Competition Law

On

Competition Law vis-a-vis Intellectual Property

Submitted to:

Mr. Mohammad Atif Khan

Faculty, Competition Law

By:

Saurabh Das Manikpuri

Roll no. 143, Section A, Semester- VII

B.A. LLB(Hons.)
Submitted on:

October, 05, 2017

Hidayatullah National Law University

Uparwara Post, Abhanpur, New Raipur – 493661 (C.G.)

1
 DECLARATION

I hereby declare that the project work entitled “Competition Law vis-a-vis Intellectual
Property” submitted to HNLU, Raipur, is an original work, which has been done by me under
the able guidance of MR. Mohammad Atif Khan, Faculty Competition Law, HNLU,
Raipur.

SAURABH DAS MANIKPURI

ROLL NO. - 143

SEM – 7, Section- A

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 Acknowledgements

I feel elated to work on the project “Competition law and Policy viz-a-viz Intellectual
Property”. The practical realisation of the project has obligated the assistance of many
persons. Firstly I express my deepest gratitude towards Mr. Mohammad Atif Khan, Faculty
of Competition Law, to provide me with the opportunity to work on this project. His able
guidance and supervision were of extreme help in understanding and carrying out the nuances
of this project.

I would also like to thank The University and the Vice Chancellor for providing extensive
database resources in the library and for the internet facilities provided by the University.

Some printing errors might have crept in which are deeply regretted. I would be grateful to
receive comments and suggestions to further improve this project.

Saurabh Das Manikpuri

Roll No. 143

Section A, Semester VII

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 CONTENTS

DECLARATION....................................................................................................................2
ACKNOWLEDGMENTS ……………………............…………………….………………3
INTRODUCTION …………………………………………………….….…...........………5
RESEARCH OBJECTIVES…………………………………………............…..……......7
LITERATURE REVIEW………………………………………………………….........….7
METHODOLOGY……………………………………………………………..........……..8
RESEARCH QUESTIONS……………………………………………………...........…....8
HYPOTHESIS………………………………………………………………..........…….…8
MODE OF CITATION……………………………………………………...........…....…..9
CHAPTERISATION………………………........................................................................9
SCOPE OF STUDY………………………….……………................................................9
CHAPTER 2 – IPR AND COMPETITION LAW.............................................................10
CHAPTER 3 – COMPLEMENTARITIES BETWEEN IPR AND COMPETITION
LAW.........................................................................................................16
CHAPTER 4 –TRIP’S IN RELATION TO IPR AND COMPETITION LAW....... ......19
CONCLUSION………………............………………………………………..............….22
BIBLIOGRAPHY……………………………………………………........................…..23

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 INTRODUCTION

World has changed drastically after globalization. In other words, as coined by Thomas
Friedman, the world is flat now. Among others, markets internationally could not have
remained untouched. Markets have been affected drastically. Some have reengineered, some
have revamped and some in a state of flux. What unfortunately has been observed in certain
quarters is that unregulated markets have the tendency to assume monopolistic or near
monopolistic character thereby affecting consumer welfare.

We all realize that Markets have an important role to play in any economy be it developed or
developing. Economic theory brings out the clearly the benefits that flow from a market of
competitive nature. A market where there is level playing field for players of all sort operates
freely. Efficiency is associated with competition and the efficient functions of the markets
could be achieved only when there is competition. Regulatory framework therefore becomes
imperative to halt the degeneration of the markets to a monopolistic or a near-monopolistic
situation.

Competition Policy basically promotes efficiency and maximizes welfare. Competition

Policy essentially comprises in place a set of policies that promotes competition in local and
national markets, which includes a liberalized trade policy, openness to foreign investments
and economic deregulation.

Competition law basically comprises legislation, judicial decisions and regulations

specifically aimed at preventing anti-competitive business practices and unnecessary
government interventions, avoiding concentration and abuse of market power and thus
preserving the competitive structure of markets.

