Patents Over Powerplay: NCLAT Reinforces the Boundary Between Monopoly Rights and Market Fairness
Patents Over Powerplay: NCLAT Reinforces the Boundary Between Monopoly Rights and Market Fairness
Introduction
The National Company Law Appellate Tribunal (NCLAT) has reaffirmed that the Competition Commission of India (CCI) lacks jurisdiction to probe disputes arising from the exercise of patent rights, clarifying that such issues fall exclusively under the Patents Act, 1970.
A Bench comprising Justice Yogesh Khanna (Judicial Member) and Ajai Das Mehrotra (Technical Member) dismissed an appeal challenging a CCI order that had closed a complaint against Vifor International (AG) concerning the pricing and availability of its patented drug Ferric Carboxymaltose (FCM).
Factual Background
The appellant, a hospital administrator providing free dialysis services under a government programme, alleged that Vifor International (AG) was selling its patented drug FCM, used to treat iron deficiency anaemia, at an exorbitant price. It was further alleged that Vifor’s licensing agreements with Indian manufacturers restricted market competition and limited drug availability. Vifor contended that it had lawfully patented FCM in 2008, and the patent expired only in October 2023, after which other manufacturers could produce the drug.
Procedural Background
In 2022, the CCI dismissed the complaint, finding no evidence of anti-competitive conduct or abuse of dominance by Vifor. The appellant challenged this order before the NCLAT, asserting that the CCI had failed to consider the exploitative pricing and restrictive licensing.
Issues
- Whether the CCI has jurisdiction to investigate the alleged abuse of dominance and restrictive trade practices concerning patented pharmaceutical products.
Contentions of the Parties
Appellant: Argued that Vifor’s conduct amounted to abuse of dominant position and unfair pricing. Contended that the CCI has jurisdiction to examine market restrictions even where patent rights are involved.
Respondents: Submitted that the Patents Act governs the exercise and enforcement of patent rights. Invoked Section 3(5) of the Competition Act, which exempts reasonable conditions imposed by a patentee for protecting intellectual property rights. Emphasized that all disputes relating to misuse or licensing of patents are exclusively governed by patent law.
Reasoning and Analysis
The NCLAT observed that when a product is protected by a patent, issues concerning pricing, licensing, or use are to be determined under the Patents Act, not under competition law. The Bench relied on the Delhi High Court’s decision in Telefonaktiebolaget LM Ericsson (PUBL) v. CCI and the Supreme Court’s affirmation in SLP No. 25026/2023, which conclusively held that CCI has no power to examine patent-related disputes. It emphasized that the Patents Act is a self-contained code, providing specific remedies for misuse, licensing, and compulsory licensing — leaving no room for parallel proceedings under the Competition Act. Accordingly, the Tribunal held that “the CCI lacks the power to examine the allegations made against Vifor International (AG), as the subject matter of contention — the patented drug FCM — is governed entirely by the Patents Act.”
Implications
This judgment reinforces the primacy of the Patents Act over the Competition Act in cases involving patented innovations. It narrows the CCI’s jurisdiction and clarifies that patent-related pricing and licensing issues must be dealt with exclusively under patent law, ensuring legal certainty for patent holders.
In this case the appellant was represented by Mr. Rohit Arora, Advocate.
