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Friction Between Competition Law And IPR

The differences between Competition Law and IPR has surfaced a lot time to time playing a vital role in the economic market. Both the laws promote welfare of the consumer and transmit of Technology. But on one hand IPR gives exclusive rights to the owner and to use it freely and on the other hand competition law tries to restricts and prevent monopolistic practices. This paper aims to deal with the differences between IPR and competition law and the conflict that arises in the jurisdiction of both the laws.

India has, in the pursuit of globalization, responded to opening up its economy, removing controls and restoring to liberalization. As a natural consequence of this the Indian market has to face competition within India and also outside India and for which there needs to be a law. The competition Act 2002 was enacted by the Parliament of India, commenced on 31st march 2003.

The Competition Act replaced the monopolies and restrictive Trade Practices Act, 1969 (MRTP Act). The failure of MRTP Act was led due to its lack of competition advocacy and restrictive economic concentration. The MRTP Act was amended several times but was unable to provide required results and hence considering the lack of provisions of the MRTP Act, 1969 was repealed and replaced by the competition Act, 2002.
  1. Competition Act 2002:

    As the rise of Globalization and Liberalization the competition rose within India and outside India. The competition Act provided with the establishment of competition commission with extensive powers to give directions and orders on anti-competition issues and also imposing penalties and prosecution for violation of the act. It provided protection of consumers interest from unfair competition practices. The Act promotes sustainable competition and freedom of trade in the market.

    Objective Of Completion Law:

    Supreme Court's view- " The laws were required to be enacted, primarily for the objective of taking measures to avoid anti-competitive agreements and abuse of dominance as well as to regulate mergers and takeover which result in distortion of the market.

    The various provisions of the Act deals with restricting anti-competitive practices such as:
    • Anti-competitive agreements
    • Abuse of dominant position
    • Bid rigging
    • predatory pricing
  2. Intellectual Property Law:

    According to Halsbury's laws of England 'property is that which belongs to a person exclusively of others and can be subject to bargain and sale'. It includes goodwill, trademark, license to use a patent, book debts, options to purchase, life policies and other rights under a contract. Property can be classified into two categories: 1. Tangible ( i.e. movable and immovable ) 2. Intangible ( Intellectual property )

    Intellectual property basically is a creation of mind created by human beings. It is the product of human intellect. Inventions, industrial designs, designs, literary and artistic works, symbols, logos used in promotion and commerce are some forms of intellectual property. According to Salmond, the unnatural product of a man's brains may be as valuable as his hands or his goods. The Intellectual property rights gives an exclusive right in it. The intellectual property law modulates the use and exploitation of intellectual property by others who are unjustly profiting from it.

According to World Intellectual Property Organization (WIPO) The IPRs shall include the rights relating to:
  • Literary, artistic and scientific work;
  • performances of performing artists, phonograms and broadcasts;
  • Invention in all fields of human endeavor;
  • scientific discoveries;
  • Industrial designs;
  • Trademarks, service marks and commercial names and designations;
  • Protection against unfair competition and all other rights resulting fro intellectual activity in the industrial, scientific literary or artistic field.

Some of the components of the Intellectual property are as follows:
  1. Copy rights
  2. Trademarks and Service marks
  3. Industrial property
  4. patents
  5. Geographical Indications
  6. Plant varieties
  7. Industrial Designs
  8. Layout designs of integrated circuits
  9. Trade secrets

IPR Laws are monopolistic in nature.4 which creates many advantages to the owner and can result in abuse of dominant position which creates conflict between competition law and IPR.

Relationship Between IPR And Competition Law:

Intellectual property law and competition law are both fields of different laws and deals with different objectives. The competition law deals with limiting of anti-competitive activities in the market, monopoly and abuse of dominance position in the market. Whereas Intellectual property law deals with protection and enforcement of intellectual property rights which gives exclusive right to the owner on the use of his intellectual creation. Which creates monopoly on the other hand and it is discouraged by the competition policy.

It can be seen that both the laws are edging to each other. However, they are also complementary in some areas. Intellectual property law and competition law are both the part of the consumer market. According to section 3(5) of the Competition Act 2002: Nothing contained in this section shall restrict- i. the right of any person to restrain any infringement of, or to impose reasonable conditions as may be necessary for protecting any of his rights which have been or may be conferred upon him under:
  1. the copyright Act, 1957 (14 of 1957);
  2. the Patents Act, 1970 (39 of 1970);
  3. the Trade and merchandise marks Act, 1958 (43 of 1958) or the trade marks Act, 1999 (47 of 1999)
  4. the Geographical Indications of goods ( Registration and protection) Act,1999 (48 of 1999);
  5. the Designs Act, 2000 (16 of 2000);
  6. the Semi-conductor Integrated Circuits layout-design Act, 2000 ( 37 of 2000); This section excludes IPR from restrictive trade practices. Competition law provides protection to IPR as it is necessary to protect the intellectual creation of human minds so that others cannot take unlawful advantage over it and regulate fair competition in the market.

