The interface between IPRs and competition law

  • 2,543 views
Uploaded on

The interface between IPRs and competition law

The interface between IPRs and competition law

More in: Education
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
2,543
On Slideshare
0
From Embeds
0
Number of Embeds
2

Actions

Shares
Downloads
0
Comments
0
Likes
2

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. THE INTERFACE BETWEEN IPRs AND COMPETITION: INDIAN SCENARIO ( : औ ) DISSERTATION Submitted toDirectorate of Distance Education (DDE), Kurukshetra University, Kurukshetra, Haryana in partial fulfilment of the requirements for the degree of LL.M. (Master of Laws) By PANKAJ KUMAR Session: 2010-12 DDE Ref. No.: 45420 Registration No.: 10-DE-823 Email id: agarwal.biotech@gmail.com Contact no. +91 9312322988 Supervised by Dr. Sushila Assistant-Professor (Law), National Law University (NLU), New Delhi-110078
  • 2. CERTIFICATE BY THE CANDIDATEI hereby declare that the work reported in this dissertation entitled “THE INTERFACEBETWEEN IPRS AND COMPETITION: INDIAN SCENARIO” has been carried out by myselfMr. Pankaj Kumar for the partial fulfilment of the requirements for the degree of LL.M. (Masterof Laws) from Directorate of Distance Education (DDE), Kurukshetra University, Kurukshetra,Haryana, India.I further declare that I have done an independent and original work of required standard underthe supervision of Dr. Sushila, Assistant-Professor (Law), National Law University, New Delhi-110078 and it has not been submitted elsewhere for award of any other degree.Date: 31/03/2012Place: New Delhi PANKAJ KUMAR Session: 2010-12 DDE Ref. No.: 45420 Registration No.: 10-DE-823
  • 3. ACKNOWLEDGEMENTSI am overwhelmed with pleasure and pride to express my feelings and a sense ofindebtness in gesture of acknowledgement to some people for their valuableguidance and wise direction during the course of my LL.M.I express my deep sense of gratitude to my supervisor Dr. Sushila, Assistant-Professor (Law), National Law University, New Delhi-110014 for her helpful andinspiring guidance, persistent encouragements and meticulous effort during thestudy.With deep sense of indebtness, I take this opportunity to express my sincere andheart-full thanks to Dr. K.D. Singh Deputy Director (Law), Competition Commissionof India (CCI), Mr. Anil Bhardwaj, Secretory General, Federation of Indian Micro andSmall & Medium Enterprises (FISME) for their helpful and inspiring guidance,persistent encouragements and constructive criticism and advise throughout thestudy.I would like to express my sincere thanks to all my colleagues at FISME for theencouragement and the support during the study.Last but not the least, I would like to thank my parents, other family members andfriends who helped me in order to finish the study. Pankaj Kumar
  • 4. PREFACEThe relationship between intellectual property rights and competition issues hasattracted growing attention. Though IP law issues intellectual assets to the exclusivecontrol of right owners, competition law strive to avoid market barriers and benefitconsumers by encouraging competition among suppliers of goods, services andtechnologies. Such challenges are particularly complex in developing countries, themajority of which have little or no tradition in the application of competition law andpolicies. In fact, in most of these countries intellectual property rights have beenexpanded and strengthened in the absence of an operative body of competition law,in contrast to developed countries where the introduction of higher levels of IPprotection has taken place in normative contexts that provide strong defencesagainst anti-competitive practices.The concept of Intellectual property rights as developed in India cannot be divorcedfrom the developments in the international arena as well as in the nation-to-nationrelations. The impact of the law relating to unfair and restrictive trade practices asaffecting the regime of IPR on the economic front is emphasized in this study. Inparticular, greater attention would be given here to the interface between IPRs andcompetition in Indian scenario.The present study discusses the relation between IPRs, monopoly and competitionand the public interest and the shifting of the balance towards the IP right holdersbefore examining the conditions and circumstances of exiting scenario. Thearrangement of the study is as, Importance and Relevance of the study are given inchapter (i). Chapter (ii) discusses objectives of the study. Hypothesis of the studyis given in chapter (iii). Chapter (iv) discusses Research Methodology. Review ofexisting statutory Law and Case-Laws are given in chapter (v). Chapter (vi)discusses conceptual framework covering important terms and their meaning etc.Analysis and interpretations given in chapter (vii). Chapter (viii) discusses brieffindings and suggestions. List of cases given in chapter (ix). Chapter (x) mentionsAnnexures: List of Tables graphs etc. Chapter (xi) mentions Bibliography andAppendices etc.
  • 5. INDEX P. No.Letter for the approval of Topic from Course CoordinatorCertificate from the SupervisorCertificate of declaration by the candidateAcknowledgementPrefaceContents -Chapter (i) Importance and Relevance of the study ……………………………….. 1Chapter (ii) Objectives of the study ……………………………………………….. 13Chapter (iii) Hypothesis of the study ……………………………………………… 14Chapter (iv) Research Methodology ………………………………………………. 16Chapter (v) Conceptual framework covering important terms and their meaning … 57Chapter (vi) Review of existing statutory Law and Case-Law ……………………… 40Chapter (vii) Analysis and interpretations ………………………………………….. 107Chapter (viii) Findings and suggestions ……………………………………………. 112Annexures:Annexure I: Genesis of Competition Policy in India ……………………………….. 116Annexure II: Illustrative List of Parameters for Undertaking CompetitionAssessment …………………………………………………………………………. 122Annexure III: List of cases ………………………………………………………….. 126Bibliography and web-links ………………………………………………………… 127
  • 6. CHAPTER (I) IMPORTANCE AND RELEVANCE OF THE STUDYINTRODUCTIONThe study explores a number of issues where not much work has yet been done indeveloping countries but that could be of relevance in tackling the interface betweenIP and competition policies. Notably, the study deals with some competition lawissues specifically relating to IPRs. It thus discusses the extent to which the refusalto license IPRs such as patent to a third party may be deemed anti-competitive. Thestudy considers, further, anti-competitive situations arising from the acquisition andenforcement of IPRs. The use of compulsory licenses to remedy anti-competitivepractices is also examined together with a number of state interventions thatdetermine key aspects of their competition policies.“People of the same trade seldom meet together, even for merriment anddiversion, but the conversation ends in conspiracy against the public or in somecontrivance to raise prices”1When there is perfect competition in the market, the consumer is sovereign, as hiswelfare is maximised. However, monopoly is bad for the consumer and theeconomy. The monopolist controls the market by various way including increaseprices, reduce volumes etc.In the present age of globalization, India has responded positively by opening upits economy, removing controls and resorting to liberalization. In quest ofincreasing the efficiency of the nation’s economy, the Government of Indiaacknowledged the Liberalization Privatization Globalization era. As a result Indianmarket faces competition from within and outside the country. This lead to the needof a strong legislation to dispense justice in commercial matters and theCompetition Act, 2002 was passed. Healthy and fair competition has proven to bean effective mechanism which enhances economic efficiency. Therefore thepurpose of implementing the competition law was to curb monopolies and1 Adam Smith, The Wealth of Nations (1776) 1
  • 7. encourage competition in Indian market. This study is a review into the advocacyissues in the field of intellectual property rights and competition law in general andmore particularly, the interface establishing the balance between these two law andpolicyIn a market economy, competition is essential to curb market distortions, induceefficiency in the use of resources, prevent monopoly or oligopoly, maintain pricesat fair levels or as low as possible, prevent excessive or monopoly profits andpromote consumer interests and welfare.IPR is privilege granted in recognition of the need of the holder to recoup costsincurred in the research and innovation process, so as to maintain incentives forfurther innovation. Thus an IP entails an exclusive right for a limited time, enablingthe holder to charge a higher price than the marginal cost of production. Suchhigher price generally reduces access of consumers to the product, and access ofother producers to production inputs and methods.The monopoly granted by IPRs prevents or deters competition from rivals that cansell at lower prices. These are costs that are seen to be short-term (since theexclusive right is of a limited duration), but which are supposed to be outweighedby the long-term benefits brought about by the innovation which IPRs encourage.2There is thus a balancing required between the monopoly privilege granted to theIP holder and the public interest (including consumer welfare, the competition fromother producers, and national development prospects). The appropriate balancerequires the right policies that enable that IP be appropriately given for correctreasons and to the correct parties, and that they be of an appropriate period, andthat flexibilities and exemptions and exclusions are provided to safeguard vitalpublic interests.If the balance is tilted excessively to the IP holder, then one consequence is thatthe IP facilitates a stream of monopoly profits beyond what is justified for2 INTELLECTUAL PROPERTY, COMPETITION AND DEVELOPMENT by Martin Khor, Third World Network 2
  • 8. recovering the costs of innovation, and society bears the costs unreasonably.These may include prevention of access to goods and services (includingessentials such as medicines, food and information, and important inputs forproduction), curbing of industrial development, an overall reduction in competitionand its benefits for resource allocation, and monopolization in products, sectors orthe economy as a whole.It is thus important, especially for developing countries, that the standards of IP beappropriate, that there be adequate exclusions and flexibilities, and that theframework enables IP to be awarded appropriately for the right inventions and tothe right parties, and that there be sufficient provisions policies and legal provisionsthat counter the abuse of IP privileges when they occur.In economic competition, the winner should be the enterprise providing the mostuseful and effective product or service on the most economical and (to theconsumer) satisfying terms. This result can only be achieved, however, if allparticipants play according to a certain set of basic rules. Violations of the basicrules of economic competition can take various forms, ranging from illegal butharmless acts (which can be committed by the most honest and carefulentrepreneur) to malicious fouls, intended to harm competitors or misleadconsumers. Experience has shown that there is little hope of fairness incompetition being achieved solely by the free play of market forces. In theory,consumers, in their role as referees of economic play, could deter dishonestentrepreneurs by disregarding their goods or services and favouring those ofhonest competitors. Reality, however, is different.As an economic situation becomes more complex, consumers become less able toact as referees. Often they are not even in a position to detect by themselves actsof unfair competition, let alone react accordingly. Indeed it is the consumer who—along with the honest competitor—has to be protected against unfair competition.3In certain jurisdictions, the intellectual property laws, unfair competition laws andanti- trust (competition) laws have developed in such a way that they complementto each other with making an appropriate balance. The balance is necessary3 WIPO Summer School Reading Material 3
  • 9. because “on the one hand, exclusive rights granted under IP laws by definitionexclude competition in a particular setting and allow excluding third parties fromdirectly competing with the IP right holder; on the other hand, competition lawseeks to facilitate direct competition and tends to limit the use of exclusive rights.” 4A number of regulations linked to the acquisition and exercise of intellectualproperty rights, such as those dealing with the marketing approval ofpharmaceuticals and agrochemicals directly influence market entry andcontestability. Such regulations integrate what may be called a country’s“competition policy”. Given the lack of legislation, weak implementation or absenceof policies to deal with the IP-competition relationship in developing countries, acompetition policy approach may be particularly useful to ensure a pro-competitiveexercise of intellectual property rights (IPRs).Developing countries can follow their own approach to competition law and IPRssince there are no international rules (with the exception of Article 40 of theAgreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) thatconstrain the capacity of such countries to discipline IP-related anti-competitivebehaviour. In the absence of international rules on the matter, countries may havedifferent views about what constitutes undesirable anti-competitive effects as aresult of the exclusivity granted under IPRs.Although competition law has usually dealt with markets for goods, markets fortechnologies exist separately from those for products or services and may also besubject to competition law. Competition law may, in particular, address situations inwhich IP is used to charge excessive prices for or prevent access to protectedtechnologies. Competition provides a strong incentive for developing newtechnologies in certain fields. In cases where IPRs are granted, governments canadopt measures to mitigate the monopolisation of technologies and promotecompetition. Thus, although Article 31(b) of the TRIPS Agreement only refers tothe refusal of a voluntary licence as a condition for the granting of a compulsory4 Teaching of Intellectual Property; Chapter 6 Teaching intellectual property, unfair competition and anti-trust law by Thomas Cottier and ChristopheGermann, Cambridge University Press 2008 4