Competition law and IPRs policies are bound together by the economics of innovating and an
intricate web of legal rules that seeks to balance the scope and effect of each policy. The aim
of competition policy in the economy of a country is to ensure fair competition in the market
by way of regulatory mechanisms. It is not intended to create restrictions or constrictions that
may be detrimental to the growth of the society. Its focus is the avoidance of market
domination by a handful through different modes such as price fixing or market sharing
cartels and undue concentration. It also aims at promoting competition as a means of market
response and consumer preference so as to ensure effective and efficient allocation of

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resources and to create an incentive for the economy for innovation.1 Companies can
monopolise their technologies for a limited period of time, but they cannot maintain a
monopoly over the market. Intellectual property protection per se is not abusive but
ironically, if it dominates over the market it is only doing a legitimate job of its purpose,
namely to create to incentive for further innovation. However, when companies refrain from
licensing their intellectual property to competitors, they undermine the basic tenets of
competition law as well as the spirit of intellectual property protection.

1
UNCTAD Secretariat, Objectives of Competition Law and policy: Towards a Coherent Strategy for Promoting
Competition and Development

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 RESEARCH OBJECTIVES

The objective of this project is:

1. To emphasize the relation between IPR and Competition law.
2. To study the recognition of IPR in competition law.

LITERATURE REVIEW

 Abir Roy and Jayant Kumar, Competition law in India, Eastern law House, 2nd
edition
This books deals with the relationship of Competition law and Intellectual Property
Rights in India.

 ABBE E. L. Brown, Intellectual Property, Human Rights and Competition

Access to Essential Innovation and Technolagy,
This book basically deals with the meaning and definition of Concept IPR And
Competition Law. .

 Dr. S. C. Tripathi, Competition Law , Central Law Publications

This books helps in to deal with the relationship between competition law and IPR.
How the competition law helps to regulate IPR

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 METHODOLOGY

This Research Project is doctrinal in nature. Accumulation of the information on the topic includes
wide use of primary sources such as cases as well as secondary sources like books, e-articles etc. The
matter from these sources have been compiled and analysed to understand the concept and
reproduced it afresh in this project.

Websites, dictionary and articles have also been referred.

QUESTIONS
This project aims to answer questions such as

 What is competition law and policy?

 What is the relationship between IPR and competition law?

HYPOTHESIS

This Project attempts to analyze the two seemingly separate branches of law in connection
with each other and read the interface between the two branches after establishing the
interconnection between them. the roject elucidates the nexus between Competition Law and
Intellectual Property Rights.

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 MODE OF CITATION

This project follows a uniform Bluebook 19th Ed. Citation format for footnotes and
bibliography.

CHAPTERISATION

The project broadly has been divided into 4 chapters. Chapter 1 comprises of the
introduction to the topic along with the research methodology that has been adopted
in this project. Chapter 2 comprises of the IPR and Competition law. Chapter 3
covers up the complementarities between IPR and Competition law. Chapter 4 is
about the concept of TRIP’s in relation to IPR and Competition law..

SCOPE OF STUDY

This is aimed at the meaning of competition law and policy. This project deals with the
relationship between IPR and Competition law. It explains the recognition of IPR in
competition law 2002 and the complementarites between IPR and Competition law. How
competition law regulates IPR.
.

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 Chapter – 2
IPR AND COMPETITION LAW

Competition law and IPRs policies are bound together by the economics of innovating and an
intricate web of legal rules that seeks to balance the scope and effect of each policy.

IPRs protection is a policy tool meant to foster innovation, which benefits consumers through
the development of new and improved goods and services, and spurs economic growth. It
bestows on innovation the right to legitimately exclude for a limited period of time, other
parties from the benefits arising from new knowledge and more specifically from the
commercial use of innovative products and processes based on that new knowledge. In other
words, innovators or IPR holders are rewarded with a temporary monopoly by the law to
recoup the costs incurred in the research and innovation process. As a result, IPR holders earn
rightful and reasonable profits so that they have incentives to engage in further innovation.2

Competition law on the other hand, has always been regarded by most as essential
mechanism in curbing market distortions, disciplining anti-competitive practices preventing
monopoly and abuse of monopoly, inducting optimum allocation of resources and benefiting
consumers with fair prices, wider choices and better qualities. It therefore ensures that the
monopolistic power associated with IPR is not excessively compounded or leveraged and
extended to the detriment of competition. Besides seeking to protect competition and the
competitive process which in turn prods innovations to be first in the market with a new a
product service at a price and quality that underscores the importance of stimulating
innovation as a competitive input, and thus also works to enhance consumer welfare.

