In my last 2 posts, I had written on the interplay between the Competition Act and the Patents Act during the course of which I had said the following about Section 60 of the Competition Act:
“What is critical to note is that Section 60 of the Competition Act states that the Act “shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force”. In other words, this Act has an overriding effect over all other laws, including the Patents Act....
How does one harmonize the interpretations of “unfair price” under the Competition Act and “reasonably affordable price” under the Patents Act?
Is harmonization necessary since, as stated in my previous post, Section 60 of the Competition Act states that the Competition Act shall prevail over all other legislations or provisions in other legislations which are “inconsistent” with it? Although the Patents Act may be treated as the “parent legislation” which governs patents and patentees, Section 60 of the Competition Act ensures that the latter prevails over the Patents Act.
An exercise in harmonization is necessary because the overriding effect of Section 60 of the Competition Act can take effect only when it is established that two provisions are “inconsistent” i.e. they are in conflict with each other. If, however, harmonization is possible without distortion of the objects or language of either legislation, Section 60 must be the option of last resort. So how does one harmonize “unfair price” with “reasonably affordable price”?
It must be borne in mind that both “unfair price” and “reasonably affordable price” judge the cost of the transaction through the prism of the effect of the price on the licensee, as opposed to the proportionality between the price demanded and the value of the technology being licensed. In other words, “fairness” of a price may be the same as its “reasonable affordability”, but it is distinct from “reasonable price”.
Therefore, it could be said that both the Patents Act and the Competition Act are in harmony with each other when they require the cost of a licence to be fair/reasonably affordable. In fact, so long as there is no conflict between the two requirements, it could be said that what is “reasonably affordable” under the Patents Act would be “fair” under the Competition Act.”
To this analysis, let me bring in Section 62 of the Competition Act, which reads as follows:
62. Application of other laws not barred: The provisions of this Act shall be in addition, and not in derogation of the provisions of any other law for the time being in force.
Let’s reproduce Section 60 of the Competition Act to compare the language of both provisions:
60. Act to have overriding effect: The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
While on one hand Section 60 proclaims the overriding effect of the Competition Act over anything that is inconsistent with the Act, Section 62 states that the Act shall be in addition to, and not in derogation of other laws. What this could mean is that so long as there is no inconsistency between the Competition Act and other legislations such as the Patents Act, both statutes shall apply simultaneously to a situation to which both Acts apply. In the event the other legislation is inconsistent with the Competition Act, the latter shall prevail.
Therefore, if “reasonably affordable price” under Section 84 of the Patents Act and “unfair price” under the Competition Act are not inconsistent with each other, both these requirements shall apply simultaneously to a patent license or such other transaction. Simply put, one requirement need not be subsumed in or prevail over the other. Also, the question as to which of these requirements/statutes applies first may not be that relevant when both are to be satisfied by the transaction.