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This article has been written by Avni Sharma, a Second Year intern from National Law University Odisha. This article deals with the relationship between IPRs and Competition Law.

Table of Contents

Introduction

The interplay between Intellectual Property rights (IPR) and Competition Law, in fact, creates one of the most necessary aspects for preserving the competitive dynamic in the market. You may be wondering, what really makes this dynamic so important. The rights protected under IPR preserve the product from getting stolen by any rival and creating copies for sale in the market. The creator of a product or any idea, for that matter, must have his or her product protected at all costs. This protection will be provided by the provisions of Intellectual Property law and when it comes to the market, Competition laws will ensure that there is absolute fair competition persisting in the market. To begin with, let us have a look at the definitions of both the laws and what it includes.

Definitions

Competition Law can be defined as the set of laws protecting a fair state of market practices. The laws ensure that both the producers and the consumers are provided with a market with ethical practices and which garners real competition among the participants of the market.

Intellectual Property Law protects creations of the mind and ensures that the creators earn benefits of their own creation. The protection tools are generally, trademarks, patents, copyrights, etc.

Intellectual property rights and the single market

In 2011, the European Commission set up a committee for carrying out single market operation for Intellectual Property. This committee was created to make a single market for Intellectual Property in Europe. Initially, the operations used to be such that, creators had to apply for claiming IPRs separately for separate markets. A single market will enable a person to avail of Intellectual Property Rights in the entire market of Europe. The reasons for doing that was:

  • Fragmented Rights: The rights could now be claimed over the entire market of Europe instead of separate systems.
  • Parasitic Copies: Since there were separate laws for separate markets, there was a good chance that the creator’s ideas could easily be copied in some other market, where the rights could not be availed.

By simple logic, one may feel that there is a visible conflict between IPR and Competition Law. Let us address the question in the section below.

Is there an inevitable tension between intellectual property rights and competition law?

The inherent conflict between IPR and Competition Laws is the fact that the IPR seeks to provide protection and monopoly to the creator of a product whereas, Competition Laws seek to provide fair and free competition by eliminating any cartels or monopolies in the market. The IPRs are not abusive of dominant position, but ironically also does form a legitimate upper position in the market.

The inherent tension between the rights may be eliminated if they serve in inherent purpose in the market. The Laws certainly have a common objective of creating a fair market place, but also entail different approaches and perspectives to the same. They do have an inevitable tension between them, but as far the Laws mark their own importance in the market and the lawmakers must make such laws that are not in contravention of each other.

Licenses of Intellectual Property Rights: Article 101 TFEU

Licenses are permission granted from someone to someone in order to use the Intellectual Property. Intellectual property, being intangible cannot ascertain possession physically. But, the possession can be ascertained by looking at the holder of the license. Licenses provide a right to the person to use the property. In some cases, the owner also transfers absolute licenses wherein, even the owner is not allowed to use the property, himself or herself.

Article 101 of the Treaty of the Functioning of the European Union prohibits the system of Cartel, which means,

  1. There must not be any practice of fixing prices in the market.
  2. There must be no sharing markets or fixing areas of distribution of products.
  3. Ascertainment of perfectly competitive prices and competitive market. 
  4. There must be no supplementary obligations form any competitor in the market.

There seems to be a conflict, prima facie, but let us have a deeper look at the aspects of licenses and understand the functioning of the system.

Typical terms in-licenses of intellectual property rights

The definitions of these terms will help us understand the nuances of in-licenses and drawing useful deductions related to the said relationship.

Territorial exclusivity

Territorial exclusivity is an agreement wherein under the certified license, the licensee ensures that the use of the license will happen only in a particular specified territory, and use its best efforts to not distribute or deliver in any other geographical territory. This agreement is not violative of the Cartel Laws, as it does not restrict any other person to sell in some other territory. It just specifies the distribution in some areas in order to use the intellectual property.

