A PROJECT
ON
RELATION BETWEEN INTELLECTUAL PROPERTY LAW AND
COMPETITION LAW: CRITICAL AND COMPARATIVE ANALYSIS
[submitted as partial fulfillment of the requirement for B.A.L.L.B- 5-year integrated course]
Session:2022-23
Submitted on: 7 Jan, 2023
Submitted by: Supervised by:
Ashwina Yadav Mr. Pratik Kumar Jain
Roll no-13
Semester – IX A
UNIVERSITY FIVE YEAR LAW COLLEGE
UNIVERSITY OF RAJASTHAN
JAIPUR
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DECLARATION
I, Ashwina Yadav, hereby declare that this project titled “Conflict Between
Intellectual Property Law and Competition Law: Critical And Comparative
Analysis” is based on the original research work carried out by me under the
guidance and supervision of Mr. Pratik Kumar Jain.
The interpretations put forth are based on my reading and understanding of
original texts. The books, articles, websites etc. which have been relied upon by
me have been duly acknowledged at the respective places in the text.
For the present project which I am submitting to the university, no degree or
diploma has been conferred on me before, either in this or any other university.
Date: 7 Jan, 2023
Ashwina Yadav
Roll No: 13
Semester: IX A
2
ACKNOWLEDGEMENT
In the accomplishment of this project successfully, many people have best
owned upon me their blessings and heart pledged support, this time I am
utilizing to thank all people concerned with this project.
First of all, I would like to thank our Director Dr. Akhil Kumar for giving me an
opportunity. I would like to thank our supervisor, Mr. Pratik Kumar Jain, for her
valuable guidance and suggestions that helped me complete this project within
time.
I would like to thank the librarian and library staff who have been a great
support throughout.
Last but not the least, I would like to thank my parents and friends for their
valuable suggestions which helped me in completing this project successfully.
Ashwina Yadav
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CERTIFICATE
Mr. Pratik Kumar Jain Date: 7 Jan, 2023
Faculty
University Five Year Law College
University of Rajasthan, Jaipur
This is to certify that Ms. Ashwina Yadav of IX Semester, Section A of
University Five Year Law College, University of Rajasthan, Jaipur has carried
out the project entitled ‘Conflict Between Intellectual Property Law and
Competition Law: Critical And Comparative Analysis’ under my supervision
and guidance. It is an investigation report of a minor project. The student has
completed research work in my stipulated time and according to norms
prescribed for the purpose.
Supervisor
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TABLE OF CONTENTS
• Declaration 2
• Acknowledgement 3
• Certificate 4
• Abstract 6
• Introduction 7
• Research Methodology 8
• Chapter 1: The Objectives of IPR and Competition law 9-10
• Chapter 2: Interface & differences between IPR & Competition Law11-13
• Conclusion 14
• Bibliography 15
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ABSTRACT
Intellectual property rights grant the owners exclusive legal rights, limiting others’ access to
the same, and thus reducing market competition. Competition law/anti-trust law, on the other
hand, seeks to promote competition and increase market access. As a result, we can see that
these two topics are diametrically opposed. However, another school of thought holds that the
two realms can not only coexist but also complement each other.
As a result, the goal of this article is to examine how IPR and competition law are linked and
interdependent. This study focuses on the fact that in order to develop the country’s economic
efficiency, both IPR and Competition Law must coexist, and this study provides guidelines to
help improve the efficiency of the Indian system of Competition law and patent offices.
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INTRODUCTION
Any discussion of the relationship between competition laws and intellectual property rights
must start with a definition of these two terms. Intellectual Property Rights are intended to
encourage inventors’ creativity by granting them certain rights over their inventions that
protect their interests in them. These are exclusionary rights, which grant inventors temporary
rights to exclude others from using their IPR. Competition law, on the other hand, exists to
promote economic growth by restricting rights arising from private property in order to
prevent anti-competitive behaviour.
Competition law seeks to preserve the competitive nature of markets because competition
among market forces is critical in protecting consumers from abuse. In India, dominance is
not a problem in terms of competition law; however, the abuse of that dominance is.
