Whether there is repugnancy between the Competition Act, 2002 and the Patents Act, 1970 in so far as jurisdiction is concerned, when abuse of patent rights is alleged. In other words, is the Patents Act, 1970 a complete code in itself or can the CCI investigate into matters regarding competition in the market where patents are of relevance?
Title: Monsanto Holdings Pvt. Ltd. & Ors. v. Competition Commission of India & Ors.
Subject matter of patent: Bollgard-II, a technology that helps develop cotton seeds resistant to Bollworms. These seeds are called Bt. Cotton seeds, and the patent protecting these seeds is held by Monsanto Holdings Pvt. Ltd. (Monsanto)
- Monsanto licenced the technology to Mahyco Monsanto Biotech Ltd. (MBBL) who further sub-licenced it to various seed manufacturers including the informant respondents namely, Nuziveedu Seeds Ltd. (NSL), Prabhat Agri Biotech Ltd. (‘PABL’) and Pravardhan Seeds Pvt. Ltd. (‘PSPL’). These companies are hereafter collectively referred to as Informants.
- The original sublicense agreement contained a two part consideration. One component was a fixed non-refundable fee paid upfront and the second component was a recurrent ‘trait fee’ determined on the basis of the sales volume of bt.seeds made by the manufacturing companies.
- The Agreement between MBBL and NSL was due for renewal on 10.03.2015 and the determinant basis for the recurrent fee was changed from sales volume to MRP operated by the manufacturing companies. Agreement was renewed, and in the months following it, there arose conflict regarding payment of royalty to MBBL.
- On 19.07.2015 the informant companies requested MBBL to consider changing their trait value commensurate with the rate of cotton seeds fixed by the State Government.
- On 01.08.2015 MBBL filed arbitration petitions against the informants for recovery of unpaid dues.
- On 19.10.2015, in a petition for interim relief filed before the Delhi HC, the informants were ordered to pay dues of about 21 lakh rupees in to a no-lien bank account.
- The informants then filed Information under Section 19(1)(a) of Competition Act, 2002.The informants submitted that MBBL held a dominant position in the market for bt.cotton seeds and the clauses put forth by them in their sublicensing agreements amoutn to unfair conditions violative of Section 4(2)(a)(i) of the Competition Act, and seek to eliminate competition in the market.
- The CCI held that there was prima facie merit in the allegations and hence ordered an investigation to be held.
- Monsanto filed a writ petition before the High Court of Delhi, seeking a stay on the CCI order and hence this judgement.
SUBMISSIONS BY PETITIONER
- CCI has no jurisdiction because the issue is regarding rights under Patents Act, 1970. Issues concerning royalty, unfair conditions for use of patents are to be determined by the Controller, before CCI can intervene and determine any abuse of dominant position.
- The only remedy for unlawful withholding of licence is a compulsory licence under Section 84 of the Patents Act and jurisdiction for the same lies with the Controller. While assessing a plea for compulsory licence, the Controller would examine issues which have in the instant case been raised by the informants as violative of Competition Act, 2002. Section 140 deals with avoidance of restrictive conditions which mirror the principles of Section 4 of the Competition Act.
- If legislature intended for CCI to control this issue, Section 85 of the Patents Act would have been repealed after the enactment of the Competition Act. Allowing the CCI to determine whether conditions in a licencing agreement are unfair/restrictive would amount to two different offices simultaneously adjudicating the same issue with potentially divergent judgements which would create conflict and ambiguity inn legal propositions.
SUBMISSION BY RESPONDENT
The Respondent had a straightforward argument that the Competition Act and the Patents Act should be read in supplement with each and not in derogation.
- Sections 60 and 62 of Competition Act hold relevance in this dispute. Section 60 has a non-obstante clause which means in case of inconsistency with other laws in force, the Competition Act would prevail. Furthermore, Section 62 lays down that the Competition Act shall be read in addition to other existing laws.
- The Court ruled that orders that can be passed by the CCI under Section 27 of the Competition Act exhibit material difference from the orders passed by the Controller under Section 84 of the Patents Act.
- Seeing no repugnancy between the two Acts, the Court decided that the CCI order warranted no changes.
COPY OF JUDGEMENT
CITATION 2020 SCC Online Del 598