INTERPLAY OF IPR AND COMPETITION LAW

 INTRODUCTION

IPR and Competition law has always been seen as contradicting to each other. The reason being IPR laws protect a business`s identity from others and at the same time provides exclusive right to use marks and their names and similar names are not allowed to be trademarked by someone else, thus creates a monopoly. Competition law`s objective is to enhance healthy competition among businesses and demote monopoly in the market.

Intellectual Property refer to creation of an intangible property with solely human efforts. They include trademark, patent, design and copyright. IPR means the right to create and protect these properties. Different acts are there in India to govern different rights such as Trademark Act, 1999, Copyright Act, 1956 and Patents Act, 1970.

Competition law in India is governed by Competition Act, 2002, which aims to prevent practices that have an adverse effect on competition, promote and sustain competition in markets, protect the interests of consumers, and ensure freedom of trade carried on by other participants. Competition Act is enforced by Competition Commission of India[CCI]. It is a government body under the Ministry of Corporate Affairs[MCA]. Both Competition Law and IPR have great importance in their respective scope.

Objectives of IPR and Competition Law

IPR:

1. Encourage Innovation and Creativity: Intellectual Property rights give exclusive right to a person or entity to use their creation, thus restraining anyone else copying the idea and in the process promoting innovation in a way.

2. Economic Development: The research and development for innovations and inventions often leads towards growth in economy. For example, recently Bajaj launched its 1^st CNG bike, which provide economic benefits and might be a new change in economy for the betterment.

3. Protection of Consumer`s interests: Consumers buy products trusting the brand they buy from, IPR protects the identity of a brand. This helps customer identify and buy authentic products. Counterfeited and pirated goods are often sold by the name of an established brand, this can be prevented through IPRs

4. Fair Competition: By promoting invention and innovation, IPR encourages the businesses to bring out their best creative works. Thus, they provide chance of competitive advantage to businesses by building a distinct reputation.

Competition Law:

1. Prevents Anti Competitive Activities: Competition law or anti-trust law is against unfair practices which restrict competition. Competition Act, 2002 of India for instance prevents and prohibits such agreements that are against healthy competition among businesses. Such practices include price fixing, bid rigging, cartels and monopolies, etc.

2. Abuse of Dominant Position: Anti-trust law aims to grant fair and equal opportunity to compete in the market. It restricts any activities done with the misuse of dominant position such as limiting production, imposing unfairly high prices or putting barrier to entry of other businesses.

3. Interest of Consumers is foremost: Along with businesses, competition laws also focus on providing consumers number of options to buy from and at reasonable price and better quality.

4. Freedom of trade and Facilitate Growth: Competition law ensures no entry barrier for eligible and prospective businesses and give equal opportunity and freedom to trade. This helps in overall growth in number of businesses and therefore growth in economy.

Competition Act, 2002

The Competition Act of 2002 is the chief regulating act relating to competitions in business. It fosters fair competition among businesses and penalizes unfair trade practices. It was a substitute to Monopolies and Restrictive Trade Practices Act, 1969 to address more modern problems and providing comprehensive solutions. The regulating and enforcing body for this act is Competition Commission of India[CCI]. Currently, CCI`s chairperson is Ravneet Kaur.

IPR and Competition Law Intersection

As we see, their objectives are different, IPR provide exclusive right and promotes innovation while Competition Law aims for fair competition and freedom to trade and prevention of monopoly. But, their ultimate goal is similar. They both promote competition in one way or another and they both work towards protection of consumers` interest. The Competition Law has some provisions which clear some complexities between IPR and Competition Law.

Section 3[4]- Tying Agreement

Tying agreements are those where a product is sold by the seller which a customer wants on the condition that the customer will buy another product, which is inferior compulsorily. This practice is prohibited. IPR`s  motive is to promote innovation. The seller will be tilted towards selling better products, fostering innovation.

Section 3[5]- Protection of IP Holders

The section 3[5] provides explicitly that the Competition Act doesn`t affect rights of IP holders. But if read with section 4, it also prevents IPR holders to misuse their dominant position, doing which they may be penalized.

Valle Peruman and others v. Godfrey Phillips India Limited, (2005): Supreme Court held that “all kinds of intellectual property have the potential to infringe the competition.” Trademark users must use it reasonably. In this case Supreme Court observed manipulation of trademark

Aamir Khan Production Private Limited v. The Director-General wp358-1 (2010):

 The Bombay High Court affirmed that the Competition Commission of India (CCI) has the authority to address issues involving both competition law and intellectual property rights (IPR). This view was further supported by the Competition Appellate Tribunal in Kingfisher v. Competition Commission of India (2012), which clarified that Section 3(5) does not restrict IP holders from pursuing infringement claims for copyright, trademark, or patent. The CCI is empowered to handle cases involving IP issues, demonstrating that competition law does not preclude the application of other legal frameworks.

Section 4- Abuse of Dominant Position: Section 4 of the Indian Competition Act, 2002, aims to prevent the abuse of a dominant market position. However, holding a dominant position itself is not illegal. This section recognizes that Intellectual Property Rights (IPRs) can create dominant market positions, but this does not automatically imply market abuse. To constitute abuse, it must be demonstrated that the dominant position is being misused.

Difference between Competition Law and IPR

The Competition (Amendment) Bill, 2020 introduced significant changes:

1. It broadened the application and scope of Section 3(4).

2. It addressed scenarios involving dominant positions within the IPR Safe Harbour.

The Bill sought to widen the definition of anti-competitive agreements by including the term "any other agreement."

Interlink Between IPR and Competition Law

Intellectual Property Rights (IPR) grant exclusive rights to creators and innovators, ensuring protection for trademarks, patents, and trade secrets. Competition Law aims to prevent anti-competitive practices and ensure fair market conditions, allowing consumers to make informed choices.

Conflict:

IPR and competition law can conflict when IP laws excessively protect non-differentiating business aspects, potentially leading to monopolies. This can stifle competition, as it might prevent imitation and decrease market competition.

Resolving Conflicts

1. Coordination: IP and competition authorities should collaborate to balance IP protection with market competitiveness.

2. Education: Organize programs to clarify the relationship between IP and competition law.

3. Regular Review: Monitor and review policies to prevent unfair competition.

4. Compulsory Licenses: Implement policies for compulsory licenses in refusal-to-deal cases.

5. Balanced Protection: Ensure that protections for inventors and creators do not hinder fair competition.

Conclusion

Intellectual Property Rights (IPR) and Competition Law, though often seen as conflicting, both aim to benefit consumers and enhance market conditions. IPR promotes innovation by granting exclusive rights, while Competition Law ensures fair market practices and prevents monopolies. To harmonize these goals, effective coordination, education, and balanced policies are essential to prevent anti-competitive practices and foster a competitive yet innovative market environment.