Business Law

The Interplay of Competition Law with IPR

By Aaron S John

Introduction

There has always been a discussion about Competition Law concerning Trademark and Copyright. Few believe that these laws go hand-in-hand while the others believe that the former promotes a false view of economics. In 1991 India took a major leap and liberalized its economy. This was done by the then Prime Minister P. V. Narasimha Rao. This was a major step towards development, this meant that companies from other countries could come and invest in India. The monopoly that few companies had also diminished gradually. India also enacted the Competition Act, 2002. But India already enacted other important laws a few years after its independence. These acts were, the Copyright Act in the year 1957, trademark laws under the Trade and Merchandise Marks Act of 1958, patents under the Patents Act of 1970, and designs under the Designs Act of 1911. These laws are very important for ease of trade. These laws also play an important role in the amount of trade a country can conduct. Ease of Competition attracts outside businesses as they can reproduce certain goods and sell them.

To understand the whole debate regarding the competition law and the intellectual property rights law, we first need to know what these are.

What is Competition Law?

Competition Law, like the name suggests, is created to control and regulate the competition and monopolies. This act replaced the then-existing MRTP Act. The MRTP Act (Monopolies and Restrictive Trade Practices Act) of 1969 was designed to prevent the concentration of economic power, to control  the existing monopolies along with complete ban on international trade and prohibit monopolistic competition. The Competition Act, 2002 was focused on more structure and laid down in a uncomplicated manner, this Act was more flexible and gels well with the other existing laws.

There are few important developments that the Competition Act has introduced.

  1. Firstly, under section 3 of this Act, it is stated that any person or enterprise cannot enter into agreements concerning production, supply, storage, and distribution of goods that can cause an “appreciable adverse impact” on the Indian market. These sorts of the agreement would be considered void.
  2. Secondly, under Section 4 of the Act, it is stated that no enterprise can abuse its dominant position (this is a position enjoyed by the enterprise that is dominant in the market, this also enables the enterprise to lay its terms down relating to trade).
  3. This Act also regulates the “combinations” that an enterprise achieves in a determined duration. Combinations refer to a term, which studies the acquisition, mergers, or amalgamations. Any enterprise that exceeds the pre-determined limit of assets or turnover will cause an appreciable adverse impact on competition. This is closely examined by the Competition Commission of India.
  4. Lastly, under this Act, the Competition Commission of India is assigned with the job of eliminating the restricted practices and has the authority to enter into a contract and sue an enterprise.

What is Intellectual Property Rights Law?

Intellectual property (IP) is related to the creations of the mind of a person, for example – an invention, artwork, designs, symbols, names, and images used to conduct trade. This law is open to fundamental changes to meet the international commitment of the Indian Government under the TRIPS/WTO Agreement. Under this Act, the following are covered-

  • Copy-right
  • Trade Marks
  • Patents
  • Industrial Design
  • Geographical Indication

Copyright

Copyright protection is available for any type of dramatic, musical, music, or artistic work. The Copyright Act of 1957 has provided the creators with this law to protect their work. The creative work of an artist is already a work of copyright but it is advised to get it registered.

Trade Mark

This law was introduced under the Trade and Merchandise Marks Act in the year 1958. A unique symbol or a logo can be registered under the Act. In a case of infringement, remedies in the form of injunctions or file a suit for infringement are available.

Patents

This was first introduced under the Patents Act in the year 1970. In India, product patent protection is recognized for a term of 14 years. There is one exception, for food, chemicals, and pharmaceuticals, patents are only recognized for 7 years.

Industrial Design

The Designs Act was created to protect certain designs, this included patterns, certain color pattern, ornaments, and shapes

Geographical Indication

The Geographical Indication of Goods (Registration and Protection) Act, 1999, was enacted to register and protect certain goods that were exclusive to a particular area. These goods can either be agricultural, natural, or manufacture. These products are different from other products due to their quality, reputation, or any other factor. This also helps the product to stand out and in turn, makes it easier for the customer for differentiating between fake and original.

The relation between Intellectual Property Rights and Competition Law

Often it is assumed that there is no relation between the Intellectual Property Rights and Competition Law, but in reality, they both complement each other. When a creator or an inventor is assured that his work is protected and he holds exclusive use over it for the particular period, it leads to trust and motivation. This will also motivate the creator as he will remain one of a kind.

Competition between Intellectual Property Rights and Competition Law

For a country to work smoothly and efficiently both the laws need to work hand in hand. The Competition law modulates the practices that have the anti-competitive clause in it. The IPR mentions the exclusiveness of the inventor and his monopoly over it. This feature of the IPR law is responsible for creating interferences between the 2 laws. Accordingly, these both need to work in a coordinated manner for ease of trade and manufacturing.

The IPR functions under the concept of reward theory. In this theory, the inventor has disclosed to the society at large which further intensifies the bone of contention. On the other hand, Competition law was introduced to curb the misuse of monopoly. The Competition Act, 2002 does recognize the functions of IPR and while framing provisions keeps in mind about the same. However, the fact is that both the Acts promote innovation and customer welfare.

Different countries on IPR and Competition Law

In India, the Competition law was introduced to improve the complications which were created by MRTP Act. This was done by including and following the provisions mentioned in the TRIPS Agreement (The Agreement on Trade-Related Aspects of Intellectual Property Right).

The European Union has mentioned the conflict under Article 81 of the EC Treaty. It recognizes the shift from the liberalistic approach to the intervening approach. Article 82 of the EC Treaty restrains the abuse of monopoly which was created via the IPR.

The US came up with a solution called the “Safety Zone”. This was introduced by the Department of Justice. In this zone, there is no restriction under the IP Licensing agreement. The one exception being, in case an appreciable adverse in the market is created via patent pooling which will result in competitive harm.

Landmark Case laws

  • Entertainment Network (India) Limited v. Super Cassette Industries Ltd, in this case, the Hon’ble Supreme Court reiterated the issue regarding both the laws. It is further observed through the monopoly is complete with the copyright holder it is not absolute. It stated that if this creates any type of disturbance in the functioning of the market then this can lead to the termination of the monopoly.
  • Valle Peruman and others Versus Godfrey Phillips India Limited,  under this case the court held that if a trademark owner misuses his trademark by manipulating or distorting it then it will amount to unfair trade practice. Further, it also stated that the trademark owner only has the right to use his trademark reasonably.
  • Entertainment Network (India) Limited vs. Super Cassette Industries Ltd, under this case, the Hon’ble Supreme Court observed that royalty charged through a license is not an absolute right. In a condition of high price for the patent, the clause of royalties and the patent will expire as this is directly contradicting the provisions of the Competition Law.

Conclusion

To conclude, it can be agreed that both laws play a major role. Competition law can be understood as a regulating body that is responsible for the provision of production, supply, and distribution and the IPR gives certain exclusive rights to the creator for a determined period. Oftentimes both these laws are considered to be contradicting each other, but it is not true. Both the laws are strategically designed to complement each other. These laws are work uniquely, they work in a systematic way of checks and balances. Almost all the countries have made their Competition Laws and IPR laws. Overall, both laws aim to achieve the same goal. Both the laws aim to conduct the trade efficiently and easily.

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