The main focus of competition law is to ensure that the business runs in open and competitive markets and promoting economic growth and restricting anti-competitive activities. On the other hand the main objective of IPR is to encourage innovation and to provide exclusive rights to the holders and protection of their rights. There is a need to protect IPR so that the rights of the innovators are protected and maintained which can further motivate them without any conflict and uncertainty.

In the case of intellectual property in competition law, The competition Act of 2002 provides for certain actions to be taken in motion to eradicate anti-competitive behavior that may effect IPR. Competition Commission of India (CCI) notes, that section 3 would not attract any fair condition imposed for the security of IPR but the imposition of 'unreasonable condition' to protect IPR.

Section 3(5) of the competition Act provides for interdicting anti-competitive agreements and limitations of person's right to avert infringement and to enforce fair conditions for the protection of IPR. The section deals with the reasonable use of private rights including innovations and that competition law does not affect the IPR rights. The competition law deals with IPR conflicts in a fullscale manner.

Conflict Between Ipr And Competition:

Competition law plays a conventional role by promoting market efficiency and preventing market distortions whereas, IPR's role is to promote innovations by providing protection and rights to requisite IP holders.
  1. Patent Pooling:
    Patent pooling is when a company decides not to issue license to the third party which could become restrictive trade practice. It is an association of two or more firms/companies to cross license their patents in accordance to a particular technology.
  2. Abuse of dominant position:
    If section 3(5) of the competition Act 2002 is read with section 4 then we can find its limitation which states that there shall be an abuse of dominant position if a company or a business imposes discriminatory or unfair conditions in the purchase or sale of the goods. Therefore, the rights of IP holders can find its limit in section 4 of the competition Act 2002. Therefore it limits the IPR holders by taking the ability to place unreasonable restrictions on innovations while licensing the Intellectual Property Rights. In the case of 'Aamir khan production pvt. ltd. v. Union of India' - competition commission of India stated that intellectual property laws do not have any absolute overriding effect on competition law.
  3. Issue of jurisdiction:
    The cases related to IPR are heard by High court or by Supreme court but The competition Act does not provide for any exemption to cases involving IPR issues which can be tried by Competition Commission Of India (CCI) 'King fisher Airlines Limited v. Competition Commission Of India' proceedings were initiated against jet Airways and King fisher Airlines by the CCI for Anticompetitive practices and the issue arose against the jurisdiction of The Commission. The Bombay High court held that CCI is competent to deal with all the issues coming before the copy right Board of India. CCI is competent to adjudicate matters relating to IPR which have adverse effect on competition in relevant market in India.
  4. Tie-in Agreement:
    When the licensee/seller agrees purchasing a highly usable product or service exclusively from the patentee under the tying agreement which leads to restrictive practices.

IPR and competition law both goes hand in hand yet sometimes it can be hard to draw boundaries between them as IPR gives exclusivity to the owner creating domination over the creation and then there is competition law preventing monopolistic practices. It is also certain that both the laws need a balance to fill in the loops.

There is a need to define the market as lucid as possible to reduce the complexities. But it should be taken into account that both the laws are complementary to each other as well as both IPR and Competition law encourages economic growth and focuses on the consumer welfare. The dominant position created by IPR are the result of misusing the competition policies for which there is a need to classify both the domains as such that the laws don't overlap each other.

Reference List:
  1. Dr. M.K. Bhandari, Law relating to Intellectual Property Rights, Sixth Ed. 2021, Central Law Publications.
  2. Dr. S.C. Tripathi, Competition Law, First Ed.2012, Central Law Publications.
  3. Hritvik Dixit and Deepshikha Ughade,Conflict between IPR and Competition Law: A Comparative Analysis between US, EU and India.
  4. Surabhi Singh and Richa Goel: The interplay between Competition law and IPR 2019.
  5. Atul Patel, Aurobinda Panda, Akshay Deo, Siddhartha Khettry and Sujith Philip Mathew: Intellectual Property Law & Competition Law, Journal of International Commercial Law and Technology Vol.6,Issue 2 (2011).
  6. Amir khan productions v. Union of India(2010) BOM 112 7
  7. Dr. S.C Tripathi, Competion Law,1st Ed.2012, central law publications.
  8. competition commission of India vs. SAIL,2010 (10) SCL 744.

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