“This article is written by Panya Sethi, a third year BBA.LLB student of Symbiosis Law School, Noida.”

INTRODUCTION

Both competition law and intellectual property law play crucial roles in regulating economic activity, protecting consumers, and facilitating the spread of new technologies. Keeping a dynamic and competitive monetary market is often dependent upon the relationship between protected innovation freedoms and contest regulation. They’re like two sides of the same coin; they’re complimentary to one another and have numerous commonalities.

According to the first school of thinking, the goals of competition law and IPR are incompatible. Intellectual property law, in contrast to competition law, is intended to help the owner of intellectual property rights make money out of his property and protect him from competitors.

However, intellectual property law and antitrust law are mutually supportive. The freedom to choose between businesses and the products and services they provide is made possible by intellectual property (IP). As a result, IP is fundamentally pro-competitive since it assures the preservation of distinctive intangible company assets. Without IP, less capable producers and suppliers would attempt to win over customers by duplicating the work of more capable rivals. The latter would be dissuaded from developing better items or introducing new ones. All of society would suffer as a result. However, intellectual property (IP) only serves that vital purpose of guaranteeing competition when it safeguards actual distinctions. One of the goals of competition policy is to encourage technical innovation, which is made possible by IPR. This, in turn, leads to the development of new goods and the rapid expansion of the market for such items.

OBJECTIVES OF COMPETITION LAW AND IPR

Many people believe that it’s impossible to uphold both IPR protection and antitrust rules at the same time. This is because intellectual property rights (IPR) provide innovators an edge over rivals by prohibiting others from profiting from their work. While antitrust law protects consumers from unfair business practices, competition law protects consumers against monopoly abuse. Since IPR and Competition Law have distinct goals, it is important to highlight that the word “competition” is employed in different ways by each.  

The word “competition” has a different meaning in intellectual property law than it does in competition law. In order to promote competition amongst potential innovators, licenses can be granted on intellectual property (IP), with the understanding that certain restrictions will be imposed on said competition, and that after a certain period of time, stated liberties would be restored in the open, thereby ending the competition. Competition law’s fundamental goal is to end unfair business activities, to define and promote healthy competition, and to guarantee that consumers may purchase goods and services at reasonable prices and of high quality.

INTERPLAY BETWEEN COMPETITION LAW AND IPR

Market rivalry is governed by competition law, which establishes rules and laws to prevent corporations from engaging in anti-competitive behavior. Predatory pricing (charging consumers so much for a product or service that they have little option but to buy it), price fixing (when businesses work together to establish uniform rates), and bid rigging are all examples of anti-competitive behaviors (procurement procedure that involves the upfront selection of successful bidders).

Both intellectual property law and antitrust legislation have the same overarching goal of fostering a healthy business climate. Legal protections for intellectual property (IP) promote individuality in the economic world while also providing fair compensation for those who make new things possible. In contrast, competition law works to limit anti-competitive activities while protecting both producers and consumers. It has been pointed out that intellectual property rules may result in the monopolization of an invention or creation, which may go against the principles of competition law. However, this is governed by laws and treaties. That being said, it is safe to say that IP laws and competition rules are compatible in theory.

The following categories of problems might lead to interactions between intellectual property and competitive policy:

Too much IP: When intellectual property rights are abused to provide monopolies on distinguishing features that should be left alone (such trademarks for common, non-specific terms or licenses for specialized highlights that don’t count as creations), it is anti-competitive.

Too little IP: If the means of enforcement are not openly available, or if the distinguishing features cannot be safeguarded, then impersonation will occur.

IP in the right dosage: Although intellectual property (IP) is generally beneficial to serious, IP in the appropriate amount (neither too much nor too little) may create a humiliating effect on the buyer’s chance to make a free choice. This arises when the benefits of permitted innovation are used in a manner that undermines the goals of the law. A well-balanced IP portfolio may also include characteristics that make it difficult, impossible, or poorly structured for competitors to pursue other routes to marketing. This occurs, for instance, when patent-protected innovations are adopted as norms in the industry, or when access to test data poses a threat to the safety of people or animals. In the primary case, it is quite unlikely that other companies would develop a comparable breakthrough. If the third possibility holds true, then it would be risky and unnecessary to conduct several experiments to get the same information.

 INDIAN SCENARIO IN RESPECT OF IPR AND COMPETITION LAW

Section 3 of the Indian Competition Act makes it illegal for any business, group of businesses, individual, or group of people to enter into an agreement regarding the production, distribution, sale, storage, securing, or control of any product or service that is likely to adversely affect competition within India. In sections 3(5) and 4 of the Act, we explore the tension that exists in India between IP legislation and competition principles. The IP processes and competition restrictions usually do not conflict with one another, as is implied by the IP special instance in Section 3(5) of the Exhibition. However, the abuse of the dominant position and its relation to IP rights is made clear in section 4 of the Act.

Section 3(5) of the Act exempts reasonable applications of such inventions from the scope of competition guideline, as stated in Section 3(5) of the act. A person’s “general right to restrict any infringement of, or to compel reasonable conditions essential for protecting any of his honors”. Section 3 prohibits anti-competitive practises but it does not apply to a person’s right to restrain infringement or impose reasonable conditions governing intellectual property such as the Copyright Act, 1956, the Patents Act, 1970,the Geographical Indications of Goods (Registration and Protection) Act, 1999 (48 of 1999), and the Designs Act, 2000.