Royalties

Royalties are payments that are made to the owners who lend their property for use for a specific purpose. Royalties may be paid for a specific purpose or generally. Royalties may be of several types but mainly they can be characterized as below:

  • Art and Online Royalties: Art and online royalties may be used for the use of pictures available online. It is known as ‘Stock Photography’. Such a royalty may be given as they are used in various other media.
  • Music Royalties: Music royalties, as the name suggests, are paid in order to use the music produced by copyrighted artists. This is also known as ‘Performance Royalty’.
  • Books Royalties: The publisher of any book has to pay a royalty to the author, in order to distribute and sell the work of the author. This is known as ‘Book Royalty’.
  • Franchise Right Royalties: The businesses when they acquire a new franchise, they are required to pay the franchise owner an amount which was pre-decided according to the terms of the contract.
  • Mineral Rights Royalties: The owner of the property, which has minerals stored in the land needs to be paid a royalty for the use of those minerals.

Duration

The duration of the Licenses’ validity is decided and agreed upon by the parties at the time of formation of the Contract. The duration also is considered as a major factor in determining royalty of a particular property. This also determines the time the intellectual property may be used and distributed in a legal way.

Field of use restrictions

Field of Use Restriction (FOUR) is a limitation on the use of the intellectual property. This is majorly used in technological properties, where given technologies can have multiple uses. The limitation is with regards to the use of the type of property.

For instance, there is a software which may be used as an evaluating software and as a ranking software as well. FOUR may be applied by the creator on the use of just the evaluating software. In this way, the ranking software will not be used by that individual and the creator still owns the absolute rights over the ranking software.

It is also the opposite of Endorsement wherein, the license is applied to any kind of application and it can also be transferred if the licensee wishes to.

Best endeavors and non-competition clauses

Best Endeavor Clause states that the person licensing an IP must take all steps that a prudent and reasonable person would do to protect the use of that IP. In case of a dispute, the owner shall claim liabilities and may also take away the rights if the appropriate court directs to. In Jet2.com v Blackpool Airports (2012), mentions about Best Endeavor Clause.

The Non-Competition Clause is a clause where the parties agree not to enter into a similar trade. In this case, this clause shall mean the licensee is not allowed to prepare or produce a similar property without the consent of the owner and creator. The non-competition clause was extended to IP agreements in the case of Crye Precision v. Duro Textiles, (2017) in the US.

No-challenge clauses

The No-challenge clause refers to an agreement not to take matters up for dispute in some areas which are agreed in the contract. This is with regard to the extent of the use of the property.  The parties agree that up to a certain amount of usage, the parties will not approach the court. But, in case that agreement is breached, the parties are free to file an application in any appropriate court.

Improvements tying and bundling

Tying agreements refer to the agreement of buying one thing along with buying some products. Similarly, Bundling refers to selling products in a pack. In that case, a buyer wants to buy a single product, he or she has to also buy the entire pack or bundle of goods. This can also be against one’s will.

In competition law, tying and bundling agreements are not allowed. They are considered as against the fair market competition but when it comes to IPR, there have been speculations regarding the validity of a Tied or Bundled Agreement.

In the case of United States v Microsoft, the application of the Per Se Rule was rejected. The Per Se rule is a rule which states that if a certain improvement is directly visible as illegal, then it must be considered illegal per se. The rule was not applied to IPR, in the above case. So, it may be deduced that this was taken as an exception from the general Competition Laws.

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Prices, terms, and conditions

Terms and conditions in an IPR arrangement differ from contract to contract and jurisdiction to jurisdiction. The terms and conditions are set according to the contract, and according to the demand of the parties. Similarly, the prices are supported by the negotiations that happen between the parties.

The Application of Article 101(1) to licenses of intellectual property rights

Licenses of the IPR must follow the guidelines under Article 101(1), as mentioned above. They must not indulge in any Cartel related activities. The licenses related to the cartel activities shall be declared invalid under Competition laws, in this case, Article 101(1).

Patent licenses: Territorial Exclusivity

Patents licenses are those which a business acquires in order to use a certain secured product or service without infringing and secured rights. Patent licenses largely depend on the degree of exclusivity they require to use that product or service. The types of patents are dependent on the degree of exclusivity.

  • Exclusive Licence: These grant access to use the property in whichever way, required by the purpose.
  • Non – exclusive License: These grant access for the usage of rights only to a certain extent.
  • Partly exclusive License: These grant access to use the license but the terms and conditions as to the exclusivity as specified in the license itself.

