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TMI Blog2020 (5) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... t is of the view that Section 62 of the Competition Act which expressly provides that the Competition Act would be in addition to and not in derogation of the provisions of any other law for the time being in force, clearly expresses the legislative intent that the Competition Act is in addition to other laws and not in substitution thereof. This Court next examined the issue whether there was any irreconcilable conflict between the Competition Act and the Patents Act and whether both the enactments could be construed harmoniously. This Court had noticed that Chapter XVI and Section 140 of the Patents Act contained provisions the subject matter of which may be common with the Competition Act. Section 84 of the Patents Act provides for grant of compulsory licenses in certain cases where reasonable requirement of public in respect of patented inventions has not been satisfied. Section 85 of the Patents Act provides for revocation of patents if after expiry of two years from the date of grant of compulsory license, the patented invention has not been worked in the territory of India and the reasonable requirements of public with respect to the patent have not been satisfied. As is app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fraining from examining the merits of the dispute. The petitioners' challenge to the order dated 18.02.2016 is also not maintainable. By the aforesaid order, the CCI had merely issued notice and afforded the petitioners for an opportunity to be heard before considering the application filed by the informants under Section 33 of the Competition Act. This Court finds no reason whatsoever to interfere with the said order. The petition-W.P.(C) 1776/2916 is unmerited and, therefore, dismissed. All pending applications are also disposed of. Petition dismissed. - Hon'ble Judges Vibhu Bakhru, J. For the Appellant : Chander M. Lal, Senior Advocate, Rajshekhar Rao, Anusuya Nigam, Lakshay Kaushik, Anandh Venkatramani and Nancy Roy, Advocates For the Respondents : Pallav Saxena, Mohammad Nausheen Samar, Ruchir Mishra, Mukesh Kumar Tiwari, Advocates, Jayant Bhushan, Senior Advocate, Vaibhav Choukse, Ela Bali, Akansha Mehta and Sunil Mathews, Advocates JUDGMENT Vibhu Bakhru, J. 1. Monsanto Holdings Pvt. Ltd. (hereafter 'MHPL'), Monsanto Company (hereafter 'Monsanto'), Mahyco Monsanto Biotech (India) Pvt. Ltd. (hereafter 'MMBL') have filed the petition, W.P.(C) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elates to the trait fee charged by MMBL and the other terms and conditions imposed by it for using the technology for manufacturing Bt. Cotton Seeds. 5. Monsanto is a company engaged in developing and commercializing technology for producing genetically modified seeds. It is claimed that Monsanto is a fortune 500 company and is engaged in providing agricultural products. It holds a portfolio of patents, trademarks and licenses. It is stated that Monsanto was the first company to develop and commercialize Bt. Cotton Technology (Bollgard-I). The technology is aimed at genetically modifying hybrid seeds to instill a particular trait-resistance to bollworms. Initially, Monsanto had developed a single-gene technology for producing seeds that were resistant to bollworms (Bollgard-I). Subsequently, Monsanto developed the second generation cotton technology, which consists of two genes that makes it resistant to bollworms (Bollgard-II). It is stated that the second generation cotton technology was developed as Pink Bollworms had become resistant to Bollgard-I. Bollgard-II technology is patented under the Patents Act, 1970 (hereafter 'the Patents Act'). Monsanto has licensed the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a reasonable trait value within a month. 10. It is stated that on 27.11.2008, MMBL issued a communication to NSL seeking on account payment towards trait value. NSL responded to the said communication by requesting MMBL to charge a reasonable trait value considering the increase in the cost of production and fixation of lower MRP of cotton seeds by the State Governments. 11. On 03.07.2009, MMBL issued a termination notice to NSL on account of non-payment of trait value for the Kharif 2008 season. In the information filed by NSL, it referred to various communications with MMBL with regard to payment of trait value. It is apparent from the above that the issue regarding payment of trait value continued to be a subject matter of dispute between the said parties. 12. MMBL had also instituted proceedings under the Arbitration and Conciliation Act, 1996 which were settled by the said parties by entering into a Settlement Agreement and a Settlement Amendment Agreement dated 20.01.2011. 