This article on ‘Interaction between Competition Law and IPR‘ is written by Anuj Gautam an Intern at Legal Upanishad.
This article explains how Competition Law affects Intellectual property rights over innovation. In today’s world, various tools exist by which giant industries or public entities affect the competition at large. With intent to take unnecessary advantage of their dominant position or enter into a contract that prohibits a person from supplying her goods and services to any other industries and the public. At the same time, Intellectual property rights provide the exclusive right to an inventor for his innovation, artistic work, and literary work that he uses or sells at his own will.
In the end, we understand those situations where the Intellectual Property Rights terminate by the government to provide the benefits public at large.
Competition law and Intellectual Property Rights
The Competition Law was made on the recommendation of the Raghavan Committee in 2002 which aimed to eliminate those practices from the market which curb the healthy competition in the market. These anti-competitive policies are adopted by the big industries that have a dominant position in the market to take unnecessary advantage of the market.
First, we understand here what is dominant position, dominant position means that the industry has a large market share in a particular product market like LIC has a large market share in the Insurance market. And abuse of the dominant position understands by an example if LIC declares that they provide interest to their policyholders at the time of maturity.
This announcement itself affects the business of other entities who are in the business of Insurance because LIC already enjoys a large market share and after that, they provide interest on the policy amount which affects the business of other companies that situation trying to create a monopoly in the market by LIC this is an abuse of their dominant position in their product market. Whereas IPR gave exclusive rights over the innovation to the inventors. The IPR rights are divided into three broad categories like patent rights, copyright, and Trademark right. The object behind the IPR right to protect the innovation of inventors to misuse in the market.
For example, if a drug company invents a drug that saves human life from severe illness then such an inventor i.e. the drug company has an exclusive right over the ownership of that drug. He has a right to sell into the international market. But suppose a situation such company is the only company to sell the drug for that severe disease. If such severe diseases are spread throughout the world, then such a company enjoys its dominant position in the market. And change their policies as per the demand for that drug. The competition law deal with these kinds of situation where they stop the enterprises from making an illegal profit and disturbing the competition in the market.
Protection of IPR under the Competition Act, 2002
In the Competition Act 2002, monopoly and dominance are not declared bad but their misuse is a bad practice. Section 3(5) of the act itself mentioned that nothing provision of this section applies to intellectual property rights. It saves the right of the inventor which promotes the entities and persons to go for innovation and also Section 4 of the Act does not prohibit the dominance of such entities in the market.
The Competition Act does not affect the intellectual property rights until they curb the competition in the market. IPR seeks to grant monopoly power to entities by which they encourage innovation and make proper competitiveness in the market. If we look closely that it is not a conflict between two laws because they are complementary to each other in certain areas. Like IPR encourages economic agencies for increasing technical innovation, which will create more products, as a result, it enhances the competition in the market which is the goal of the competition act itself.
There are two types of market economy exits one is the free economy and another is a regulated economy the difference in these types only that the first one is developed by the manufacturers they can sell only those products to consumers which they manufactured by which their motive is to earn more and more profit and this kind of market never help the development of national economy because under this market few entities establish their dominance and start abusing them.
They do not care about other market players who are also in the market. And the second one is a regulated market where the government provides the equal opportunity to earn from the market and the ultimate benefit goes to the consumer this kind of market helps the nations to develop their economy. So, for the development of a nation, we need both IPR and Competition Law.
TRIPS role in maintaining the balance between Competition law and IPR.
TRIPS right are an international agreement between member nations over free trade. WTO set down some standards for IPR regulations. The standards of WTO set out some guiding principles related to licensing practices, and conditions related to the adverse effect on trade. The Protection of IPR has an exception that will be used by governments at the time public health emergencies exist in the country by providing compulsory licensing to other entities for saving the lives of their citizens.
For example all over the world facing the Covid-19 pandemic. In the pandemic approximately all countries facing a shortage of a few drugs which will produce only two or three companies in the world. At that time when the life-saving drugs shortage fell by the world then some countries granted the compulsory licensing for the production of that drugs using them they saved the lives of people at large. At that time protection of IPR are not possible because the life of people whole over the world is at risk.
Article 31 of the TRIPS agreement provides the grant of compulsory license at the time of public emergency exist. India is still developing their Competition Law and IPR regulations.
A landmark judgment that explains the jurisdiction to deal with the issues between Competition law and IPR. Aamir Khan Production vs The Director-General, 2010 in this case High court of Bombay declared that CCI had the jurisdiction to deal with such kinds of issues. In 1998 USA Microsoft company enter into an agreement for selling their operating system and web browser in which they put a clause that if you want a purchase web browser of Microsoft then you must purchase the operating system of Microsoft.
This agreement is a clear example of showing abuse of their dominance in the market. Later on, US regulations by their judgment broke the companies for separate product web browsers and operating systems.
Conclusion and Suggestions
Competition Law and IPR are complementary to each other if one gives protection to the other right then it must be used wisely not for earning illegal profit by using their dominance in the market. In another way, both have a common object but they attempt it differently. In the Covid-19 times, the country think allows compulsory licensing for a Covid-19 vaccine because in India only two drug companies manufactured the drug, and many people lost their lives.
At the same time, WTO thinks about the same because this situation occurs in the future then how we save the lives of people if these companies continue their right the innovation. Many countries already did in Covid-19 to direct them for compulsory licensing to others for manufacturing of Covid-19 drugs.
- Aamir Khan Production vs The Director-General, 2010 (112) Bom L R 3778
- The United States vs Microsoft Corporation, 253 F.3d 34.
- Shubhodip Chakraborty(“Interplay Between Competition law and Intellectual Property Rights In Its Regulation Of Market”, Academike (Nov 15, 2015)
- Robert D. Anderson. (“Competition policy and the TRIPS Agreement: more guidance needed? Where might we look? What insights from policy evolution at the national level?”) (https://www.researchgate.net/publication/228795672_Competition_Policy_and_Intellectual_Property_in_the_WTO_More_Guidance_Needed)