The intersection of intellectual property and antitrust law is an important area of law that deals with the overlap between two distinct legal fields. Intellectual property law is concerned with the protection of creative works, while antitrust law is concerned with promoting competition and preventing monopolies. The intersection of these two fields arises when intellectual property rights are used in a way that may harm competition. In the Ericsson v. Micromax case, Ericsson sought to enforce its Standard Essential Patents (SEPs) against Micromax. However, Micromax alleged that Ericsson was engaging in anti-competitive behavior by attempting to impose unfair royalty rates and conditions on the use of its SEPs. Micromax also accused Ericsson of patent bundling (tying weaker patents with stronger ones), coercing informants to enter one-sided NDAs and other anti-competitive practices. The case highlights the tension between patent law and competition law, as well as the need to balance the rights of patent holders with the goal of ensuring fair competition in the marketplace.
THE TENSION BETWEEN IP AND ANTITRUST LAW
The tension between intellectual property (IP) and antitrust law arises from the fact that IP rights can create monopolies that limit competition, while antitrust laws seek to promote competition and prevent the formation of monopolies. The Supreme Court M/S Entertainment Network Limited v. M/S Super Cassette Industries Ltd held that a copyright holder would be deemed to have violated competition law if they have a full monopoly and that monopoly prevents the market from operating normally.
On one hand, IP protection is essential to incentivize innovation and creativity. On the other hand, antitrust laws are designed to promote competition by preventing monopolies from forming. Paris Convention states unfair competition under Article 10(b)(2) as ” any act of competition that goes against honest and fair practices in business and competition.” The laws of Patent are designed to prevent the unauthorized use of an invention or creation by another party, which is also known as bootlegging. The concern arises when a patent owner uses their patent in a way that goes beyond the objective of their rights and abuses their power to violate anti-trust policies. Therefore, it is important to balance the rights of Intellectual Property holders with the goal of promoting fair competition in the marketplace.
CCI’S JURISDICTION OVER IPR CASES
In India, the Competition Act of 2002 gives the Competition Commission of India (CCI) the power to investigate and adjudicate cases that involve both IPR and competition law. In the case of Amir Khan Productions Private Limited v. Union of India, it was held by Bombay HC that the Competition Commission of India (CCI) has the authority to investigate the issue of competition and IPR.
Section 3 of the Indian Competition Act specifies that: –
“No enterprise or association of an enterprise is allowed to make any agreement about production, distribution, supply, acquisition, storage, controls of goods or provision of services, which will have a significant adverse impact on competition within India.”
But Section 3(5) discusses the exception. It states that the IPR rights are unaffected by competition law. However, if we examine Section 3(5) in conjunction with Section 4 of the Act which prohibits enterprises from abusing their position of strength in the market to dislodge equally competing businesses., we discover that it also prohibits IP holders from abusing their dominant position, and if they do, competition law will become involved. This leads us to the conclusion that they complement one another rather than conflict with it.
In Kingfisher vs Competition Commission of India, the court held that a provision in the Indian Competition Act, Section 3(5), does not bind the rights of the holder of intellectual property (IP) rights, such as copyright, trademark, or patent, to sue for infringement of those rights. This means that IP holders can still use the courts to protect their rights, even if the case also involves competition law issues. However, the Competition Commission of India has been given the power to deal with cases related to copyright through the Copyright Board. This means that in cases involving both copyright and competition law issues, the competition law will still apply, and the Competition Commission will have the authority to handle the case. So, while the court’s decision confirms that IP rights holders can still sue for infringement, it also recognizes that competition law can still apply to cases involving IP, and the Competition Commission has the authority to deal with those cases.
BALANCING IP PROTECTION AND COMPETITION: THE BALANCING TEST
Balancing IP protection and competition is a key challenge for policymakers and courts, as both areas of law aim to achieve different goals. To address this tension, courts have developed a balancing test that weighs the potential harm to competition against the potential benefits of protecting IP. The balancing test involves analyzing the specific circumstances of a case and assessing the potential effects on competition and innovation.
In general, courts will allow IP rights to exist and be enforced, as they play an important role in incentivizing innovation and creativity. However, courts may intervene if the exercise of IP rights harms competition or innovation in a particular market or sector. The balancing test is a flexible framework that allows courts to consider the unique circumstances of each case and to weigh the competing interests at stake.
In conclusion, the tension between intellectual property and antitrust law is a complex issue that requires careful balancing of the competing interests at stake. While there are challenges and debates surrounding these areas of law, the balancing test provides a useful framework for courts and policymakers to navigate these issues and promote both innovation and competition in the marketplace. Finding the right balance between these two areas of law is essential to ensure that both innovation and competition are protected.
Author’s Name: Prachi Saraf (Indore Institute of Law)