Intellectual Property and Competition Law

An intellectual property right is a statutory exclusivity granted to induce creation and disclosure; competition law is directed against exclusivity that harms the market. The tension is narrower than it appears, because the grant of the right is not the objection and the manner of its exercise may be. Section 3(5)(i) saves reasonable conditions necessary to protect the listed rights, and Section 4 contains no equivalent saving. What remains contested is not the substantive standard but the forum: whether the Commission may examine the conduct of a patentee at all, or whether the Patents Act occupies that field.

1. The Statutory Saving

Section 3(5)(i) provides that nothing in Section 3 shall restrict the right of any person to restrain any infringement of, or to impose reasonable conditions as may be necessary for protecting, his rights under the Copyright Act, 1957, the Patents Act, 1970, the Trade Marks Act, 1999, the Geographical Indications of Goods Act, 1999, the Designs Act, 2000 and the Semiconductor Integrated Circuits Layout-Design Act, 2000.

1. The saving is conditional. It protects reasonable conditions necessary for protecting the right. A condition that goes beyond the scope of the right, or beyond what its protection requires, is not saved, and the burden of establishing reasonableness and necessity is on the party claiming the saving.
2. The list is closed. Rights arising from confidence, know-how or a foreign registration with no Indian counterpart in the listed statutes do not attract it.
3. It applies to Section 3 alone. There is no corresponding provision in Section 4, so an enterprise dominant by reason of its intellectual property is fully subject to the abuse provisions.
4. It does not protect the agreement as a whole. A licence may be saved as to the conditions necessary to protect the right and examined as to the rest.

2. Licensing under the Principal Statutes

• Patents. The Patents Act contains its own competition-like provisions. Section 140 voids certain restrictive conditions in a licence, including requirements to acquire from the licensor articles not protected by the patent and prohibitions on using articles supplied by others. Chapter XVI provides for compulsory licensing where the reasonable requirements of the public are not satisfied, the invention is not available at a reasonably affordable price, or it is not worked in India. These provisions are the foundation of the argument that the Patents Act is a complete code for the conduct of a patentee.
• Copyright. The Copyright Act provides for compulsory licensing where a work is withheld from the public. In Entertainment Network (India) Ltd. v. Super Cassettes Industries Ltd., (2008) 13 SCC 30, the Supreme Court held that the owner has no absolute right to refuse a licence, that a refusal amounting to withholding the work from the public may attract compulsory licensing, and that terms must be reasonable.
• Trade marks. The mark identifies origin, so quality control is necessary and protected. Conditions unrelated to that function, such as restrictions on the licensee's dealings in other goods or the fixing of resale prices under cover of brand protection, are outside the saving.

3. Standard Essential Patents and FRAND

A standard essential patent is one that must be infringed in order to implement a technical standard. Because the standard eliminates alternatives by design, the holder occupies a position no competitor can challenge in respect of that standard, and standard setting organisations therefore require members to commit to license on fair, reasonable and non-discriminatory terms as the condition of inclusion.

1. Hold-up. Having obtained inclusion in the standard, the holder demands royalties far above what the technology would have commanded beforehand, using the threat of an injunction against an implementer who is already locked in.
2. Patent ambush. A member of the standard setting organisation conceals the existence of its patent or of its application while the standard is settled, and asserts it once the industry has adopted the standard. The competition objection is to the concealment, which deprived the organisation of the chance to choose a different technology or to secure a commitment.
3. Hold-out. The converse complaint: the implementer uses the technology and refuses to take a licence, relying on the commitment and on the difficulty of obtaining an injunction, so that the commitment becomes a means of devaluing the right.
4. Excessive royalty and the royalty base. Whether the royalty should be computed on the price of the whole device or on the value of the component implementing the standard; computing on the device price captures value attributable to features the patent does not touch.
5. Discrimination. Offering different rates to similarly placed implementers, often raised together with complaints about non-disclosure agreements that prevent implementers from comparing the terms they are offered.
6. Refusal to license. A refusal by the holder of a standard essential patent stands differently from an ordinary refusal to license, because the commitment to license on fair terms was the condition on which the technology entered the standard.

4. The Jurisdictional Question: Ericsson and Monsanto

The substantive standards described above have been argued in India for more than a decade without ever being decided, because the proceedings have turned on whether the Commission has jurisdiction at all. The sequence should be learnt in order.

1. 2013 onwards. Informations were filed against Telefonaktiebolaget LM Ericsson by Indian handset manufacturers alleging that its licensing of standard essential patents imposed unfair and discriminatory royalties and used the threat of injunctions to extract terms; a separate information was filed against Monsanto concerning royalties on genetically modified cotton technology. The Commission directed investigation in both.
2. 2016. A single judge of the Delhi High Court held that the Patents Act and the Competition Act operate in different fields and that the Commission's jurisdiction was not ousted, the two providing remedies for different mischiefs.
3. 2020. That view was followed in Monsanto Holdings (P) Ltd. v. Competition Commission of India.
4. 13 July 2023. A Division Bench of the Delhi High Court took the contrary view, holding that Chapter XVI of the Patents Act is a special and later enactment constituting a complete code for the conditions attaching to a patent licence, that it therefore prevails over the Competition Act, and that the Commission lacked jurisdiction over the exercise of patent rights. It added that the private settlements reached between the informants and the patentees had removed the factual substratum of the proceedings. The investigations were quashed.
5. 2 September 2025. The Supreme Court dismissed the Commission's special leave petitions. The dismissal proceeded on the footing that the informants had settled with the patentees, so there was no justification for interfering with the High Court's order on those facts. The Court expressly kept open the questions of law concerning the interplay between the Patents Act and the Competition Act, to be raised in an appropriate case in the future.

The position has continued to develop. The National Company Law Appellate Tribunal has applied the Division Bench view to dismiss an appeal in a matter concerning pharmaceutical patent licensing, and in proceedings arising from that order the Supreme Court has set aside the jurisdictional findings and confined the appeal to the extent of the Commission's power where the grievance concerns a refusal arising from the exercise of patent rights. That question remains for decision, and anything written on this topic should be checked against the current position before publication.

5. Private Settlement and the Public Proceeding

A second proposition emerged from the same litigation and deserves separate attention. The Division Bench held, and the Supreme Court accepted on the facts, that once the informant and the patentee have settled their private dispute the substratum of the competition proceeding is gone. That reasoning sits uneasily with Samir Agrawal v. Competition Commission of India, (2021) 3 SCC 136, which holds that proceedings before the Commission are in rem and that the informant is not a plaintiff whose satisfaction ends the matter. The tension is real: if a settlement with the complainant ends the inquiry, an enterprise can extinguish public enforcement by buying off the informant. A similar approach has been taken in a matter concerning design infringement, where proceedings were set aside after the underlying dispute was settled in mediation. The point should be noted as an unresolved difficulty rather than as a settled rule.

6. How to Analyse an Intellectual Property Question

1. Identify the right relied on and confirm that it is one of those listed in Section 3(5)(i).
2. Ask whether the conduct complained of is the exercise of the right or something beyond it: restraining infringement is within the saving, extending the right to unprotected goods, markets or periods is not.
3. If the conduct is unilateral and the enterprise is dominant, remember that Section 4 has no saving at all, and proceed under the abuse provisions.
4. Consider whether the specialised statute supplies its own remedy, such as Section 140 or compulsory licensing under the Patents Act, and address the forum question expressly.
5. State the jurisdictional position accurately, as unsettled, and identify which line of authority the answer follows and why.

7. Related Topics and Provisions