Delhi High Court sets aside anti-trust proceedings against Ericsson and Monsanto

Delhi HC Ericsson and Monsato

A two-judge bench of the Delhi High Court on July 13th set aside antitrust proceedings in the Competition Commission of India (CCI) against telecom giant Ericsson and agrochemical company Monsanto.

The court held that the Patents Act of 1970 is a special law, and any issue related to a party's exercise of its patent rights should be addressed exclusively under the patent law, rather than the Competition Act of 2002. Additionally, the court ruled that the CCI lacks the jurisdiction to investigate whether a company, in the exercise of its patent rights, has abused its dominant position.

Monsanto and Ericsson initially approached the court in 2015 and 2020, respectively, to seek a resolution of this legal question arising from the antitrust proceedings against them.

By delivering this judgment, the court has resolved the dispute regarding whether the CCI can investigate allegations of abuse of a dominant position based on a company's patent holdings.

Ericsson's case:

Ericsson sued mobile phone manufacturer Micromax stating that its phones infringed upon its patent and demanded that it pay a royalty.  Micromax and Intex filed complaints before CCI alleging abuse of dominant position by Ericsson stating that the company was demanding unfair royalty from them for the use of its technology.  The CCI took a primary view that Ericsson was abusing its dominant position because it owns the patents and ordered an investigation into the company's conduct.

Ericsson approached the Delhi HC against this order and argued that CCI could not deal with matters pertaining to patent infringement and royalties as the patent act is a specialised law.

Monsanto's case:

Monsanto held the patent for a technology to produce genetically modified cotton seeds. It had licensed the technology to certain manufacturers in India such as  Nuziveedu Seeds Ltd. These Indian companies had to pay a non-refundable fee and a recurring fee to use its technology.

The companies approached the CCI against this arguing that Monsanto was abusing its dominant position by virtue of holding the patent for this technology. CCI had decided to investigate the issue, after taking a primary view that Monsanto had abused its dominant position. Monsanto approached the Delhi High Court against this order contending that the CCI could not decide on patent rights.

Single judge's order:

A single judge of Delhi HC refused to stay the investigation against these companies and held that CCI was not wrong in ordering this investigation as it has only taken a prima facie view.  Thus permitting the anti-trust watchdog to continue investigating them. The companies then approached the division bench against this order.

Two-judge bench:

The two-judge bench after a detailed consideration concluded that any issue pertaining to the exercise of patent law must necessarily be investigated under Patents Act and not from the purview of the competition act.

The CCI can however approach the Supreme Court against this order.

Monsanto was represented by law firm Shardul Amarchand Mangaldas & Co. Speaking of the judgment, Naval Satarawala Chopra, a partner in the firm, said "Today’s ruling by the Division Bench of the High Court is a significant departure from some of the past decisions where the Courts would rule in the CCI’s favour.  We are happy that after lengthy arguments, the Delhi High Court has ultimately followed a pragmatic approach. This decision is likely to give respite to licensors and holders of intellectual property who have been embroiled in competition litigation.”