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ANALYSIS OF RELATION BETWEEN INTELLECTUAL PROPERTY LAW AND COMPETITION LAW BY: - ISHWITA MONDAL
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ANALYSIS OF RELATION BETWEEN INTELLECTUAL PROPERTY LAW
AND COMPETITION LAW
AUTHORED BY: - ISHWITA MONDAL,
PRESIDENCY
UNIVERSITY, BANGALORE
ABSTRACT
This
paper will try to draw relation between Intellectual Property Law and
Competition Law. The main objective or
motive behind granting intellectual property is to give exclusive right to
inventor or the maker, so that they can be benefited from their invention which
creates monopoly in the market as common public has no right to use that intellectual
property without the permission of the inventor. On the other hand the main
objective of Competition law is to ensure a competitive and fair market and
eradicate monopoly from the market. It seems that Intellectual Property Law and
Competition are completely in conflict or opposite to each other and they
cannot reconcile. Leaving this negative approach behind, in recent days positive
perspectives are taken to harmonize or balance the relation between this two
law. Though Intellectual Property Law and Competition Law are divergent from
each other but they meet at certain point like the ultimate purpose of both this
law is to ensure consumer welfare by encouraging innovation, so that consumers
are able to get the utmost benefit. Intellectual Property right does not ensure
automatic income or gain, income can be generated only when it is able to
create a position in the market by maintaining its quality, in this way the
objective of both the laws are preserved. It can be also said that Intellectual
Property Law are complementary to each other in dealing with parallel imports,
compulsory licensing and in Anti-competitive agreements. Help of judicial
precedents are also taken to understand the matter wisely.
Key
Words: - Intellectual Property, Competition, relation, conflict, harmonize,
complementary.
RESEARCH OBJECTIVE
·
To analyze the ultimate purpose and
goal of Intellectual Property Law and Competition Law.
·
To know up to what extent
Intellectual Property Law and Competition Law contradicts each other
·
To find out the specific areas in
which Intellectual Property Law and Competition Law harmonizes with each other.
·
To find out how the Intellectual
Property Law and Competition Law are complementary to each other.
RESEARCH QUESTION
·
How Intellectual Property Law and Competition Law are
contradictory to each other?
·
Up to what extent does Competition Law and
Intellectual Property Law harmonizes with each other?
·
How Intellectual Property Law and Competition Law are considered
as complementary to each other in-spite of being contradictory with each other?
RESEARCH METHODOLOGY
To
complete the study author have used doctrinal method of research, where the
help of primary and secondary sources (like books, journals, articles) are
taken to complete the research.
HYPOTHESIS
The
relation between Intellectual Property Law and Competition Law are such that
they cannot be reconciled.
INTRODUCTION
After
Liberalisation, Globalisation and Privatisation, the world has changed rapidly
and Intellectual Property and Competition Law are the two emerging law of this
period. As the world is developing through innovation and technologies, so
there is a tough competition in the market and to regulate this invention and
competition, Intellectual Property Law and Competition Law, respectively, plays
a major role. Though both these laws serve the purpose of consumer benefits but
they generally they conflict with each other, so their relation can be termed
as “friends with disagreement”. In the case of NDC Health V. IMS Health[1]
European Court of Justice stated that
“Competition Law and Intellectual Property have never been easy
bedfellows”[2].
The main reason behind this conflict or sayings is Competition law ensures that
there is fair competition in the market amongst the competitors and to prevent
monopoly in the market whereas the main idea behind Intellectual Property Law
is to grant exclusive rights to the inventor and it tends to create monopoly in
the market. So, it creates a tassel between this two.
Though
both these law are contradictory to each other, but in recent trends scholars
came with a opinion that Competition law and Intellectual Property law also harmonizes
with each other. Intellectual Property Law encourages people to come up with
new invention which can be useful for the society or for the common people and
Competition law prevents monopoly to ensure that customer can enjoy the
benefits of all goods by investing the minimal amount, so it can be said both
these law is for consumer welfare but their way of doing is different. Even
Competition Law and Intellectual Property Law acts as complementary to each
other because when intellectual property right is granted competition law
ensures that right is not used in adverse way.
HISTORICAL BACKGROUND OF INTELLECTUAL PROPERTY LAW AND
COMPETITION LAW
Intellectual
Property is intangible property which is “creation of mind”. It is the bundle
of rights which is conferred to intellectual property holder to use that for
commercial exploitation. Intellectual Property is of two types which
are:-Industrial Property and Copyrights. Patent, Semi Conductor, Industrial
Design, Trade Marks comes within the ambit of industrial property.
With
the advent of technology, new innovations are emerging in the market, so the
need to protect the innovation and innovator is of utmost importance. The term
“Intellectual Property” was first used in 19th century but it is
mostly used from 20th century.
