Introduction

Intellectual property rights are legal rights given to the inventor or creator to protect his invention for a certain period of time. The objective is to foster innovation, protecting investments in research and development, increasing overall efficiency of the market resulting in promotion of economic growth. It is the right given to owner for exclusive control. But this exclusive right does not include the right to exert restrictive or monopoly power in the market. As much as there is need to protect human creativity so is the need to curb and prevent anti-competitive practices. Here comes the role of Competition Act of 2002 whose main aim is to protect competition in the market by preventing anti- competitive agreements and anti-competitive conduct that causes an appreciable adverse effect on the competition.

There have been tussle between whether Intellectual Property Rights and Competition Act are complementary or contradictory as former endangers competition while latter engender competition. By closer analysis of this, we can understand that both are complementary to each other both and were created with the goal of promoting economic development of the country. The latest judgement by Delhi High Court has stated that as far as there are irreconcilable differences between patents act and competition act, Patent being a special act shall prevail. The intent of the parliament to introduce the both the laws were not to prevail one in derogation of another. They both shall be worked and implemented in addition to each other.

IPR under Competition Act 2002

Section 3 of the Competition Act states that any agreement which causes or is likely to cause an adverse appreciable effect on competition is void. The factors mentioned under Section 19(3) are considered to determine adverse appreciable effect. Section 3(5) of the Competition Act mentions that that an agreement is not competitive if there is reasonable condition to protect patents, copyright and trademark rights. The question of what shall be considered as the reasonable or not would be the matter which can only be decided by the CCI.

Is it necessary to consider it under Section 4 of the Competition Act?

Section 4 of the Competition Act talks about dominant position of an enterprise and abuse of that position. Dominant position means position of strength of an enterprise to exist independently in the market or affect its competitors or consumers or relevant market in its favor. It is further determined by looking at factors mentioned under Section 19(4) of the competition act. Competition act protect IP rights under Section 3 where an “ agreement” is considered as void. Unless and until it do not come under ambit of definition of agreement under Sec 2(b) reasonable condition cannot be applied. Thus, misuse of IP rights shall also be considered under abuse of dominance under Section 4 where unilateral conduct by person or enterprise is anti-competitive. It shall be consider abuse under subsection 2(a)(i) that is any condition imposed unfairly or discriminatory in condition of sale or purchase of goods or services.

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An enterprise which is dominant in the market can use its market power to exploit the exclusive rights provided under IPR. There can be various anti- competitive effects in the market. An dominant enterprise can enter into and exploit other upstream or downstream market. It can provide exclusive rights such as patent or copyright to an enterprise in vertical market, make that enterprise dominant and create monopoly in that relevant market. This vertical arrangement can further also result in practices of excessive pricing and predatory pricing which are anti-competitive practices. It may acquire patents not to innovate but to prevent others from innovating in certain areas, thereby hindering technological progress and limiting consumer choice. Such anti-competitive behavior of an enterprise cannot always come under the ambit of agreement and thus it is necessary to see such unilateral conduct as abuse of dominant position.

EU jurisdiction on the abuse of dominance and IPR

In case of EU Microsoft 2005, copyright protected interoperability information was considered as because of dominant position as it resulted in preventing production and technological development. EU through their jurisdictions such as Microsoft, IMS etc. has laid down four factors to consider the abuse of dominance in case of IPR-

• Assessing whether a company holds a dominant position in a market preceding the one in question.

• Evaluating the essentiality of the product or service to competition in downstream markets.

• Examining whether refusal to grant access results in the elimination of effective competition.

• Analyzing the presence of objective justifications for the refusal to grant access.

Conclusion

It is necessary to balance the interest of IP holders and competitive behavior in the market. The competition in market ought to be fair and transparent. On one hand it is necessary to ensure that creators and inventors are protected but on the other hand anti-competitive behavior and monopolistic practices shall be prevented. IPR and Competition law shall be seen as complementing each other and not contrasting as both aim to promote economic development. Furthermore it is necessary to consider abuse of IP rights under abuse of dominance to ensure that competition is not unduly hindered and distorted in the market. Competition act 2002 mentions IP rights only under Section 3 but it is time to include it under abuse of dominance if there are no reasonable and objective justifications as it can result in various anti-competitive practices.

Author :Srushti Khule, in case of any query, contact us at Global Patent Filing or write back us via email at support@globalpatentfiling.com.

References

1. FICCI Multiplex Association of India v United Producers/Distributors Forum, 2011 Comp LR79 (CCI).

2. European Commission decision in case COMP/C-3/37.792 Microsoft, C(2004) 900 final and Judgement of the Court of First Instance in Case T-201/04, 17.09.2007

3. Abuse of Dominant Position & Intellectual Property- Emerging Competition Law Norms in India https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.taxmann.com%2Fpost%2Fblog%2Fopinion-abuse-of-dominant-position-intellectual-property-emerging-competition-law-norms-in-india%2F&psig=AOvVaw2GCExN3ACW8eBTZ49cjnC8&ust=1711218307427000&source=images&cd=vfe&opi=89978449&ved=0CAcQrpoMahcKEwjY4s2Lv4iFAxUAAAAAHQAAAAAQBA

4. Abuse of Dominance in case of Intellectual Property Rights

https://www.google.com/url?sa=i&url=https%3A%2F%2Fpapers.ssrn.com%2Fsol3%2FDelivery.cfm%2FSSRN_ID3550623_code3949075.pdf%3Fabstractid%3D3550623%26mirid%3D1&psig=AOvVaw2GCExN3ACW8eBTZ49cjnC8&ust=1711218307427000&source=images&cd=vfe&opi=89978449&ved=0CAcQrpoMahcKEwjY4s2Lv4iFAxUAAAAAHQAAAAAQBg