This article has been written by Aarchie, pursuing the Certificate Course in Competition Law from LawSikho.

Introduction

The relationship between Competition Law and Intellectual Property Rights (IPR) is one of the most discussed topics in recent years. Competition law is widely regarded as the most effective tool for combating anti-competitive agreements, prohibiting abuse of dominant position, regulating mergers and acquisitions, and encouraging efficient resource allocation, all of which benefit consumers by providing them with more choices and better-quality products at a reasonable price. Intellectual property rights advocates for establishing a balance between the owner’s exclusive right and the public good. It assures that the owner of the intangible property receives an exclusive right to financially exploit his creative invention, granting him monopoly rights. IPR is a collection of rights that grants the owner the right to prevent others from using the product for a set length of time.

From the foregoing, it is clear that a battle between IPR and Competition Law will erupt. IPR tries to grant monopoly power, which Competition policy opposes since, on the one hand, it is vital to foster innovation while, on the other hand, sufficient market competitiveness must be maintained. However, there is no conflict between the two laws; rather, they are complementary in nature in some areas. IPR provides economic actors with incentives for technological innovation, resulting in the creation of additional products and the dynamic growth of the product, which is one of the goals of competition policy.

Free market and regulated market operations

Products are created in a free market economy with little or no government influence. The dynamics influencing supply and demand, especially the manufacturers’ monopolistic conduct, have a significant impact on products and their prices. 

In the scenario presented, the producers decide on the number of items to be produced, the amount of money to be invested in innovation and the creation of new products, as well as the price structure. Because government control oversupply and pricing is minimal in a free market economy, producers have a free hand in controlling the supply and demand chain.

A regulated market is one in which the state regulates buying and selling through various market regulating authorities. Unlike free-market operations, checks and balances enacted by the government through regulation keep track of the numerous forces at work in the market, making it more difficult to gain a monopoly on the supply and manufacture of life’s necessities.

As a result, unscrupulous activities by manufacturers and suppliers are limited, but not eliminated. Prices are also kept in mind to ensure that both suppliers and consumers benefit. On the other hand, excessive regulation is harmful to the economy because it causes stagnation and reduces operational flexibility, which leads to less innovation and customers might not get what they actually want.

Objectives of Competition law & IPR

The law on intellectual property aims to establish a balance between the owner’s exclusive right and the public good. “In the field of intellectual property, the law seeks to achieve a balance between conflicting interests in order to find a justifiable compromise,” Bainbridge summarises. 

Intellectual Property Rights are a set of legal rights that allow stakeholders in intellectual property to financially utilize it. Those rights are obtained by statutory recognition rather than delegation.  

The State confers the rights for a set period of time to avoid, first, a perpetual monopoly of the rights and, second, to maintain balance and harmony between the conflicting interests of stakeholders and the public good.

The goal of competition law is to avoid market abuses, promote and sustain market competition, and ensure that customers acquire the right items at a reasonable price and of higher quality. 

Competition law vs IPR: a comparative analysis

The link between competition law and intellectual property rights may appear to be fundamentally antagonistic, but it is not; rather, it encourages dynamic competition by limiting static competition. IP rights provide their owners a leg up on the competition by allowing them to commercialize their goods for a set period of time. It is self-evident that during this time, the IP rights holder will always have monopoly power and a dominant position. Monopolistic action has never been prohibited under competition law, but abusing such a position is a breach of antitrust law.

Changes in the law over time as a result of interactions in various cases have resulted in these two laws working in tandem rather than in opposition. It is critical to examine the laws of different nations and how they have designed their legislation to address these issues in order to comprehend the difficulty in implementing competition law and IPR. 

Changes in the law over time as a result of interactions in various cases have resulted in these two laws working in tandem rather than in opposition. It is critical to examine the laws of different nations and how they have designed their legislation to address these issues in order to comprehend the difficulty in implementing competition law and IPR.

Competition Act, 2002 in relation to competition and IPR policy

Section 3 of the Competition Act, 2002 states: “No enterprise or association of enterprises, person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect.”

IPR policies are given a blanket exception in Section 3(5) of the Act, demonstrating how competition law does not conflict with IPR policy. However, when Section 4 of the same Act is broken, it deals with abuse of dominant position that interferes with IPR rights. This demonstrates how competition law complements rather than contradicts IPR.

In terms of competition and intellectual property rights regulation, India is still in the early stages. The case of Aamir Khan Productions vs. The Director-General, 2010 sparked a slew of IPR and competition cases. The Bombay High Court ruled that the CCI has jurisdiction over instances involving IPR and competition issues. 

It was also decided in Kingfisher v. Competition Commission of India, that the CCI had authority and power to deal with cases brought before the Copyright Board. These major instances paved the way for this debate over competition and intellectual property regulations. However, India is still in its infancy and requires a much more comprehensive approach to this issue. 

The courts have now concluded that the consumer’s interest is of paramount importance and cannot be surrendered at the expense of the right holder. India can progress to a significant extent on this subject if it can embrace methods and refer to US and EU instances and legislation.

Conclusion

The difference between Intellectual Property Rights and Competition Law is that IPR is a right, but Competition Law is legislation that functions as an artificial hand over the market. IPR is something that the government gives to an inventor or a reward that the government gives to a product developer to allow him to commercialize his innovation for a limited time. 

These two laws appear to be at odds, yet they are not, as evidenced by the preceding study, which shows that they complement each other by stepping in when one is violated.

Competition law aims to give consumers more options and to strike a balance between manufacturers’ and consumers’ rights by ensuring profitability and a high-quality product at a fair price. IPR also aims to compensate the producer for being the exclusive creator of the product, which should be for the benefit of the general public. IPR’s strong position does not in and of itself violate competition policies, but its abuse does. In a nutshell, each of these laws has the same goal, but the means by which they achieve it are different.

Despite the foregoing, it cannot be denied that framing the interaction between IP and competition in terms of a clash between the exclusionary features of one and the principle of freedom of the other, or in terms of the reassuring prospect of substantial converging goals for each, is overly simplistic. Neither extreme is totally accurate. Each has a distinct aim that cannot be completely aligned with the others. Each has a distinct aim that cannot be completely aligned with the others. If one is attributed the direct function of stimulating innovation the other is engaged in the direct role of promoting competition and hence the analysis of these intersections of IP and competition rules would be erroneous.

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