The
first convention on intellectual property was made in Paris Convention in 1883
and was followed by Berne Convention in 1886. World Intellectual Property Right
Organisation(WIPO), Trade Related Aspect of Intellectual Property(TRIPS)
further paved the way for protection of invention.
The
object behind granting intellectual property right is encourage new invention
and to use that commercially which will also help in the economic development
of the country as well as it will benefit the common people.
The
Competition emerge in the market when people started selling same product and
competition arose regarding which product is better and can be availed in
affordable price. In India the competition was first governed through The
Monopolies and Restrictive Trade Practices Act, 1969(MRTP), but which was
inefficient because this act focuses more on controlling monopoly rather than
ensuring competition. To regulate competition , MRTP Act was abolished and Competition
Act, 2002 was enforced. The main is that every player can get chances to
flourish in the market, and control abusive position in the market and to
ensure consumer are benefited from it.
So,
intellectual property is to give exclusive right to the intangible property
holder and he only have right to exploit that where as Competition law
encourages competition in the market.
THE OBJECTIVE BETWEEN INTELLECTUAL PROPERTY LAW AND
COMPETITION LAW
As
mentioned, the objective of Intellectual Property law is to encourage new
invention and to grant exclusive right to the inventor, and without his prior
permission common people can not use it, and it creates monopoly, where as main
purpose of competition law is to prevent monopoly
.
The
term “competition” is not used in same sense in Intellectual Property Law and
Competition Law
The
word “Competition” used in Intellectual Property Law and Competition Law are
not used in same sense. In case of Intellectual Property Law competition is
encouraged for doing new inventions and for that exclusive right is granted,
and this restricts competition in the market in several ways. Intellectual
Property law is only for individual good and not for the society as a whole.
But Competition law does not restrict the market in the hand of one player, it
ensures that every player in the market, who is competent gets fair chance to
carryon their activities and also to ensure customer can get the best quality
product in affordable price.
It
can be concluded that intellectual property law is for individual purpose which
will help the inventor to exploit his invention for his own economic gain
whereas competition law serves the purpose of community or of society at large
where all the people can be benefited.
THE RELATION BETWEEN INTELLECTUAL PROPERTY LAW AND
COMPETITION LAW
Prima
facie through the object of Intellectual Property law and Competition Law it is
clear that they act against each other and their relation cannot be reconciled.
It
is said by the scholars that Intellectual Property Law results in “the very
same market condition” that the competition law seeks to eradicate.[3]
But this statement is not completely true. Intellectual Property law does not
create monopoly in strict sense, rather it can be called as exclusionary
because it gives exclusive rights to the owners. The exclusive right which is
granted to the innovators for a specific time period and the right is granted
over a particular product and not over the whole market place.
Merely
granting exclusive right does not create monopoly in the market or generate
automatic profit. It is needed that the product on which right is granted
should meet the standard of the market and must be satisfactory to its
consumer, so it is needed to maintain quality in order to sustain in market and
take profit by using intellectual property right. So, intellectual property
right only confers the exclusive right and not the monopolistic right.
Only
restricting the big market players, is not the competition law. Mere agreements
between the market players is not illegal in nature. Competition law only
restricts those agreements and consider it to be illegal when it tries to
create a dominant position in market and does not allow other market players.
In
case of granting intellectual property and the holder of intellectual property
uses his right in order to abuse the market, or charging high price which
common people can not access then competition law comes into play to control or
regulate such thing.
It
can be said that they are not totally different from each other, and they try
to attempt same objective that is consumer welfare by taking different
approach. A positive approach is taken and they are considered to be
complementary to each other.
CONFLICT BETWEEN INTELLECTUAL PROPERTY LAW AND
COMPETITION LAW
Relation
between Intellectual Property Law and Competition Law have been described as
unhappy marriage.[4]
The
conflict between Intellectual Property Law and Competition Law arises when
there is abuse of market by the intellectual property holders. Intellectual
property holders can manipulate the market in different ways: -
Abuse
of Dominant Position:- The intellectual property holder can
use their exclusive right to create monopolistic market by not allowing other
players into the market. If intellectual property right is granted then no
other person can use that without the permission of intellectual property holder
and by this way dominant position can be created in the market and competition
law is against it.
Section
3(5) (i)of the Competition Act states that: -
(5)
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:
(a) the Copyright Act, 1957 (14 of 1957);
(b) the Patents Act, 1970 (39 of 1970);
(c) the Trade and Merchandise Marks Act, 1958 (43
of 1958) or the Trade Marks Act, 1999 (47 of 1999);
(d) the Geographical Indications of Goods
(Registration and Protection) Act, 1999 (48 of 1999);
(e) the Designs Act, 2000 (16 of 2000);
(f) the Semi-conductor Integrated Circuits
Layout-Design Act, 2000 (37 of 2000)
This
section prioritize intellectual property right and does not restrict trade
practices. This is because intellectual property protection is, in fact, necessary as it is prerequisite
for innovation, which is why most laws including Competition Law, give priority
to IPR protection.[5]
Patent
Thickets:- It means the patent with which there are multiple
claims are associated. So, while using such patents one need to take permission
or license from different patent holders before using that. So, it becomes
difficult for market players or competitor to use that technology, as a result
it automatically reduces the competition in the market and can create monopoly
in the market.
