Intellectual property law focuses the creator's interests and attempts to
safeguard his rights, whereas competition law emphasises providing consumers
with choices through healthy competition among manufacturers and dealers.
While it is critical to have incentives for invention and creativity, which can
be ensured by allowing the owner monopolistic rights, it is also critical to
stimulate market competition for the benefit of the general public. The concern
is not how the laws appear to be at odds in their goals, but rather where the
balance should be found. IPR, in its own way, promotes technical innovation. As
a result, more products are available on the market, giving customers a larger
While competition law aims to encourage more effective competition, intellectual
property law aims to secure a monopoly by safeguarding the owner's exclusive
rights at the expense of preventing others from exploiting that particular item.
Given the opposing goals of both schools of law, it's easy to see why there's so
much disagreement between them. The purpose of this essay is to examine how the
two laws' opposing natures can be reconciled.
The common components of both competition law and intellectual property law, as
they both relate to the consumer market, are simple to investigate. However,
they can also be compared to fire and water, as they are very distinct.
Competition law aims to eliminate any actions that stifle commerce and
discourage monopoly in general. Intellectual property law, on the other hand,
aims to provide a benefit to intellectual property owners by allowing them to
freely use their rights while maintaining exclusivity.
Though intellectual property law guarantees lawful owners full rights over their
creative assets, competition law aims to prevent market barriers by encouraging
competition among various suppliers of goods, services, and technologies to
ensure that consumers gain the most.
Conflicts, if any, may arise as a result of such competing and disparate
agendas. Another point to consider is that competition law promotes a variety of
ideas, such as the importance of free markets and the goal of creating a
completely competitive environment that enhances consumer choice. This framework
tries to build a system that promotes free trade, consumer rights, and effective
resource allocation, among other things. On the other hand, intellectual
property establishes a monopoly. There is a discrepancy between the two in this
IPR in Competition Law is addressed under Section 3(5)(i) of the Competition Act
of 2002. The section aims to reconcile some of the inconsistencies by excluding
IPR from restrictive trade practises. This is because intellectual property
protection is vital because it is a necessity for innovation, which is why most
laws prioritise IPR protection, especially Competition Law.
There are two mechanisms
A country's economic activity is controlled by two mechanisms: the free market
and the regulated market. The adoption of the two separate procedures is
intended to improve the functioning of the country market. Manufacturing
determines how much goods should be produced and how much money will be invested
in creation or innovation in a free market system. Instances of new items, as
well as the product's pricing and availability. It has no bearing on the
It opposes the manufacturers' monopolistic behaviour. In this case, the service
provider, producer, or manufacturer has a direct interaction with the consumer.
As a result of this system, the producer may easily take advantage of the
customer for profit, and the unrestrained conflicting interests lead to an
imbalanced economy or market in the country.
Market System that is Regulated: Business and commerce (buying and selling) are
regulated by several regulatory agencies that are overseen by the government.
This is done to avoid monopolies and unfair trading practises. Different law
provides a check and balance for monitoring the activity of suppliers. It also
obligates the manufacturer to develop a variety of items that are necessary for
the general welfare of the public and the improvement of the nation's economy.
When an economy is subjected to extreme restrictions, the economy becomes
inflexible because there is no or very little flexibility in its operation. As a
result of the consumer's need to have exactly what they want, there will be less
creativity and innovation when there is less flexibility.
Competition law is a body of law that regulates the market in order to encourage
market competition. This is accomplished by monitoring and regulating any
anti-competitive behaviour on the part of corporations. The goal of competition
legislation is to ensure that consumers have a fair marketplace to choose from
and that producers can continue to do business. It aims to ban immoral business
activities aimed at getting a bigger market share, which makes it difficult for
small and new enterprises to enter the market.
Predatory pricing is one example of anti-competitive behaviour.
Intellectual Property Rights
Intellectual Property (IP) refers to mental creations such as inventions,
literary and artistic works, design, and symbols, names, and pictures used in
business, according to WIPO. It is the result of the human mind's creative
process. It grants the owner the sole right to benefit from their creation
for a set length of time, just like any other property right.
Article 27 of the Universal Declaration of Human Rights guarantees the right to
moral and material interests protection as a result of authorship of scientific,
literary, or artistic works. It supports science, technology, art, and other
related fields, and can be linked to a country's growth in those and other
fields. As a result, intellectual property must be safeguarded.
