INTERFACE BETWEEN IPRs AND COMPETITION LAWS
INTRODUCTION
Competition law and Intellectual
Property have divergent intellectual cultures–the former more realistic and
experimentalist; the latter influenced by natural law and vested rights. The
connection between Competition Law and Intellectual Property Rights (IPR) is
one of the most talked about subjects as of late. Competition Law has been
viewed as the most effective system in countering anti competitive
understandings, denying abuse of dominant position, directing mergers and
combination and inciting proficient allotment of assets to eventually profit
the purchasers, furnishing them with more extensive decisions, better quality
items at a sensible cost. Intellectual Property Rights vouches for finding some
kind of harmony between the exclusive right of the proprietor and the social
intrigue. It guarantees that the proprietor of the elusive property gets a exclusive
right, in order to misuse industrially his scholarly creation, picking up the
restraining infrastructure rights thereof. IPR comprises of a heap of rights
which gives the proprietor the option to bar others from getting to the item,
subject to a constrained timeframe.
It very well may be gathered from over
that a scrimmage will undoubtedly emerge among IPR and Competition Law. IPR
looks to allow monopoly power to which Competition approach contradictions to
give, on one hand, it is important to energize development and on the other
legitimate Competition in the market ought to likewise be watched. Subsequently
it's anything but a contention which exists between the two laws however they
are additionally reciprocal in nature in specific zones. IPR gives motivators
to financial agents to technology development, which will make more products
and result in the dynamic development of the products, which is one of the
destinations of the competition arrangement.
INTELLECTUAL PROPERTY LAWS
Intellectual
Property law deals with standard and rules for securing and enforcing legal rights
to a person’s intellectual property. The word “Intellectual Property” means “an
intangible right protecting a commercially valuable product.”[1] It alludes to thoughts of
innovative nature including works, for example,
designs, music, written works, inventions, formulations, symbols and
phrases. Typically the person is given a exclusive right directly over the utilization of his/her
creation for a specific time frame. The reason behind for this is to give a
motivating force for development, research and venture. Without IPR protection,
different firms would have the option to take a free ride on the R&D
venture made by the investor firm.
Intellectual
Property is divided into two categories: Industrial property, which includes patents, trademarks, geographical indication
and industrial desgins; and Copyright, which includes artistic and literary and artistic. Rights
related to copyright include those of performing artists in their performances,
producers of phonograms in their recordings, and those of broadcasters in their
radio and television programs.[2]
The law
on intellectual property seeks to strike a balance between the exclusive right
of the owner and the social interest. Bainbridge sums up “in the area of
intellectual property the law strives to reach a balance between conflicting
interests to reach a justifiable compromise. Justifiable on the ground of
protecting the private interest and promoting investment and providing benefits
and providing benefits for society at large in terms of increased wealth,
knowledge and employment”[3]
The
need for comprehensive international agreements governing intellectual property
was fervently realised. The Paris Convention for Protection of Industrial
Property in 1883 was first multilateral effort made for Intellectual Property.
It was followed by Berne Convention for Protection of Literary and Artist Works
in 1886. Together, these two initial international efforts can be termed as the
Magna Carta of IPRs. From that point forward IPR system has made a long
excursion and with the foundation of WIPO and TRIPs the IPR law has been firmly
settled at International just as
national level
Intellectual
Property Right (IPR) in India was imported from the west. The Indian Trade and
Merchandise Marks Act 1884, was the first Indian Law regarding IPR. The first
Indian Patent Law was enacted in 1856 followed by a series of Acts being
passed. They are Indian Patents and Designs Act in 1911 and Indian Copyright
Act in 1914. Indian Trade and Merchandise Marks Act was replaced by Trade and Merchandise Marks
Act 1958 and Indian Copyright Act 1914 was replaced by The Copyright Act 1957.
