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Relation between Competition Law and IPR


Authored by Pavitra Somani


Keywords: Intellectual property, copyright, patent, trademark, TRIPS, Section 3-ICA.


Abstract

The Competition Law and the IPR function differently and there relation is quite contradictory. This Article talks about the relation between Competition Law and IPR. It has been divided in phases, the phases describe how the various agreements and legislations helped India to reduce the gaps and conflicts between both the laws. It states how both these laws complement each other.


Introduction

Competition laws and Intellectual Property Law work in different directions and have been designed to achieve different objectives. Therefore it is very important to comprehend the functioning of both competition and Intellectual property laws.

Competition Law helps to regulate the activities which make an anti-competitive and hence make an unstable market and hamper it. Whereas, IPR lends the rights of monopoly to the holder. These contrasting regulations of both the laws result in creating a conflict of interest between both the Competition law and IPR.


Here, the IPR helps the holder to obtain and hold the monopoly rights which therefore makes it difficult for other players or competitors to enter into the market. The sole holder moves towards monopoly and the other players cannot even offer their products and services in the market which reduces the element of competition in the market. Therefore the Competition Laws have been enacted to put a check on the powers of monopoly which has been granted to the holders under the statutes.

But also the intents of the IPR have been largely acknowledged by the Competition Act, 2002. And therefore such balanced approach will help in construction of both the statutes of IPR and Competition laws harmoniously.


Background:

The Competition Act, 2002 was sanctioned for the liberalisation and efficiency of economy. It was enacted to promote justice on various fronts like social, political and economic justice. It was ordained to rectify and balance out the mischief of the MTRP Act and also the various compliances of TRIPS. In the Section 3(15) there is an exception clause provided for the agreements which are under IPR and promote innovation and novel ideas in the market. And in Section 4 it mentions about the regulation of the acts which leads to misuse of the power and abuse to the market.


Precedents showing interface between both the laws:

Entertainment Network Limited v. Super Cassette Industries Ltd.[1] It was observed by the court that the copyright owners have the right to have full monopoly in the market but it also observed that this right is not absolute as it may create hindrance in the market and violation of competition laws.


Aamir Khan Productions Pvt. Ltd. v. UOI.[2] , in this case law it was observed that the cases related to competition law and IPR can come under the CCI’s jurisdiction and it was also held that the IPR is a statutory right but not sovereign.


Two mechanisms of Economic Mechanism

· Regulated market system:

Under this system, the businesses and all the trade activities are governed by some regulatory authorities which are controlled and governed by the government. There is a check and balance for the powers in the market so that misuse of the power in market through different laws and legislations. Through this system the producers produce standard goods and help in contributing to the society and development and growth of economy by reducing misuse of powers.


· Free Market System:

In this market system, government has no role to play, it only scratches away the monopolistic behaviours and attributes of the producers and manufacturers. The manufacturers only identify the demand for the product, quantity of the product and to whom to select as the target market and also make pricing decisions. In this form of market there may be chance of misuse of power by the manufacturers as there is direct contact between the manufacturers and consumers.


Objectives of Competition Law and IPR

The objectives of both Competition Law and IPR are different and conflicting with each other.as IPR provides the holder to access their exclusive legal rights such as monopolies by using copyrights, trademarks, and patents to the new invention or the novel ideas. And these objectives come in the path of the objectives of Competition Law which are working towards healthy competition in the market.


The word competition is taken in different sense in both competition law and IPR. In IPR the competition among the top innovators id encouraged and the competition among others is restricted in ways but in competition laws, the competitiveness is among the producers, manufacturers of the market who help in making the economy grow.

Also the Article 10(b) of the Paris Convention states that any act contrary to the honest principles of competition and industrial matters will be termed as unfair competition.


Competition Law and IPR: A Comparison

The relationship between the Competition Law and IPR is always taken to be a conflicted one but in reality both of them complement each other well. The IPR gives the holder the right to be above the other competitors and exploit his product commercially for a definite time period and this monopolistic behavior is not totally annulled by the Competition law but it does put a barrier on the misuse of power by the monopoly holder and violation of anti-trust. But in these years there have been many acts and laws acted out to make these both the laws go hand in hand and for the smooth functioning.


TRIPS Agreement:

The Trade Related Aspects of Intellectual Property Rights (TRIPS) is an agreement initiated by the WTO internationally. During the meetings for these agreements many countries delivered their problems in relation to the abuse of the competition law due to the power of the IP holder. Article 40 and Article 40.2 states the disadvantages of licensing practises and also the abuses the IP power holder can do with the counter. It also provides some anti -competitive practices and these provisions are permissible rather than prescriptive and also are not exhaustive.


Also the Article 31 of the agreement mentions about the compulsory licensing in the periods of national emergency or extreme situation and also for the anti -competitive practises.

Competition law and Patent Law:

The Patent Law acts as the helper of the Competition Law. It helps the Competition law to make an ideal market by preventing unauthorised trade of patented products. It goes against the interest of competition laws only when the use of the patent rights is not proper by the IP holder. In this case also giving the patent rights is not the problem but misuse of those rights will violate the Competition Laws. It also says that Patent rights are only for a definite period and therefore does not contradict with the objectives of Competition Laws as there will be no misuse of monopoly.


Indian Competition Act:

The Section 3 of the Competition Act provides that enterprise will be restrained from entering into any agreement which hurt the competition or which will create anti- competitive environment. It is valid only in India. But then Section3 (5) of the Act gives the exception that IPR will not be affected by Competition Laws. But Section3(5) and Section 4 of the Act studied together states that if the power of IPR is misused by the holder then Competition Laws will play in role in the same.


So here it can be said that both the laws, Competition Laws and IPR supplement each other rather than conflicting or contradicting with each other. This relation has been growing in India and is slowly advancing and progressing.


Some of the case laws involved in showcase of this relation are:

Valle Peruman and Ors. v. Godfrey Phillips India Limited[3], is a case in which it was observed by the courts that competition can be infringed and disturbed by all kinds of IPR including the trademark.


Kingfisher v. Competition Commission of India[4], in this case the court held that the competition laws cannot put a barrier on the other laws prevailing.

In the case of FICCI Multiplex Association of India v. United Producers Distribution Forum[5], it was stated that the rights of the copyright holder are statutory rights but are not absolute but are qualified.

Conclusion

Competition Laws and IPR have different goals and objective but it can be concluded that there have been various and numerous steps taken by India by bring various legislations and Acts to make both these laws go hand in hand and there is reduced or no conflicting interests. The IPR gives the exclusive rights of monopoly to IP holder and the Competition Laws just act as check and balance on the power of these exclusive rights.


References:

· https://blog.ipleaders.in/interplay-competitionlaw-ipr/amp/

· http://www.legalserviceindia.com/Competition-Law-Intellectual-Proprty-Laws.html


Foot Notes:

[1] Entertainment Network Limited v. Super Cassette Industries Ltd., 16 May, 2008 [2] Aamir Khan Productions Pvt. Ltd. v. UOI., 18 August, 2010 [3] Valle Peruman and Ors. v. Godfrey Phillips India Limited, 1986 AIR 806, 1985 SCR Supl. (3) 123 [4] Kingfisher v. Competition Commission of India, Laws(BOM)-2010-3-261 [5] FICCI Multiplex Association of India v. United Producers Distribution Forum, 25 May, 2011