Onerous Conditions Cannot be Imposed for the Purpose of Protecting Patentee Rights

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The Hon’ble Delhi High Court in the matter of Monsanto Holdings Pvt.Ltd&Ors Vs. Competition Commission of India &Ors has categorically enunciated that onerous conditions cannot be made under the pretense of protecting Patentee rights.
In the present case, a Writ Petition was filed by Monsanto Holdings Pvt. Ltd (‘MHPL’), Mahyco Monsanto Biotech (India) Pvt. Ltd. (‘MMBL’) (together referred to as Petitioners) against the impugned common order of Competition Commission of India (CCI). The main issue arose as to the unfair terms and conditions imposed by the Petitioners while sub-licensing the technology to various seed manufacturers and the exorbitant trait fee charged for the same. Few seed manufacturers (informants) had filed for information U/s 19(1)(a) of the Competition Act, alleging that the Petitioners have abused their dominant position as they were the only player in the field and had no substitute for their products, thus charging unfair prices for their technology.
The CCI, taking these facts into due consideration, observed that the Petitioners were holding a dominant position in the relevant market and also stated that the conditions imposed in the sub-licensing agreements were unreasonable and harsh for the protection of IPR. Thus the CCI directed the Director-General to conduct an investigation on this matter.
The Petitioners challenging the order passed by the CCI contended that the CCI lacked jurisdiction to adjudicate the issue as it fell under the ambit of the Patents Act. Petitioners also alleged that the Controller of Patents was the appropriate authority to decide issues pertaining to the terms and conditions of the sub-licensing agreement and the trait fee and not the CCI. Further, Petitioners also submitted that Section 140 of the Patents Act mirrored Section 3, 4 of the Competition Act and by virtue of Section 66 & 85 of the Patents Act a patent can be revoked under public interest.
However, the Court dismissing the petitions observed that the exclusionary provision U/s 3(5) of the Competition Act, though endowed a person with the right to protect his IPR and to impose reasonable conditions; it must under no circumstance be read to include unreasonable conditions which may far exceed the necessary conditions. The Court also viewed that the CCI’s order U/s. 26(1) of the Competition Act was an administrative order and ruled that it cannot be warranted or interfered unless it was arbitrary, unreasonable and failed the Wednesbury test.
The quintessence of this judgment is that a patentee cannot impose onerous conditions under the pretence of protecting his rights and CCI’s jurisdiction cannot be ousted when the complaint is regarding the egregious abuse of dominance in respect to patent rights.


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