The Abuse of Intellectual Property Rights through Competition Law in India

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INTRODUCTION

The conflict between Intellectual Property Rights and Competition law has always been at the top level. Both have a different occupied area as well as has a distinct objective to fulfill.

IPR refers to the monopoly right of the holder over intellectual property whereas the competition law regulates those practice which has an anti-competitive effect on the market and also it hampers the smooth functioning of the market.

The main objective of IPR is to strike a balance between the rights of the owner and social interest. It is a method that helps the owner and social interest. It is a method that helps the owner of intangible assets and property to avail exclusively right as well as commercial value for the intellectual property.

There is always a tussle between both IPR and the competition law. On one side, the inventors are constantly boosting up and on the other side, competitiveness in the market is needed to be controlled.

It won’t be wrong if we say Intellectual Property Rights and Complementary to one another.

From the beginning, it has been noticed that Intellectual Property Rights and Competition Law have conflicting objectives. The main reason behind this distinctness is that in IPR, the competitors often exercise exclusive legal rights over their invention by ascertaining certain limits. The tactics somewhere looked against static market access and level playing fields in competition rules especially when it also started restricting the horizontal and vertical lines.

Competition has been used in both IPR and competition law but in both places in a different context.

INTERPRETATION OF COMPETITION WITH REGARD TO IPR AND COMPETITION LAW

The word competition has been interpreted differently in both IPR and Competition law. The main motive behind permitting license in IPR is to encourage competition among the deserving innovation and at the same time restrict the competition after a certain period of time, the right of the public domain ending competition.

DIFFERENCE BETWEEN IPR AND COMPETITION LAW?

Intellectual Property Rights i.e. IPR are used as mechanisms to create exclusive monopoly rights to the holder and at the same time deter other holders from offering the item in the same market which faces a decrease in the competitiveness in the market and also led to the creation of dispute between objectives of both the regulations. On the other hand, competition law is basically enacted to avoid misuse of monopoly power granted under the statute which is widely traced in different before enacting such legislation mainly to control abuse of monopoly power.

In the year 2002, the Competition Act was passed which widely accepted the intention of IPR while framing provisions and it does not eliminate the dominance achieved by an individual due to such intellectual property rights.

The court has also passed several judgments regarding the interface between IPR and competition laws.

In the case of Aamir Khan Production Pvt. Ltd Vs. Union of India[1], the Bombay High Court held that CCI has jurisdiction to hear all the matters vis-à-vis competition law and IPR. The CCI also stated that IPR related right is not sovereign in nature but merely a statutory right granted under law.

Similarly in the case of Entertainment Network (India) Limited Vs. Super Cassette Industries Ltd[2], the supreme court reiterated the issue related to the conflict between two laws. The court observes that even though the copyright holder has an overall monopoly but the same is limited in the sense that if such monopoly creates a disturbance in smooth functioning of the market will be a violation of competition law and the same was in relation to the refusal of license. Undoubtedly, IPR owners can enjoy the fruits of their labor via royalty by issuing licenses but the same is not absolute.

COMPARISON BETWEEN IPR AND COMPETITION LAW

There is always found a contradiction between IP rights and competition law. It looks distinct and contradictory in an actual manner, it is not contradicting.  It assists a person to invest in a dynamic competition by restraining the rigid competition. It also provides benefits to the holder to make exclusive use of his product within a specified duration of time.

MISUSE OF IPR THROUGH COMPETITION LAW

As we all know how the government has shifted all its importance to online transactions so as to promote digitization. This increased use of the internet has largely exposed IPR to several risks since it has made, “illegitimate copying and reproducing quite easier.” Intellectual property being intangible needs to be protected by law in the same sense as corporeal property and therefore, copyright, patent, trademark, trade secrets are some mechanisms under intellectual property rights (IPR) that protect novel innovation from being imitated without permission.

Intellectual Property abuse is a kind of defense for a suite of IP infringement. When such a defense proves to be justified in a case, then the defendant is spared from the liability of granting immediate relief to the plaintiff.  The misuse doctrine does not prevent the party to get purely dependent on the court of law once they have purged the misuse. For example- Like by striking anti-competitive provisions in their licensing agreements.

There are various kinds of Intellectual misuse such as-

  • Patent Misuse- When a patent owner with a wrong intention surpasses its legitimate boundary, it leads to misuse of patent rights. For example- Illegal typing of products and services, patent invention, price-fixing, etc.

In the famous case of Brulotte V. Thys Co. (1964), the United States Supreme Court held that patent holder’s attempt to collect royalties beyond the term of the patent constitutes a misuse of the patient.

One of the essential condition for using patent misuse defence is that it must bring the threat to the competition in the market. When a company accuses a patent owner of misuse, then the allegations must fulfill two conditions:

  1. The valid patent was used as a way to change business outcomes;
  2. The anti-competitiveness effects extended outside of the patient’s scope.
  • Copyright Misuse-This kind of misuse usually takes place when an individual makes an unjustified use of copyright which is not under any legal capacity and it ultimately leads to violation of copyright Act.

In the famous case of Tekla Corporation v. Servo Ghosh, it was decided by the Delhi High Court on 16th May 2014, Justice Endlaw of the Delhi High Court held that “copyright misuse does not constitute a legitimate defense for copyright infringement in India.”

CONCLUSION

It can be concluded by saying that IPR mainly seeks to provide the manufacturer his reward for being the sole creator and owner of a product and it is for the benefit of the public whereas competition law attempts to provide a wider choice to the consumer and it also seeks to balance the rights of the manufacturer and the consumers by providing them profits and quality item in a reasonable cost. The dominant position offered by IPR is per se not violating the competition policies but abuses that position. We can clearly say that both the laws have a common objective but their ways are different to achieve it.


[1] (2010) 112 Bom L R 3778

[2] 2008(5) OK 719


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