India: The Interplay Between The Intellectual Property Law And Competition Laws

Last Updated: 21 May 2019
Article by Shambhavi Sinha

Introduction

The most important role that is played by any law in this world of free markets is the laws of intellectual property. They act as a survival kit in a highly competitive market by ensuring that the owner's right of the intellectual property are not being infringed to his prejudice by another party. The exclusive enjoyment of rights is conferred upon the rightful owner[. Therefore, a huge deal of attention is being given to IP Laws and along with it, an another niche filed of law which is gaining strong foothold in the gamut of laws that affect this technologically advanced contemporary world is competition laws. Historically speaking, these two fields of law have emerged as two separate systems but they share the common goal with different perspectives. On one hand, IP Laws deal with the promotion of innovation by providing exclusive rights over invention. On the other hand, competition laws promote efficiency in the market and prevent market distortions. It leads us to the general perception that there is an inherent tension between the two laws which is quite evident from the fact that in the recent past across jurisdiction, there is a rise in the number of case pertaining to the matters of intellectual property related competition cases.

The article will address the nexus between the two laws and will conclude by reflecting on the lack of sufficient provision in the Competition Act, 2002 to deal with the interplay between IP Law and Competition laws.

IP v. Competition Law

Ever since the Statues of Monopolies was enacted in England in the year 1624, the tension between the IP and completion laws have existed because the prohibited monopolies but allowed patent monopolies. Companies are not allowed to maintain a monopoly over the market however they can monopolise their technologies for any specific period of time. The Competition Act of India seeks to prohibit anti-competitive agreements, prohibit the abuse of dominant position by organisations and to regulate mergers. The act prohibits an enterprise to enter into an agreement in respect of production, supply distribution or control of goods or provision of services, which is likely to cause an adverse effect on competition within India but at the same time it bestows a blanket exception on IPR[4]. However, section 4 of the act provides with sufficient conditions for interfering in intellectual property matters in cases of abuse of dominant positions. The courts have held that CC has the jurisdiction to deal with competition cases involving IPR. In the case of FICCI Multiplex Association of India v United Producers Distribution Forum, the question was whether c copyright holder can enjoy his right when it effects the competition in the market. The court held that the copyright is a statutory right under the Copyright Act, 1957 and not an absolute right and the IP laws do not have a total overriding effect on the competition laws. The European Courts of Justice and US Supreme court have held that the aim of IPR is to ensure innovation in all areas and furtherance of commercial interest is only secondary[. The CCI has the authority to punish IPR holders who abuse their dominant position under Section 27 of the Competition Act, 2002.

Furthermore, the concept of complementary goals of intellectual property and competition law system is used to make laws on licensing. In the case of Entertainment Network (India) Limited v Super Cassette Industries Ltd, Supreme court held that the rights of copyright owner to exercise monopoly or to charge royalty through issue of license is not absolute. Overpricing of any patented product is not really against the provisions of the competition Act but has close links to the refusal to license. In the case of Singhania & Partners LLP v Microsoft Corporation[, Indian competition authorities failed to see the abuse of dominant position, tying agreements and other anti-competitive charges by Microsoft.

Conclusion Competition law acts against the abusive monopoly rights whereas IPR rewards the inventor by providing him with a monopoly right for a limited period of time. IPR goes against the principle of competition law to enhance market conditions by more choices. However, Competition laws can play an active role in checking the abuse of rights granted by IPR. These two laws are neither conflicting nor competing in nature but they are complementary to each other. Therefore, CCI should adopt specific guidelines to deal with cases that involves both the provisions of IPR and competition laws. To avoid of concentration of undertakings in IPR rich companies, merger guidelines should be strictly implemented. Furthermore, using of license to eliminate competition for improper benefits must be brought under the horizon of abuse of IPRs .

References:

[1] See Indian Farmers Fertilizer Co-operative Limited

[2] See WIPO Intellectual property Handbook

[3] See also, David D. Friedman

[4] The competition Act of India, 2002, section 3

[5] Aamir Khan Productions v Union of India

[6] FICCI Multiplex Association of India v United Producers Distribution Forum

[7] United Brands Co & United Brands Cont'l BV v Comm'n,

[8] Entertainment Network (India) Limited v Super Cassette Industries Ltd

[9] Singhania & Partners LLP v Microsoft Corporation (I) Pvt Ltd & others

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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