ABSTRACT
In India, Intellectual Property Law and Competition Law are considered two of the principal statutes governing the fair and proper use of intellectual property. Both statutes have distinct features, yet they operate simultaneously, or side by side. In today’s world, the relationship between IP Law and Competition Law remains a contemporary and unresolved issue in many jurisdictions, including India.
Competition law provides mechanisms to prevent or counter anti-competitive agreements, bid rigging, predatory pricing, abuse of dominance, and similar practices. On the other hand, IP law grants protection to creators, owners, or authors of intellectual property, including trademarks, patents, and copyrights. IP law promotes innovation by granting exclusive rights, which may create a limited monopoly. In contrast, competition law seeks to ensure that market competitiveness is maintained and not distorted.
This represents the tension between the two statutes. However, they are also complementary in nature. Intellectual Property Rights (IPR) encourage technological innovation, leading to the creation of new products and services. This, in turn, contributes to market growth and consumer welfare, which are key objectives of competition policy. This article particularly deals with the relationship between IP Law and Competition Law and also the importance of both of them. It also discusses the procedure as how both the statutes work simultaneously so as to create a balanced situation.
INTRODUCTION
Intellectual Property Law protects owners against the unauthorized use or duplication of their intellectual property. It grants creators exclusive rights to use and commercially exploit their creations, thereby providing a temporary statutory monopoly. In contrast, Competition Law promotes free and fair competition in the market, prevents anti–competitive practices such as abuse of dominance and cartels, and safeguards consumer interests.
At first glance, these two laws appear conflicting because IP law grants exclusive rights, while Competition Law restricts monopolistic abuse. However, monopoly under IP law is not illegal in itself, only its abuse attracts scrutiny under competition law.
When viewed comprehensively, both statutes complement each other. Intellectual property protection encourages innovation and technological advancement, while Competition Law ensures that such exclusive rights are not exercised in a manner that harms competition or consumers. Together, they maintain a balance between innovation and market fairness.
ORIGIN OF IP LAW AND COMPETITION LAW
Intellectual Property Law
During the 19th century, in Europe an industrial revolution took place which was termed as the ‘Era of Scientific Inventions’ as it led to many new inventions by the people. When people started making new inventions and creations, few other people started plagiarizing it and declaring themselves as the owner of such creation. Hence it was misused for some time. To protect the rights of such owners, the term IPR was started being used. It took almost a decade to enforce IPR Laws in major countries which then provided protection to the creators and owners.
On 20 March 1883, the Paris Convention for the Protection of Industrial Property was adopted in Paris to provide international protection for industrial property such as patents, trademarks, and industrial designs. Later, in 1886, the Berne Convention for the Protection of Literary and Artistic Works were concluded to protect literary and artistic works.
These two landmark conventions laid the foundation of the modern international intellectual property system and are often regarded as the cornerstones of international IP law. Their administration eventually led to the establishment of the World Intellectual Property Organization (WIPO), which formally came into existence in 1967.
Subsequently, the TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights) came into force in 1995 under the framework of the World Trade Organization (WTO), significantly strengthening global standards for intellectual property protection.
Competition Law
In 1890, when the Sherman Anti-Trust Act 1890 came into force, the Competition Law was enacted in the United States. This act was enacted to protect the small groups against the large groups which were formed at the time of Industrial Revolution. The main aim of this was to help the small groups so that they can protect use their assets properly by controlling their business in the market with other competitors. After that it became a key pillar in the market economy and it also started to enact in other various developing and developed countries.
In India, it was formulated under Articles 38 and 39 of the Indian constitution where it has been stated that the state has been entrusted with the responsibility of securing and protecting the social order. These both articles laid down the provisions for safeguarding social, economic and political justice and it also ensures that the ownership and control of material sources in a community are not concentrated in a single hand but it has been distributed among every user equally. The Competition Law was formulated to equitably distribute wealth among all and without any unreasonable monopoly[1].