COMPETITION LAW
Competition
law is law that promotes or seeks to maintain market competition by regulating
anti-competitive conduct by companies.The purpose of competition laws is to
guarantee that consumer follow through on the least conceivable cost combined
with the highest caliber of the goods and service which they consume. It
includes defining a sets of policy to encourage competition in the market. A
powerful competitive condition bolstered by viable competitive policy and law
is viewed as one of the fundamental components of an effective market economy.
The advantage of having competition in the market are lower value, better
items, more extensive decision and more noteworthy proficiency than those under
monoploy. Competition law is the instrument through which the Government
controls and directs the makers/players in the market. In this way, the
competition law identifies with matter of competition and seriousness so good
and service are sold at competitive costs and the buyers have a decision
concerning the items they wish. Moreover, competition law forestalls artificial
entry hindrances, encourages marjet access and praises other competition
promoting activities.
The
history of competition law is usually traced back to the enactment of Sherman
Act in 1890 in the US. This Act was coordinated against the power and
predations of the enormous trusts framed in the wake of the Industrial
Revolution where a little control group procured and held the load of
competitiors, ordinarily in resource, and controlled their business.
Continuously, Competition law came to be perceived as one of the key mainstays
of a market economy. This acknowledgment prompted enactment of competition law
in various nations, including developing nations.
The
underlying foundations of Indian law on competition can be followed back to
Articles 38 and 39 of the Indian Constitution which set out the obligation of
the State to promote the welfare of the people by securing and protecting a
social order in which social, political and economic justice is prevalent and
its further duty to distribute the ownership and control of material resources
of the community in a way so as to best sub-serve the common good, in addition
to ensuring that the economic system does not result in the concentration of wealth.
It is from these obligations that the MRTP Act, 1969, likewise impacted by US,
UK and Canadian legislation, came to fruition.
In
1991, the MRTP Act, 1969 was amended to cope up with the new reforms of
liberalisation, privatisation and globalisation. However, the act despite of
several amendments unable to adequately deal with anti-competitive practices
like cartels, boycotts and refusal to deal, predatory pricing, bid rigging and
abuse of dominance. Thus, the MRTP Act became obsolete in the light of international
economic developments relating more particularly to competition laws. Under
these circumstances the Competition Act, 2002 came into light.
The
obejective of Competition Law is to forestall abusive practices in the market,
promote and support competition in business sectors and guarantee that the
customers get the best possible goods at a sensible cost and better quality.
Presence of horizontal agreements which is agreements between enterprises who
are engaged in trading with similar or identical goods is said to have an
appreciable adverse effect on competition.
An
agreement is said to have a appreciable adverse effect on competition if the
agreement has a power of constraining or controlling goods or administrations
at any stage and which straightforwardly or in a roundabout way brings bid rigging or collusive bidding. Anti trust
law additionally denies vertical agreement which may bring about having a
appreciable adverse effect on competition. Vertical agreement are the agreement
between enterprises at diferent stages of production, distribution, and so on.
Competition Law likewise precludes abuse of dominant situation of an
undertaking.
Dominance
over a particular zone of a market can be earned by any undertaking through
monopoly force, this is not per se violation of anti-trust law however abuse of
this position is unlawful and detrimentally affects the market. An undertaking
will in general become dominant if the pertinent market is barely characterized
and it stops to be so in the event that it is characterized widely. The law
additionally directs mergers and acquisitions. Competition Law likewise
controls monopoly and their situation of dominance. The focal point of
Competition Law is basically on three zones, agreement among enterprises, abuse
of dominance and mergers or mix among undertakings. Basically, counteraction of
unfair competition.
INTERFACE BETWEEN COMPETITION LAW AND INTELLECTUAL PROPERTY LAW IN INDIA
TRIPS
(Trade-Related Aspects of Intellectual Property Rights) is an international
agreement formed by the WTO (World Trade Organization) that sets down minimum
standards for many forms of IP regulation as applied to nationals of other WTO
members.[4]
During the negotiation of the agreement, many countries expressed their concern
on the regulation of unfair competition and abusive power of the IP rights
holder.