The Intent behind the two laws
The term 'competition' has different meanings in the paradigm of the two
different fields of law. IPR encourages potential innovators and creators to
compete, which leads to increased innovation and creation. This limits the
competition by providing an exclusive right for a specific period of time.
However, at the end of that time period, that product or service eventually
enters the public domain. Competition Law intends to prevent unfair trade
practices, and instead, encourage competition in marks.
Competition law prevents a company or business using their dominant position in
the market as an unfair advantage over all businesses. A business may earn a
dominating position, for e.g. Android has a fairly large share of the
smart-phone market. That is not a problem but the problem is if Android uses
this dominant position in any unlawful manner to have a negative impact on the
Paris Convention defines unfair competition under Article 10(b)(2) as "any act
of competition that is opposed to honest practises in industrial and competition
Patent laws are drafted in such a way that bootlegging can be avoided Patent law
and competition law, in a sense, are both attempting to promote fair market
behaviour, which is the primary goal of competition law. The concern in
competition law arises only in a situation where the patent owner may use the
patent in such a way that exceeds the objective of his rights and abuses it to
cause a violation of anti-trust policies.
The World Trade Organization (WTO) formed an international agreement known as
the Trade Related Aspects of Intellectual Property Rights (TRIPS) to standardize
the regulations for different aspects of Intellectual property Law. The members
of WTO signed up for this, including India. One of the primary concerns raised
during the policy-making of TRIPS was the unjust competition created by granting
the IP Rights holder a monopoly on their product.
Article 40 of the TRIPS agreement says that licensing practices regarding IPR
can have a detrimental effect on trade and may hinder the transfer of
technology. Article 40(2) allows members to shortlist any IP Rights violations
and develop mechanisms to counter those violations. However, this list is not
exhaustive. The provisions with regard to the anti-competitive measures are
suggestive and permissible instead of mandatory and binding.
Compulsory licensing is a statutory mechanism adopted to prevent IPR Rights from
getting concentrated in the hand of the right holder. This helps the government
to ensure the non-voluntary transfer of copyright from the owner to an
individual who may apply for permission to republish that work to the public, in
exchange for paying a royalty to the owner. Article 31 of the TRIPS agreement
provides an exemption from compulsory licensing in times of national emergency
or any urgent situation.
The Conflict in the Indian Context
Given the progress of the jurisprudential school of thought that encourages
harmonious construction of two seemingly opposing laws, for an overarching
objective, we must apply that ideological lens to understand the link between
IPR and Competition Law. Every aspect of IPR is not necessarily in conflict with
Although intellectual property rights provide a monopoly to the owner or
creator, it is always accompanied by reasonable restrictions and regulations, to
avoid any exploitation of that monopolistic power. To understand this in greater
detail, one has to analyse the legislative framework in India.
The Competition Act 2002 was drafted on the notion of economic competence and
liberal policies. The Act aimed for social economic and political justice and
progress for the common man. Competition Law was drafted in a way to cover the
loopholes found in the Monopolies and Restrictive Trade Practices Act. The
Competition Act did so by accommodating certain provisions and adhering with the
Indian Competition Act in relation to Intellectual Property RightsAs per Section 3 of the Indian Competition Act, 2002:
'No enterprise or association of enterprises or 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 on competition within India'
An exception is provided through Section 3(5) of the Act for intellectual
property rights, which conveys that competition law usually does not intervene
in matters of IPR law. However, the abuse of dominant position which may meddle
with policies for IPR is covered under Section 4 of the Act. Section 4 helps us
see how the link between Competition Law and IPR can be complementary in nature.
As Section 3 referred to anti-competitive agreements, section 3(5) is in
reference to the interaction between the laws which culminates into an exception
to IPR related licensing agreement, in order to strike a balance between
encouraging innovation in the market while enforcing regulations that lead to
the Appreciable Effect on Market by the exploitation of the monopolistic power
as per Section 4.
In our country, both the law of IPR and the law of competition are still
developing. In the case of Aamir Khan Productions v. The Director General
Bombay High Court held that the Competition Commission of India has the
jurisdiction and authority necessary to manage the matters concerned with
Intellectual Property rights.
The court also stated that rights associated with intellectual property are
simply a statutory provision and not sovereign in nature Similarly, in the
matter of Kingfisher v. Competition Commission of India, the court held that
CCI has the authority to deal with matters that come before the Copyright Board.