  • 10. licence, the unilateral refusal to license a patent (generally known as “refusal todeal”) can be considered grounds for granting a compulsory licence and has beencontemplated in a number of national patent laws.The possibility of allowing third parties to use IPRs in cases of refusal to deal hasalso been considered in some countries under competition law in the context of the“essential facilities” doctrine. This doctrine applies when one firm, which controlsan essential facility, denies a second firm reasonable access to a product orservice that the second firm must obtain in order to compete with the first.While some US court decisions have suggested that information may constitute anessential facility, the extent of application of this doctrine to intellectual propertycases is uncertain. Under European Community law, an “essential facility” mayinclude an intellectual property right. An IPR holder is not entitled to excludecompetitors from the use of his/her rights when a licence is essential forcompetition, such as where the refusal to license prevents the introduction of anew product or allows the intellectual property holder to monopolise a secondarymarket. Developing countries may draw interesting lessons from the application ofthe concept of refusal to deal and the essential facilities doctrine in developedcountries. However, there are no rigid models and developing countries canelaborate their own approaches on the matter in order to respond to their publicinterests.The accumulation of patents in the form of “package patents” may have anti-competitive effects if used, for instance, to inappropriately extend market powerfrom legitimate patent claims to illegitimate patents, or to coerce a party intolicensing patents that it might not have otherwise done. “Patent thickets” may alsoraise competition law concerns, as co-operation among competitors in differentforms (including cross-licensing) may be necessary to navigate the patent thicket,ultimately limiting competition.While much of the literature on IPRs and competition law focuses on patents, anti-competitive behaviour may be based on or facilitated by other modalities of IPRs.Thus, copyrights have been involved in important competition law cases. Several 5
  • 11. studies have shown that copyright creates monopoly power and that the majority ofmarkets on information goods follow a pathway of progressive concentration atboth the national and international levels. The anti-competitive effects of copyrightprotection of software, particularly of interfaces, have been central in severalcases, notably involving the dominant software provider, Microsoft. Competitionlaw concerns have also frequently arisen in relation to copyright collectingsocieties. A fundamental tension between the goals of trademark and competitionlaws has also been observed in some cases.Enforcement measures should allow the protection of the IPR holder’s legitimateinterests, but equally protect against abuses that may unjustifiably distortcompetition.Compulsory licences can be used, both in the context of IPRs and of competitionlaws, to remedy anti-competitive practices. Article 31(k) of the TRIPS Agreement,explicitly provides for the granting of such licences in the case of patents.Compulsory licences may be used in cases of cross licensing that unduly limitcompetition, particularly when they involve substitute technologies, that is,technologies that actually or potentially compete with each other, independently oftheir intrinsic characteristics.“Patent pools” represent another situation that may be subject to analysis from acompetition policy perspective. Such pools may be used for pro-competitivepurposes. However, they may facilitate tacit collusion in a multiplicity of marketsand allow the pool members to impose abusive terms on non-members wishing toget access to technologies.Finally, there are a number of areas in which IPRs play an important role andwhere actions taken by governments decisively shape competitive relations. Thisis, for instance, the case of regulations determining the requirements for marketingapproval of pharmaceutical and agrochemical products. The sui generis system of“data exclusivity” applied in some countries – and promoted through free tradeagreements – confers a temporary right to the exclusive use of such data by thefirst applicant (generally the company that developed a new product), thereby 6
  • 12. excluding generic competition during the period of exclusivity. Restrictions tocompetition may also arise from the so-called “patent registration linkage” underwhich a national health authority cannot approve a medicine, or is obliged to takeother measures, when there are patents relating to the medicine and the applicanthas not obtained the patent owner’s consent. 7
  • 13. Issues arises from the interface of IPR and competitionThere are many issues arises from the interface of Competition & IP laws and someof them are as follows: • What extent the court and the competition authority restrict the exercise of IPRs? • When is competition law actually applied to IPRs? • What extent can and should various IPRs Laws be reformed? • What regulatory relationship needs to be built between CCI and the Patent Office? • What conditionality in the licensing agreement needs to be examined and what could be India’s licensing policies with regard to Intellectual Property? • What should be CCI’s role when examining grant, if any, of product patents? • What competition concerns may indicate the probability of imposing compulsory licensing? • What regulatory relationship needs to be built between CCI and the Patent Office? • What conditionality in the licensing agreement needs to be examined and what could be India’s licensing policies with regard to Intellectual Property? • What should be CCI’s role when examining grant, if any, of product patents? • What competition concerns may indicate the probability of imposing compulsory licensing? • What is the relevant market in which the dominance/abuse is alleged? • Is the enterprise dominant in the relevant market? • What are the specific indicted practices and do these amount to abuse? • Exclusionary terms in the licensing of IPRs, specifically the inclusion in licensing contracts of restrictive clauses such as territorial restraints, exclusive dealing arrangements, tying or grant-back requirements; • Use of IPRs to reinforce or extend the abuse of dominant position on the market, unlawfully; • IPRs as an element of mergers and cooperative arrangements; and • Refusal to deal. 8
  • 14. BACKGROUNDInteractions between trade and competition could not be more intimate than theyare today, when countries the world over are getting severely affected by thevolatility of trade in primary commodities. The major commodity spike of 2007-08sent alarm bells ringing when the prices of many primary goods doubled from whatthey had been not so long ago. Much of this fluctuation may be explained throughthe simple economics of demand and supply, while managing supply side failuresis critical to restore some sense in the market. One such management issue is thatof the inability of trading nations to deal with rampant anticompetitive practices,especially when the importing countries pay heavily for anticompetitive practicesexempted by exporting countries competition laws. 5Technology transfer agreements are necessary to fulfil technological needs thatare impossible to meet with local technical capabilities. Traditional devices oflicence transfer often fall within the purview of antitrust scrutiny and are deemedanti-competitive practices in general trade, as in the case of territorial restrictions inlicensing. Antitrust laws, although fit to evaluate general trade agreements, oftenfail to address intricate problems involving IPR and therefore, lack the tools toadequately solve them. The blanket protection approach to IP as provided bySection 3(5) of the Indian Competition Act is equally ineffective due to lack of amechanism to deal with IP-related unfair trade practices. The TRIPS under Article40, permits member states to prevent abuse of IP through anti-trust legislations.India has permitted cross licensing under its patent laws but has failed to preventits anti-competitive fallout in technology licensing. Therefore, a need for a balance between the two conflicting interests ofcompetition policy and the protection of technological know-how arises. It furtherpurports to set forth an adaptation of guidelines for India, keeping in mind the anti-trust laws of other jurisdictions.65 TRADE AND COMPETITION IN THE PRIMARY GOODS SECTOR: "GLOBAL PROBLEMS & SOLUTIONS", AU: Frederic Jenny & Pradeep S Mehta;The Financial Express, January 13, 20126 JOURNAL OF INTELLECTUAL PROPERTY RIGHTS | 16 (3): 258-266 MAY 2011The Competition-IP Dichotomy: Emerging Challenges in Technology Transfer Licenses; Kutty, AA | Chakravarty, S; Kutty 9
  • 15. The issues relate to interactions between IPRs and competition law are all themore important with the coming into force of several provisions of the CompetitionAct, 2002. The possibility of tensions between IP and competition law seems tohave been present in the mind of the legislature, when it made some IP-specificexceptions in Section 3(5) of the Act. Among the important questions which arelikely to arise are (i) the treatment of exclusivity agreements and (ii) the likelihoodof the abuse of intellectual property being categorized as an abuse of dominantposition.A more general question might arise first – are competition law and intellectualproperty rights necessarily at odds with each other?“… intellectual property rights do not ipso facto confer monopoly power. While theydo permit product differentiation, and sometimes give the owner power over price,there is a vast difference between an exclusive right and the sort of economicmonopoly that is the concern of anti-trust law…”Furthermore, the goal of competition law is not to prohibit monopoly. Instead, thegoal is to prohibit anti-competitive conduct – a company that achieves a monopolywithout entering into anti-competitive conduct will not violate the principles ofcompetition law at all. In sum, the argument is that there is no tension in the goalsbeing sought by intellectual property rights and competition law (there mighthowever be some tension in the means through which the goals are sought to beachieved). The goals in both cases are the same – “wealth maximization”.7India, embarked on a new trajectory of economic liberalization in 1991, whena host of controls on trade and industry were removed. The various reformsinitiated recognised the need for removing various fetters on trade and industrywith a view to unleashing the energy and dynamism of competition in themarket. In his Budget Speech, Dr Manmohan Singh, the then Finance Minister7 Intellectual Property Rights and Competition Law: Friends or Foes?, Mihir Naniwadekar http://spicyipindia.blogspot.in/2009/09/intellectual-property-rights-and.html 10
  • 16. underlined, “no power on Earth can stop an idea whose time has come” and that“It is essential to increase the degree of competition between firms in thedomestic market so that there are adequate incentives for raising productivity,improving efficiency and reducing costs” Since then, a host of new policy andregulatory reforms across various sectors have been introduced by theGovernment.After Independence, India pursued a strategy of planned economicdevelopment, with the objective of developing a broad industrial base to achievespeedy economic self-reliance and promoting social justice. The industrial policyassigned commanding heights of the economy to the public sector. The Stateexercised control over the direction, pattern and quantum of investments throughthe Industries (Development & Regulation) Act, 1951 and the Monopolies andRestrictive Trade Practices Act, 1969 (MRTP Act). A major part of the financialsector was also kept under Government control while a number of products werealso subjected to price and distribution controls coupled with extensivereservations and concessions in favour of small-scale industry. The trade policytoo affected competition by providing a high level of protection to domesticindustry. These restrictions, which were in consonance with the NationalStrategic Policies at that time and relevant in the context of limited resources andneed of checking monopolies and concentration of economic power, didnevertheless, impacted competition. However, gradually, and from 1980 onwards,incremental changes were brought in to usher in greater competition. TheIndustrial Policy Statement of 1980 introduced greater competition in the domesticmarket, technological up-gradation and modernisation. The major reforms initiatedfrom 1991 onwards were, however, on a much broader scale, sweep and scope,and provided a new paradigm shift to economic growth in India, releasing newentrepreneurial energy and dynamism in the Indian industry, diversification ofdomestic production and stimulating exports, adding to the GDP growth. The last two decades since 1991 have witnessed significant changes in terms of opening of markets, factor mobility and regulatory environment. The benefits have been substantial and manifested in various segments of economy, e.g. telecom, civil aviation, transport, manufacturing, etc. However, the 11
  • 17. progress has been somewhat uneven, and so also the trickle- down effects onthe common man. Underlying this success is a structural shift in Indias growthtrajectory. Further, like many other similar economies under transition, therehave been residual restraints and anti-competitive traits in several areas ofeconomy. While the process of reforms is a continuing one, the pace anddirection necessitates the introduction of an overarching National CompetitionPolicy to realize the fuller growth potential of the economy. 12
  • 18. CHAPTER (II) OBJECTIVES OF THE STUDY1. Understanding the interface – The interface between IPRs and Competition is required to understand in Indian scenario2. Examine market practice – The market practice need to examine regarding competition and intellectual property3. Status report - a status report regarding product patent and competition need to be prepared4. Policy guideline - a policy guideline for licensing (compulsory licenses) where it might lead to anti-competitive practices need to be prepared5. Study the concern laws - competition law concerns stemming from acquisition of intellectual property need to be studied6. Merger & Acquisition - issues of acquisition of intellectual property though merger & acquisition need to be examined7. Authority restriction - to what extent the court and the competition authority restrict the exercise of Intellectual Property Rights need to understand8. Application of Competition Law top IPRs - to what extent the competition law actually applied to Intellectual Property Right need to understand9. Laws need to be reformed – to what extent can and should various Intellectual Property Rights Laws be reformed need to discuss10. Development of jurisprudence - the development of jurisprudence in India in the field of protecting of IPRs and competition law need to be observed and discuss11. Impact of the Laws - the impact of patent law and competition policy and law in India need to be observed and discuss12. Awareness of the law and policy - Generate and increase understanding of the relationship between intellectual property (IP) and competition law and policy13. Prevent abuse - Understanding how to prevent abuse of IP using anti-trust legislations14. Highlight the balance - Highlight the need for a balance between the two conflicting interests of competition policy (IP-related unfair trade practices) and the protection of technological know-how (Technology transfer) 13