Refusal
to deal or license:- The patent holders may refuse to
grant license to any other party or competitor in the market to deal with its
patented right. The patent holder generally has no duty or obligation under
anti-trust or patent law to license its intellectual property to other. Because
of this it becomes easy for them to have control over the market and to
commercially exploit the right without any intervention of any competitors.
Excessive
Pricing:- In this case the dominant firm charges even more price
than the usual rate. This trend is mostly prevalent in pharmaceutical industry.
And the consumers are forced to buy such pharmaceutical product as consumer are
forced to do so as there are no alternatives available in the market. So,
through it a dominant position is created in the market which is against the
competition law.
The
goal of Intellectual Property Law is to protect intellectual property right
holder’s right and to protect them from infringement but this has become the
ultimate cause of contradiction between Intellectual Property Law and
Competition Law. Reward theory of Intellectual Property law encourages to grant
intellectual property right and reward also encourage innovation but
constraining the right on a single hand may go against public or consumer
benefit.
COMPLEMENTARY NATURE OF INTELLECTUAL PROPERTY LAW AND
COMPETITION LAW
Historically
there is negative approach regarding the relation between Intellectual Property
Law and Competition Law because they evolved with distinct and separate
objective. But in presents positive approach is taken regarding their relation.
They are considered to be the opposite side of the same coin. They have same
objective that is consumer welfare by taking different perspective.
Intellectual property encourages new invention from which the public at large
will be benefited and along with it, intellectual property right also protects
the interest of the inventors as well where as Competition law also protects
the interest of the consumer so that they can enjoy that innovation within a
reasonable and affordable price and also ensure a healthy competition among the
market players.
It
may be stated that Competition Law and Intellectual Property Law share the same
economic objectives.[6]
Intellectual Property Right were introduced because they were thought to be
essential for further industrial and economic development.[7]
If rights are not protected then the
urge of innovation will reduce and the problem of “free rider” will arise.
Competition can only play its role as market regulators if the products of
human labour are protected by property rights. [8]If
this law is analyzed by considering the same objective, then it will be
possible to overlook their contradiction. Competition law also recognises the
role of Intellectual Property Right to encourage innovation, which will be
beneficial to public and therefore Competition law also values Intellectual
Property Law.
Competition
law also plays important role in controlling the exclusive right of
commercialization, which is granted through intellectual property right. If
there is no control in market players then the intellectual property right
holders can manipulate the market on their own way, which can act as hindrance
for healthy competition. Granting intellectual property right does not create
monopoly by itself, or having dominant position itself is not an offence,
Competition law will come into play when the market player uses their position
to abuse the market. Competition Commission has also prohibited some of the
intellectual property law, which is in contravention with the competition law.
HARMONIZATION BETWEEN INTELLECTUAL PROPERY LAW AND
COMPETITION LAW
The
relation between intellectual property law and Competition Law is governed by
Trade Related Aspects of Intellectual Property Rights(TRIPS). It can be said
that TRIPS provision tries to bring harmonization between Intellectual Property
Law and Competition Law. TRIPS introduced the concepts like compulsory
licensing, parallel imports and Anti-competitive practices to create balance
between this laws.
Compulsory
Licensing
Pursuant
to the general consideration in
paragraph 1 of the TRIPS preamble, read with Article 8(2) of the TRIPS
Agreement., Members are allowed to take appropriate measures consistent with
the TRIPs to prevent abuse of intellectual property rights by right holders.[9]
Article 31 of the TRIPS Agreement gives right to govt. for compulsory
licensing. Compulsory Licensing is a concept in which govt. has right to
transfer the patent to the third party without taking permission of the
patentee. It is used in the case where patentee takes undue advantage of his
right and which is detrimental for consumer. Generally compulsory license is
granted when patentee sells his patented product on a high price, or does not
make or use his patented product sufficiently. Compulsory license is granted so
that innovation can be used for public good and not for preserving the rights
without any use. Section 84 of The Patents Act, 1970 also mentions about
compulsory licensing.
Parallel
Imports
Parallel
imports basically refer to the genuine and legitimately acquired goods from the
respective rights holders and thereafter
sold at lower prices through trade channels which are legally unauthorized.[10]
It can be called as exhaustion of rights, because in this case the intellectual
property holder totally gives his right to the third party. Since parallel
imports are part of trade it is governed by both Competition Law and
intellectual property law, i.e. under
The Trade Marks Act, 1999. Section 29 and Section 30 of the Trade Marks
Act allows parallel imports or international exhaustion of rights.