Territorial exclusivity is a facet of exclusive licenses where the property can be used only in a specific area, geographically. This does not violate the competition laws because the territorial exclusivity is with regard to the use of intellectual property and not the distribution of it.

Case law of the EU Courts

Groupe Canal + v European Commission

Canal+ was a broadcasting company in France, which had exclusive rights over the broadcasting of content from American Studios in France (Exclusive territory). The European Commission (EC) opened an investigation relating to the violation of Article 101(1) TFEU. Canal+ argued that the broadcasting did not raise any competition concerns because instead of the violation, there was a promotion of cultural diversity through these agreements and adequate remuneration was being provided. The EC made a two-fold analysis of the plea. 

  1. The court analyzed its own jurisdiction over the matter and found that it was restricted to only adjudicating over the fact whether the license agreement was against the working of Article 101(1). The matters relating to specific territorial exclusivity were to be decided by the commission only.
  2. The agreement did raise competition concerns in the market and was violative of TFEU 101(1) because this agreement was dividing the market. TFEU aims at creating a single competitive market.

It was held that the exclusivity agreements are violative of the objectives set by TFEU. However,  the courts have said that exclusivity agreements can be concluded for a fixed period of time.

The Commission’s decisional practice

In its analysis, the Court examines the possible competition concerns in the light of “both the object and the economic and judicial context to which these clauses apply”. The commission’s decision practices are focused on applicability and jurisdiction.

Patent licenses: non-territorial restrictions

Patent licenses also contain non-territorial restrictions which include:

  1. Know-how Licenses;
  2. Copyright Licences;
  3. Software Licenses;
  4. Trademark Licenses; 
  5. Licenses of plant breeders’ rights;
  6. Subcontracting agreements;

Let us understand each type of license.

Know-how licenses

Know-how licenses are rights over a set of knowledge that one possesses. Any person who has a certain talent or know-how of something, that person can reserve the right to that set of knowledge.

Copyright licenses

A copyright license is an extended privilege, which a person acquires more than the general public over any reserved products. The person may acquire the right to use, distribute, redistribute or distribute any modifications of this product or service.

Software licenses

Software license is known as the freedom to use the software in both source code and object code forms unless that software was developed by the Government, in which case it cannot be copyrighted.

Trademark licenses

Trademark licensing is a kind of merchandising agreement. Merchandising agreements are those where the parties decide on the role of the parties according to the owners’ agreement. Trademark licensing refers to a process by which a registered trademark owner acquires powers to distribute the rights.

Licenses of plant breeders’ right

Plant Breeder Right or the Plant Variety Right is a right which secures the rights over a newfound variety of a plant. PVR helps the discoverer to retain the rights to the discovery and later claim it when researchers want to acquire the freedom to research on that particular species.

Subcontracting agreements

Subcontracting agreements are arrangements where the person who has been given a contract (contractee) can hire different contractees. That is known as subcontracting agreements.

Application of Article 101(3) TFEU to licenses of intellectual property rights

Article 101(3) provides:

“The provisions of paragraph 1 may, however, be declared inapplicable in the case of:

  1. Any agreement or category of agreements between undertakings,
  2. Any decision or category of decisions by associations of undertakings,
  3. Any concerted practice or category of concerted practices,

which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:

(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.”

The application of Article 101(3) is pro-competitive. The generalized approach promotes the dynamic nature of a market and promotes competition in the market.

Technology transfer agreements: Regulation 316/2014

Technology transfer agreements (TTA) are those which preserve technology rights and increase economic efficiency by reducing duplication. We are examining this because technological transfer agreements are essentially, Intellectual Property Agreements. They show the applicability The regulation is with regards to the Technology Transfer Agreements and the applicability of the TFEU. The articles will be dealt with in a systematic manner in the following section.

Article 1: Definitions

The article defines the various definitions, including the definition of an ‘agreement’, ‘technology rights’, ‘transfer agreements’, ‘reciprocal agreements’ etc. The basic words that have been used frequently and might have a tendency of being misinterpreted are added in this particular article.

Article 2: Block Exemption

There is a block exemption of the applicability of Article 101(1) TFEU on the technology transfer agreements. According to Article 2(3) of the regulation, the exemption is also put on the purchase of the licenses and distribution and the know-how of the licenses.