Following liberalisation and privatisation, India has shifted to more open market policies that
encourage more innovation and rapid economic growth. The Indian Competition Act was
enacted in this context to preserve market competition for the benefit of consumers.
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RESEARCH METHODOLOGY
The research methodology for this project is doctrinal. The student has relied on secondary
sources of data. For obtaining necessary information, various books, journals as well as
websites have been explored by the researcher which have been mentioned in the reference
section.
STATEMENT OF PROBLEM
This project aims to study the provisions of Intellectual Property Law and Competition Law
and the relation between them. To study the critical and comparative analysis of Intellectual
Property Law and Competition Law and to understand differences between them with
reference of case laws till date.
OBJECTIVES
The main objective of the study is-
1. To know about the Competition Law and Intellectual Property Law.
2. To study the critical and comparative analysis of Intellectual Property Law and
Competition Law
3. To know about the difference between Intellectual Property Law and Competition
Law with reference of case laws.
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CHAPTER 1: THE OBJECTIVES OF IPR AND COMPETITION LAW
1. Competition Law
Competition Law is the body of law that seeks to promote market competition by regulating
the market. This regulation is done by monitoring any anti-competitive conduct on the part of
businesses and regulating the same. The objective of competition law is to ensure that there is
a fair marketplace for consumers to choose from and for producers to carry on their business.
It seeks to prohibit unethical practices that are aimed at gaining a larger market share, which
causes difficulty to smaller businesses and new businesses trying to enter the market.
Some anti-competitive practices include:
• Predatory pricing
• Price fixing
• Bid rigging
• Dumping
These practices are generally prohibited by most countries and are deemed to be anti-
competitive.
Intellectual Property Rights
According to WIPO, Intellectual Property (IP) refers to creations of the mind, such as
inventions; literary and artistic works; design; and symbols, names and images used in
commerce. It is the creative work of the human intellect. Like any other property right, it
gives the owner the sole right to benefit from their creation, for a specified period. Article 27
of the Universal Declaration of Human Rights provides for the right to benefit from the
protection of moral and material interests resulting from authorship of scientific, literary or
artistic productions. It promotes science, technology, art etc. and can be associated with a
nation's progress in those fields and other related fields. It is therefore necessary to protect
intellectual property. IPRs are extremely private rights. Intellectual property can be classified
under the following types:
▪ Copyrights
▪ Trademarks
▪ Design
▪ Patents
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▪ Geographical Indication
The Objectives Of IPR And Competition Law
It has been observed that IPR and competition law are incompatible. It is because IPR grants
the innovators of a new product a monopoly that others do not have access to, or it simply
protects those owners from commercial exploitation of their products by granting them
exclusive legal rights. Competition law, on the other hand, is opposed to static market access
and competition rules, specifically the abuse of monopoly position. As a result, it should be
noted that the term “competition” is used differently by IPR and Competition Law.
The main goal of granting licences in IPR is to encourage competition among prospective
innovators while simultaneously restricting competition in various ways. After a specified
period, the rights revert to the public domain, effectively ending the competition. The primary
goal of competition law is to prevent abusive market practices, stimulate and encourage
market competition, and ensure that customers receive high-quality goods and services at a
reasonable price.
According to a UNCTAD1 document on ‘examining the interface between the objectives of
competition policy and intellectual property,’ the main goal of IPR is to encourage innovation
by providing appropriate incentives. This goal is met by granting inventors exclusive rights to
their inventions for a set period of time, allowing them to recoup their R&D investments.
Instead, the goals of Competition Law are to promote efficiency, economic growth, and
consumer welfare. To achieve them, competition law limits, to some extent, private property
rights for the benefit of the community. Competition is thought to be beneficial to the
economy because it fosters innovation and increases competitiveness.
Thus, we can say that IPR is about individual rights that provide monopoly only to the owner
of the innovated product in order to protect his invention from commercial exploitation,
whereas Commercial Law protects the interests of the market and the broader community,
rather than an individual, by limiting private rights that may harm the community’s wellbeing
and thus encourages market competitiveness. Despite the fact that they are diametrically
opposed, their ultimate goal is consumer welfare.