Article
40 states that licensing practices or conditions pertaining to the IPR’s may
have an adverse effect on trade and may impede the transfer of technology.[5]
Article
40.2 permits the members to specify any abuse of IP rights having an adverse
effect and adopt measures to counter them.[6]
Some of the anti-competitive practices are mentioned in Article 40.2 of the
agreement but it should be noted that this list is not exhaustive. The
provisions regarding anti-competitive agreement practices (especially Article
40) generally are permissible rather than prescriptive in nature.[7]
Intellectual
Property Rights involve grant of exclusive license to the right holders to
exploit the result of their inventions for a limited period of time. Section
3(5) of the Indian Competition Act exempts reasonable use of such inventions
from the purview of competition law. But Section 4(2) says that actions by
enterprises that shall treated as abuse be equally applicable to IPR holders as
well. Section 3 prohibits anticompetitive practices, but this prohibition does
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” which have been conferred under IPR laws like Copyright Act, 1957,
Patents Act, 1970, the Geographical Indications of Goods (Registration and
Protection) Act, 1999 (48 of 1999), The Designs Act, 2000 and the
Semi-conductor Integrated Circuits Layout-Design Act, 2000. It implies that an
IPR holder can't put any preposterous conditions while authorizing his licensed
intellectual property which will be considered as abusing the competition law.
It incorporates any limitations between the licensor and the licensee to
confine creation, distribution, restrictiveness conditions, limiting amounts
and costs, patent pooling and tiein agreement. In such cases the competition
commission can pass an assortment of orders like cut it out, changes to the
licensing agreement as it considers fit.
Section
3(5) is included in the Competition (Amendment) Act, 2007 to deal with
intellectual property and anticompetitive practices. This provision generally
excludes IPR protection, but this is subject to “reasonable” condition and the
unreasonable conditions or abuse of dominant position will attract Section 3.
Abuses
are elucidate in section 4 as follows:
•
Imposition of unfair or discriminatory conditions on price
•
Limiting or restricting the production of goods or services or market
•
Limiting or restricting technical or scientific development to the prejudice of
consumers
• Concluding of contracts subject to
acceptance by other parties of supplementary obligations which have no use or
no connection with such contracts.
•
Denying market access in any manner
•
Using dominant position to protect or enter into another market.
The
merger for R&D may likewise
influence viable competition. The exclusive licensing and cross licensing may
offer ascent to competition issues on account of award back clauses and market
strength. Patent pooling can be another prohibitive practice which might be
utilized to encourage price collaboration.
The
conflict between Competition law and IPRs came before Monopolistic and Restrictive
Trade Practices Commission in the case of Vallal Peruman and Others v. Godfrey
Phillips India Limited[8].
The commission observed: “Trademark owner has the right to use the trademark
reasonably. This right is subject to terms and conditions imposed at the time
of grant of trademark. But it does not allow using the mark in any unreasonable
way. In case, trademark owner abuses the trademark by manipulation, distortion,
contrivances etc., it will attract the action of unfair trade practices.” While
introducing the products available to be purchased in the market or for
promoting thereof, the holder of the trademark certificate abuses the same by
control, distortion, contraptions and embellishments and so forth in order to
misdirect or befuddle the customers, he would open himself to an activity of
indulging in unfair trade practices.
Licensing
arrangements likely to affect adversely the prices, quantities, quality or
varieties of goods and services will fall within the contours of competition
law as long as they are not in reasonable concurrence with the bundle of rights
that go with IPRs. Unreasonable conditions under Section 3(5) of the
Competition Act is thus prohibits the unreasonable use or exploitation of intellectual
property rights. Competition policy of India,[9]
states that “all forms of intellectual property have the potential to violate
the competition”.
Intellectual
property is not differentiated from other tangible properties for the purpose
of competition law. So CCI can adjudicate matters relating to IPRs. The
competition commission can decide constitutional, legal and even jurisdictional
issues except the validity of statute under which tribunal is established[10].