Many technology transfer agreements do not infringe Article 101(1)

The above exemption is provided because most of the technology transfer agreements do not infringe Article 101(1). The agreements, in fact, create a competitive regime in the market, as the technology cannot be duplicated and the participants will work towards creating another or better technology in order to be competitive in the market. So, in a way, it promotes competition in the market.

If it is not forbidden, it is permitted

According to the regulation, whatever is not forbidden under the act, will be permitted. The transfer which has not been mentioned to be expressly forbidden will be allowed under the act because they have attempted at creating regulations against all illegal arrangements in the market.

The exempted agreement must be bilateral

The agreements which are exempted from the applicability of the article are required to bilateral. Bilateral agreements refer to those agreements which are agreed by both the foreign parties to the agreement.

Duration

The exemption is valid only until the agreement is licensed by the contracting parties. The rights to the property must not be expired. As long as the license is valid, the exemption will also be considered valid.

Article 3: The Market Share Cap

The market share cap is a restriction under competing undertakings, the exception will be provided up to 20% only. Moreover, where the undertakings are not under competing undertakings, the exception will be provided up to 30% only.

Horizontal agreements

Horizontal agreements are arrangements between competitors in the market in order to maintain healthy relations among competitors. These agreements generally contain information related to prices and the markets. These can be negative for the market as they hamper the actual competition. Therefore, they are prohibited under Competition Law. Horizontal agreements are applicable in all the markets. Let us look at the technology markets and product market agreements.

Technology markets

The technology market contains the intellectual property of the creators and designers. In technology markets, horizontal agreements are allowed only till 20 percent among competitors and 30 percent with undertakings that are not competitors. This restriction is applied by Article 3 of the technology transfer agreement, discussed above.

Product markets

Product markets may also have intellectual property, but they are different from the technology market because it contains technically transferable property. The risk from the technology market is way higher than the product markets.

Vertical agreements

The agreements which happen between two stages of the production. For example, a retailer may have an agreement with a wholesaler in order to fix prices and markets in the next stage of distribution. These are also prohibited under Competition Law because Price Fixing is a facet of the Cartel system, which is prohibited, strictly.

Technology markets

Vertical agreements are prohibited under the technological market. The calculation is exactly the same as the horizontal agreements, except the difference of level in the distribution chain.

Product markets

Vertical agreements are also prohibited in the product markets because of the products which may be sold at a price pre-fixed, which may be a hindrance in creating a perfectly competitive market.

Examples

For example, there has been a transfer in a property which is software. The property has been transferred down in the chain of distribution. There is one more transfer which has been done among the market. The transfers also have agreements related to price-fixing and market distribution. The first situation is a vertical agreement and the second situation is a horizontal agreement. Both the agreements are invalid under competition law because they have consented to things which are prohibited under cartel laws 

Article 4: Hard-core restrictions

Hard-core restriction, according to Article 4 is applicable to competing and non-competing undertakings in a market. Let us have a look at the provisions, step by step.

Agreements between competing undertakings: horizontal agreements

The exception from article 2 will not apply to the undertakings which are under agreements which have any of the following:

Prices

First provision states that there must not be any restriction on the ability to ascertain prices by any agreement. Such agreements will lead to the removal of the exception provided in Article 2.

Output

There must be no restrictions as to the output except on the contract only on one of the licenses where the license has been applied in a reciprocal agreement. The output must not be restricted except for the application of these rules.

The allocation of markets and customers

There is an obligation on the licensee to protect the property and not share or transfer the property to anybody. The allocation of market share and customers is prohibited except certain circumstances such as those mentioned in Article 3.

Exploitation by the licensee

Exploitation of the property by the licensee will be prosecuted by the licensor which may be fined with heavy compliance fines. The licensee must not transfer or distribute property beyond the agreement. 

Agreements between non-competing agreements: vertical agreements

Article 3 mentions that agreements between the non-competing agreements must non-competing undertaking must not be involved in Vertical agreements because they are against the competition laws of TFEU. There are certain restrictions imposed by the present statute, which are listed below.

Prices

Prices must not be fixed under vertical agreements as they are violative of the TFEU.