  • 19. CHAPTER (III) HYPOTHESIS OF THE STUDYConflicting objectivesIPRs and competition are normally regarded as areas with conflicting objectives.The reason is that IPRs, by designating boundaries within which competitors mayexercise monopolies over their innovation, they appear to be against the principlesof static market access and level playing fields sought by competition rules, inparticular the restrictions on horizontal and vertical restraints, or on the abuse ofdominant positions.Intellectual Property Rights and Competition Law have been described as anunhappy marriage. The former may be seen to promote monopolies whilst the latteris designed is oppose them. In other words, on one hand, IP laws work towardscreating monopolistic rights whereas competition law battles it. In view of this thereseems to be a conflict between the objectives of both laws.There are two opposing views on the interface between a competition law and IPR(Intellectual Property Rights) laws. The first contents that there is a tension betweencompetition and intellectual property, arguing that competition law seeks toeliminate monopolies and encourage competition, while IPR laws reward creatorsand inventors with a limited monopoly. According to the proponents of this view, themain function of IPR laws is to properly assign and defend property rights on assetsthat have economic value. On the other hand, the main goal of competition lawshould be to minimise the adverse consequences of monopoly power arising fromIPRs.The second view contends that competition law continues to be a vital means ofensuring continued innovation and economic growth. The aims and objectives ofIPRs and competition laws are complementary, as both aims to encourageinnovation, competition and enhance consumer welfare. It is vitally important topreserve competition in innovation because competition ensures the best outcomefor consumers. 14
  • 20. Competition authorities are normally concerned with anti-competitive practices suchas abuse of dominant position whatever be the source of such practices, rather thanwith the abuse of IPRs. The Competition Act 2002 specifically refers to IPR laws.Section 3(5) of the Act states that agreements entered into for imposing reasonableconditions or restraining infringements of IPRs conferred under respective IPRslaws would not be actionable under the Competition Act 2002. The Competition Act2002 applies to IPRs in relation to abuse of dominant position and combinations.Therefore, abuse of dominance due to an IPR is liable for action under the IndianCompetition Act just as IPR-related dealings in combinations leading to an anti-competitive effect.Thus, the issues involved are technical and multifarious and need to be dealt with indiverse ways.As there are opposing views on the interface between a competition law and IP lawsand it has argued that competition laws encourage competition and prohibitmonopolies while IP laws reward innovators with a limited monopoly.ObservationIt has been observed that –• Marketing and distribution related business alliances with others• Use of multiple channels for marketing, though considerably through open market• No competition from imports for majority• Sourcing IP through in-house R&D by many• R&D suffers from low success rate and long gestation lag• Increasing technology acquisition/licensing• Majority of the IPs are product related 15
  • 21. CHAPTER (IV) RESEARCH METHODOLOGYThe main significance and objective behind the IP laws is defend ones IPRs byissuing some limited monopoly rights for a limited terms in order to promote thefurther investment in research & development. On the other hand, the mainobjective of competition law is to minimize the adverse consequences of monopolypower including one arising from IPRs. To address various said issues concerningthe subject, various online documents other than few books need to be referred.The situation of developing countries and the development contextThe models and practices that serve as the basis for harmonization are generallytilted in favour of IP holders, with serious implications also for competition. Whenthey are transferred to developing countries, so too are the imbalances. However,the effects on developing countries are even more serious, as there are systemicreasons why upward harmonization towards developed countries’ IP standards isinappropriate and damaging for most developing countries.The overwhelming share of patents in developing countries is held by foreigners,and thus most of the commercial benefits of IP accrue to these foreign institutions.There are large and growing patent rents transferred from developing to developedcountries. Since the patents are owned by foreigners, local researchers andenterprises are blocked or restricted in their use of the patented materials. Localindustries will also find it difficult or impossible to produce similar products as thosepatented.In terms of effect on competition, the situation confers monopoly rights onforeigners, and local enterprises are placed in a situation in which they face high oreven insurmountable obstacles to compete. The kind of reverse engineeringundertaken by today’s now-developed countries during their development phase,or by industrially successful developing countries such as South Korea, when theydid not have to adhere to the TRIPS Agreement’s high IP standards, will beextremely difficult or impossible to undertake today. 16
  • 22. Recent studies show the high extent of costs incurred by developing countries. Theformer chief of trade policy research8 estimates that the obligations on developingcountries to implement TRIPS will result in increased payments by them of US$60billion a year. It has estimated that the net annual increase in patent rents resultingfrom TRIPS for the top six developed countries in this field will be US$41 billion(with the top beneficiaries being the US with $19 billion, Germany $6.8 billion,Japan $5.7 billion, France $3.3 billion, UK $3 billion and Switzerland $2 billion).Developing countries that will incur major annual net losses include South Korea($15.3 billion), China ($5.1 billion), Mexico ($2.6 billion), India ($903 million) andBrazil ($530 million).9It has argued that the World Bank’s patent rents estimates, already high enough,significantly understate the actual costs to developing countries, as these onlymeasure the direct outflow of patent rents from these countries. In addition thereare economic distortions as the IP protection causes goods to sell at prices farabove their marginal costs, thus giving rise to “deadweight costs”. Citing otherstudies, they estimate the deadweight costs to be twice the size of the estimatedpatent rents.10In addition, there are costs for administering and enforcing IP laws and policies,requiring law reform, enforcement agencies and legal expertise. World Bankproject experience indicates that it will cost a developing country $150 million to getup to speed on three new WTO areas (IPRs, SPS and customs valuation). Henotes that this amount is more than a full year’s development budget in manyLDCs.11Many analysts believe that the developing countries received a bad deal inaccepting TRIPS in the Uruguay Round. “Through TRIPS developing countriestook on as legal obligation a cost of $60 billion per year, but there is no legalobligation in the agreement on any Member to provide anything in exchange”.8 the World Bank, Michael Finger (2002)9 A report by the World Bank (2002)10 Weisbrot and Baker (2002)11 Finger (2002) 17
  • 23. Finger adds that the Uruguay Round “grand bargain” was that developing countrieswould take on obligations in the new areas and in exchange developed countrieswould provide better access to their markets, particularly on agricultural productsand on textiles and clothing.12It has concludes that compared with the outcome of the market accessnegotiations, the TRIPS amounts (i.e. net rents) are big money. The US obtained13 times more benefit from annual patent rents arising from TRIPS than fromliberalization of industrial tariffs with Germany, France and UK gaining 3.6 timesmore. Conversely, the loss from TRIPS obligation is 18 times greater for Koreathan gains from Uruguay Round tariff liberalization, and the costs outweigh benefits7 times for Mexico and 4.7 times for China.Well known trade economists who advocate free trade have also written harshly onthe imbalances of TRIPS and the adverse effects on competition caused by theupward harmonization of IP standards induced by TRIPS. The economicsprofessor at Columbia University, in a letter to Financial Times argued that theWTO must be about mutual gains in trade whereas IP protection is a tax on poorcountries’ use of knowledge, constituting a wealth transfer to the rich countries.“We were turning the WTO, thanks to powerful lobbies, into a royalty-collectingagency by pretending, through continuous propaganda that our media bought into,that somehow the question was ‘trade related’.” He advocated that the TRIPSAgreement be removed from the WTO.13The economics professor at Yale University also advocates taking TRIPS out ofWTO altogether or at least renegotiating some of its provisions. The arguments putforward as benefits to developing countries of high IP standards are that this wouldencourage local innovation, and foreign enterprises would be more willing totransfer technology and to invest.14“These a priori arguments are based on the premises that first IPR protection of the12 Finger 2002: p.1113 Jagdish Bhagwati (2001)14 T.N. Srinivasan (2000) 18
  • 24. type imposed by TRIPS is needed to encourage innovation and second that foreignenterprises place a significant weight on the strength of IPR protection regime. Thetheoretical justification for and even more importantly the empirical evidence insupport of both these premises is not at all strong….It would appear that patentprotection as a spur to innovation does not appear to be powerful in the real world.And the cost to the general public of restricting access to new technology throughpatenting may be high.”15In relation to balance of gains and losses and to the effect on competition, it can bestated, “Most of the gainers from TRIPS are in rich developed countries and only afew, if any, in poor countries. This being the case, even if gains outweigh losses,international transfers would be needed to compensate losers. No such transfersfrom gainers to losers are envisaged as part of TRIPS. Besides, TRIPS, unliketariff reductions, involves the creation or strengthening of the monopoly position ofdeveloped country producers in the markets of poor countries. Thus, TRIPScreates a distortion of monopoly in developing countries, the rents from whichaccrue to the rich. Besides, any acceleration of innovative activity, which is the onlyrationale for granting monopoly rights, if it comes about at all, will take place mostlyin rich countries. Whether some of the benefits from any acceleration of innovationin the rest of the world will accrue to poor countries is arguable. In any case thebenefits, if any, are uncertain and in the future, but the costs to developingcountries are concrete and at the present.”16Competition and Patents -There is a close link between patent rights and competition, which, in simple terms,can be characterized by two factors: on the one hand, patent laws aim to preventthe copying or imitation of patented goods, and thus complement competitionpolicies in that they contribute to fair market behaviour. On the other hand,competition laws may limit patent rights in that patent holders may be barred fromabusing their rights by applying monopolistic practices. In sum, experience showsthat too high or too low protection of both patents and competition may lead to15 T.N. Srinivasan (2000)16 T.N. Srinivasan (2000) 19
  • 25. trade distortions. A balance has thus to be found between competition policy andpatent rights, and this balance must achieve the goal of preventing abuses ofpatent rights, without annulling the reward provided for by the patent system whenappropriately used.The search for this balance between patents and competition policy objectives isreflected both within the patent system as well as in respect of its relationship withcompetition law.Within the patent system, the core principles of the system have been framedprecisely with a view to ensure that the system simultaneously fosters innovationand remains consistent with fair market rules. Therefore, safeguards andboundaries have been built into the patent system, among which are the fact thatmost patent systems protect only inventions, not discoveries, the limitation ofpatent rights as to their contents and their duration, and the conditions ofpatentability that have been framed precisely in a way that should allow the systemto generate patents only for those inventions which are most likely to serve thepublic interest, but should prevent patents for those inventions that would appearnot to benefit society.On the other hand, competition law has as its objective to prevent undesiredmarket behaviour and, in particular, abuses of a market position. In relation topatent rights, such behaviour would cover activities going beyond the objectivesand boundaries set by the patent system. Such situations may occur, for example,where an exclusive license totally excludes other competitors from market entry,through restrictive selling practices or where patent rights are used to createhorizontal agreements for fixing price levels. Against this backdrop, competitionpolicies and laws can be an important instrument to regulate potential abuses ofpatent rights and to complement patent inherent boundaries.17Competition issues and MSMEs -Competition Policy relates to introduction and fostering of competition principles inexecutive policies of government on one hand, and to provide legal recourse17 WIPO web resources on competition and patents http://www.wipo.int/patent-law/en/developments/competition.html 20
  • 26. against public or private behaviour, that results into stifling of competition in aneconomy, on the other. The phenomenon of Competition Policy is new one in India.While a not-so effective mechanism of MRTP did exist for curbing monopolies inprivate markets, there is no precedence of institutional mechanism for restrainingexecutive policies against anti-competitive behaviour.A functional and effective Competition Commission mechanism is needed urgentlyby MSMEs to ensure that they are not victimized by Monopolies and Cartels and arenot thrown out from public procurement through ‘crowding out’ and pooling.MSMEs are already suffering from the instances of monopolies, cartels and abuseof dominance in Iron and Steel, Copper, Aluminium and plastic raw material in India.Public procurement and Government buying also suffer from ad-hoc policies whichaim to crowd out MSMEs. A recent decision of the Government not to buymedicines from companies having a turn-over less than Rs. 30 crore is a case inpoint. Such instances are increasingly coming to light in power sector also in boththe centre and the states.Indications on the ground show that developing countries are more prone to cartels,because they often lack effective competition regimes.In India, cartels have been alleged in various sectors viz. cement, steel, tyres,transport (trucking), rubber, power cables etc. and also a number of overseas carteli.e. soda ash, bulk vitamins, petrol etc. Very recently the real estate developersbody National Real Estate Development Council has approached the CompetitionCommission of India (CCI) seeking intervention against alleged cement cartelisationhitting real estate developers. One has to wait and watch how the same is handledby CCI.Shifting of balance of IP, Monopoly and competition-There are benefits to be derived from an appropriately designed and implementedIP policy geared to the public interest and to development needs, that takesaccount of the factors requiring balancing, and that attains the right balance.However, when the policy is inappropriately designed, or when the proper balanceis not struck, there can be adverse effects of IP on competition, the public welfare 21
