November 2015, MMBL filed a similar petition against PSPL for securing an amount of ` 20,34,48,646. Thereafter, on 22.08.2015, MMBL issued a notice calling upon NSL to pay the amount within a period of twenty one days failing which MMBL would take legal action against NSL. Similar notices were also issued to other sub-licensees. On 18.10.2015, MMBL filed another petition under Section 9 of the Arbitration and Conciliation Act, 1996 before a coordinate bench of this Court seeking certain interim relief in relation to the trait value claimed by it. On 19.10.2015, the Court passed an ad interim order directing NSL to secure MMBL for a sum of ` 21,37,76,123/- by depositing the amount in a no lien account with its bank. 14. Subsequently, MMBL issued termination notices to NSL, PABL and PSPL terminating the sub-licenses on the ground that they had failed to pay the trait value for the technologies sub-licensed to them. 15. It is not necessary, for the purposes of this petition, to set out the disputes between the parties-MMBL and Monsanto Group on one part and....
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.... the Informants. They further alleged that there is a reasonable apprehension that dealing with any competitor or any competing technology provider, would invite an adverse action against the Informants. It is alleged that the said apprehension is not unfounded as MMBL has followed a policy of selective licensing and had refused to sub-license Bt. Technology to certain seed manufacturers. 20. The Informants further claim that Article 9.4 of the sub-license agreements also imposes an unfair condition as in terms of the said clause, the Informants are required to destroy all parent lines or cotton germplasm, which has been modified to contain Monsanto Technology after the sub-license is terminated. They state that destroying germplasm (parent line) would effectively amount to destroying their intellectual property, which normally takes about five to ten years to develop. 21. Informants allege that MMBL has virtually eliminated all potential competition for its technology by incorporating restrictive and unfair conditions in the sub-license agreements. 22. In addition, the informants allege that MMBL and Monsanto Group has violated Section 4(2)(a)(i) of the Competition Act as they ....
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....s" in India; (ii) MMBL's practice of charging unreasonably high trait fees for 'Bt. cotton seeds' may be 'abuse of dominant' position within the meaning of Section 4(2)(a) of the Competition Act; (iii) MMBLS's sub-licence agreements with Indian seed manufacturing companies appear to be anticompetitive within the meaning of Section 3(4) of the Competition Act, 2002; (iv) MMBL is exploiting the permissions given by the Government to market Bt. cotton technology by creating monopoly through restrictive agreement for unjust enrichment by charging high trait value from its licensees and ultimately from farmers." 27. The CCI held that MMBL held a dominant position in the relevant market of "provision of Bt. Cotton Technology in India" as well as the downstream market of "manufacture and sale of Bt. Cotton seeds in India". The CCI further found the allegations made by the informants to be prima facie merited. It held that the stringent conditions imposed in the Sub-licence agreement(s) discouraged the Seed companies from dealing with competitors and also amounted to restricting development of alternate technologies. The CCI held that prima facie MMBL's c....
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....ndia (TRAI) as the Controller also exercises powers to regulate the grant of patents and exercise of rights under the Patents Act. He submitted that these powers are akin to the powers of TRAI in the field of the telecom industry. 30. Next, it was contended that the field regarding the exercise of rights under the Patents Act is occupied by the Patents Act and thus, by implication excludes the jurisdiction of the CCI. It was submitted that the only remedy in case where a patentee has unjustifiably withheld the grant of a license, is to seek a compulsory license under Section 84 of the Patents Act and the jurisdiction to entertain such issues would rest with the Controller. Mr. Lal contended that the Controller is bound to take into account whether there is any appreciable adverse effect on the competition/market while determining the question whether to grant a compulsory license. The petitioners contend that such exercise is similar to the issues that would be considered by the CCI while examining whether Sections 3 and 4 of the Competition Act have been violated. 31. Mr. Lal contended that Section 140 of the Patents Act lists out cases where exercise of patents rights constitut....
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....atents Act, it would result in various parties abusing the same and proceeding directly to CCI instead of resorting to remedies under the Patents Act. This according to him would result in loss of significant resources and cause market disruptions. 35. The petitioners further contended that the respondents had also failed to establish that the jurisdiction of the civil courts or Controller with regard to the issues raised by the Informants was excluded. Mr. Lal relied on the decision of the Supreme Court in Abdul v. Bhawani AIR 1966 SCC 1718 and contended that a civil court has jurisdiction to decide all questions of civil nature and any provision which seeks to exclude the jurisdiction of a civil court is required to be strictly construed. 36. Mr. Lal further contended that in terms of Section 3(5) of the Competition Act, the petitioners were well within their right to enter into agreement to restrain any infringement and this aspect was expressly excluded by virtue of Section 3(5) of the Competition Act. He submitted that clauses of the agreement, which are designed to restrain infringement of IPR including patents are excluded from the purview of the Competition Act and the CC....
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....at in conformity with the TRIPS Agreement, the Patents Act was amended and now contains provisions for grant of compulsory licenses in certain cases. Further, Section 140 of the Patents Act also proscribes inclusion of certain restrictive conditions in certain contracts-contracts relating to sale or lease of a patented article, license to manufacture a patented article or to work any patented process. The specified restrictive conditions are statutorily declared to be void by virtue of Section 140 of the Patents Act. However, this Court did not accept that the jurisdiction of the CCI to examine matters relating to certain rights granted under the Patents Act or to examine any alleged anticompetitive conduct of any enterprise including abuse of its dominant position, is excluded. 40. The Court also referred to Section 62 and Section 60 of the Competition Act. Section 60 of the Competition Act contains a non obstante provision and expressly provides that the provisions of the Competition Act would have effect notwithstanding anything inconsistent contained in any other law for the time being in force. This Court held that although Section 60 of the Competition Act expressly provided....