Territories and customer groups

Geographical territories must not be marked between businesses under vertical agreements. This creates customer groups which leads to violation of the statute. 

Restrictions in selective distribution systems

These practices mentioned above lead to selective distribution systems which is strictly prohibited under the TFEU or competition laws.

Article 5: Excluded Restrictions

Article 5 mentions that the exception under Article 2 shall not be given to:

  1. The innovations made to the property and the changes made by the licensee.
  2. Any property held in a union, in case of an exclusive license.
  3. Non-competing parties as indirect obligation unless such restriction is indispensable to understand the know-how to third parties.

Article 6: Withdrawal in Individual Cases

Article 6(1): Withdrawal by the Commission in individual cases

The Commission may withdraw the benefit of this Regulation, pursuant to Article 29(1) of Regulation (EC) No 1/2003. The benefits of these regulations will be severed if,

  1. Access to third parties is denied
  2. Access to potential licensees is restricted.

Article 6(2): Withdrawal by a Non-Compatible Agreement of a Member State

The exceptions may also be excluded when the agreement is incompatible with Article 101(3) of the Treaty in the territory of a Member State. State may also withdraw benefits by the application of Article 29(2) of Regulation (EC) No 1/2003.

Article 7: Non-Application of the Regulation

The application of this regulation will not be valid if more than 50 per cent of the relevant market contains technology transfer agreements on that market. This is in pursuance of Article 1a of Regulation (EC) No 19/65/EEC.

Article 8: Application of the market share thresholds

Application of Article 3 will happen in the following way:

  1. Market share shall be calculated on sales value.
  2. Market share will also be calculated in relation to the preceding calendar year.
  3. The market share held by the undertakings referred to in point (e) of the second subparagraph of Article 1(2) shall be apportioned equally to each undertaking having the rights or the powers listed in point (a) of the second subparagraph of Article 1(2).
  4. Calculations will be made on the basis of the present technological resources present in the market.
  5. If the market share referred to in Article 3(1) or (2) is initially not more than 20 % or 30 % respectively, but subsequently rises above those levels, the exemption provided for in Article 2 shall continue to apply for a period of two consecutive calendar years following the year in which the 20 % threshold or 30 % threshold was first exceeded.

Articles 9 to 11: Other Block Exemptions, Transitional Period and Period of Validity

  • Article 9: The exemption will not apply to those agreements that come under the scope of Regulation (EU) No 1217/2010.
  • Article 10: The prohibition laid down in Article 101(1) of the Treaty shall not apply from 1 May 2014 until 30 April 2015 to agreements already in force on 30 April 2014.
  • Article 11: This Regulation shall enter into force on 1 May 2014. It shall expire on 30 April 2026.

Application of Article 101 to other agreements relating to intellectual property rights

Application of Article 101 falls directly on other agreements relating to intellectual property rights. TFEU prohibits certain agreements under Intellectual Property Law but, there are certain exceptions granted in order to make the two laws compatible with each other.

Technology pools

Technology pool is a collection of resources that are kept ready for general use. When clients approach these pools for resources, the resources are provided to them. However, instead of leasing them or selling them, these resources are returned after use.

Effect of technology pools

Technology pools have both pro-competitive effects as well as anti-competitive effects. The effects are listed down below:

Pro-competitive effects

The competition is boosted in the market because the resources are readily available for the use of all the competitors in the market. This provides equal opportunity to all the competitors which will induce fair competition in any single market.

Anti-competitive effects

The competition is also hampered because it provides exceptions which leave a way to create a divide in the markets. It may also lead to the creation of separate markets and restriction on the dynamic growth of the market.

Regulation 316/2014

This regulation, as discussed above, provides certain exceptions related to technology transfer agreements. These exceptions are provided to bring them in compliance with Intellectual Property laws and Competition law.

Assessment of the formation and operation of technology pools

  • Reliability and risk analysis:

The reliability and risks are checked and the market is checked whether it is fit to acquire the technology pools or not.

  • Economic analyses:

The market is also assessed through its market economic analysis so that the formation of operation of technology pools is checked and then formed.

Open participation

The technology pools are open for participation from any member of the relevant market. They do not have restrictions as to participation from any member, which aids in creating a market that is open to a fair and competitive market.