  • 27. and development requirements.Due to the TRIPS Agreement, several flexibilities that countries had in their IPpolicies have been narrowed. For example, TRIPS mandates that nationaltreatment be provided for patent applications; patents have to be given for bothproducts and processes, and there cannot be different treatment on a sectoralbasis. This has affected many developing countries that had previously excludedfrom patentability certain sectors (such as medicines, food and chemicals) orcertain categories (especially product patents in medicines).TRIPS set minimum standards for a wide range of IP that are mandatory toimplement. Many analysts have concluded that TRIPS has very significantly tiltedthe balance in favour of IPR holders, most of who are in developed countries, vis-à-vis consumers and local producers in developing countries and vis-à-visdevelopment interests.The results are that:(i) The new orientation of the patent office combined with the court’s legalinterpretations make it much easier to get patents. Patents on inventions that aretrivially obvious, such as the process of making a particular type of sandwich, or amethod for swinging on a swing, are being given.(ii) Patents have become weapons for firms to harass its competitors.(iii) Patents have enabled companies to win huge damages awards and put rivalsout of business.(iv) Patent approvals are extended to new areas including purported discoveriesthat are actually familiar, such as patents on previously well-known option pricingformulas.18 While some innovators who obtain the patents are rewarded, theactivities of many others who are competitors are inhibited or even stopped,including their potential innovation activities.IP policy and practice in developed countries have been exported to the rest of theworld through international harmonization programmes and treaties. The TRIPS is18 Jaffe and Lerner 2004: pp.2-3 22
  • 28. the best example of these. The agreement was mainly prompted by and evendesigned by representatives of certain industries in developed countries, whichsucceeded in getting their governments to successfully advocate their cause in theUruguay Round, overcoming the initial strong resistance of many developingcountries.19WIPO has also been an active forum for IP harmonization, for example through its1996 Copyright Treaty. The present negotiations for possible new treaties relatingto patents and to broadcasting are other examples. In fact, WIPO has become amore active forum for negotiations for new treaties aimed at harmonization of IPsystems and rules than the WTO.If current patent harmonization negotiations proceed along the lines advocated bythe developed countries in the substantive patent law treaty process, there is astrong possibility that the results of recent developments in the major countries(such as the relaxing of criteria of patentability and the much easier granting ofpatents) will be disseminated to the rest of the world. There is thus a danger thatwhat many analysts consider a dysfunctional system will be disseminated todeveloping countries.Bilateral and regional agreements that involve developed countries with developingcountries are other channels through which new aspects of IP are beingtransferred to developing countries. Many of these arrangements have TRIPS-plusprovisions, requiring the parties to undertake obligations that narrow their policyspace to choose between options. For example, they may contain conditions forcompulsory licensing that are more restrictive than permitted under TRIPS, or thatrequire parties to commit to a provision on data exclusivity preventing the use oftest data in the drug approval process relating to generic drugs that is not requiredby TRIPS.19 Raghavan 1990, Drahos 2003 and Sell 2003 23
  • 29. STUDY ON HOW PATENTS RIGHTS ARE ABUSED AND THEIR IMPACT ON SME’S & OTHER DEVELOPING COUNTRIESPatents are privileges granted by the governments to the applicant (innovator) inhope on promoting innovation and creation of new technologies. Though, todaycompanies are taking advantage of their monopolistic rights after acquiring patents.More & more organisations are plugging into strategic patenting of inventions whichcan be harmful to the society and public in large both consumers and the MSMEs.Further, this has been a growing concern on the increasing costs of patentedmedicines, food & other basic goods.This study does not criticize IPRs or patents but gives an insight on the ways inwhich patent rights are abused. Further this study reveals the impacts, due to suchabuse of patents rights, on the SMEs & the developing countries.EXAMPLES OF EFFECTS OF IPRs ON COMPETITION AND WELFAREThe upward harmonization of IP standards has shifted the balance adversely forthe public interest and for development needs in developing countries. Recentdevelopments in developed countries have also tilted the balance much moretowards the IP holders. There have been adverse effects on competition as well asconsumer access. Below are examples.(a) Effects on competition and market structure -The monopoly provided by patents enables the patent holder to block or otherwisediscourage rival firms entering the market, or even in some cases to undertakeresearch and innovation. This may be justified if the patents are given correctly,and for the right duration, and moreover if the IP holder does not abuse his right.The trend in some developed countries in relaxing the criteria, standards orpractice of granting patents, and the practice of some companies owning patents inharassing rivals is increasing the anti-competitive effects of IP. The number ofpatents tripled from 1983 to 2002 (from 62,000 to 177,000), accompanied by aproliferation of patent awards of dubious merit, for example “inventions” that arenot new or are trivially obvious.2020 Jaffe and Lerner (2004) 24
  • 30. There has also been a corresponding explosion in patent lawsuits. One recenttrend is that an established firm with many patents demands rivals to take outlicences to its patents and many of the rivals choose to settle rather than fight(even if they do not believe they infringe) as they do not have the means to fightexpensive cases. Many large companies engage in this patent enforcementactivities as a line of business; for example, Texas Instruments is netting almost $1billion annually from patent licences and court settlements due to an aggressiveenforcement policy, and in some years this source of revenue has exceeded netincome from product sales. Besides paying royalties, the small firms may reducetheir R and D investment, shying away from innovations in areas where big firmshave patents. Thus, the effect is the suppression of innovation by younger andsmaller firms, and the reduction of competition in the market.A second trend is the emergence of individual inventor who holds up establishedfirms. The individuals have been granted patents of dubious validity, with overlybroad claims. The established firms often choose to settle rather than face theuncertainty of a court case.(b) Effects on competition, prices and access to essential goodsThe monopoly rights granted to patent holders enables them to restrict competitionand charge monopoly prices. Proponents of IP point to the need for innovators torecoup the cost of research, and thus a mark-up on normal profits is needed.However, critics claim that in some cases the balance is tilted in favour of thepatent holders, who make excessive or even exorbitant profits by over-chargingconsumers excessively high prices, even after taking account of the need torecoup research costs. In order for policy makers to be able to judge whether thebalance is struck, or how far it has been missed, it is important to be able to obtaindata on costs and prices from the companies that hold the patents.In medicines, the effect of patent monopolies on prices is demonstrated by datathat compare prices of patented/branded and generic products; the prices of thesame product sold in different countries; and the prices of raw materials used in 25
  • 31. producing medicines in the open competitive market and in transfer-pricingpractices of TNCs. The following are some conclusions.(i) Prices of branded or patented products are often far higher than prices ofgenerics. A comparison of HIV/AIDS medicines in 2001 show that the US price of3TC (lamivudine) by Glaxo was US$3,271 per patient per year while the Indiangeneric producer Cipla’s price was $190. For viramune (nevirapine), the brandedproduct was sold in the US for $3,508 while the Cipla generic price was $340.21(ii) When generic competition is introduced, prices of the patented product will fall.For example, the drug simvastatine was sold in branded version in Malaysia(where there was no generic competitor) for $1050 per 100 units; in India the samebrand was sold for $18 as there was a generic competitor which was sold for $11.22In Brazil, when the government started producing generic versions of AIDS drugs,the prices of equivalent branded products dropped by 79%.23(iii) When a drug company sells the same product in different countries, itdifferentiates the prices according to “what the market can bear”. Where alternativeor generic medicines are available, a branded product is usually priced lower; thesame brand will sell at higher price levels in countries where there is nocompetition. The same brand zantac was sold cheaply in India ($2 for 100 tablets)because it faced generics competition. It was sold at $3 in Nepal, $9 inBangladesh, $30 in Vietnam, $37 in Thailand, $55 in Malaysia, $61 in Sri Lanka,$63 in Philippines and $183 in Mongolia. It was also sold at $23 in Australia, $77in Canada, $196 in Chile, $132 in El Salvador, $150 in South Africa and $97 inTanzania.24(iv) TNCs practice transfer pricing in the trade of raw materials used in the drugs,raising the cost of medicines in developing countries. A study in Pakistan foundthat TNCs exported raw materials to their subsidiaries in Pakistan at much higher21 Kavaljit 200122 K. Balasubramaniam 200223 Medicins sans Frontieres 200124 Health Action International 1998 26
  • 32. prices than the prices of the same raw materials if purchased from the openinternational market at competitive rates. In the case of a drug produced by aGerman company, the price for raw materials charged to the company’s subsidiaryin Pakistan was $11,092 per kg whereas the competitive international price was$320, a price difference of 3,360%. An Italian company charged its Pakistansubsidiary for raw materials at a price 7,044% more than the international marketprice.25(v) Some surveys show that drug companies can charge more in developingcountries than in developed countries for the same branded products. Forexample, in 1998, retail prices of 10 out of 13 commonly used drugs were higher inTanzania than in Canada; the average retail prices of 20 commonly used drugs in10 countries of Central and South America were all higher than the average retailprices of the same drugs in 12 OCED countries.26(c) Patenting of life forms -An example of abuse of the patent system is in the patenting of biologicalresources and the misappropriation of these resources and associated traditionalknowledge. The patenting of these resources can lead to monopolization of theseresources by corporations mainly of developed countries, thereby affecting thecompetitiveness of developing countries.TRIPS thus oblige WTO members to grant patents for micro-organisms and non-biological and micro-biological processes for the production of plants and animals.There is no reason why these have been singled out for patentability, whereasmembers are given the discretion to prohibit patents on plants and animals, and onbiological processes.(d) Agriculture, biological resources and traditional knowledgeBefore TRIPS, developing countries were able to deal with agriculture, food andgenetic resources in their own way. Several countries excluded agriculture and25 Health Action International 199426 Health Action International 1998 27
  • 33. food from IP protection. However, TRIPS Article 27.3(b) provides for protection ofplant varieties by a patent, a sui generis system or a combination of both.In some of those countries where there are patents on plant varieties, farmers arebeing prosecuted for alleged violation of IPRs. These developments could bereproduced in developing countries in the future.A report27 how American farmers have been impacted by litigation arising from theuse of patented genetically engineered crops produced by Monsanto. The reportnotes that, to date, Monsanto has filed lawsuits against 147 American farmers andthe company has a staff of 75 devoted solely to investigating and prosecutingfarmers. The report expresses concern that in its quest to be the source for staplecrop seeds in the US and around the world, the company will overturn centuries-old farming practices through lawsuits. The largest recorded judgment that wasfound thus far in favour of Monsanto as a result of a farmer lawsuit isUS$3,052,800. Farmers have paid an average of US$412,259 for cases withrecorded judgments. Many farmers have to pay additional court and attorney feesas well as costs of the company.The study found that farmers even have been sued after their fields werecontaminated by pollen or seed from someone elses genetically engineered crop;when seed from a previous years crop has sprouted, or "volunteered," in fieldsplanted with non-genetically engineered varieties the following year; and when theynever signed Monsantos Technology Agreement but still planted the patented cropseed. In all of these cases, because of the way patent law has been applied,farmers are technically liable. It does not appear to matter if the use was unwittingor if a contract was never signed.According to a press report28 Tennessee farmer named Kem Ralph spent fouryears in jail for saving and replanting Monsantos Roundup Ready soy seed in1998 and he also had to pay the company 1.8 million dollars in penalties. The27 Center of Food Safety (2005), USA28 Inter Press Service 14 January 2004) 28
  • 34. report says that even if a farmer decides to stop using Monsanto seeds, the GEplants self-seed and some will spring up of their own accord the following year.These unwanted "volunteers" can keep popping up for five or more years after afarmer stops using the patented seeds. Under U.S. patent law, a farmer commitsan offense even if they unknowingly plant Monsantos seeds without purchasingthem from the company. Other countries have similar laws.The reports above show a trend in developed countries that may be replicated inother countries, including the developing countries, should these countries alsoadopt particular systems of plant varieties protection.Developing countries that do not want to allow patents for plant varieties may wishto introduce their own version of sui generis protection, which provides for therights of farmers. However, there may be pressures placed on them to accept acertain definition and model of a “sui generis system” for plant varieties protection.These pressures may be partly caused by the lack of clarification as to theflexibility that Members, especially developing country Members, may have ininstituting their own sui generic system of protection.(e) Patents and the transfer and use of technology -It has been argued that higher standards of IP can lead to transfer of technology asforeign firms would be encouraged to invest in developing countries and make useof their technologies. However, there is also a counter-argument that foreign firmsthat have obtained patents in developing countries are able to make inroads andprofits in these countries without having to produce the patented products there, asthey can import the products and sell them at monopoly prices.On the other hand, there are several ways in which a strong IPR regime can hinderaccess of developing countries to technology.29 Obstacles to technology transfermake it difficult for developing countries and their firms to upgrade productivitywhich is necessary for them to compete successfully. They thus impedecompetition.29 Khor 2002: pp.87-101 29