1
http://unctad.org/meetingsen/sessionalDocuments/ciclpd36_en.pdf
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CHAPTER 2: THE INTERFACE AND DIFFERENCE BETWEEN
COMPETITION LAW AND IPR
Interface
It is obvious that, at first glance, the goals of IPR and competition law appear to be at odds.
They appear to be irreconcilable, with conflict and friction unavoidable. Whereas friction
may be a part of the overlap between IPR and competition law, where they may clash in any
case, the truth is that they also work in tandem. Their goals are aligned with their ultimate
goal: to improve the welfare of consumers in society by facilitating market innovation.
They achieve this goal through various means. Whereas IPRs give innovators and producers
monopoly rights to be adequately reimbursed for their research and development costs,
competition law protects the rights of the entire community by limiting private rights,
including those granted by IPRs, to ensure the market is free of anti-competitive behaviour,
resulting in more innovation and better products for the consumer. In this way, IPRs and
competition law ultimately serve to improve consumer welfare by facilitating innovation.
This goal of enabling innovation necessitates a balancing act of competition law to ensure
that IPRs are not exploited and abused while still allowing enough room and incentives for a
vibrant market for innovation and creativity. The various sections which speak about the
inevitable connection between IPR and competition law are:
Section 3(5) of the Indian Competition Act, 2002 exempts reasonable use of such inventions
from the purview of competition law, implying that it only protects reasonable conditions
imposed by the IPR holder and that any unreasonable condition imposed can be dealt with
under competition law.
Section 4 of the Indian Competition Act, 2002, deals with abuse of dominant position, and it
only prohibits abuse, not the mere existence of a dominant position. What is important to note
for our current discussion is that no exception has been made for IPRs under this Section,
possibly because IPRs do not confer dominant position in the market, and even if they do,
this Section does not prohibit the mere existence of dominant position, but only the abuse of
dominant position.
Section 4(2) of the Indian Competition Act, 2002, which treats enterprise action as abuse and
applies equally to IPR holders,
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Section (3) of the Indian Competition Act, 2002 prohibits anti-competitive practices, but this
prohibition does not limit “any person’s right to restrain any infringement of, or to impose
reasonable conditions necessary for protecting any of his rights” conferred by IPR laws such
as the Copyright Act, 1956, the Patents Act, 1970, the Geographical Indications of Goods
(Registration and Protection) Act, 1999 (48 of 1999), and the Designs Act, 2000.2
DIFFERENCES
The conflict between competition policy and the regime of intellectual property rights has
been most contentious in the context of patent laws. The methods used to achieve their
mutual goals give rise to the interface between competition policy and patent law. On the one
hand, competition policy requires that no unreasonable restraints on competition exist; on the
other hand, patent laws reward the inventor with a temporary monopoly that protects him
from competitive exploitation of his patented article.3
IPR protection is a tool for encouraging innovation, which benefits consumers by allowing
for the development of new and improved goods and services, as well as promoting economic
growth. It grants innovators the right to legitimately bar other parties from commercializing
innovative products and processes based on that new knowledge for a limited time. In other
words, the law provides innovators or IPR holders with a temporary monopoly to recover
costs incurred during the research and innovation process. As a result, they earn just and
reasonable profits, giving them an incentive to innovate.
Competition law, on the other hand, is critical in closing market gaps, disciplining
anticompetitive practices, preventing monopoly abuse, inducing optimal resource allocation,
and benefiting consumers with fair prices, a wider selection, and higher quality. As a result, it
ensures that the dominant power associated with IPRs is not overcomplicated, leveraged, or
extended to the detriment of competition. Furthermore, while competition law seeks to
protect competition and the competitive process, which in turn encourages innovators to be
the first in the market with a new product or service at a price and quality that consumers
want, it also emphasizes the importance of stimulating innovation as competitive inputs, and
thus works to improve consumer welfare.