Selection and nature of the pooled technologies

Pooled technologies are selective in nature as they are clubbed together because of their nature and technology. Selected technologies are clubbed for greater access to all the competitors of the market.

Selection and function of independent experts

The selection and function of experts are done after due deliberation and the experts help in the improvements of the technology. 

Exchange of sensitive information

Technology pools may lead to an exchange of sensitive information. It is the duty of the resource taker to keep the sensitive information safe and not to take undue advantage of the resource.

A safe harbor

A safe harbor is a law that says that certain conduct will not be deemed to be a violation of the law. Technology pools also keep a certain set of conducts as a safe harbor, which will help in the sustainability of the technology pools and the safety of resource takers. There are also several safeguards that also save sensitive information.

Assessment of individual restraints in agreements between the pool and its licensees

The way in which a technology pool is formed, organized and operated can reduce the risk of it having the object or effect of restricting competition and provide assurances to the effect that the arrangement is pro-competitive. In assessing the possible competitive risks and efficiencies, the Commission will, inter alia, take into account the transparency of the pool creation process; the selection and nature of the pooled technologies, including the extent to which independent experts are involved in the creation and operation of the pool and whether safeguards against exchange of sensitive information and independent dispute resolution mechanisms have been put in place.

Copyright pools

Copyright pools is an arrangement where multiple copyrights are available for use of all the members. It is an example of IPR based collective rights organizations. This is similar to technology pools and helps the IPR community to have access to a greater number of copyrights.

Settlements of litigation

Since the disputes are very costly and very consuming the parties prefer settlements instead of litigation. Let us have a look at the settlement agreements.

Settlement agreements

In order to settle a case that is related to a patent being infringed or not, the parties agree to settle. However, these agreements are considered against Article 101 of the TFEU. If the parties are actual potential competitors in the market, there are high chances of an agreement t d=ivide markets and that will lead to violation of Competition Laws.

‘Pay for delay’ agreements

These agreements are generally used in medical patent infringement settlements. The party that is sued, pays the party suing for the delay in infringements.

Cross-licensing

These are agreements where the companies share their patents with each other. These agreements are not violative of competition law because this leads to the formation of better products for the market.

No-challenge clauses

No-challenge clauses are those which prevent a licensee to challenge the validity of a technology, benefit from the safe harbor under neither the 2004 Technology Transfer Block Exemption Regulation (TTBER) nor the revised TTBER. They are to be assessed individually as they can be a significant barrier to the removal of invalid IPR from the market.

Trademark settlements

Trademark settlements are agreements between two or more parties to avoid litigation and smoothing the process of avoiding the conflict.

Article 102 and Intellectual Property Rights

Article 102 prohibits the abuse of a dominant position in the internal market. This provision was contained in Article 82 of the EC Treaty. Intellectual property rights may have a conflict in this area because, through the advent of Intellectual Property Rights, the rights provide the property holder with a dominant position. That dominant position may be misused in many ways. These may be understood better with cases provided below.

Compulsory licenses

The Renault and Volvo Judgment

In this case, the geographical markets were ascertained, the dominant position was assessed. Finally, certain ancillary restrictions were posed:

  1.  Licenses related to RIV and Renault needed to be contractually obliged.
  2. Renault or Volvo were requested to comply with the treatment of ancillary restrictions in order to smoothen disruptions in traditional lines of supply.
  3. The parties had agreed on certain non-compete provisions, whereby Renault undertakes for a period of five years from completion not to compete with the divested business and not to acquire certain key RVI employees for a period of one and half year or 18 months.

The Magill Case

In this case, the broadcasting rights and exclusive business zone demarcation were challenged. Under the United Kingdom and Irish copyright law, the BBC, ITV, and RTE held the television broadcasting rights. When Magill decided to acquire the licenses and provide a guide to television programs, he was refused the grant of the license. The case was taken to the European Commission and was also appealed several times. Ultimately, it was held that the holding back of licenses and not permitting any new entrant to the market is a violation of Article 86 of the Treaty of European Union. This case was heard in the European Court of Justice and is applicable to the entire region of the EU. However, this judgment was criticized on grounds of lack of lucidness.