  • 35. Firstly, a strict IPR regime can discourage research and innovation by locals in adeveloping country. Where most patents in the country are held by foreigninventors or corporations, local R&D can be stifled since the monopoly rightsconferred by patents could restrict the research by local researchers. Strict IPRprotection, by its apparent bias, may actually slow the pace of innovation indeveloping countries, and increase the knowledge gap between industrial anddeveloping countries. In such situations, the IPR system favours those who areproducers of proprietary knowledge, vesting them with greater bargaining powersover the users.30 The report31 also provides analysis and examples of how thepatent system might inhibit research and innovation."The proposed changes to the IPR policies of developing countries have raised anumber of important issues. One of the most important of these is the likely impactof these changes on a developing countrys ability to undertake research anddevelopment in agriculture. We are particularly concerned about the impact of astrong IPR system on research aimed at the development of new plant varietiesand genetically engineered plants."32The research in this area is dominated by firms in developed countries, while publicsector research institutions (both international and national) are very weak. Theadoption of an IPR system which includes patents for biotechnology basedtechniques and products will be extremely detrimental to local research.As study of cotton and rice research in India has shown, most of the importanttechniques and genes used in the development of genetically engineered plantsare already owned by firms in developed countries. As these patent rights are notapplicable in developing countries, local researchers are able to undertakeresearch on local problems. However, once these rights become applicable indeveloping countries, research and its commercialisation will face serious problems.30 Oh 200031 CIPR report (2002: pp.126-130)32 Dr Gahuur Alam (1999) 30
  • 36. Secondly, a strict IPR regime makes it difficult for local firms or individualresearchers from developing or making use of patented technology.Thirdly, should a local firm wish to "legally" make use of patented technology; itwould usually have to pay significant amounts in royalty or licence fees. As pointedout earlier, TRIPS increases the leverage of technology-suppliers to charge ahigher price for their technology. Many firms in developing countries may notafford the cost. Even if they could, the additional high cost could make theirproducts unviable. Moreover, there could be a large drain on a developingcountrys foreign exchange from having to pay foreign IPR holders for the use oftheir technology. Many developing countries with serious debt problems will beunable to afford to pay the cost of using the technologies.Fourthly, even if a local firm is willing to pay the commercial rate for the use ofpatented technology, the patent holder can withhold permission to the firm, orimpose onerous conditions, thus making it impossible or extremely difficult for thetechnology to be used by the firm. Patent holders can refuse to grant permission tocompanies in the South to use the technologies, even if they are willing to paymarket prices; or else the technologies may be made available at high prices (dueto the monopoly enjoyed by the patent holders). Companies in the South may notafford to pay at such prices, and if they do their competitiveness could be affected.POLICIES AND METHODS TO PRIORITISE COMPETITION PRINCIPLES INRELATION TO IPThere are several measures that countries can take to give higher priority tocompetition principles in relation to intellectual property. Below is a discussion onsome of them.(a) Limit the granting of IP according to correct criteriaThe wrong granting of IP extends monopoly rights needlessly or to the wrongparties, and thus widens the extent of anti-competitive behaviour and marketdistortions. Perhaps the most important measure to promote competition principlesvis-à-vis IP is that governments institute policies that enable or ensure the 31
  • 37. appropriate granting of IPRs and that the proper conditions are set (for examplewith regard to duration of patent, copyright, etc). The nature of appropriateness ofthe grant should be in accordance with the need to attain the right balancebetween the need for incentives for the right holder, and society’s need for accessand use of the inventions.A useful set of guidelines is provided in report33 which states that the underlyingprinciple in developing country legislation should be to aim for strict standards ofpatentability and narrow scope of allowed claims, with the objective of:  limiting the scope of subject matter than can be patented;  applying standards such that only patents which meet the requirements for patentability are granted and that the breadth of each patent is commensurate with the inventive contribution and the disclosure made;  facilitating competition by restricting the ability of the patentees to prohibit others from building on or designing around patented inventions;  providing extensive safeguards to ensure that patent rights are not exploited inappropriately; and  Considering the suitability of other forms of protection to encourage local innovation.The report also provides details on the implementation of each of the objectives.The duration to be given to patents, copyright and other IP should be appropriate inthat it be sufficient to enable the innovator to recover the costs of research andinnovation but not so much as to enable excessive profits. Prices can be regulatedto ensure that the right of consumers to access to essential goods and services isrespected.(b) Providing for and making use of exceptions, exemptions and limitations -There should be policy space, especially for developing countries to have adequateprovisions for exceptions, exemptions and limitations to IP in accordance withdevelopment needs and requirements, and the rights to access of essential goods andservices.33 CIPR (2002: p.49, p.114) 32
  • 38. Where such exceptions and limitations exist or are allowed in international lawssuch as TRIPS, developing countries should make use of them. This would reducethe extent of monopoly and increase the extent and scope of competition in theeconomy, as well as catering to the fulfilment of rights and access to essentialgoods and services.Organisations like WTO, WIPO and other UN agencies should provide technicalassistance to developing countries on how to make use of the exceptions,exceptions and limitations allowed by international laws, by incorporating them indomestic law and thereafter in practice.Existing international laws should be examined for whether the exceptions,exemptions and limitations are adequate in providing the necessary balance, andto allow the fulfilment of rights and access to essential goods and services. Thereview should then result in the appropriate clarifications and amendments.Negotiations for new IP-related treaties or new provisions or amendments toexisting treaties should fully take these factors into account. Bilateral and regionaltrade/economic arrangements should not have TRIPS-plus provisions.(c) The proper design and implementation of flexibilities -Besides exceptions, international frameworks should also contain adequateflexibilities especially for (but not limited to) developing countries to enable or evenencourage them to take measures that may be required to offset IPRs that aregranted. Such measures are meant to uphold the principles of competition andmeeting the need of access to essential goods and services.Among these safeguard measures are compulsory licensing, parallel importationand government and non-commercial use. Technical assistance should beprovided in (i) raising the knowledge of developing countries and their institutionsabout their existence, rationale and use, (ii) instituting them in national law and (iii)implementing these measures.The existing international treaties should also be examined for their adequacy in 33
  • 39. providing for these safeguard measures, and clarifications or amendments made tostrengthen these where needed. Negotiations for new treaties should fully take intoaccount the need for adequate safeguards. Bilateral and regional trade andeconomic arrangements should not contain provisions that restrict the flexibilitiesthat are allowed by international treaties such as TRIPS.At the national level, governments should review existing legislation to fullyincorporate the flexibilities that are allowed, and then institute policies andmechanisms to implement them.(d) Competition principles and legal provisions in laws relating to IP and beyondPro-competition principles and measures that exist in IP-related internationaltreaties should be fully recognized and appreciated and technical assistanceshould be provided to developing countries to enable them to be aware of theseand to incorporate them where possible in national legislation, policy and practice.For example, Article 8.2 of TRIPS under general principles states that appropriatemeasures (consistent with the agreement’s provisions) may be needed to preventabuse of IPRs by right holders or the resort to practices which unreasonablyrestrain trade or adversely affect technology transfer. While licensing is a legitimateactivity of IPR holders and in most cases can be seen as pro-competitive inlegitimizing access to technology to third parties, these activities may also be “anti-competitive where they are a mere sham for a cartel arrangement, where theyrestrict competition between technologies that are economic substitutes for oneanother or where they exclude new technologies from the market.”34Section 8 of TRIPS on “Control of anti-competitive practices in contractuallicenses” has an Article 40 that recognizes that some licensing practices orconditions pertaining to IPRs which restrain competition may have adverse effectson trade and impede technology transfer and dissemination. Article 40.2 says thatnothing in the agreement shall prevent members from specifying in their legislation34 Roffe (1998) 34
  • 40. licensing practices or conditions that abuse IPRs, having adverse effect oncompetition, and a member may adopt appropriate measures to prevent or controlsuch practices, including exclusive grant-back conditions, conditions preventingchallenges to validity and coercive package licensing, in light of relevant laws andregulations of that member. Article 40.3 also provides for consultations andcooperation among members (including through supply of non-confidentialinformation) to deal with IPR owners that are undertaking anti-competitive practicesin violation of a requesting member’s laws.Several developed countries have laws or regulations that hold certain anti-competitive practices as per se unlawful.35 The US Antitrust Guidelines for theLicensing and Acquisition of IPRs 1995 states that among the restraints that havebeen held per se unlawful (by courts in the past) are bare price-fixing, outputrestraints and market division among horizontal competitors, as well as certaingroup boycotts and resale price maintenance. To determine whether a particularrestraint in a licensing arrangement is given per se or rule of reason treatment, theagencies will assess whether the restraint will contribute to an efficiency-enhancingintegration of economic activity.The EC in its Technology Transfer Block Exemption Regulation in general has 8categories on its blacklist including restrictions relating to price or output,competing markets, exports to territories within the common market, customerallocations, R&D activities or full grant-backs of licence improvements.36Some Commonwealth countries, following the UK, have a provision in their patentlaws that certain anti-competitive practices in patent licences are automaticallydeemed to be null and void. For example, Australia’s Patents Act 1990 hold invalidany conditions that restrict the licensee from purchasing or using a product orprocess supplied by the licensor’s competitors or that requires the licensee toacquire a product not protected by the patent from the licensor; in addition theAustralian Trade Practices Act 1974 specifically prohibits 5 activities: anti-35 Watal 2001: pp.304-30936 EC, Technology Transfer Block Exemption Regulation, 240/96, (effective 1996) 35
  • 41. competitive agreements (including price fixing and exclusionary provision), misuseof market power, exclusive dealing, resale price maintenance, mergers andacquisitions with a substantial lessening of competition.According to the above regulations, the mentioned features in contractual IPlicences are anti-competitive per se and thus deemed unlawful in general; thus itwould not require a case-by-case examination to determine whether the mentionedactivities are anti-competitive.Following the example of developed countries, developing countries should specifyanti-competitive conditions in IPR licences to be per se null and void. As seenfrom the above examples, there is leeway for countries to determine what licensingconditions can be considered to have anti-competitive effects per se and thisflexibility should be retained. However, as pointed out37 in many cases it is not therestrictive nature of IPR licences that are a cause of concern but the outrightrefusal to transfer technology without other cross licensing arrangements, to whichdeveloping country enterprises may have no access. Also, the question as towhether refusal to deal or license a patent by the right holder can be considered apatent misuse, has to be clarified. It has provides a useful account of the evolutionof international negotiations in and outside the TRIPS Agreement, on restrictivepractices, and their implications for interpreting and implementing TRIPS.38There are other provisions in TRIPS that deal with competition issues. Forexample, Article 31 on the use of patents without authorization of the right holder,has a sub-paragraph (k) relating to anti-competitive practices. If a compulsorylicence is granted to remedy a practice determined after judicial or administrative tobe anti-competitive, the obligations in subpara (b) (that before a compulsorylicence can be given, efforts have to be made to obtain a voluntary licence) and insubpara (f) (that a compulsory licence has to predominantly for the supply of thedomestic market) are waived. Moreover “the need to correct anti-competitivepractices may be taken into account in determining the amount of remuneration in37 Watal (2002: p307)38 Roffe (1998) 36