Regulating IPR vis-a-vis CompetitionLaw

As a piece of individual property – IPRs are fully subject to general anti-trust principles
because what is conferred upon its owner is precisely that autonomy of decision in
competition and freedom of contracting according to individual preferences that recalls from
any private property no matter tangible or intangible and that is the object of and connecting
factor for restraint of competition.

2
Competition Law Today by Vinod Dhall (Oxford University Press)

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Competition law, thus, while having no impact on the very existence of the IPRs, operates to
contain the exercise of the property rights within the proper bounds and limits which are
inherent in the exclusivity conferred by the ownership of intellectual assets. This starts the
tussle when exercise of IPRs give rise to some competition concerns because of anti-
competitive dimensions that it may embody.

Competition law is a framework of legal provisions designed to maintain competitive market

structures. Competition laws in general seek to:-

a) prohibit anti-competition agreements

b) prevent abuse of dominant position and

c) regulate mergers and acquisition.

However Section 3(5) defines the very interface between the paradigm of Competition law
and IPR. It states that nothing contained in this section shall restrict:-

1) 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

b) The Patent Act,, 1957

c) The Trademarks Act, 1957

d) The Geographical Indication of Goods(Registration & Protection) Act, 19994

e) The Design Act, 2000

f) The Semi-Conductor Integrated Circuits Layout Design Act, 2000.

Broadly speaking, IPRs related competition issues include:-

1) Exclusionary terms in the licensing of IPRs, specifically the inclusion of restrictive clauses
such as territorial restraints, exclusive dealing arrangement, tying or grant back requirements
in licensing contracts

2) Use of IPR to reinforce or extend the abuse of dominant position on the market unlawfully.
3) IPRs as an element of mergers and co-operative arrangements.

4) Refusal to deal

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Case of Mahyco-Monsanto

Mahyco-Monsanto( a 50-50 joint venture between Maharashtra Hybrid Corporation and

American Agricultural Company) was found guilty of price gouging ( price above the market
price when no alternative retailer is available) in a Bt Cotton case filed by the Andhra
Pradesh government and some civil society organizations before the MRTP Commission of
India. Mahyco-Monsanto was charging an excessively high royalty fee for its Bt gene which
made the seed too expensive for the farmers. As there was no competition due to their IPR on
Bt cotton seeds, Mahyco-Monsanto had a monopoly and had acted arbitrarily.

The Competition law applies to IPR in relation to abuse of dominant position and
combination. Therefore abuse of dominance due to an IPR is liable for action under the
Indian Competition Act just as IPR- related dealings in combination leading to an anti –
competitive effect.

Harmonizing IPR With Competition Law

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is an

international agreement administered by World Trade Organization (WTO) that sets down
minimum standards for many forms of intellectual property regulation as applied to nationals
of other WTO members. It was negotiated at the end of Uruguay Round of the General
Agreement on Tariffs and Trade (GATT) in 1994. India is a signatory for the Agreement on
Trade Related Aspects of Intellectual Property Rights (TRIPS).

The TRIPS agreement introduced intellectual property law into the international trading
system for the first time and remains the most comprehensive international agreement on
intellectual property to date.

TRIPS Agreement covers 9 categories of Intellectual Property: -- they are Copyright rights,
including the right of performers, producers of sound recordings and broadcasting
organization, geographical indications, including appellations of origin , industrial designs,
integrated circuit layout designs, patents, monopolies for the developer of new plant varieties,
trade mark, trade dress, and undisclosed or confidential information.

TRIPS ensures protection and enforcement of all intellectual Property should result in social
and economic welfare and balance of rights and obligations. Arising out of this, TRIPS does
try to achieve a degree of balance between Competition law (protecting the consumers) and
Intellectual Property Rights (protecting the innovators). Some of the tools provided to attain a

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degree of balance are parallel imports (Section 6), Compulsory Licensing (Section 31) and
Control of anti Competitive Practices (Section 40).