IMS Health

IMS Health is the world’s largest supplier of information related to Pharmaceutical products. In this case, it was held that an abuse of a dominant position will be held only when that restriction of sharing the copyright leads to prohibition of the launching of a new product in the market. The dominant will also be violated in case, the product has the capacity of removing all the competition in the market.

The Microsoft Case

The Commission and the General court’s assumption of Microsoft enjoying intellectual property rights

The market of Microsoft was above 90 per cent share of the market. The closest competitor which was Apple contained only a market of 2 per cent. The courts assumed the position to be dominant because of the trend of dominance in the market.

General court’s summary of the applicable law

In 2007, the Grand Chamber of the Court of First Instance (CFI), the courts checked for any errors in calculation of misuse of power. The Court applied a Four-Pronged Test which contained 4 requirements:

  1. The product or service, which is protected by the copyrights must indispensable for carrying out that business.
  2. This protection must prevent the emergence of a ‘new product’.
  3. The refusal must not be objectively justified.
  4. All competition must be excluded from the secondary market.

General court’s benign application of the ‘new product’ requirement

The courts have applied the four-pronged test in terms of the ‘New-Product’ requirement. The new product requirement manages to have its own jurisprudence through the passage of time. This benign application also helps with the smooth functioning of the market and competition laws.

Remedy

The remedies may be available in all the competent courts and the International Courts as well. The competition laws have emerged as an important area and they may have a remedy in all the competent courts.

The Commission’s Guidance on Article 102 Enforcement Priorities

The European Commission guidance related to Article 102 is as follows:

  • Market Power: An assessment of the dominant position is ascertained by the market power that the product holds.
  • Anti-Competitive Foreclosure: There must be a foreclosure to the consumers that no information relating to the markets must be withheld from the customers.
  • Price-Based Exclusionary Conduct: There must not be exclusionary conduct on the basis of price.

Collecting societies

Collecting societies are organizations that collect royalties on behalf of its members. The members are generally artists, musicians, etc. who have their property protected under IPR and have given their licenses, elsewhere.

Miscellaneous cases concerning intellectual property rights

There are certain miscellaneous cases that come under the Intellectual Property rights which need to be taken into consideration. Let us have a look at them:

Unlawful acquisition of technology

If there are any ways in which technology can be acquired in illegal ways, they must be declared unlawful and such acquisition must be held inappropriate, immediately.

Demanding excessive royalties

In certain cases, there are demands for excessive royalties from the licensors. This happens because of the over-estimation of the property. This must be reported and majorly, it is a decision between the parties that must be sorted internally, itself.

Seeking an injunction to enforce standard-essential patents

There may be cases where a party may seek an injunction in order to enforce standard-essential patents. The matter must be reported if the parties find this abusive.

Vexatious behavior and abuse of process

The cooperation is expected from the parties, at all times, through the process. The abuse of the process of law will lead to legal consequences. The legal process must be taken with due respect.

UK Law

Licenses of intellectual property rights: The Chapter I prohibition

Licenses under the Intellectual Property law of the UK are largely inspired by the laws from the European Union, so the laws provided in this article mirror those present in the UK laws. Chapter one of the Competition Act, 1998, states the prohibition regarding intellectual property rights.

Other agreements relating to intellectual property rights

Intellectual property Right Laws contain various agreements such as:

  1. Negotiation of licensing agreements;
  2. Commercial transfers and technology transfer agreements;
  3. Government licensing agreements;
  4. Patent licenses;
  5. Trademark licenses;
  6. Copyright licenses.

Anti-monopoly control of intellectual property rights: The Chapter II prohibition and market investigations

A monopoly refers to the single standing in the market. Chapter two of the Competition Act, 1998. control over anti-monopoly behavior. This happens because intellectual property rights tend to provide exclusivity to a certain person. That exclusive license may lead to the formation of a monopoly in the market.

Conclusion 

Intellectual Property Laws and Competition Laws have an inherent conflict between them but, with the advent of laws mentioned in this article have made it easy for them to co-exist. A fair conclusion would be that such conflicting laws may co-exist only when there is jurisprudence that supports this maintenance. Such cooperation helps in the growth of the market and its dynamics.

References

  1. Magill Case Summary
  2. Microsoft Case Summary

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