  • 42. such cases” and authorities can refuse termination of authorization if and whenconditions which led to such authorization are likely to recur. Developing countriesshould include this pro-competitive safeguard provision and measure in theirnational legislation and policy.Generally, it would be important for developing countries to incorporate the pro-competition principles and elements in their national laws and regulations relatingto IP. Moreover, they should establish provisions within national competition lawand regulations that prohibit anti-competitive practices in IP-related licences, asreferred to above.The process of economic reform in India started in earnest in 1991, when theregime of license and control began to be dismantled. Sometime after this processbegan, but rather lately, the Government turned its attention to having a genuinecompetition law. In a free economy, there could be market failures, and enterprisescould form cartels or abuse their dominance. Adam Smith (to quote his words)wrote of the ‘wretched spirit of monopoly’ in which ‘the oppression of the poor mustestablish the monopoly of the rich’.Thus liberalization is incomplete unless it is complemented by a competition watchdog that can discipline players that seek to undermine the market for individualadvantage. This wisdom has in fact compelled almost 100 countries to rewrite orfreshly enact a competition law, and set up a modern competition authority.The Indian Government set up of a high level committee to study the matter; afterconsidering its report and the suggestions from trade, industry and others, a newCompetition Act was enacted in January, 2003. This Act is a modern piece ofcompetition legislation moulded on the pattern of similar laws in the world. It coversthe usual three fields: 1. anti-competitive agreements, 2. abuse of dominance, and 3. regulation of mergers and acquisitions.In addition, it mandates undertaking competition advocacy. 37
  • 43. The Competition Act marks a conscious departure from the previous Monopoliesand Restrictive Trade Practices Act (MRTP Act). The MRTP Commissionrepresented the regime of license and control, and it became an anachronism inthe new economic order. According to the Preamble, the Competition Act is forestablishing a Commission which is to prevent anti-competitive practices, promotecompetition, protect the interests of consumers and ensure freedom of trade; theAct specifically makes these the duties of the Commission. This is very differentfrom the purpose of the MRTP Act which was to control monopolies, defined interms of size; the Competition Act punishes behaviour, not mere size. There areother critical differences between the new Act and the MRTP Act; for example theCompetition Act clearly defines and penalizes cartels, regarded as the mostpernicious form of competition violation; the Commission can impose heavypenalties; it has extra-territorial jurisdiction and can additionally enter intoarrangements with overseas competition authorities; it incorporates a leniencyprogramme, and so on. Overall, the two bodies and the two laws are poles apart intheir philosophy, tenor and thrust.India is the only major economy in the world without a fully functional competitionauthority, which is an unfortunate fact. Meanwhile, the Indian economy and itsconsumers are losing out, and the gainers are those who may be happily profitingat public and national expense. It must be the common hope of all who areconcerned about the health of the Indian economy that this exercise will end thelegal uncertainty and will enable the Competition Commission to start its regulatoryand adjudicatory work in full measure, sooner rather than later.39The creation of “packages” of patents by a company around a given technology orproduct has become increasingly common. In the pharmaceutical field, forinstance, ten or more patents are often acquired around the same activeingredient, even after it has already fallen into the public domain. The accumulationof patents may be the result of different patent strategies. As examined40, packagepatents may be used:39 Speech of Mr Vinod Dhall, Member, Competition Commission of India, CUTS InternationalConference on “Moving the Competition Policy Agenda in India”, 31 January-1 February, 200540 Rubinfeld and Maness (2005), 38
  • 44. - to inappropriately extend market power from legitimate patents claims toillegitimate patents;- to coerce a party into licensing patents that it might have chosen to avoid ordesign around (especially when the licence fee is not dependent on the number ofpatents);- to reduce a competitor’s incentive to challenge individual patents since as “thecost of challenging patents increases with the number of patents included in thebundle, a firm may have an incentive to include weak patents in the package”;- to misuse patents if the bundle is used “to extend a firm’s monopoly power fromthe “space” covered by a strong patent to the space encompassed by strong andweak patents together”Compulsory Licences to Remedy Anti-Competitive Practices –Compulsory licences can be used, both in the context of IPRs and of competitionlaws, to remedy anti-competitive practices. Article 31(k) of the TRIPS Agreement,explicitly provides for the granting of such licences. Unlike other compulsorylicences allowable under the Agreement and following the previous US practice, inthe case of anti-competitive practices:(a) there is no need to previously negotiate a voluntary licence with the patentowner;(b) the need to correct anti-competitive practices may be taken into account indetermining the amount of remuneration;(c) the compulsory licensee is not subject to the limitation imposed by Article 31;(d) the licence shall be predominantly for the supply of the domestic market of themember granting it. 39
  • 45. Chapter (V) Conceptual framework covering important terms andtheir meaning etcThe concept of unfair competition is very wide since any conduct objectivelycontrary to good faith is deemed to be unfair. The law includes amongst such formsof conduct Laws of confusion and deception, gifts which lock consumers intocontractual obligations or which create confusion as to price, and Laws ofdenigration, comparison, imitation, exploitation of another’s reputation, breaches ofconfidentiality, incitement to breach of contract, infringement of laws ondiscrimination and dumping.Competition laws all over the world are primarily concerned with the acquisitionand/or exercise of market power and its abuse. The term “market power” isvariously known as “dominant position”, “monopoly power” and / or “substantialmarket power”. The term “Competition” refers to a situation in a market place in which firms/ entities or sellers independently strive for the patronage of buyers in order to achieve a particular business objective, such as profits, sales, market share etc. By responding to demand for goods and services with lower prices and higher quality, competing businesses are pressured to reduce costs, innovate in processes and products, invest in technology and better managerial practices and increase productivity. This process leads to achievement of static, dynamic as also resource/allocative efficiencies, sustainable economic growth, development, and poverty alleviation. Competition is not an end unto itself, rather a means to achieve economic efficiency and welfare objectives. Importantly, competition is not automatic, and requires be promoting, protecting and nurturing through appropriate regulatory frameworks, by minimising market restrictions and distortions, and provision of related productive inputs such as infrastructure services, finance, human capital etc. However, a Competition Policy has to be evolved to imbibe the principles of competition in various endeavours of the Government, of course in 40
  • 46. alignment with the national strategic objectives, alongwith social, environmental, public safety, and other considerations. The expression “Competition Policy” means government measures, policies, statutes, and regulations including a competition law, aimed at promoting competitive market structure and behaviour of entities in an economy41. Competition Law is but a sub-set of the Competition Policy. The Raghavan Committee had observed that “Competition law must emerge out of a national competition Policy, which must be evolved to serve the basic goals of economic reforms by building a competitive market economy.”The World Trade Organisation (WTO) defines competition policy as: “the fullrange of measures that may be used to promote competitive market structuresand behaviour, including but not limited to a comprehensive competition lawdealing with anti-competitive practices of enterprises”. World Bank also provides adefinition of competition policy as: “government measures that directly affect thebehaviour of enterprises and the structure of industry. An appropriate competitionpolicy includes both: (a) policies that enhance competition in local and nationalmarkets, and (b) competition law, also referred to as antitrust or antimonopoly law.” Competition Policy is a broader term which includes all government policies and laws whereas competition law is specific statute with a pre- defined mandate to adjudicate on violation(s) of the law. In the case of India, the Competition Act, 2002 deals with anti-competitive agreements such as price fixing, bid rigging, joint boycotts, etc; abusive practices undertaken by dominant entities such as predatory pricing, abusive conditions of supply, etc, and regulation of combinations. It would be seen that a competition law is a regulatory instrument to check the prevalence of anti-competitive practices whereas a competition policy is a proactive and positive effort to build a competition culture in an economy.41 Several agencies such as the World Trade Organisation (WTO), the World Bank, UNCTAD etc have attempted to define the terms competition policy.WTO (1999), “The Fundamental Principles of Competition Policy: Background Note by the Secretariat” Working Group on the Interaction between Tradeand Competition Policy WT/WGTCP/W/127 41
  • 47. The Act defines the expression “dominant position (dominance)” in terms of aposition of strength enjoyed by an enterprise, in the relevant market in India, whichenables it to:  operate independently of the competitive forces prevailing in the relevant market ; or  affect its competitors or consumers or the relevant market in its favour.It is the ability of the enterprise to behave/act independently of the market forcesthat determines its dominant position. In a perfectly competitive market noenterprise has control over the market, especially in the determination of price of theproduct. However, perfect market conditions are more of an economic “ideal” thanreality. Keeping this in view, the Act specifies a number of factors that should betaken into account while determining whether an enterprise is dominant or not.Dominance has been traditionally defined in terms of market share of the enterpriseor group of enterprises concerned. However, a number of other factors play a role indetermining the influence of an enterprise or a group of enterprises in the market.Factors to determine dominant position:  market share,  the size and resources of the enterprise;  size and importance of competitors;  economic power of the enterprise;  vertical integration;  dependence of consumers on the enterprise;  extent of entry and exit barriers in the market;  countervailing buying power;  market structure and size of the market;  source of dominant position viz. whether obtained due to statute etc.;  social costs and obligations and contribution of enterprise enjoying dominant position to economic development.The Commission is also authorized to take into account any other factor which itmay consider relevant for the determination of dominance. 42
  • 48. ABUSE OF DOMINANCEDominance is not considered bad per se but its abuse is. Abuse is stated to occurwhen an enterprise or a group of enterprises uses its dominant position in therelevant market in an exclusionary or/and an exploitative manner.The Act gives an exhaustive list of practices that shall constitute abuse of dominantposition and, therefore, are prohibited. Such practices shall constitute abuse onlywhen adopted by an enterprise enjoying dominant position in the relevant market inIndia.Abuse of dominance is judged in terms of the specified types of acts committed by adominant enterprise alone or in concert. Such acts are prohibited under the law. Anyabuse of the type specified in the Act by a dominant firm shall stand prohibited.Section 4 (2) of the Act specifies the following practices by a dominant enterprisesor group of enterprises as abuses:(i) directly or indirectly imposing unfair or discriminatory condition in purchase orsale of goods or service;(ii) directly or indirectly imposing unfair or discriminatory price in purchase or sale(including predatory price) of goods or service;(iii) limiting or restricting production of goods or provision of services or market;(iv) limiting or restricting technical or scientific development relating to goods orservices to the prejudice of consumers;(v) denying market access in any manner;(vi) making conclusion of contracts subject to acceptance by other parties ofsupplementary obligations which, by their nature or according to commercial usage,have no connection with the subject of such contracts;(vii) using its dominant position in one relevant market to enter into, or protect, otherrelevant market. 43
  • 49. Exploitative and exclusionary behaviour -Abuses as specified in the Act fall into two broad categories:  exploitative (excessive or discriminatory pricing, including predatory pricing) and  exclusionary (for example, denial of market access).Predatory Pricing -The “predatory price” under the Act means “the sale of goods or provision ofservices, at a price which is below the cost, as may be determined by regulations, ofproduction of goods or provision of services, with a view to reduce competition oreliminate the competitors” [Explanation (b) of Section 4]Predation is exploitative behaviour and can be indulged in only by enterprises(s)having dominant position in the concerned relevant market. The major elementsinvolved in the determination of predatory behaviour are:  Establishment of dominant position of the enterprise in the relevant market  Pricing below cost for the relevant product in the relevant market by the dominant enterprise [Cost, for this purpose, has been defined in the Competition Commission of India (Determination of Cost of Production) Regulations, 2009 as notified by the Commission.]  Intention to reduce competition or eliminate competitors.IPRs and abuse of dominance –While reasonable use of IPRs stand exempted from the rigours of Section 3 relatedto anti-competitive agreements, no such derogation is available in case of abuse ofIntellectual Property Rights by right holders, in respect of specified abusive acts.IPRs involve grant of exclusive rights to the right holders to exploit the results oftheir innovation so as to provide incentive to innovate. Competition Act, 2002exempts the reasonable use of such rights by right holders from the provisions ofSec. 3 related to agreements. However, the actions by enterprises that shall betreated as abuse (specified under Section 4 (2)) shall stand applicable equally to 44
  • 50. IPR holders provided such rights are considered by the Commission to render theholder a dominant player in the relevant market.Unfair competition -The idea of unfair competition has been around for some time and was mentionedas one of the ways of protecting intellectual property as early as 1900 in theBrussels revision of the Paris Convention. It can best be seen as practices thatdistort the free operation of intellectual property and the reward system that itprovides.An act of unfair competition is any act of competition contrary to honest practices inindustrial or commercial matters. For example, the following in particular shall beprohibited:- all acts of such a nature as to create confusion, by any means, with theestablishment, the goods, or the industrial or commercial activities, of a competitor;- false allegations in the course of trade of such a nature as to discredit theestablishment, the goods, or the industrial or commercial activities, of a competitor;- indications or allegations the use of which in the course of trade is liable to misleadthe public as to the nature, the manufacturing process, the characteristics, thesuitability for their purpose, or the quantity, of the goods."There are many different types of acts of unfair competition including:- Causing confusion- Misleading- Discrediting Competitors- Violation of trade secrets- Taking advantage of anothers achievements (free riding)- Comparative advertisingDefinition of Unfair Competition under the Paris Convention –Article 10bis (2) of the Paris Convention defines an act of unfair competition as "anyact of competition contrary to honest practices in industrial or commercial matters". 45