13. On 19.07.2015, NSL, PABL and seven other seed manufacturers (sub-licensees) issued a letter to MMBL requesting that it consider charging a trait value at a rate determined by the State Governments. Imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Competition Act inasmuch as they have abused their dominant position by charging excessive and unfair prices for Bt. Technology. The informants allege that MMBL and Monsanto Group have exploited their dominant position and set prices for the technology, which are significantly higher than those that would result if there was effective competition in the relevant market. They further allege that linking of the trait value to MRP of cotton seeds is unreasonable and not reflective of the economic value of the said technology. 19. Next, the informants allege that MMBL had imposed unfair conditions in the sub-license agreement(s) and the same violated Section 4(2)(a)(i) of the Competition Act. The Informants aver that in terms of clause 2.05(c) of the sub-license agreements entered into by MMBL with them, they are required to notify MMBL in case their affiliates enter into negotiations with any competitor of MMBL within thirty days of commencement of such negotiations. In terms of the said clause, the Informants are also required to inform MMBL in case they or their affiliates intend to deal with any competitor of MMBL and failure to give such prior notice entitles MMBL to terminate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llege that MMBL has been following a policy of selective licensing and has sub-licensed its Bt. Technology to major players in the cotton seeds market. Bt. Cotton Hybrid Seeds have gained a significant market share and account for 99% of the cotton seeds market in India. This has placed MMBL in a position of dominance where it can leverage the same by licensing Bt. Technology to monopolize the downstream market relating to sale of Bt. Cotton Hybrid Seeds through its affiliates. It is stated that MMBL's affiliates have a combined market share of 14% in the downstream market for manufacturing Bt. Cotton Seeds. The Informants contend that in the circumstances unfairly terminating sublicense agreements with major seeds manufacturers, would effectively result in various affiliates of MMBL gaining a larger market share of the Bt. Cotton Seeds. 25. Next, the Informants claim that the sub-license arrangements between them and MMBL also contravene Section 3(1) and Section 3(4) of the Competition Act. 26. MOA FW' also filed a Reference under Section 19(1)(b) of the Competition Act, which was registered as Reference Case No. 02/2015. In its reference MOA FW set out the main allegation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is impliedly excluded. The petitioners contend that in order for the CCI to determine whether the conduct of the petitioners is anti-competitive, it would be necessary for the CCI to return findings that the royalty fee/trait value charged is unreasonable and excessive and the terms of the sub-license agreement are unreasonable. It is submitted that such issues are required to be determined by authorities under the Patents Act, namely, the Controller of Patents (hereafter the Controller). And, without effective findings returned by the Controller, the CCI would have no jurisdiction to proceed in the matter. 29. Mr. Lal, learned senior counsel appearing for the petitioners earnestly contended that the decision of this Court in Telefonaktiebolaget L.M. Ericsson v. Competition Commission of India Another: W.P.(C) 464/2014 decided on 30.03.2016 is no longer good law in view of the subsequent decision of the Supreme Court in Competition Commission of India v. Bharti Airtel Ltd. And Ors.: Civil Appeal No. 11843/2018, decided on 05.12.2018. He contended that the CCI can examine the question whether there has been abuse of dominance or an unfair trade practice only once a finding as to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the fact that Section 140 of the Patents Act was not amended is indicative of the legislative intent that it did not contemplate the CCI examining such issues and the same were required to be examined by the Controller. 33. Mr. Lal contended that interpreting the provisions of the Competition Act to confer upon the CCI concurrent jurisdiction to investigate allegations and issues, which are within the domain of Controller would result in two different bodies simultaneously evaluating the same matters resulting in potentially conflicting decisions. He submitted that keeping the aforesaid principle in mind, the Supreme Court in Bharti Airtel Limited case (supra) had harmoniously reconciled the provisions of two enactments-the Competition Act and the Telecom Regulatory Authority Act, 1997-and held that the CCI could exercise its jurisdiction only after the Regulator (TRAI) had returned the findings on the basis of which any order could be passed by the CCI. 34. Next, it was contended that the Court must also look into economic and realistic consequences on the issues of interpretation. Mr. Lal placed reliance on the decision of the Supreme Court in Shiva Shakti