However, one must keep in mind that India is still at a nascent stage.
In a similar fashion to TRIPS, India may adopt programs like Compulsory
Licensing in situations where the price of products is exorbitant. The
Competition Commission of India should come up with stricter regulations. The
courts now prioritize the interest and rights of the consumer and believe that
they should be guarded even at the cost of the right holder or owner. One way
for India to develop these laws and policies further is by drawing parallels to
American and European cases.
There is a multitude of cases that can be analysed to understand the interaction
between Competition law and IPR. In the case of Entertainment Network (India)
Limited v. Super Cassette Industries
, the Supreme Court reflected on the
clash between IPR and Competition law.
It was held that even though the copyright holder has a designated and complete
monopoly, it is essential that the monopoly is not used to exploit the
functioning of the market. The abuse of that power will be seen as a violation
of competition law and will lead to a refusal of granting a license. Although
the IPR owners can derive royalty by issuing licenses, it is not an absolute
In the case of Union of India v. Cyanamide India Limited
, the court
stated that the issue of selling life-saving drugs for exorbitant prices is
under the ambit of price control. The CCI has jurisdiction on matters of price
control. In a situation where customers have the choice to select amongst
limited options, there is always the concern of a particular product gaining
hegemony, which interrupts the economic competency of the market. This principle
was also reflected in the case of United States v. Microsoft.
The landmark American Case:
"It is a longstanding topic of debate in economic and legal circles � how to
marry the innovation bride and the competition groom"
The case of United States v. Microsoft Corporation was a milestone judgment in
this regard. This case started in 1998 when allegations arose against Microsoft
for exploiting their dominant position by linking their operating system with
their web browser for purchase. This limited the market for all other
web-browsers. Those who used the Windows operating systems anyway had a copy of
the Internet Explorer.
It was contended that the Internet Explorer was a unique and distinct set-up
altogether since there is a different version found in the other Operating
Systems. The judgment held that Microsoft has abused its monopolistic power and
intended to disadvantage other operating systems through an unfair practice. It
was considered a violation as per Section 1 and 2 of the Sherman Anti-Trust Act.
Microsoft challenged this verdict. However, the final decision said that
Microsoft has to be categorized into two different components. One would be the
browser, and the second one would be the operating system.
The goal of intellectual property rights is to establish a balance between the
creator's exclusive rights and the general good. Competition law, on the other
hand, focuses on limiting monopolies and unfair advantages so that customers
have a wider range of options and higher-quality items at more affordable costs.
To understand the relationship between Intellectual property Right and
Competition Law one must understand that IPR provides rights while Competition
Law is a set of regulations. IPR aims to protect the rights of the owner and
creator while Competition Law functions like a hand controlling the market. The
government grants the innovator exclusive rights as an award and incentive.
The innovator is free to commercially capitalize on his product for a specific
time duration. On prima facie level it may seem that IPR and Competition laws
oppose each other but through the analysis provided above, one can see that they
have an overarching goal and they complement each other to reach that objective.
Competition Law strives to provide a multitude of choices to the customers and
balance it against the rights of the manufacturers and sellers. It is essential
for the public good that consumers have access to quality products at affordable
prices and a variety of options to select from. IPR intends to grant the
manufacturer his due for being an innovator.
The hegemonic position granted by IPR is not necessarily in derogation with
Competition law but the exploitation of that position would be. Both laws are
interested in encouraging innovation and public good simultaneously. The
objective of both laws can be understood through a harmonious construction to
define the balance between the two. Both these laws cannot achieve their
objective separately but need to be understood through the lens of similarity,
for them to accomplish what they intended.
- VK Ahuja, Law relating to Intellectual Property Rights (2nd edn, Lexis
Nexis 2013) 3
- Parveen G, 'The Interplay Between Competition Law And IPR
- Licensing Of IP Rights and Competition Law (Organisation for Economic
Co-operation and Development 2019)
- Aamir Khan Production v. The Director-General, 2010 (112) Bom L R 3778
- Kingfisher v. Competition Commission of India, Writ petition no 1785 of
- Entertainment Network (India) Limited v. Super Cassette Industries
- Union of India v. Cyanamide India Limited, (AIR 1987 SC 1802)
- United States v. Microsoft, 38 1998 WL 614485 (DDC, 14 September 1998.