A. Parallel Imports

Parallel Imports are imports of a patented or trademarked product from a country where it is
already marked. For e.g.:- in Mozambique 100 units of Bayer’s CIPROFLOXACIN(500mg)
costs US$ 740 but in India Bayer sells the same drug for US$ 15 (owing to local generic
competition) Mozambique could import the product from India without Bayer’s consent.

According to the theory of exhaustion of IPR, the exclusive right of the patent holder to
import the patented product is exhausted and thus ends, when the product is first launched on
the market. When a state or group of states applies this principle of exhaustion of IPRs in a
given territory parallel importation is authorized to all residents in the state in question. In a
state that does not recognize this principle, however only the patent holder who has been
registered has the right to import the protected product.

Sometimes referred to as “grey market” parallel imports often take place when there is
differential pricing of the same product – either brand name or generic drugs—in different
markets ( using owing to local manufacturing costs or market conditions). TRIPs agreement
explicitly states that this practice cannot be challenged under the WTO dispute settlement
system and so is effectively a matter of national discretion.

B. Compulsory Licensing

The TRIPS agreement allows compulsory licensing as part of the agreement‘s overall attempt
to strike a balance between promoting access to existing drugs and promoting research and
development into new drugs. Under TRIPS Article 31—a WTO member may in its domestic
law provide for compulsory licensing of national or extreme emergency or in cases of public
non-commercial use. Procedural safeguards require that the measure is used for essential
products and that prior negotiations with the right holder have failed to obtain a reasonable
result. TRIPs waive the requirement of prior negotiation in emergency cases or when the
subject matter of the patent is required for public non-commercial use. The scope and the
duration of the license shall be limited to the purpose for which it was authorized. The TRIPs
Agreement does not specifically list the reasons that might be used to justify Compulsory
Licensing. However, the DOHA DECLARATION on TRIPS and Public Health confirms that
countries are free to determine the grounds for granting Compulsory Licenses. In Article 31,

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the TRIPS Agreement does prescribe a number of conditions which ought to have been
fulfilled before issuing compulsory licenses. In Particular such conditions require that:-

a) Normally the person or company applying for a license must have tried to negotiate a
voluntary license with the patent holder on reasonable commercial terms. Only if that fails
can a compulsory license be issued and

b) even when a compulsory license has been issued the patent owner has to receive payment,
the TRIPS Agreement says “the right holder” shall be paid adequate remuneration in the
circumstances of each case , taking into account the economic value of the authorization but
it does not define “adequate remuneration” or “economic value”.

Again, Compulsory Licensing must meet certain additional requirements:--

1) It cannot be given exclusively to licenses (e.g.—the patent holder can continue to produce)

2) It should be subject to legal review in the country.

Case of Natco Compulsory licensing in India

The first ever compulsory license application made in India was by Natco Pharma
(Hyderabad based Indian Pharmaceutical Company) for the manufacture and exportation of
Roche’s patented anti-cancer drug – ERLONITIB to Nepal, the Sub-Himalayan Kingdom.
Besides ERLOTINIB, Natco Pharma had also applied for the issue of a second compulsory
license to the IPO for manufacture and export of SUNITNIB also an anti-cancer drug .

C. Control of anti –Competitive practices in Contractual licenses

Article 40 of the TRIPS Agreement recognizes that some licensing practices or conditions
pertaining to IPRs which restrain competition may have adverse effects on trade and may
impede the transfer and dissemination of technology.

Member countries may adopt consistently with the other provisions of the Agreement,
appropriate measures to prevent or control practices in the licensing of Intellectual Property
Rights which are abusive and anti-competitive.

The TRIPS provides for a mechanism where a country seeking to take action against such
practices involving the companies of another member country can enter into consultations
with that other member and exchange publicly available non-confidential information of
relevance to the matter in question and of other information available to that member , subject

14
to domestic law and to the conclusion of mutually satisfactory agreements concerning the
safeguards of its confidentiality by the requesting member . Similarly, a country whose
companies are subject to such action in another member can enter into consultations with that
member.

