Monsanto Holdings Pvt Ltd v Competition Commission of India (2023)

Summary

“These are four appeals and a Writ Petition that, in their essence, raise a common question of far-reaching implications – when a patent is issued in India, and the patentee asserts such rights, can the Competition Commission of India” ... “inquire into the actions of such patentee in exercise of its powers under the Competition Act, 2002” (para 1). Ericsson’s appeals “impugn a common judgement dated 30.3.2016” which had held “that there is no legal bar in law to the CCI” (“Competition Commission of India”) “proceeding against Ericsson under the Competition Act for violation of sections 3 or 4 thereof” on information alleging that Ericsson “was imposing conditions for licensing certain standard essential patents” ... “that are not fair, reasonable or non-discriminatory” (para 2). Monsanto’s appeal “impugns the judgement dated 20.05.2020” which “dismissed the writ petition, holding that there is no bar in law to the CCI proceeding against Monsanto”, the informants’ contention being “that Monsanto is charging excessive royalties and not making its patents available reasonably” (para 4). The CCI’s own appeal “impugns the judgement dated 14.12.2015” which, on “a settlement arrived at between Ericsson and iBall”, had quashed its proceedings (para 3).

The Bench held that “the inquiry that the CCI proposes to conduct in respect of an assertion of patent rights is nearly identical to that which the Controller will conduct under Chapter XVI of the Patents Act” (para 49) and that “Chapter XVI of the Patents Act is a complete code in itself on all issues pertaining to unreasonable conditions in agreements of licensing of patents, abuse of status as a patentee, inquiry in respect thereof and relief that is to be granted therefor.” (para 52) “the Patents Act must prevail over the Competition Act on the issue of exercise of rights by a patentee under the Patents Act.” (para 55) “For this reason, in our view, LPA 246/2016, 247/2016, 150/2020, 550/2016 and WP(C) 8379/2015 ought to be and are allowed. The 2016 judgment and 2020 judgment are set aside. The proceedings initiated by the CCI, that are impugned in the said appeals/ petitions are hereby quashed.” (para 56) “For the above reasons, the 2015 Judgement is sustained.” (para 58)