Sugars v. Shri Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreements to restrain infringement of IPR. 37. Next, he submitted that the Informants (the respondents) had disguised their complaint as one regarding violation of Section 4 of the Competition Act. However, their grievances, essentially, related to agreements that were covered under Section 3 of the Competition Act. Reasons and conclusion 38. In Telefonaktiebolaget L.M. Ericsson (supra), this Court had elaborately dealt with the question whether the jurisdiction of the CCI to examine matters, which involve one of the parties exercising rights as a Patentee, is excluded. In the present case, the principal contention advanced on behalf of the petitioners is that there is an implicit repugnancy between provisions of the Competition Act and the Patents Act and, therefore, the applicability of the Competition Act is excluded. It is contended that the Patents Act occupies the entire field in respect of not only the grant of patents but also exercise of rights granted to a patentee. And, this includes provisions regarding abuse of Patent rights. Therefore, it is implicit that the Competition Act would have no applicability to agreements that are related to exercise of rights by a Patent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents Act provides for revocation of patents if after expiry of two years from the date of grant of compulsory license, the patented invention has not been worked in the territory of India and the reasonable requirements of public with respect to the patent have not been satisfied. The instances listed out in Section 84(7) of the Patents Act can in certain circumstances be considered as an abuse of dominance if the patentee is dominant in the relevant market. Section 4 of the Competition Act contains provisions, which indicate abuse of a dominant position by an enterprise. And, Section 27 of the Competition Act provides for orders that can be passed by the CCI in cases where it finds that any enterprise has violated provisions of Section 3 and Section 4 of the Competition Act. This Court had after examining the various provisions of the two enactments, concluded that the orders that can be passed by the CCI under Section 27 of the Competition Act in respect of abuse of dominant position by any enterprise are materially different from the remedies that are available under Section 84 of the Patents Act. This court also observed that in certain case it may be open for a prospective lic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to regulating and promoting a free market. The Supreme Court noticed that the Competition Act dealt with three kinds of practices, which are treated as anti-competitive and are prohibited: (a) where agreements are entered into by certain persons with a view to cause an appreciable adverse effect on competition; (b) where an enterprise or group of enterprises, which enjoys dominant position abuses the said dominant position; and (c) regulating the combination of enterprises by means of mergers or amalgamations to ensure that such mergers or amalgamations are not anti-competitive or result in an abuse of the dominant position, which may be resultantly attained. The Court noticed that the CCI has been entrusted with a function to deal with the aforesaid kind of anti-competitive conduct and to the aforesaid extent, the functions assigned to the CCI were distinct from the function of TRAI under the TRAI Act. In this view, the Supreme Court did not accept the contention that the jurisdiction of the CCI in respect of matters, which are regulated by a specialised statutory body, were excluded from the applicability of the Competition Act. Thus, this decision does not support the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning infringement of any rights granted under the Patents Act. 47. This Court finds the aforesaid contention bereft of any merit. Clause (i) of sub-section (5) of Section 3 of the Competition Act cannot be dissected in the manner as suggested on behalf of the petitioners. Clause (i) of Subsection (5) of section 3 must be read in a meaningful manner. Sub section (5) of section 3 is set out below: (5) Nothing contained in this section shall restrict-- (i) the right of any person to restrain any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his rights which have been or may be conferred upon him under-- (a) the Copyright Act, 1957 (14 of 1957); (b) the Patents Act, 1970 (39 of 1970); (c) the Trade and Merchandise Marks Act, 1958 (43 of 1958) or the Trade Marks Act, 1999 (47 of 1999); (d) the Geographical Indications of Goods (Registration and Protection) Act, 1999 (48 of 1999); (e) the Designs Act, 2000 (16 of 2000); (f) the Semi-conductor Integrated Circuits Layout-Design Act, 2000 (37 of 2000); (ii) the right of any person to export goods from India to the extent to which the agreement relates exclusively to the production, supply, di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contented that since issues relate to patents, the same would be best debated before the Controller. 