Competition Law and Patent Abuse in India

Excluding the Competition Commission from this process creates gaps. Patent authorities focus on the grant and validity of rights, and in some cases on their limited regulation. Competition authorities, in contrast, look at market impact. They can assess whether a particular practice harms competition, restricts entry, or affects consumers. These are questions that go beyond the scope of patent law.

Intellectual property rights play a central role in modern economies. They encourage creativity and investment by allowing innovators and creators to control and benefit from their work. At the same time, markets cannot function efficiently if such control becomes absolute. This is where competition law steps in. It ensures that the rights granted to one party do not unfairly restrict opportunities for others. The real challenge lies in drawing the line between legitimate use of intellectual property and conduct that harms competition.

The Competition Act, 2002, reflects this balance. It prohibits agreements that have an appreciable adverse effect on competition and also addresses abuse of dominant position.¹ At the same time, it recognises that intellectual property rights require some level of protection. Section 3(5) allows reasonable restrictions that are necessary for safeguarding these rights.² This shows that the law does not see intellectual property and competition as opposing forces. Instead, it attempts to make them work together. However, the phrase “reasonable restrictions” becomes crucial here. If a restriction goes beyond what is necessary and begins to distort the market, it should no longer be protected.

In practice, most intellectual property is used through licensing. Companies rarely exploit their rights alone. They license technology, trademarks, or designs to others, often through agreements that operate across different levels of the supply chain. These arrangements are important because they allow wider access to innovation and help industries grow.³ However, they also create space for misuse. A dominant firm may impose unfair pricing, restrict how a licensee operates, or refuse to license altogether. Such behaviour can limit competition and create entry barriers for smaller players.

These concerns become sharper in industries that depend on standardisation. Standard Essential Patents are a good example. These patents are necessary for products to comply with technical standards, especially in sectors like telecommunications.⁴ A company that owns such patents holds significant power because others cannot enter the market without using that technology. To prevent misuse, patent holders are expected to license their technology on FRAND terms, which means the terms should be fair, reasonable, and non-discriminatory. In theory, this sounds straightforward. In reality, it often leads to disputes. What is fair or reasonable can vary widely depending on the situation.

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There have been many instances where patent holders have demanded high royalties or imposed conditions that are difficult for licensees to accept. This creates a situation where the licensee has little choice but to agree, especially when the technology is unavoidable. Scholars have described this as patent holdup. It can also lead to royalty stacking, where multiple patent holders demand fees, making the final product more expensive. These outcomes affect not just competitors but also consumers, who ultimately bear the cost.

The question then is who should step in when such issues arise. Should it be the patent authorities, or should competition regulators also have a role? This question became particularly important in the Telefonaktiebolaget LM Ericsson v Competition Commission of India case.⁵ Ericsson was accused of imposing unfair licensing terms for its Standard Essential Patents. The case raised a fundamental issue about jurisdiction. Could the Competition Commission of India examine such conduct, or was it purely a matter for patent law?

In 2016, the Delhi High Court took a clear position. It held that the Competition Commission did have the authority to investigate.⁶ The Court explained that the Commission was not concerned with the validity of patents. Instead, its role was to examine how those patents were being used in the market. If the use of a patent led to anti-competitive effects, then the Commission had every right to intervene. This reasoning made sense because it allowed both legal frameworks to operate in their own domains without overlap.

However, this position did not remain settled. In 2023, a Division Bench of the same court took a different view. It held that the Patents Act should prevail in matters related to patent licensing because it is a special law.⁷ According to this reasoning, issues such as excessive pricing or refusal to license could be addressed through mechanisms like compulsory licensing under the Patents Act. This created uncertainty because it seemed to limit the role of the Competition Commission.

The matter eventually reached the Supreme Court, but the broader jurisdictional issue was not conclusively resolved. As a result, the larger question about jurisdiction remains unresolved. This lack of clarity is not just a technical issue. It has real consequences for how markets are regulated.

One of the main arguments against involving the Competition Commission is that patent law already provides remedies. Compulsory licensing is often cited as an example. Under Section 84 of the Patents Act, a patent can be licensed without the consent of the holder under certain conditions, such as when public demand is not being met or the patented product is not available at a reasonably affordable price.¹⁰ While this is an important tool, it has its limits. It is typically used in specific situations and involves a detailed process. It is not designed to address every form of anti-competitive conduct.

FRAND commitments, on the other hand, are more flexible. They are based on negotiation and are meant to ensure ongoing access to technology.⁹ However, they rely heavily on good faith. When disputes arise, there needs to be a mechanism that can step in quickly and effectively. This is where competition law becomes important. It allows regulators to examine market behaviour in real time and to impose remedies that are tailored to the situation.

Excluding the Competition Commission from this process creates gaps. Patent authorities focus on the grant and validity of rights, and in some cases on their limited regulation. Competition authorities, in contrast, look at market impact. They can assess whether a particular practice harms competition, restricts entry, or affects consumers. These are questions that go beyond the scope of patent law.

The structure of the Competition Act itself supports this broader role. Section 21A allows the Commission to consult with other statutory authorities when necessary.¹¹ This shows that the law expects cooperation rather than conflict. Section 62 further clarifies that the Act operates in addition to other laws, not in place of them.¹² Taken together, these provisions suggest that the legislature intended for competition law and intellectual property law to coexist.

From a policy perspective, this makes sense. Innovation and competition are not opposing goals. In fact, they depend on each other. Innovation thrives in environments where firms can compete, and competition ensures that innovation benefits society as a whole. If intellectual property rights are allowed to be used in ways that block competition, the entire system becomes unbalanced.

At the same time, it is important to recognise that overregulation can also be harmful. If patent holders feel that their rights will be constantly questioned, they may be less willing to invest in research and development. The goal is not to weaken intellectual property rights but to ensure that they are used responsibly. This is why a balanced approach is necessary.

Allowing the Competition Commission to exercise jurisdiction in appropriate cases does not undermine patent law. Instead, it strengthens the overall framework by adding a layer of oversight. It ensures that markets remain fair while still respecting the rights of innovators. A coordinated approach, where both patent authorities and competition regulators work within their respective domains, is the most practical solution.

In the absence of clear judicial guidance, there is a risk of inconsistent decisions and prolonged disputes. This uncertainty can discourage investment and create confusion for businesses. It also places smaller firms at a disadvantage, as they may lack the resources to navigate complex legal processes. A clear recognition of the Competition Commission’s role would help address these concerns.

In conclusion, the question of jurisdiction is not just about legal interpretation. It is about how best to regulate modern markets. Intellectual property rights are essential for innovation, but they must be exercised without harming competition. The Competition Commission of India has an important role to play in ensuring this balance. Rather than excluding its jurisdiction, the focus should be on creating a system where different legal frameworks work together effectively. This is the only way to ensure that both innovation and competition continue to thrive.

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References

1. The Competition Act, 2002 (Act No. 12 of 2003).
2. Ibid., § 3(5).
3. OECD, Intellectual Property and Competition Policy (2006).
4. Mark A. Lemley & Carl Shapiro, “Patent Holdup and Royalty Stacking,” (2007) 85 Tex. L. Rev. 1991.
5. Telefonaktiebolaget LM Ericsson v Competition Commission of India, Delhi High Court & Supreme Court proceedings.
6. Ibid., Single Judge Bench Judgment (2016).
7. Ibid., Division Bench Judgment (2023).
8. Supreme Court Order dismissing SLP (September 2025) following settlement.
9. ETSI IPR Policy, FRAND Licensing Principles.
10. The Patents Act, 1970, § 84(1).
11. The Competition Act, 2002, § 21A.
12. Ibid., § 62.