INTERPLAY BETWEEN IP LAW AND COMPETITION LAW
From the above discussion, it can be understood that Intellectual Property Law and Competition Law are distinct statutes with different objectives. However, they operate together to ensure that the market functions in an orderly manner for the welfare of consumers.
The primary objective behind the enactment of Competition Law is to safeguard market integrity and protect the broader public interest by preventing anti-competitive practices and limiting the abuse of private market power that may harm consumer welfare. On the other hand, Intellectual Property Rights (IPR) focus on protecting individual creators by granting legal rights over their inventions and creations, thereby encouraging innovation and economic growth.
For example, in the case of Monsanto v. Competition Commission of India, Monsanto had a patent for genetically modified cotton seeds. It entered into licensing agreement with Indian Seed Companies, which allowed them to use the patented technology for a fee. However, the Competition Commission of India found that Monsanto was abusing its dominant position in the market by charging exorbitant prices and imposing unfair licensing conditions on the Indian Seed Companies. The commission held that such conduct was anti-competitive and imposed a penalty on Monsanto. Therefore, by the help of this case we can understand that IPR and Competition Law can co-exist with one another and they are also complementary as well as supplementary to each other[2].
There are some sections within the Indian Competition Act, 2002, which deals with the relationship between the IPR and the Competition Law, which are mentioned below:
Prevention of tying Agreement
Section 3(4) of the said act is related to the prohibition of tying agreements which means where a useful or desirable product is sold by a seller on a condition that the buyer will buy another product which is less desirable from the seller. This provision was enacted to encourage innovation and to promote competition in the market.
Protection of IP right holder
Section 3(5) was added to protect the rights of IP Holder. It also states that the competition law does not affect the IPR rights. But when section 3(5) is read with section 4, it restrains the IP holder from using their dominant position. But if they misuse their dominant position, then the Competition Law comes into the picture. With the help of this we can understood that the IP Law and the Competition Law are complementary to each other and both statutes work side by side.
Preventing the misuse of dominant position
Section 4 of the Indian Competition Act 2002 intends to prohibit the misuse of dominant position. However, it does not mean that the existence of dominant position is prohibited. It means that an exception has been made for IPRs under this section.
Section 4(2) deals with the way an enterprise should be treated if action taken by them seems to be abusive, hence his section is equally applicable to IPR holders.
Section 4(3) is applicable to restraining any infringement of or imposition of conditions so as to safeguards one’s IPRs that are granted by the IPR Law.
Hence, it can be understood that the interplay between the Competition Law and the Intellectual Property Law has an essential aftermath on market. The two laws operate in totally two guidance. Intellectual Property Laws provides a stimulus to the inventor and reward him as an incentive for his imagination. On the other hand, Competition Law regulates and safeguards the interests of the inventor and of the technologies as a follow-up action to the invented technology by facilitating through licensing procedures.
CONCLUSION
From the above discussion it can be explained that in this age of globalization, both Intellectual Property (IP) Law and Competition Law are trying to work in tandem together acknowledging their roles and responsibilities in the process of innovation. The above discussion frames a picture that the IP Law is a right whereas Competition Law is a legislation which acts as an artificial hand over the market operation. The synthesis of the two important legal frameworks is essential for fostering innovation, protecting intellectual creation and ensuring fair market competition.
When IPR holders misuse their dominant positions and go beyond the fair use of their rights as specified in Section 3(5), competition law steps in to regulate IPR. This shows that both statutes work hand in hand and are supplementary to each other. When IPR and competition legislation work together, they provide level playing fields for market participants while advancing consumer welfare, which unquestionably promotes economic growth and innovation[3].
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AUTHOR: KHUSHI TAYAL, BA LLB 5TH YEAR, JIWAJI UNIVERSITY
[1] https://ijcrt.org/papers/IJCRT2107043.pdf
[2] https://www.ijlra.com/details/intersection-between-competition-law-and-ip-laws-in-indian-perspective-by-akshy-varshanth-b
[3] https://www.jusscriptumlaw.com/post/interplay-between-ipr-rights-and-competition-law