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 CHAPTER-3

COMPLEMENTARITIES BETWEEN IPR’S AND COMPETITION LAW

It follows from the above discussion that when we think of the relationship between these
two regulatory systems at a high level of abstraction, rather than being simply antithetical to
each other, they complement each other in .promoting an efficient marketplace and long-run
dynamic competition through innovation.3 As discussed above, IPRs policy creates and
protects the right of innovators to exclude (ius excluendi) others from using their ideas or
forms of expression. This provides economic agents with the incentives to engage in efforts
that produce technological innovation and/or new forms of artistic expression. This will
create more inputs for competition on the future market, as well as promote dynamic
efficiency, which is characterized by increasing quality and diversity of goods and growth
generated through increased productive efficiency.

However, in the short run, and in some circumstances when patents, copyrights or other IPRs
confer market power (through exclusivity), they may lead to restriction of production, a
supra-competitive price, and what economists call a deadweight loss. Moreover, in the
rational exercise of its self interest, an IPR holder may sue would-be rivals for infringement,
deterring entry to compete, or prolong its market power by precluding access to technology
necessary for the next generation of products to emerge. This is where competition law
comes in to help IPRs protection to be fair and on the right track of its virtue towards the
welfare goal.

1. Both as a means to achieve improved efficiency and better welfare

Thus, competition is not the end goal of competition law just as IP protection is not the end
goal of IPRs policy but only a means to achieve improved efficiency and better welfare in the
long run. In some circumstances, the society would be better off by allowing for limited
market restrictions, monopolistic profits and short-term allocative inefficiency when these
can be proven to promote dynamic efficiency and long-term economic growth. This has even
been explicitly included among those factors to be taken into account by competition
authorities in some competition statutes. For example, it has been asserted that allowing price
to rise above the marginal cost through a succession of temporary monopolies can spur

3
Anthony, S.F, Antitrust and Intellectual Property Law: From Adversaries to Partners, 28 AIPLA Q.J.1 (2000)
at http://www.ftc.gov/speeches/other/aipla.htm

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dynamic competition. Analysts also argue that rapid innovation, increased importance of
declining average costs, and network externalities have created conditions ideal for
―dynamic competition for monopoly, in which temporary monopolies rise and fall in the
rhythm of rapid entry and exit.4

2. Both as a driving force for innovation

Moreover, competition may drive a race for innovation, as firms compete to exploit first-
mover advantages, learning-curve advantages, as well as to gain IPRs protection.5 It is also
one of the tasks of competition law to protect this type of competition: competition in the
innovation race or competition for the market as distinguished from competition in the
product market. Nevertheless, it should be noted as well that competition cannot serve as the
sole driver of innovation. Inventors sometimes cannot appropriate value from the invention
without the grant of IPRs, making IPRs protection an important incentive for innovation in
such settings.

3. Both promoting consumer welfare

Both regimes can thus function to promote consumer welfare in the same manner, while
showing similarities and differences in their consideration of short and long run effects on
consumer welfare. Patent law and the incipiency elements of antitrust law are similar in that
they both are ultimately based on inherently uncertain predictions of what is going to happen
in the future. The difference is that in the antitrust regime we sometimes are concerned about
conduct that in the short-term may be benign or even helpful to consumers, but that may be
harmful in the long run, whereas in the patent regime, we are willing to tolerate immediate
consumer harm, e.g. monopoly pricing in the expectation that in the long run it will benefit
consumers by encouraging innovation.6

We can sum up the above discussion with the words of the US Department of Justice (DoJ)
and the Federal Trade Commission (FTC), which in their 1995 ―Antitrust Guidelines for the
Licensing of Intellectual Property‖, have stated:

“The intellectual property laws and the antitrust laws share the common purpose of
promoting innovation and enhancing consumer welfare. The intellectual property laws

4
Ordover, J.A (2002), Antitrust for the New Economy or New Economics for Antitrust, 2002, at
http://www.ftc.gov/opp/intellect/020220januszordover.pdf.
5
The US FTC reports that, in the pharmaceutical industry, participants asserted that 60% of inventions would
not have been developed and 65 percent would not have been commercially introduced absent patent protection.
6
Leary, T.B (2001), The Patent-Antitrust Interface, Remarks before the ABA Section of Antitrust Law Program
in Philadelphia, Pennsylvania at: http://www.ftc.gov/speeches/leary/ipspeech.htm.

