Patent Exclusivity Versus Competition Oversight: India's Emerging Jurisprudence

The interplay between competition law and intellectual property rights has been one of the most complex and debated areas of law. This tension comes to play when allegations of anti-competitive conduct involve products or conduct protected under the intellectual property laws namely the Patents Act, 1970 ("Patents Act") as in the present case. In a recent development, the National Company Law Appellate Tribunal ("NCLAT") reiterated that the Competition Commission of India ("CCI") lacks power to examine disputes where the subject matter is governed by patent rights. It is a significant decision with implications for competition enforcement in sectors dominated by patented products.

In Swapan Dey v. Competition Commission of India¹, the tribunal dismissed an appeal against an order of the CCI that had closed a complaint alleging anti-competitive conduct by Vifor International (AG) in relation to its patented drug Ferric Carboxymaltose ("FCM"). The NCLAT's view grounded in statutory interpretation and existing judicial precedents underscores a jurisdictional boundary between competition law and the exclusive domain of patent regulation.

Statutory Framework

The Competition Act, 2002 ("Competition Act") seeks to prevent practices having an adverse effect on competition, promote and sustain competition, protect consumer interests and ensure freedom of trade. Under Section 3 of the Competition Act, combinations or agreements that appreciably restrict competition are prohibited. Section 4 prohibits abuse of dominant position. Sections 26 and 27 provide for inquiry and orders by the CCI after investigation by the Director General. The Competition Act also contains a non-derogation clause in Section 3(5) which states that the Competition Act shall not restrict the right of any person to protect his rights under the Patents Act.

The Patents Act is a comprehensive code governing the grant, enforcement and exploitation of patent rights. It confers exclusive rights on patentees to make, use, sell or import the patented invention for a specified term, subject to certain statutory exceptions and compulsory licensing provisions. Regulation of patent licensing, conditions on working of patents, and remedies for infringement are all within the purview of the Patents Act.

Section 3(5) of the Competition Act is particularly instructive. It reflects the legislative intent to ensure that competition law does not undermine or override rights conferred under intellectual property laws including patents. The provision creates an explicit safeguard for patentees allowing them to seek protection of their rights under the Patents Act without the Competition Act acting as a fetter.

Background of the Dispute

The underlying dispute in Swapan Dey v. CCI began with a complaint filed by Swapan Dey, the Chief Executive Officer of a hospital participating in the Pradhan Mantri National Dialysis Programme. He alleged that patients undergoing dialysis commonly developed iron deficiency anaemia and required injections of FCM. Dey contended that the pricing and licencing practices of Vifor International (AG), the Swiss pharmaceutical giant that developed and held a patent over the FCM molecule resulted in anti-competitive conduct by making the drug unaffordable and therefore limiting its accessibility in the Indian market.

Dey invoked Sections 3 and 4 of the Competition Act suggesting that Vifor's licensing arrangements with Indian manufacturers and the alleged restrictive conditions imposed in those agreements amounted to agreements restraining competition and abuse of dominant position. The CCI after conducting an investigation closed the complaint on 25 October 2022 finding no prima facie evidence of violation of competitive norms. Dey challenged this finding before the NCLAT arguing that the CCI had failed to properly define the relevant market, assess the alleged dominant position and appropriately examine licensing conditions

However, Vifor International countered with a jurisdictional objection that the Competition Act did not empower the CCI to examine disputes arising from the exercise of patent rights which are governed by the Patents Act. In support of this argument, the company relied heavily on Section 3(5) of the Competition Act and prior judicial pronouncements indicating the primacy of patent rights in certain contexts.

NCLAT's Reasoning

A two-member bench of NCLAT dismissed the appeal. The tribunal held that the CCI lacked jurisdiction to examine allegations of anti-competitive conduct in circumstances where the dispute centred around the exercise of patent rights protected under the Patents Act. The tribunal emphasised that at the relevant time Vifor International held the patent for FCM and therefore matters concerning pricing, licensing and related conduct were regulated by the Patents Act not the Competition Act.

The NCLAT's conclusion was anchored on the non-derogation clause in Section 3(5) which expressly preserves rights under the Patents Act irrespective of competition law considerations. The tribunal observed that where the subject matter in question is protected by patent the Competition Act cannot be invoked to impinge on the statutory rights conferred on the patentee. In this respect, the tribunal's ruling aligns with prior judicial stance from the Delhi High Court in Telefonaktiebolaget LM Ericsson (PUBL)² and the Supreme Court's refusal to entertain a special leave petition challenging that position in SLP No. 25026/2023³ both indicating judicial restraint in allowing competition law to encroach upon patent territory.

Importantly, the NCLAT did not focus on the merits of the allegations of anti-competitive conduct, rather it resolved the appeal on jurisdictional grounds. The tribunal refrained from engaging in detailed competition law analysis underscoring that the examination of alleged conduct protected by patent rights was beyond the CCI's mandate.

Policy Considerations

While the NCLAT's ruling provides doctrinal clarity on the jurisdictional question in the context of patent-protected products, it also highlights broader policy tensions. Intellectual property rights and competition law share a complementary yet sometimes conflicting mandate. The former encourages innovation through limited monopolies while the latter seeks to prevent market distortions and protect consumer welfare.

In international practice, jurisdictions such as the United States and European Union have grappled with similar issues. Competition authorities routinely examine patent licensing arrangements and pricing conduct under abuse of dominance or anti-competitive agreement provisions with careful jurisprudential guardrails that respect the underlying intellectual property framework. Indian jurisprudence, however, appears currently inclined towards a strict separation favouring patent law exclusivity where the subject matter is directly tied to patent rights. This raises questions about whether a more harmonised framework is required one that enables domain expert adjudication without jurisdictional ouster while preventing regulatory overreach. The lack of explicit legislative guidance aggravates this tension leaving courts and tribunals to fill the gap through interpretive reasoning.

Conclusion

The NCLAT's ruling that the CCI lacks the power to examine disputes over patented products represents a significant development in Indian competition jurisprudence. By asserting that the Patents Act prevails over the Competition Act in such cases the tribunal has delineated a clear jurisdictional boundary affirming that competition law cannot be used to scrutinise allegations arising directly from the lawful exercise of patent rights. While this decision brings necessary clarity to an ambiguous area of law, it also underscores the need for careful calibration between competition enforcement and intellectual property protection. Competition authorities, practitioners and policymakers must now grapple with the implications of this boundary ensuring that neither statutory mandate is unduly compromised and that markets remain both innovative and competitive.

Footnotes

1 Swapan Dey v. CCI, 2025 SCC OnLine NCLAT 1698

2 Telefonaktiebolaget LM Ericsson (PUBL) v. Competition Commission of India & Anr., 2023 SCC OnLine Del 4078

3 Competition Commission of India v. Monsanto Holdings Private Ltd. & Ors., SLP (C) No. 25026/2023

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