51. This Court is unable to accept the aforesaid contention. The decision of the Supreme Court in Bharti Airtel Ltd. (supra) was delivered in the context of the specific disputes that had arisen between Reliance Jio Infocom Ltd. (RJIL) and the specific role of the Telecom Regulatory Authority of India (TRAI) in regulating the said industry. TRAI is a statutory body constituted under the Telecom Regulatory Authority of India Act, 1997 (TRAI Act). Section 11 of the said Act sets out the functions that are to be performed by TRAI. In terms of Section 11 of TRAI Act, TRAI is charged to perform two kinds of functions: recommendatory functions and regulatory functions. Clause (a) of Section 11 of the said Act lists out the recommendatory functions of TRAI. In terms of clause (a) of Section 11, TRAI is required to make recommendations, either suo moto or on request of the licensor (Government of India), on the matters as listed therein. Clause (b) of Section 11 of the TRAI Act sets out the other functions that are required to be performed by TRAI. Section 11(1) of the TRAI Act is set out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l service obligations; (c) levy fees and other charges at such rates and in respect of such services as may be determined by regulations; (d) perform such other functions including such administrative and financial functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of this Act: Provided that the recommendations of the Authority specified in clause (a) of this sub-section shall not be binding upon the Central Government: Provided further that the Central Government shall seek the recommendations of the Authority in respect of matters specified in sub-clauses (i) and (ii) of clause (a) of this sub-section in respect of new licence to be issued to a service provider and the Authority shall forward its recommendations within a period of sixty days from the date on which that Government sought the recommendations: Provided also that the Authority may request the Central Government to furnish such information or documents as may be necessary for the purpose of making recommendations under sub-clauses (i) and (ii) of clause (a) of this sub-section and that Government shall supply such information within a period of seven days f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d systems. Thus, the subject matter of the disputes fell squarely within the domain of the TRAI and the TRAI was charged with the function of ensuring that the quality of services to consumers is not affected. 55. It is also relevant to note that the role of TRAI as a regulator is materially different from that of a Controller. Telecom services are regulated and controlled and TRAI has a vital role in regulating the industry. As noticed above, the nature of functions of TRAI are two-fold. The first is recommendatory in nature. TRAI is required to make recommendations to the licensor on the matters as specified in Section 11(a) of the TRAI. Thus, matters that relate to licensing between the licensor and the service provider are squarely covered at the said level. In addition to the above, TRAI is required to perform other functions for regulating the telecom services. The TRAI's scope of regulation is all pervasive. In exercise of its powers, TRAI has made several Regulations, which are required to be complied with. TRAI also fixes the tariff for interconnection. Thus, the issue whether adequate number of POIs had been provided by service providers for connecting with the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of TRAI in much detail, expressed its the view that the role of TRAI was different than the role of a Controller of Patents and, therefore, the decision in Telefonaktiebolaget L.M. Ericsson (supra) was not applicable. 58. In view of the above, this Court finds no reason to interfere with the impugned order. It is also relevant to note that an order passed by the CCI under Section 26(1) of the Competition Act is an administrative order and, therefore, unless it is found that the same is arbitrary, unreasonable and fails the wednesbury test, no interference would be warranted. A review on merits is impermissible at this stage, and therefore, this court is refraining from examining the merits of the dispute. 59. The petitioners' challenge to the order dated 18.02.2016 is also not maintainable. By the aforesaid order, the CCI had merely issued notice and afforded the petitioners for an opportunity to be heard before considering the application filed by the informants under Section 33 of the Competition Act. This Court finds no reason whatsoever to interfere with the said order. The petition-W.P.(C) 1776/2916 is unmerited and, therefore, dismissed. All pending applications are al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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