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.... order under Section 27 of the Competition Act. 42. This Court had also examined the provisions of Section 21A and Section 21 of the Competition Act In terms of section 21A of the Competition Act, CCI can make a reference to any regulator where in course of proceedings the CCI proposes to take any decision which may be contrary to provisions of any statute, the implementation of which has been entrusted to any statutory authority. Similarly, Section 21 of the Competition Act enables any statutory authority, which is charged with administration of any statute to make a reference to CCI if it proposes to take any decision, which may be contrary to the provisions of the Competition Act. 43. This Court concluded that these provisions of the Competition Act clearly indicate that the intention of the Parliament was not to repeal any other statute by enacting the Competition Act but on the contrary the legislative intent was to ensure that the provisions of the Competition Act are implemented in addition to the provisions of other statutes. After elaborately discussing the various provisions of both the enactments (Patents Act and the Competition Act), this Court concluded that there wa....
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....f the matters that relate to patents on account of any implicit repugnancy. As noticed by this Court in Telefonaktiebolaget L.M. Ericsson (supra), the focus of the Patents Act and the Competition Act are different and there is no irreconcilable repugnancy between the two enactments. 45. It was also contended by the petitioners that Section 3(5) of the Competition Act excludes the applicability of the Competition Act in respect of any agreement, which relates to restraining infringement of any patent rights. 46. The aforementioned contention was also examined by this Court in Telefonaktiebolaget L.M. Ericsson (supra) and it was held that while an agreement, which imposes reasonable condition for protecting patent rights is permissible any anticompetitive agreement which imposes unreasonable conditions would not enjoy the safe harbor of Section 3(5) of the Competition Act. Mr. Lal contended that a Patentee could include any condition/obligation in an agreement for restraining infringement of a patent and examination of such clause including the question whether such clause is reasonable or not, is expressly excluded by virtue of sub-section (5) of Section 3 of the Competition Act. ....
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....ub-section (5) of Section 3 that nothing contained in Section 3 of the Competition Act would restrict the right of a person to restrain any infringement of his IPR or to impose reasonable conditions for protecting them. It recognizes that a person has a right to restrain infringement of IPR granted under the specified statutes and any agreement entered for the aforesaid purpose would fall outside rigors of Section 3 of the Competition Act. However, such rights are not unqualified. Only such agreements that are "necessary for protecting any of his rights which have been or may be conferred upon him under" the specified statutes are provided the safe harbor under Sub-section (5) of Section 3 of the Competition Act and only to such extent. This also entails right to impose reasonable conditions. The words "or to impose reasonable conditions" are placed between two commas and thus must be interpreted as being placed in parenthesis that explains and qualifies the safe harbor of Sub-section (5) of Section 3 of the Competition Act. Plainly, the exclusionary provision to restrain infringement cannot be read to mean a right to include unreasonable conditions that far exceed those that are n....
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....f the Authority shall be to- (a) make recommendations, either suo motu or on a request from the licensor, on the following matters, namely:-- (i) need and timing for introduction of new service provider; (ii) terms and conditions of licence to a service provider; (iii) revocation of license for non-compliance of terms and conditions of licence; (iv) measures to facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services; (v) technological improvements in the services provided by the service providers; (vi) type of equipment to be used by the service providers after inspection of equipment used in the network; (vii) measures for the development of telecommunication technology and any other matter relatable to telecommunication industry in general; (viii) efficient management of available spectrum; (b) discharge the following functions, namely:-- (i) ensure compliance of terms and conditions of licence; (ii) notwithstanding anything contained in the terms and conditions of the licence granted before the commencement of the Telecom Regulatory Authority of India (Amendment) Act, 2000 (2....
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....Government may issue a licence to a service provider if no recommendations are received from the Authority within the period specified in the second proviso or within such period as may be mutually agreed upon between the Central Government and the Authority: Provided also that if the Central Government, having considered that recommendation of the Authority, comes to a prima facie conclusion that such recommendation cannot be accepted or needs modifications, it shall refer the recommendation back to the Authority for its reconsideration, and the Authority may, within fifteen days from the date of receipt of such reference, forward to the Central Government its recommendation after considering the reference made by that Government. After receipt of further recommendation if any, the Central Government shall take a final decision." 52. It is apparent from a plain reading of clause (b) of Section 11 that TRAI is inter alia charged with the function to ensure technical compatibility and effective interconnection between different service providers. 53. In Bharti Airtel Ltd. (supra), the disputes, which were sought to be placed before the CCI, related to non-provision of Points of ....
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....f regulatory powers of TRAI and TRAI was required to determine it. A Controller does not regulate the exercise of patent rights in such pervasive manner. This is for an obvious reason that patents is not an industry. Grant of a Patent recognizes and confers an intellectual property right. The principal function of the Controller under the Patents Act is to examine the application for grant of patents and grant patents if the applicant is entitled to such rights. Although, the Controller also exercises other powers and performs other functions, including issuance of compulsory licenses in given case. But the Controller does not regulate, in a pervasive manner, the exercise of patent rights or the agreements that are entered into by patentees with third parties. The nature of the role performed by a Controller, thus, cannot be equated to that as performed by the TRAI. 56. The expertise of TRAI in the field of telecommunications is materially different than the expertise that a Controller bears in regard to grant of patents and exercise of patent rights. There are certain technical aspects relating to the telecom industry where TRAI has domain expertise. In Bharti Airtel's case o....