17
provide incentives for innovation and its dissemination and commercialization by
establishing enforceable property rights for the creators of new and useful products, more
efficient processes, and original works of expression. In the absence of intellectual property
rights, imitators could more rapidly exploit the efforts of innovators and investors without
compensation. Rapid imitation would reduce the commercial value of innovation and erode
incentives to invest, ultimately to the detriment of consumers. The antitrust laws promote
innovation and consumer welfare by prohibiting certain actions that may harm competition
with respect to either existing or new ways of serving consumers.”

These types of guidelines need to be re-examined and appropriately adjusted in the context of
the New Economy, which is characterized by an increased dependence on products and
services that are the embodiment of ideas. A major challenge is, thus, to identify policies that
will ensure an efficient operation of the competitive process that underlies this IP revolution.
More narrowly, questions abound concerning the relationship between competition and IPRs
laws, or the right way to bring out the benefits of as well as reinforce the complementarities
between these two regulatory systems for the sake of dynamic efficiency and consumer
welfare in the new era.

Thus, by creating and protecting the right of innovators to exclude others from using their
ideas or forms of expression, IPRs provide economic agents with the incentives for
technological innovation and/or new forms of artistic expression. This will create more inputs
for competition on the future market, as well as promote dynamic efficiency, which is
characterised by increasing quality and diversity of goods, which is also the objective of
competition policy. Moreover, IPRs may create a race for innovation, as firms compete to
exploit first-mover advantages so as to gain IPR protection. Therefore, both IPRs and
competition policy are necessary to promote innovation and ensure a competitive exploitation
thereof. It is necessary therefore to ensure their co-existence.7

Further, they pursue the goals of consumer welfare and encouraging innovation through
different means. Premised on the idea that enterprises in a competitive market will be less
complacent and have greater incentive to innovate to gain market share, competition law can
indeed act as a spur for intellectual property.

Competition Law has never questioned or interfered with the most primary function of IP
rights: preventing free riding of creative achievements and/or the firm‘s identity and

7
Cornelius Dube (CUTS International), Intellectual Property Rights and Competition Policy

18
reputation, acting as an incentive to innovate.In fact, the former acknowledges the role of IP
in promoting competition because by preventing free-riding, firms are encouraged to produce
their own innovative products, which necessarily leads to competition. The competition law
promote innovation and consumer welfare by prohibiting certain actions that may harm
competition with respect to either existing or new ways of serving consumers.8

CHAPTER-4

TRIPS in relation to IPR & Competition law

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is

an international agreement administered by the World Trade Organization (WTO) that
sets down minimum standards for many forms of intellectual property (IP) regulation as
applied to nationals of other WTO Members. TRIPS Agreement provides scope for the
enforcement of competition law vis-à-vis anti- competitive licensing practices and
conditions.

Article 8.2 of TRIPS provides general recognition that appropriate measures may be
needed to prevent the abuse of intellectual property rights by rights holders.

Article 31 of TRIPs provides for the grant of compulsory licenses, under a variety of
situations, such as the interest of public health, national emergencies, nil or inadequate
exploitation of the patent in the country, anti-competitive practices by the patentees or
their assignees and overall national interests. However the drawback related with this
provision is that the Agreements, however, do not restrict the freedom of members to
determine the grounds for compulsory licenses other than those explicitly mentioned
therein (with the only exception being semiconductor technology which can only be
subject to compulsory licenses for public noncommercial use and to remedy anti-
competitive practices). Diverse grounds are therefore to be determined by respective
national laws.

8
US Antitrust Guidelines for the Licensing of Intellectual Property,
http://www.justice.gov/atr/public/guidelines/

19
 Article 40 provides detailed conditions for the granting of compulsory licenses aimed at
protecting the legitimate interests of rights holders.

“Members agree that some licensing practices or conditions pertaining to intellectual

property rights which restrain competition may have adverse effects on trade and may
impede the transfer and dissemination of technology.”