What the court decided

1. The finding in law. “In our opinion, WP(C) 464/2014, 1006/2014, 1776/2016 and 8379/2015 should be allowed on a finding in law that the CCI” (“Competition Commission of India”) “cannot exercise jurisdiction over actions of an enterprise that are in exercise of their rights as a patentee.” (para 11)
2. Two special laws. “Both the Patents Act and the Competition Act are special laws in their respective fields, i.e., patents, and competition respectively.” “Both laws being enacted by the Parliament, the provisions of Article 254 of the Constitution have no relevance in this case. The patentees assert that the Patents Act is a special Act, whereas the CCI and informants contend that the Competition Act is a special Act. Neither of them is wrong.” (para 20)
3. Resolving the conflict. After setting out “the Constitution Bench dicta of the Supreme Court in Ashoka Marketing Ltd & Anr. v. PNB & Ors., (1990) 4 SCC 406” (para 22), the Bench held: “The indication, clearly, is that the Court must not automatically uphold the subsequent law as overriding the earlier law when two statutes are special. So too must the Court not hasten to declare laws as special merely because they deal, overall, with a specific issue/subject.” (para 25) “What must be considered is: (i) the subject matter in question, (ii) the intendment of the statutes in respect thereof, as well as (iii) whether the scheme and relevant provisions of the two statutes have any indication apropos which, the legislature felt must override the other, especially when both statutes have a non-obstante clause.” (paras 22, 25–26)
4. Not reserved for the CCI. To the contention “that the CCI, and that only the CCI can consider whether a condition imposed in an agreement licensing a patent is unreasonable” the Bench answered “We disagree.” (para 47) “The question of whether an agreement under which a patent is licensed will cause an appreciable adverse effect on competition within India or will amount to an abuse of dominant position is not one that is reserved for the CCI. To the contrary, the factors that the CCI is required to consider under Sections 19(3) and 19(4) when assessing a potential violation of Sections 3 or 4 of the Competition Act are not very different from those that the Controller, in exercise of power to grant a compulsory license, will consider in terms of Sections 84(6) and 84(7), especially when read with Sections 83 and 89 of the Patents Act.” (paras 47–48)
5. A nearly identical inquiry. “In our view, the inquiry that the CCI proposes to conduct in respect of an assertion of patent rights is nearly identical to that which the Controller will conduct under Chapter XVI of the Patents Act.” “It is especially for the field pertaining to patents, unreasonable conditions in agreements of licensing, abuse of status as a patentee, inquiry in respect thereof and relief that is to be granted therefor are all to be governed by the Patents Act.” (para 49)
6. The legislative indications. “In our view, the Competition Act is a general legislation pertaining to anti-competitive agreements and abuse of dominant position generally. The inclusion of Section 84(6)(iv) in the Patents Act by way of an amendment after the Competition Act was passed with Section 3(5)(i)(b) is particularly instructive of the above legislative intent as regards anti-competitive agreements.” (para 50) “Since such reasonable conditions are exempted from examination under section 3(5)(i)(b) of the Competition Act, it is indicative of the legislature’s intendment as to the exclusive domain of the Patents Act regarding reasonable conditions. Similar, in our view, is the situation with the language of Section” “83(f) of the Patents Act as compared with that of Section 4 of the Competition Act.” (paras 50–51)
7. Chapter XVI a complete code. “In our opinion, Chapter XVI of the Patents Act is a complete code in itself on all issues pertaining to unreasonable conditions in agreements of licensing of patents, abuse of status as a patentee, inquiry in respect thereof and relief that is to be granted therefor.” (para 52)
8. The subject matter in focus. “In reconciling the two statutes, the subject matter that is in focus is not merely anti-competitive agreements and abuse of dominant position, which both the Patents Act (in Chapter XVI) and the Competition Act (in Sections 3 and 4) deal with. The subject matter that is relevant for this assessment is anti-competitive agreements and abuse of dominant position by a patentee in exercise of their rights under the Patents Act.” (para 53)
9. The Patents Act prevails. “On this issue, there is no scope of doubt beyond the pale of doubt that the Patents Act is the special statute, and not the Competition Act. It is also a fact that Chapter XVI of the Patents Act is a subsequent legislation as compared to the Competition Act.” (para 54) “Therefore, when asessed, by the maxim generalia specialibus non derogant or by the maxim lex posterior derogat priori, the Patents Act must prevail over the Competition Act on the issue of exercise of rights by a patentee under the Patents Act. Even assessed by the rigours of Ashoka Marketing (supra), which require the conflict to be resolved by reference to the purpose and policy underlying the two enactments and the clear intendment conveyed by the language of the relevant provisions therein, the” “Patents Act must necessarily prevail over that of the Competition Act.” (paras 54–55)
10. Section 48. “The conclusion drawn by the 2016 Judgement at para. 172, that there is no overlap between the two enactments and that the CCI has powers that the Controller does not have is not sustainable.” “This is because of not just the provisions of Chapter XVI, but also the opening words of section 48 of the Patents Act, which makes the rights of a patentee subject to the other provisions of the Act.” (para 60)
11. Sections 21 and 21A. “Section 21A whether read on its own or in conjunction with section 62 cannot necessarily empower the CCI to exercise powers that the Controller would otherwise exercise under Chapter XVI of the Patents Act. Once there is clear legislative intent that the Patents Act will override the Competition Act, the same cannot be saved by the provisions of Section 21A of the Competition (Competition) Act. Its sections 21 and 21A are intended to deal with situations where the powers of the Commission are not excluded by other statutes.” (para 61)
12. Orders in rem and in personam. To the submission “that the decisions of the CCI are in rem, while those of the Controller are in personam” the Bench answered “We find ourselves unable to concur.” (para 62) “The legislature, in its wisdom, after enacting the Competition Act, amended the Patents Act to introduce Chapter XVI and has chosen to keep the effect of the orders of the Controller in personam. It is not for this Court to comment on the propriety thereof, nor does this persuade us to permit exercise of powers by CCI contrary to legislative intent.” (paras 62, 64)
13. Settlement with the informant. “The CCI’s proceedings deserve to be quashed for want of power. The Court is of the view that once a settlement has been reached between the informant and person against whom the information is filed, the very substratum of the proceedings by CCI is lost and the 2015 Judgement has rightly quashed the same. The question of liberties granted by the 2015 Judgement being sustainable do not arise, given as this Court has already held that CCI has no power to conduct the investigation that was impugned.” (para 58)
14. Procedure. Disposition. “For this reason, in our view, LPA 246/2016, 247/2016, 150/2020, 550/2016 and WP(C) 8379/2015 ought to be and are allowed. The 2016 judgment and 2020 judgment are set aside. The proceedings initiated by the CCI, that are impugned in the said appeals/ petitions are hereby quashed.” (para 56) “The Appeals and the Petition are disposed off in the above terms. The parties shall bear their own costs.” (paras 56, 65)

What the court did not decide

“This judgement, of course, must not be understood as expressing any opinion on the merits of the claims of any of the parties as to whether Ericsson or Monsanto have, in fact, imposed anti-competitive conditions, or abused their dominant position.” (para 57) Of the other submissions, the Bench held that “The other issues, though contentious, are not relevant in view of the conclusion we have reached.” (para 10)

Subsequent treatment

• Appealed — On 2 September 2025 the Supreme Court (J.B. Pardiwala and Sandeep Mehta JJ) dismissed the Competition Commission of India’s special leave petitions (SLP(C) No. 25026 of 2023 and connected matters), declining to interfere with this judgment and, as reported, keeping the questions of law open.