Section 4 of the Competition Act deals with the abuse of a dominant position and prohibits abuse as opposed to the mere existence of such a position. For the purposes of our discussion, it is important to remember that no exception has been made for IPRs under this part, possibly on the grounds that IPRs don’t provide superior position, and even if they do, this section doesn’t ban the mere existence of a dominant position, but rather the abuse of superior position.

LEGALITIES CONCERNING IP AND TECHNOLOGY LAWS

The role of the TRIPS agreement in IPR and competition law

The Agreement on Trade-Related Aspects of Intellectual Property Rights is an international treaty signed by all World Trade Organization signatory countries. The TRIPS Agreement’s primary goal is to allow its member countries to provide comprehensive intellectual property protection. The TRIPS Agreement also defines unfair competition and its relationship to intellectual property rights. According to Article 40 of the TRIPS Agreement, any licensing practice or conditions related to Intellectual Property Rights may have a severe impact on trade and may also act as a barrier to technology transfer. Furthermore, Article 40.2 of the TRIPS Agreement allows its members to specify any type of IP rights abuse that may have a negative impact and to take measures to prevent such negative effects. Article 40.2 of the Agreement also allows its members to take action against practices such as exclusive grant backs and coercive package licensing. However, the practices listed in Article 40.2 are not exhaustive.

PREVENTIVE MEASURES

Two strategies have been implemented to curb IPRs’ misuse:-

• Compulsory licensing (an agreement which is compulsory between a willing purchaser and a reluctant merchant is implemented by the public authority.)
• Parallel imports (merchandise brought into one more country whenever they have been set in the market somewhere else without the consent of a patent or copyright holder.)

Compulsory licenses are available under Article 31 of the TRIPS Agreement in the following circumstances:

• “In the interest of public health”
• “In case of national emergency” 
• “Anti-competitive practices”

Second, there are several conclusions pertaining to the relationship between competition policy and IPR that need its consideration. Every situation involving intellectual property rights (IPRs) should be carefully considered by the authorities governing competition policy. If, regulations against the abuse of a dominant position were implemented with regard to intellectual property rights, and appropriate measures were taken. the potential cost associated with lowering incentives to develop would be much diminished.

OVERLAP BETWEEN IP RIGHTS AND ANTITRUST REGIME

An antitrust system is a set of rules and regulations designed to prevent the kind of market failure that goes into the creation of a syndicate. Intellectual property rights, on the other hand, are a kind of private freedom that is granted to the IP Holder and stands in for market syndication through the IP Holder’s ability to exercise selective ownership. Despite the common misconception that the two systems operate independently of one another, they really have the same goal of protecting citizens’ access to government aid.

The IP laws and antitrust policies of India have evolved over time. It must be admitted that the gap between the two regimes is not adequately addressed by Indian intellectual property law. Competition Act, 2000 is the Indian law that governs antitrust issues. Section 3(5) of the Act requires that the problem of conflicting IP rights and antitrust legislation be addressed. The Competition Commission of India (CCI) is the government agency in India responsible for overseeing compliance with competition legislation. Companies and people are now prevented from abusing their dominating position in the market to acquire an unfair advantage, thanks to antitrust legislation.

The lack of any provision using the word “competition” in the Indian IP legislations is the most major area of uncertainty. The problem here is that an individual may sue another person or business for infringement of their intellectual property rights if they choose to do so.

JUDICIAL PRECEDENTS

Recently, both the European Union and the United States have received a flood of cases, many of which include disputes over intellectual property rights and competition regulations. However, there aren’t a lot of instances involving IPR and Contest Regulation problems in India yet since the law is still developing in that area. But in Aamir Khan Creations v. Director General^. The court has, for the first time, considered the intersection between antitrust and IP law. In this decision, the Bombay High Court determined that any disputes involving intellectual property rights (IPR) and competition law must be resolved by the Competition Commission of India (CCI).

2. “Entertainment Network (India) Pvt. Ltd. vs. Super Cassette Industries Ltd” 2008(5) OK 719

The Supreme Court considered the tension between IP protection and antitrust legislation in this decision. The Court noted that even if the copyright owner had a powerful business strategy, any syndication would be illegal under Rivalry Regulation because it would prevent the free and fair operation of the market. While it’s true that those with intellectual property may profit by licensing their discoveries to others, this is not always the case.

RECOMMENDATIONS TO RESOLVE THE CONFLICTS

Intellectual Property Rights (IPR) cannot be addressed apart of Competition Law. Competition law’s stipulations might be useful in finding a compromise. The following are some suggestions for easing the tensions:

1. Defining the market
2. Ensure coordination between the competition law and IPR authorities
3. Compulsory licenses must be granted in terms of refusal to license
4. The TRIPS agreement must be used to ensure flexibility and combat anti-competitive practices related to IPR

REFERENCES

1. https://www.legalserviceindia.com/legal/article-7101-competition-law-and-ipr-a-critical-analysis.html 

2. https://www.wipo.int/ip-competition/en/ 

3. https://enhelion.com/blogs/2022/08/22/the-interplay-between-intellectual-property-law-and-competition-law-similarities-and-differences/ 

4. https://blog.ipleaders.in/interplay-competition-law-ipr/ 

5. https://www.mondaq.com/india/trademark/1117244/analyzing-the-intersection-of-competition-law-and-ipr 

6. https://blog.ipleaders.in/competition-law-and-intellectual-property-rights/ 

7.  https://blog.ipleaders.in/interplay-competition-law-ipr/