10th April, 2025 - 7:22 am
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Intellectual Property
Intellectual Property Protection
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Intellectual Property Rights are rights that are embedded in the statute and were created to provide protection to the creation of intellect and bestow the creator with exclusive rights to monetize their creation and generate wealth through it. Intellectual property rights are generally viewed as an avenue to create monopoly in the marketplace. While Competition laws intend to create a space where fair trade practices and healthy competition can foster and thrive. Any contravention to this ideology may amount to anti-competitive practices. The main conflict between these two laws is that Intellectual property rights intend to create monopoly while competition laws seeks to prevent, curb and restrain it. While prima facie these two provisions of law may appear to be at conflict with each other but on careful deliberation and understanding the intricacies and nuances of these provision it can be seen that they are in fact complementary to one another as a balance of both is required for the necessary growth of the economy while fostering creativity, innovation and fair trade practices. The primary aim of Intellectual property rights is to promote innovation and creativity and the commerce aspect of it comes secondary and competition laws strive to ensure a fair marketplace to carry on healthy competition. Both of them intrinsically want to create freedom of trade and ensure consumer welfare while encouraging innovation.
Interface between IPR and Competition Laws:
Intellectual Property Rights are intangible rights that provide protection to tangible products of creativity and human intellect. These rights are a set of statutory rights that are protected under the Indian Copyrights Act, Trademarks Act, Patents Act, Design Act and so on. IPR secures the creator with an exclusive right over their creation and the special right to exploit it commercially. IPR seeks to designate boundaries which create monopolistic or quasi-monopolistic rights over their innovation, thus limiting the emergence of any novel competition in the marketplace. Competition laws on the other hand are a set of rules, regulation and principles that advocate for fair competition in the marketplace and promote efficacious trade practices and restrict participants from engaging in anti-competition trade practices. Though on the surface level these two regimes may appear to be rivals, a deeper look results in the realisation that they are in fact complementary of each other.
Role of TRIPS Agreement:
Trade Related Aspects Of Intellectual Property Rights (TRIPS) is an international agreement that laid down the minimum standards for IP regulations that are ought to be adopted and followed by the member nations of WTO (World Trade Organisation). Though the agreement primarily elaborates on Intellectual property rights but there are some provisions that deal with competition laws as well. The agreement permits the member nations to adopt and implement rules and regulations pertaining to the minimum standards prescribed in the agreement to control the abuse of power and exclusive rights granted under IPR and ensure fair trade practices are adopted and promoted. It is at the discretion of the member nations to decide upon the stringency of the policies and measures to be adopted to ensure freedom of trade and consumer welfare.
Components of Competition Laws and IPR:
- Abuse Of Dominant Power:
IP rights provide exclusivity to the creator to further commercialize it through creating reasonable monopoly and benefitting monetarily from it. However, the exclusivity though puts the creator or the IP holder in a dominant position but the mere being in the dominant position in the marketplace does not violate competition laws. But the abuse of the dominant position is subjective and depends on the particulars of the respective case.
- Excessive Pricing and Competition Laws:
Exclusivity can birth extremist form of monopoly with an outcome of exorbitantly high pricing in the marketplace creating an unjust playground for healthy trade practices. This is the common ground and point of intersection of IP law and Competition laws reaching an ad idem as, though IP laws provide and promote exclusivity, the TRIPS agreement provides provisions to curb the arbitrary use of that exclusivity and competition laws are all about curbing extreme exclusivity and monopolistic trade practices.
- Refusal to Deal/License:
The general principle of trade across the world is that even the monopolists are free to contract with whomever they desire to enter into a contractual obligation with. But the refusal to deal should not be arbitrary and shouldn’t be the abuse of one’s power. It is crucial to note that mere refusal to grant license is not anti-competition however arbitrary refusal is considered a violation of competition laws.
Indian Competition Laws:
The Indian Competition Act was enacted in the year 2002, which replaced the Monopolies & Restrictive Trade Practices Act, 1969. This new enactment was a result of the advent of liberalization of the Indian economy. The Act, is comparatively new and intends to regulate trade practices to ensure fair trade and healthy competition in the marketplace and protecting the welfare of the consumers. There are provisions provided in the Act which address the complex and nuanced relationship between competition laws and IPR. Section 3(5) of the Act speaks of reasonable conditions imposed by the IP holders while exercising their rights would not amount to anti-competition practices. However, any unreasonable conditions would fall under the ambit of anti-competition practices. Specific provisions addressing the issue of jurisdiction needs to be clarified on, as lack of judicial precedents in this area leads to a confusion. A standard needs to be set to avoid such confusion. An overview of the Act, gives rise to a realization that competition law and even IPR for that matter are areas of laws that are at a nascent and developing stage respectively but with the rapid growth of the economy, the necessity of extensive statutory provisions to tackle such judicial issues with ease has only increased and the lack of it needs to be addressed and corrected at the earliest.
The growing importance of the nexus between IPR and Competition laws are indisputable and will only grow from hereon. IPR and Competition laws are these two regimes that support and complement each other while keeping the other in check. While IPR promotes innovation and creativity and aids the commerce aspect of exclusive rights of the creators, competition law on the other hand regulates the trade practices in the economy ensuring the implementation of fair trade practices and healthy competition among the participants. Neither of the two regimes should undermine the prominence of the other. Both have their own significant role on the development and growth of the economy. The concept of competition laws is quite novel to the Indian Courts and therefore they lack the required experience to handle such issues with ease. Further the lack of extensive and clear statutory provisions appears to be a lacunae that needs the attention of the legislation. Lastly, the Courts should provide a clear demarcation between the two regimes and ensure consumer welfare, promotion of innovation and economic growth.
Author: Suprana Chakraborty, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.