  • 51. Article 10bis (3) continues specifying which acts, in particular, shall be prohibited:"all acts of such a nature as to create confusion, by any means, with theestablishment, the goods, or the industrial or commercial activities, of a competitor;false allegations in the course of trade of such a nature as to discredit theestablishment, the goods, or the industrial or commercial activities, of a competitor;indications or allegations the use of which in the course of trade is liable to misleadthe public as to the nature, the manufacturing process, the characteristics, thesuitability for their purpose, or the quantity, of the goods."The need for protection -Experience has shown that there is little hope of fairness in competition beingachieved solely by the free play of market forces. In theory, consumers, in their roleas referees of economic play, could deter dishonest entrepreneurs by disregardingtheir goods or services and favouring those of honest competitors. Reality, however,is different. As an economic situation becomes more complex, consumers becomeless able to act as referees. Often they are not even in a position to detect bythemselves acts of unfair competition, let alone react accordingly. Indeed it is theconsumer who-along with the honest competitor-has to be protected against unfaircompetition.Fair play in the marketplace cannot be ensured only by the protection of industrialproperty rights. A wide range of unfair acts, such as misleading advertising and theviolation of trade secrets are usually not dealt with by the specific laws on industrialproperty. Unfair competition law is therefore necessary either to supplement thelaws on industrial property or to grant a type of protection that no such law canprovide.Combat the abuse of a dominant market position -The rules on the prevention of unfair competition and those on the prevention ofrestrictive business practices (anti-trust law) are interrelated: both aims at ensuringthe efficient operation of a market economy. They do so, however, in different ways.Anti-trust law is concerned with the preservation of the freedom of competition bycombating restraints on trade and abuses of economic power. Unfair competitionlaw, on the other hand, is concerned with ensuring fairness in competition by forcing 46
  • 52. all participants to play according to the same rules. Yet both laws are equallyimportant, although in different respects, and supplement each other.It is true that describing unfair competition as acts contrary to "honest tradepractices," "good faith" and so on does not make for clear-cut, universally acceptedstandards of behaviour, since the meaning of the terms used is rather fluid. Thestandard of "fairness" or "honesty" in competition is no more than a reflection of thesociological, economic, moral and ethical concepts of a society, and may thereforediffer from country to country (and sometimes even within a country). That standardis also liable to change with time. Furthermore, there are always new acts of unfaircompetition, since there is ostensibly no limit to inventiveness in the field ofcompetition. Any attempt to encompass all existing and future acts of competition inone sweeping definition-which at the same time defines all prohibited behaviour andis flexible enough to adapt to new market practices-has so far failed.This does not mean, however, that acts of unfair competition cannot beencompassed by any general definition. The most notable of these acts are thecausing of confusion, discrediting and the use of misleading indications. Thecommon aspect of these most important, but by no means exhaustive, examples ofunfair market behaviour is the attempt (by an entrepreneur) to succeed incompetition without relying on his own achievements in terms of quality and price ofhis products and services, but rather by taking undue advantage of the work ofanother or by influencing consumer demand with false or misleading statements.Practices that involve such methods are therefore doubtful at the outset as to theirfairness in competition.The most important factor for determining "unfairness" in the marketplace, however,is derived from the purpose of unfair competition law. In this respect, unfaircompetition law was initially designed to protect the honest businessman. In themeantime, consumer protection has been recognized as equally important.Moreover, some countries put special emphasis on the protection of the public atlarge, and especially its interest in the freedom of competition. Modern unfaircompetition law therefore serves a threefold purpose, namely: the protection of 47
  • 53. competitors, the protection of consumers and the safeguarding of competition in theinterest of the public at large.On the other hand, there is broad agreement that at least some acts and practicesare always irreconcilable with the notion of fairness in competition. These arediscussed in detail below.Categories of Acts of Unfair Competition -The following are amongst the most common generally recognized acts of unfaircompetition:- Causing confusion- Misleading- Discrediting Competitors- Disclosure of secret information- Taking advantage of anothers achievements (free riding)- Comparative advertisingLets look at each of these in turn.CAUSING CONFUSIONThe Paris Convention (Art. 10bis (3)) obliges member States to prohibit all acts thatare "of such a nature as to create confusion by any means whatever with theestablishment, the goods or the industrial or commercial activities of a competitor".The scope of this article is very broad, as it covers any act in the course of tradeinvolving a mark, sign, label, slogan, packaging, shape or color of goods, or anyother distinctive indication used by a businessman. Thus not only indications usedto distinguish goods, services or businesses but also the appearance of goods andthe presentation of services are considered relevant for the prohibition of confusion.However there are two main areas in which confusion frequently occurs.These are indications of commercial origin on the one hand, and the appearance ofgoods on the other. However, this does not preclude or limit the protection of otherattributes or achievements against confusion. 48
  • 54. MISLEADING-Misleading can roughly be defined as creating a false impression of a competitorsown products or services. It may well be the single most prevalent form of unfaircompetition, and it is by no means harmless. On the contrary, misleading can havequite serious consequences: the consumer, relying on incorrect information, maysuffer financial (or more harmful) prejudice. The honest competitor loses clients.The transparency of the market diminishes, with adverse consequences for theeconomy as a whole and economic welfare.There is a consensus according to which the concept of misleading is restrictedneither to inherently false statements nor to statements that have actually led to afalse impression on the part of the consumer. Instead it is considered sufficient thatthe indications in question are likely to have a misleading effect. Even statementsthat are literally correct can be deceptive.If, for example, chemical ingredients are generally forbidden in bread, the courts ofmost countries would consider an advertising claim that a certain bread "waswithout chemical ingredients" to be deceptive, because, though literally true, it givesthe misleading impression that the advertised fact is something out of the ordinary.It is likewise not necessary for the product in question to be inferior, in an objectivesense, so long as the indication or allegation has some enticing effect on theconsumer. For example, if the public prefers domestic goods to foreign goods, afalse declaration to the effect that imported goods are domestic is misleading even ifthe imported goods are of superior quality.Does the concept of misleading vary from country to country?Generally the concept of misleading does vary from country to country and this canbest be seen in the various national treatments of exaggerations. Although in allcountries obvious exaggerations (even if literally inaccurate) are not considereddeceptive because they can easily be recognized as "sales talk," the question ofwhat is mere "hot air" or "puffing" and what is to be taken seriously is answereddifferently in different countries. In some countries (such as Germany), it is assumedthat the public basically believes all advertising statements, and especially thosethat claim uniqueness ("the best, the first," etc.); consequently an especially strict 49
  • 55. standard is applied. Other countries (such as Italy and the United States of America)take the exact opposite position and tolerate generally formulated indications, inparticular those in the form of claims of uniqueness. Thus in the United States ofAmerica the courts have generally only intervened if the product advertised as thebest is in reality inferior.Discrediting Competitors-Discrediting (or disparagement) is usually defined as any false allegation concerninga competitor that is likely to harm his commercial goodwill. Like misleading,discrediting tries to entice customers with incorrect information. Unlike misleading,however, this is not done by false or deceptive statements about ones own product,but rather by casting untruthful aspersions on a competitor, his products or hisservices. Discrediting, therefore, always involves a direct attack on a particularbusinessman or a particular category of businessmen, but its consequences gobeyond that aim: since the information on the competitor or his products is incorrect,the consumer is liable to suffer also.Is the concept of discrediting different in different countries?In some countries a literally truthful remark about a competitor may be consideredunfair competition if the "attack" is blown up out of proportion, or if the words usedare needlessly injurious. On the other hand, some countries expressly restrict thenotion of discrediting to inaccurate or at least misleading statements.An explanation of this difference in attitudes can be found in the divergingassessment of "commercial honour." Where unfair competition law has its roots inthe protection of the commercial reputation of the individual businessman-as it doesin the continental European countries-a "special tort of business disparagement"has emerged, to which, in principle, much stricter rules apply than to defamatorystatements outside the bounds of competition, where constitutional considerationssuch as freedom of speech have to be taken into account. In other countries,especially those that have not developed a comprehensive system of protectionagainst unfair competition, the attitude is exactly the opposite: it is assumed that, inthe interest of competition, attacks on individual competitors are unavoidable, thatthey must be widely tolerated and that a line should only be drawn where the attack 50
  • 56. is based on false facts. In those countries, the plaintiff usually also bears the burdenof proof as to the falseness of the statement-which can sometimes make an actionimpossible.Disclosure of secret information-A considerable amount of commercial competitiveness of an enterprise can be dueto information developed and accumulated by that enterprise or individuals in it. Forexample, the customer and potential customer lists could give that company anedge over its competitors who do not have such good quality lists. Another examplecould be that an enterprise has developed a secret industrial process, whichenables it to sell a better quality or cheaper product. I hope you agree with me that ifeither of these pieces of information were given to a competitor without thepermission of the owner of the information this would result in unfair competition.Indeed, the disclosure of secret information is defined as unfair competition by theTRIPS Agreement of 1994, which obliges World Trade Organization members toprovide protection for "undisclosed information".The TRIPS Agreement specifically describes the protection of undisclosedinformation as necessary to protect against unfair competition (Article 39(2)).Taking undue advantage of anothers achievements-The notion of "free riding" has a number of common features with the notions ofcausing confusion and misleading. It could be defined as the broadest form ofcompetition by imitation. Under the principles of a free market, however, theexploitation or "appropriation" of another persons achievements is unfair only underspecific circumstances. On the other hand, acts that cause confusion or misleadnormally imply free riding on another persons achievements, but are generallyrecognized as forms of free riding that are always unfair.There are various types of free riding including the dilution of the distinctive valueand quality of a competitors mark. This could happen if a similar mark is used fordissimilar goods or services. 51
  • 57. Comparative advertising-Comparative advertising may take two forms: a positive reference to anothersproduct (claiming that ones own product is as good as the other) or a negativereference (claiming that ones own product is better than the other). In the firstinstance, where the competitors product is usually well known, the crucial questionrelates to the possibility of misappropriation of anothers goodwill. In the secondcase, where the competitors product is criticized, it is the question ofdisparagement that arises. However, both forms of comparison involve an(unauthorized) reference to a competitor, who is either mentioned by name orimplicitly identifiable as such by the public.It must be remembered, however, that there are differences in the evaluation of thenotion of "misleading" and especially in that of "discrediting." As mentioned above,some countries consider statements claiming superiority or uniqueness (like "thebest," etc.) misleading unless they can be proved correct, while others considerthem harmless exaggerations. Different assessments of the notions of "discrediting"and "misappropriation" are of even greater importance. In countries with a ratherpermissive attitude towards true but nevertheless disparaging statements,comparative advertising is generally tolerated. As long as what is said is true, thecourts will not interfere, even if the reference to the competitor or his product isclearly disparaging or exploits his goodwill. In countries that traditionally put specialemphasis on the protection of the "honest" businessman and his reputation,comparative advertising is either forbidden or at least severely restricted.Sometimes the mere fact that a competitor is named against his will is considereddiscrediting and therefore unfair competition. According to the rule that "the honestbusinessman has a right not to be spoken of, even if the truth is spoken," thelegislation of some countries has even expressly forbidden all comparisons thatneedlessly identify a competitor. The same argument has led the courts of othercountries to find comparative advertising more or less automatically against honesttrade practice (and therefore against the general provision on unfair competitionlaw).Although many countries take a strict view that comparative advertising is an unfairpractice, there has been a trend in recent years in which this negative attitude 52