2
Conflict of IPR in Competition Law available at: https://libertatem.in
3
https://www.lloydlawcollege.edu.in/blog/interface-between-ipr-and-competition-law.html
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Despite their differences, the two regimes tend to coexist on various grounds where both
disciplines prevail by limiting each other’s rights. The interface between these two areas of
law is widely anticipated in many sectors of the economy, including the pharmaceutical
sector, where there is a lack of consumer knowledge, which gives rise to the problem of Pay
for delay/Reverse delay settlements, discrimination in patient assistance programs, ever-
greening of patents, and so on, and for which the concept of ‘Compulsory Licensing’ was
addressed to draw the balance between intellectual property rights and competition law so
that owners of intellectual property rights cannot abuse their privileges and stifle market
competition by abusing their dominant position.
JUDICIAL PRECEDENTS
There are very few cases in India involving IPR and Competition Law disputes; in fact, it is
still in its infancy.4 However, in Aamir Khan Productions vs. the Director-General5, the court
addressed the issue of competition law and intellectual property law for the first time. The
Bombay High Court ruled in this case that the Competition Commission of India has
jurisdiction to hear all IPR and competition law cases.
Conflicts over intellectual property rights were typically resolved before the Monopolistic
and Restrictive Trade Practices Commission, the predecessor to the Competition
Commission. However, the Competition Commission of India, which enforces The
Competition Act, 2002 throughout India, now handles cases involving the applicability of
competition issues to both IPR and Competition Law. This Commission was established on
October 14, 2003, and it went into full operation in May 2009. The CCI is made up of a
chairperson and six members.
Entertainment Network (India) Pvt. Ltd. vs. Super Cassette Industries Ltd6. In this case, the
Supreme Court addressed the issue of conflict between intellectual property rights and
competition law. The Court observed that, even if the copyright holder has a complete
monopoly, such a monopoly is limited if it disrupts the smooth operation of the market,
which would violate Competition Law, and the same was true with the refusal of licence.
Undoubtedly, intellectual property owners can reap the benefits of their innovations by
issuing licences, but this is not an absolute.
4
http://www.eui.eu/RSCAS/Research/Competition/2005/2005 pdf.
5
2010 (112) Bom L R 3778.
6
2008(5)OK 719.
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CONCLUSION
The difference between Intellectual Property Rights and Competition Law is that IPR is a
right, but Competition Law is legislation that functions as an artificial hand over the market.
IPR is something that the government gives to an inventor or a reward that the government
gives to a product developer to allow him to commercialize his innovation for a limited time.
These two laws appear to be at odds, yet they are not, as evidenced by the preceding study,
which shows that they complement each other by stepping in when one is violated.
Competition law aims to give consumers more options and to strike a balance between
manufacturers and consumers’ rights by ensuring profitability and a high-quality product at a
fair price. IPR also aims to compensate the producer for being the exclusive creator of the
product, which should be for the benefit of the general public. IPR’s strong position does not
in and of itself violate competition policies, but its abuse does. In a nutshell, each of these
laws has the same goal, but the means by which they achieve it are different.
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BIBLIOGRAPHY
BOOK REFERENCES
• The Competition Act, 1956, Bare Act, (Shekhawat Law House, 2020).
• Dr. Md. Zafar Mahfooz Nomani and Dr. Faizanur Rahman, Competition Law( University
Book House(P) Ltd., Edition 2019).
WEB REFERENCES
• https://enhelion.com/blogs/2022/08/22/the-interplay-between-intellectual-property-law-
and-competition-law-similarities-and-differences/.
• https://www.mondaq.com/india/cartels-monopolies/807504/conflict-between-intellectual-
property-law-and-competition-law-critical-and-comparative-analysis.
• https://blog.ipleaders.in/conflict-intellectual-property-law-competition-law-critical-
comparative-analysis/.
• https://www.legalserviceindia.com/legal/article-7101-competition-law-and-ipr-a-critical-
analysis.html.
• https://www.ijlmh.com/paper/conflict-between-ipr-and-competition-law-a-comparative-
analysis-between-us-eu-and-india/.
• https://www.juscorpus.com/a-critical-analysis-of-the-relationship-between-competition-
law-and-intellectual-property-rights-in-india/.
• http://ijlljs.in/interface-between-intellectual-property-rights-and-competition-law-indian-
jurisprudence/.
• https://www.lloydlawcollege.edu.in/blog/interface-between-ipr-and-competition-law.html
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