Parallel
imports also promotes competition in the market because through it the trade
marked goods becomes easily available in the market at lower prices and
consumers gets benefited out of it. In this case the rights are transferred to
other party, so they acquired right to sold that in the market, and due to it
monopoly is prevented in the market and ensures competition for producing best
quality goods.
Anti-Competitive
Agreements
Article
40 of the TRIPs Agreement deals with Anti-competitive agreements in contractual
licensing and it prevents to do such licensing which will create adverse effect
on the market. The countries which adopted TRIPs have right to control or take
measure against the licensing which is anti-competitive and abusive in nature.
Appropriate measures such as exclusive grant-back conditions, condition
preventing challenges to the validity
and coercive package licensing in order to prevent or control restrictive
licenses which have adverse effect on competition.[11]
JUDICIAL PRECEDENTS
In
the case of Entertainment Network (India) Pvt. Ltd. V. Supper Cassette
Industries Ltd.[12],
it was held that compulsory can be granted to any applicant(eligible), which is
taken for public interest. It was also held that Copyright owner has right over
his creation and can charge royalty for it, but it should not be unreasonable
and the right is not absolute in nature.
In
the case Amir Khan Productions Pvt. Ltd. V. Union of India[13],
the main issue was whether Competition Commission of India(CCI) has power to
deal with intellectual property rights. The court in this case held that CCI
has power to deal with intellectual property rights if it effects the
competitive aspects of the market and abuses it.
In
the case of Atari Games Corp V. Nitendo America Inc[14],
it was opined that though on first instance it may seem that competition law
and intellectual property law contravenes each other but they are complementary
in nature by encouraging innovation and competition through which consumer will
be benefited.
CONCLUSION
In
conclusion it can be stated that generally Competition Law and Intellectual
Property Law are contradictory in nature. In taking consideration the incentive
theory of the Intellectual Property Rights, the reward should be granted to the
inventor. The inventor will only have the right to do commercial exploitation,
which tends to give rise to monopoly. And Competition Law is against monopoly,
which is abusive in nature. So, one grants the right and the other one tries to
curve it.
If
a close view is taken, it is found that though Intellectual Property Law and
Competition Law are in contradiction, still the relation between them can be
reconciled. And they act as complementary to each other as both aims for
consumer good. Even TRIPs also provide certain provision where this two law
goes parallel, like as in anti-competitive practices in case of licensing can
be dealt or control by competition law when it goes against the competition
law. It can be said though the intellectual property right is granted which
preserves the right of the innovator but it is limited in nature. Even with the
judicial precedents it is clear that CCI also has power to deal with IPR
matters. Thus it can be said they go hand in hand, and no one is superior than
the other.
[2] Roitch Caroline Jerobn, The Interface Between Competition Law
and Intellectual Property Law in
Kenya(2014) (unpublished LLM Dissertation, University of Nairobi)
[4] Atul Patel, Aurobinda Panda,
Akshay Deo, Siddhartha Khettry and Sujit Philip Mathew, “Intellectual Property Law
and Competition Law” 6 Journal of International Law and Competition Law 122
(2011)
[5] Minakshi Bindhani, What is the
Conflict Between IPR and Competition Law, available at: https://enterslice.com/learning/what-is-the-conflict-between-ipr-and-competition-law/#:~:text=This%20is%20because%20intellectual%20property,harm%20consumers%20or%20restrict%20competition.
( last visited on 4th October 2023)
[6] K.D Raju, The Inevitable
Connection between Intellectual Property and Competition Law:
Emerging
Jurisprudence and Lessons for India, 18 Journal of Intellectual Property Rights
112(2013)
[7] Atul Patel, Aurobinda Panda,
Akshay Deo, Siddhartha Khettry and Sujit Philip Mathew, “Intellectual Property
Law and Competition Law” 6 Journal of International Law and Competition Law 128
(2011)
[9] Lakshmikumaran and Sridharan
attorneys, Interface between Competition
Law and Intellectual Property Laws Indian Perspective, available at: https://www.lakshmisri.com/Media/Uploads/Documents/Interface%20between%20Competition%20Law%20and%20Intellectual%20Property%20Laws%20-%20INDIAN%20PERSPECTIVE.pdf.
(last visited on October 4, 2023).
[10] Aabir Shoaib, Lexlife India,
available at: https://lexlife.in/2021/02/15/legality-of-parallel-imports-in-india/.
(last visited on October 4, 2023)
Article Information
ANALYSIS OF RELATION BETWEEN INTELLECTUAL PROPERTY LAW AND COMPETITION LAW BY: - ISHWITA MONDAL
Authors: ISHWITA MONDAL
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/10/06
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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