This sub-clause recognizes that licensing practices that restrain competition may have
adverse effects on trade. This sub-clause permits members to specify anti-competitive
practices constituting abuses of IPRs and to adopt measures to prevent or control such
practices. Such practices may include exclusive grantbacks, clauses preventing validity
challenges and coercive package licensing.

Nothing in this Agreement shall prevent Members from specifying in their legislation
licensing practices or conditions that may in particular cases constitute an abuse of
intellectual property rights having an adverse effect on competition in the relevant
market.

Hence, as provided above, a Member may adopt, consistently with the other provisions of
this Agreement, appropriate measures to prevent or control such practices, which may
include for example exclusive grant back conditions, conditions preventing challenges to
validity and coercive package licensing, in the light of the relevant laws and regulations
of that Member.

Recognition of IPR in the competition law

The Competition Act, 2002 in India recognizes the importance of IPRs such as patents,
Copyrights, trademarks, geographical indications, industrial designs and integrated circuit
designs. Also, Section 3 of the Competition Act prohibits anti-competitive agreements,
Section 3(5) lays down that this prohibition shall not restrict “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” enjoyed under the statutes relating to the above mentioned
IPRs. Hence, this clearly implies that unreasonable conditions imposed by an IPR holder
while licensing his Intellectual property rights would be prohibited under the Competition

20
Act.

CONCLUSION

Innovation has always been a catalyst in a growing economy resulting in more innovation.
The advent of fresh innovations gives rise to healthy competition at macro as well as micro
economic levels. IP laws help protect these innovations from being exploited unlawfully. In
view of this IP and Competition laws have to be applied in tandem to ensure that the rights of
all stake holders including the innovator and the consumer or public in general are protected.
The common objective of both policies is to promote innovation which would eventually lead
to the economic development of a country however this should not be to the detriment of the
common public. For this the competition authorities need to ensure the co-existence of
competition policy and IP laws since a balance between both laws would result in an
economic as well as consumer welfare.

The interface between competition law and IPRs protection is very complex and
multifaceted. It needs to be handled very carefully.

There are certain similarities between IPR and Competition Law. IPR system promotes
innovation which is a key form of competition,, on the other hand , competition policy by
keeping market open and effective , preserves the primary source of pressure to innovate and
diffuse innovation . But there are also conflicts such as when as IPR serves to entrench
market power. A regulatory balance therefore should be maintained.

Current developments indicate that the enforcement of competition laws no longer begins
with the assumption that restrictive use of IP is necessary anti-competitive. Current
enforcement instead starts with three basic assumptions about intellectual property.

First, intellectual property is comparable to other forms of property so that ownership

provides the same rights and responsibilities.

Second, the existence of IP does not automatically mean that the owner has market power.

Third, the licensing of IP may often be necessary in order for the owner efficiently to
combine complementary factors of production and thus may be pro-competitive.

21
Raghavan Committee observed that Innovation has always been a catalyst in a growing
economy resulting in more innovation. The advent of fresh innovation give rise to healthy
competition at macro as well as micro-economic levels .IP laws help protect these
innovations from being exploited unlawfully. In view of this IP and Competition laws have to
be applied in tandem to ensure that the rights of all stakeholders including the innovators and
the consumer or public in general are protected.

22
 BIBLIOGRAPHY

BOOKS

 Abir Roy and Jayant Kumar, Competition law in India, Eastern law House, 2nd
edition
 ABBE E. L. Brown, Intellectual Property, Human Rights and Competition
Access to Essential Innovation and Technolagy
 Dr. S. C. Tripathi, Competition Law , Central Law Publications

ARTICLES AND STATUTES

 .legalservicesindia.com/article/article/competition-law-and-intellectual-property-
rights-confronting-paradigms
 livemint.com/article/GWrGWACHE69WH4Nobl407N/Intellectual-property-vs-
competition-law.html
 The Competition act, 2002
 The Agreement on Trade related aspects of Intellectual Property Rights (TRIPS)
1995

WEBSITES

 www.lawctopus.com
 http://www.legalservicesindia.com

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