Patents Act Trumps Competition Law: NCLAT rules CCI has No Jurisdiction in Patent Rights Disputes [Read Order]
The NCLAT concluded that the CCI lacked the power to examine the allegations against Vifor and accordingly dismissed the appeal, affirming that the rights of a patent holder are protected from the scope of the Competition Act in such matters
The National Company Law Appellate Tribunal ( NCLAT ) has held that the Patents Act, 1970, as a special statute, prevails over the Competition Act, 2002, and that the Competition Commission of India (CCI) lacks jurisdiction to examine disputes concerning the alleged abuse of patent rights.
Mr. Swapan Dey, the appellant and CEO of a hospital, filed a Competition Appeal under Section 53B of the Competition Act, challenging the order of the Competition Commission of India (CCI). The appeal was directed against the CCI's order dated 25.10.2022, which had closed the case initiated by the appellant against Vifor International (AG), Switzerland.
The factual background revealed that the appellant had filed information with the CCI alleging anti-competitive conduct and abuse of dominant position by Vifor in relation to its patented Ferric Carboxymaltose (FCM) injection. The appellant claimed that Vifor's licensing practices made the essential medicine inaccessible and unaffordable. The CCI, after investigation, found no prima facie violation of the Competition Act and closed the matter, prompting the present appeal.
Counsel for the Appellant argued that the CCI had erred by not defining the relevant market and assessing the dominant position of Vifor. He contended that Vifor's limited licensing agreements for the manufacture and distribution of FCM injections amounted to an abuse of its dominant position under Section 4(2) of the Act.
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Per contra, Counsel for Respondent No. 2 (Vifor) strongly opposed the appeal, contending that the dispute was squarely governed by the Patents Act, 1970. He submitted that Section 3(5) of the Competition Act explicitly protects the rights of a patent holder and that the CCI therefore had no jurisdiction. Vifor also argued that the patent for FCM had since expired and that the appellant had approached the tribunal with 'unclean hands'.
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The NCLAT bench, comprising Justice Yogesh Khanna (Member Judicial) and Mr. Ajai Das Mehrotra (Member Technical), after considering the rival submissions, dismissed the appeal. The Tribunal placed primary reliance on the judgment of the Division Bench of the Delhi High Court in Telefonaktiebolaget LM Ericsson (PUBL) v. CCI, which had held that the Patents Act is a 'complete code' and a special statute that prevails over the general Competition Act.
The NCLAT noted that the Supreme Court of India had subsequently dismissed a Special Leave Petition filed by the CCI against this High Court judgment. The Tribunal observed that the subject matter of the dispute was the exercise of patent rights by Vifor, a domain exclusively governed by the Patents Act.
The NCLAT concluded that the CCI lacked the power to examine the allegations against Vifor and accordingly dismissed the appeal, affirming that the rights of a patent holder are protected from the scope of the Competition Act in such matters.
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