In
the case of Amir Khan Productions Private Limited v. Union of India[11],
the court ruled that competition commission has the power to deal with
intellectual property cases. What can be challenged before copyright board can
also be challenged before Competition Commission Competition Act, 2002 has
overriding effect over other legislations for the time being in force. In Amir
Khan Private Limited versus Union of India,[12]
FICCI filed information against united producers/distributors forum (UPDF) and
others for market cartel in films against the Multiplexes. In order to raise
their profit, UPDF refused to deal with multiplex owners. Multiplex business is
totally dependent upon films. So this is refusal is considered to be as anti-competitive.
UPDF was indulged in limiting/controlling supply of films in the market by
refusal to deal with Multiplexes. It is violation of Section 3(3) of
Competition Act 2002. CCI prima facie found there is anticompetitive agreement
and there is abuse of dominant position also. So CCI directed Director General
to inquire about the matter. DG in his inquire found that there was cartel. UPDF
contended that films are subject to copyright protection[13].
Therefore Copyright board has the jurisdiction to deal with matter. Furthermore,
contended that for exclusive license, only remedy is compulsory license
available under Copyright Act. So petitioner challenges the action taken by the
CCI on the ground of lack of jurisdiction. However, considering the importance
the matter, Bombay High Court discussed the matter in great detail. The court
ruled that Section 3(5) provides that Section 3(1) shall not take away the
right to sue for infringement of patent, copyright, trademark etc. All the
defences which can be raised before copyright board can also be raised before
CCI. Competition law does not bar application of other laws.
CONCLUSION
The
association between IPR and Competition Policy is neither clashing nor they
mean to supplant one another; in actuality the both complement one another. The
basic target of the two laws is to promote development. The appearance of crisp
innovation offers ascend to solid competition at full scale just as micro
economic levels which further prompts more competition for promotion, which in
the long run outcomes in monetary improvement of the nation. Anyway this ought
not be to the drawback of the regular open. For this the competition
specialists need to guarantee the concurrence of competition law and IP laws
since a harmony between the two laws would bring about a consumer welfare and
economic.
Further
Competition law and IP law seek after a similar point of consumer welfare. The
law of property concedes a exclusive right in the want to instigate individuals
to make interests in things which are required in the public eye. Competition
law intends to give the purchasers highest caliber of products and services
that too at the least conceivable cost. The two of them receive distinctive way
to accomplish a similar objective of customer welfare.
In
this manner, when appropriately applied, the two collections of law supplement
and fortify each other's motivations. On the other hand, wrong use of either
can undermine the reason for both. On the off chance that antitrust requirement
superfluously keeps protected innovation proprietors from benefitting from
creation, this impedance additionally may bargain the objectives of antitrust
laws. Furthermore, unseemly or overbroad awards of licensed intellectual
property rights may meddle with the competition that regularly drives
development.
In
view of this, IP and Competition laws have to be applied in tandem so that
interest of both innovators and consumers are protected.
[1] Black’s Law Dictionary (5th edn, 2010).
[2] V S Warrier,
‘Competition Law and its conflict with IPR’ (2010) The Lex Warrier,
<http://lex-warrier.in/2010/09/competition-law-and-ipr/>
accessed 1st April, 2020.
[3] Aamir Khan Production
vs The Director General, 2010 (112) Bom L R 3778.
[4] Kingfisher v.
Competition Commission of India Writ petition no 1785 of 2009.
[5]Agreement on Trade
Related Aspects of Intellectual Property Rights, art. 40, Jan. 01,1995.
[6] Ibid.
[7] Lectures on
Intellectual Property Rights by Dr.Jayanta Lahiri.
[8] (1995) 16 CLA 201.
[9] Based on Raghvan
Committee Report, the high level committee report on Competition Law 2002
[10] (112) Bom LR3778.
[11] 2010(112)
Bom LR3778.
[12] 2010(112) Bom LR3778 .
[13] Section 13(1) (b) and
14(1)(d)(ii)
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