  • 58. towards comparative advertising has changed. It has been increasingly recognizedthat true comparisons of relevant facts can not only reduce the consumersinformation search costs, but also have positive effects on the economy byimproving market transparency. The courts of those countries that traditionally viewcomparative advertising as disparaging have gradually relaxed the strict prohibitionon all statements identifying a competitor. For example, price comparisons, if basedon true, relevant and ample material, may be allowed. On the whole, there seems tobe a clear trend towards the admission of truthful comparative advertising.Other acts of unfair competition-The field of unfair competition is large and the treatment by different countries quitevaried. So, in order to complete the list of unfair acts as much as possible, it isworthwhile giving a few more examples, briefly. These are:- Nuisance advertising. For example advertising which unduly exploits fear to makea sale.- The use of sales promotion techniques such as, lotteries, gifts and bonuses.These are usually regulated to avoid undue inducement to buy.- Impeding of market activities, such as, the destruction of a competitors returnablesoft drink bottles.The main forms of unfair competition in relation to trademarks are unlawful Laws ofimitation that take unfair advantage of a third party’s reputation or efforts.Indeed, whereas IP rights cover the granting, substance, validity and infringement ofprivate rights, the concept of unfair competition deals with conduct and actionswhich violate general rules and customary practices of honesty, which may harmthe economy and market as a whole (not necessarily an individual or legal entitytrading in the market).The term "unfair competition" does not therefore relate specifically to competition orantitrust law but is generally understood to be a liability mechanism not necessarilyrelated to the breach of IP rights but covers also advertisement, misuse ofconfidential information, misappropriation of goodwill, amongst other ways ofmisleading customers. 53
  • 59. Nonetheless, a misconception has existed amongst legal commentators for sometime, according to which parties violating private IP rights should be sanctionedunder the provisions regulating unfair competition.Intellectual Property v Intellectual Property RightsIntellectual property (IP) – • refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce • a broad concept that includes productions and matter forming part of creations of the mind, including inventions, industrial designs, literary and artistic works, symbols, and names and images • results from intellectual activity in the industrial, scientific, literary or artistic fields;Intellectual Property Right (IPR)- • an intangible right “protecting commercially valuable products of the human intellect”; it may comprise patents, copyrights, trademarks and other similar rights. An IPR includes the right to exclude others from exploiting the non- corporeal asset • legal rights, which may or may not be based on a registration, that aim to protect creations and inventions resulting from intellectual activity in the industrial, scientific, literary or artistic fields. The scope of the protection obtained through IPR varies according to the type of instrument employed.Categories of IPIP is divided into two categories: 1. Industrial property – it includes inventions such as patents and utility models, trademarks, industrial designs, and geographic indications of source 2. Copyright – it includes literary and artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings, paintings, photographs and sculptures, and architectural designsSuch rights-holder includes those of performing artists in their performances,producers of phonograms in their recordings, and those of broadcasters in theirradio and television programs. 54
  • 60. IP and Unfair Competition-IP rights often interfere with many public policy areas. Public policies facilitatingfree and fair competition sometimes have a potential conflict with IP rights. Therelations between IP rights and competition or anti-trust laws have been muchstudied in connection with the potential abuse of IP rights to monopolize the market.IP rights and the market monopoly are not inherently linked. The majority oflicensing agreements today involve IP rights and most of them contribute to faircompetition in the market in pursuit of greater and enhanced level of innovation inthe economy.IP system and competition policies are not regarded as an inherent trade-off anddichotomy. The relationships between them are considered as supplementary andmutually supportive. Patent and anti-trust law are actually complementary, as bothare aimed at encouraging innovation, industry, and competition.”42The protection of trademarks and industrial design also promote fair competitionthrough branding and consumer protection, since they function to clearly identify theorigin of products and services. To provide safeguards and checking mechanismsagainst the abuse of IP rights, however, makes it necessary to manage the interfacebetween competition policies and IP system and policies. In some countries, forexample, guidelines regulating misappropriation of IP rights in licensing have beenactively debated and reviewed. In many countries, the abuse of market-related IPrights is checked by unfair competition laws or anti-trust laws.Some common objectives behind the legislation in the subject matter of IPRsand Competition - • need to protect the IP by respective IPRs • Defensive • Protect creative assets • Counterattack • Reduce risk of innovation42 US Fair Trade Commission Report on ‘Competition and Intellectual Property Law and Policy in theKnowledge-Based Economy’ (2003). 55
  • 61. • Offensive• Exclude others• Generate income• Product and service distinctions• Strategic funds, partners, customers, employees• Increase valuation 56
  • 62. CHAPTER (VI) REVIEW OF EXISTING STATUTORY IP LAW AND CASE-LAWIP Laws are monopolistic legal rights granted to the creators and owners of workwhich are a result of human intellectual creativity. These can be in varied fields suchas industrial, scientific, literary and art. Intellectual Property Rights (IPR) gives theowners the right to exclude others from using their invented subjected-matter for alimited period of time. Further, IPR laws pertaining to copyrights, patents,trademarks, industrial designs and trade secrets prevent commercial exploitation ofthe innovation by others. IP rights grant the owner an advantage over the rest of theindustry or sector. When this advantage or dominant position is abused it creates aconflict between IPR and competition law.Protection from Unfair Competition -IP rights are granted on application by IP Offices and confer exclusive rights withrespect to the subject matter concerned. On the other hand, protection againstunfair competition is based not on such grants of rights but on the consideration—either stated in legislative provisions or recognized as a general principle of law—that acts contrary to honest business practice are to be prohibited.Nevertheless, the link between the two kinds of protection is clear when certaincases of unfair competition are considered. For example, in many countriesunauthorized use of a trademark that has not been registered is considered illegalon the basis of general principles that belong to the field of protection against unfaircompetition (in a number of countries such unauthorized use is called “passing-off”).Protection against unfair competition has been recognized as forming part of IPprotection for almost a century. It was in 1900, at the Brussels DiplomaticConference for the Revision of the Paris Convention that this recognition was firstmanifested by the insertion of Article 10bis in the Convention. As a result of thesubsequent revision conferences, the Article now reads as follows (in the StockholmAct (1967) of the Paris Convention):“(1) The countries of the Union are bound to assure to nationals of such countrieseffective protection against unfair competition. 57
  • 63. Any act of competition contrary to honest practices in industrial or commercialmatters constitutes an act of unfair competition.The following in particular shall be prohibited:- all acts of such a nature as to create confusion by any means whatever with theestablishment, the goods, or the industrial or commercial activities, of a competitor;- false allegations in the course of trade of such a nature as to discredit theestablishment, the goods, or the industrial or commercial activities, of a competitor;- indications or allegations the use of which in the course of trade is liable to misleadthe public as to the nature, the manufacturing process, the characteristics, thesuitability for their purpose, or the quantity, of the goods.”Article 1(2) of the Paris Convention mentions the repression of unfair competitionalong with patents, utility models, industrial designs, trademarks, trade names,indications of source and appellations of origin among the objects of industrialproperty protection, and Article 10bis contains an express provision on therepression of unfair competition. In the more than one hundred and fifty Statesparty to the Paris Convention, the legal basis for the protection against unfaircompetition may thus be found not only in national legislation but also at theinternational level.Under Article 10bis(1) of the Paris Convention, the countries of the Paris Union arebound to ensure effective protection against unfair competition. Article 10ter(1) ofthe Convention further provides for the obligation to ensure “appropriate legalremedies.” In particular, measures must be taken to permit federations andassociations representing interested industrialists, producers or merchants to takeaction, provided that this is not contrary to the laws of the country concerned anddoes not exceed the rights normally granted to national associations.Article 10bis(2) of the Paris Convention defines unfair competition as any act ofcompetition contrary to honest practices in industrial or commercial matters. Thisdefinition leaves the determination of the notion of “commercial honesty” to thenational courts and administrative authorities. Member States of the Paris Union are 58
  • 64. also free to grant protection against certain acts even if the parties involved are notcompeting against each other.Article 10bis(3) of the Paris Convention gives three examples of cases that “inparticular” have to be prohibited. These examples must not be seen as exhaustive,but rather as the minimum protection that has to be granted by all member States.The first two—creating confusion and discrediting—can be regarded as belonging tothe “traditional” field of competition law, namely that of competitor protection. Thethird one—misleading—was added by the 1958 Revision Conference in Lisbon, andtakes into account the interests of both competitors and consumers.Apart from Articles 10bis and 10ter, the Paris Convention contains severalprovisions relevant to protection against acts of unfair competition in a broadersense, especially those concerning trademarks and trade names.INTERNATIONAL OBLIGATION TO APPLY IP LAWS IN INDIAINTERNATIONAL BODIES/TREATIES:  Paris Conventions  WTO (TRIPS)  WIPO  OthersIP Laws available in India:The position of IP in the Constitution: - “Patents, inventions and designs; copyright;trade-marks and merchandise marks” (Entry 49 of the List I of Schedule VII)IP laws in India:  The Patents Act, 1970  The Designs Act, 2000  The Trade Marks Act, 1999  The Copyright Act, 1957  The Semiconductor Integrated Circuits Layout-Design Act, 2000  The Geographical Indications of Goods (Registration & Protection)Act, 1999  Biological Diversity Act, 2002 59
  • 65.  Protection of Plant Varieties and Farmers Rights Act, 2001Other IP related laws in India:  Cable Television Networks (Regulation) Act, 1995 (2002)  The Wildlife (Protection) Act, 1972 (2002)  The Information Technology Act, 2000 (2000)  Drugs and Cosmetics Act, 1940 (1995)  The Cinematograph Act, 1952 (1984)  Forest (Conservation) Act, 1980 (1980)  The Code of Civil Procedure, 1908 (1980)  Seeds Act 1966 (1966)  The Customs Act, 1962 (1962)  The Indian Wireless Telegraph Act, 1933 (1933)  The Indian Penal Code (1860)  The Competition Act 2002 (2003)Concerned Authorities in India-  Office of the Controller General of Patents, Designs & Trade Marks (O/o CGPDTM)  Competition Commission of India (CCI)  Courts  Tribunals such as the IPAB, COMPAT etcCOMPETITION COMMISSION OF INDIA (CCI):Composition and functions: The Competition Commission of India has beenconstituted under Section 7 of the Competition Act, 2002 as amended in 2007.The Competition Commission of India consists of a Chairperson and not less thantwo and not more than six other Members. Under Section 18 of the Competition Act,the functions of the Commission inter-alia are to eliminate practices having adverseeffect on competition, promote and sustain competition, protect the interests ofconsumers and ensure freedom of trade carried on by other participants, in marketsin India. 60
  • 66. INQUIRY INTO ABUSE OF DOMINANCEIn exercise of powers vested under section 19 of the Act, the Commission mayinquire into any alleged contravention of section 4 (1) of the Act that proscribesabuse of dominance. Section 19 (4) gives a detailed list of factors that theCommission shall consider while inquiring into any allegation of abuse ofdominance. Some of these factors are market share of the enterprise, size andresources of the enterprise, size and importance of the competitors, dependence ofconsumers, entry barriers, and social obligations and costs in the relevantgeographic and product market.The Commission, on being satisfied that there exists a prima facie case of abuse ofdominance, shall direct the Director General to cause an investigation and furnish areport. The Commission has the powers vested in a Civil Court under the Code ofCivil Procedure in respect of matters like summoning or enforcing attendance of anyperson and examining him on oath, requiring discovery and production ofdocuments and receiving evidence on affidavit. The Director General, for thepurpose of carrying out investigation, is vested with powers of civil court besidespowers to conduct search and seizure.POWERS OF THE CCI -After inquiry the Commission may pass inter- alia any or all of the following ordersunder section 27 of the Act:1) direct the parties to discontinue and not to re-enter such agreement;2) direct the enterprise concerned to modify the agreement.3) direct the enterprises concerned to abide by such other orders as theCommission may pass and comply with the directions, including payment of costs, ifany; and4) pass such other orders or issue such directions as it may deem fit.5) can impose such penalty as it may deem fit. The penalty can be up to 10% of theaverage turnover for the last three preceding financial years upon each of suchpersons or enterprises which are parties to bid-rigging or collusive bidding.6) Section 28 empowers the Commission to direct division of an enterprise enjoyingdominant position to ensure that such enterprise does not abuse its dominantposition. 61
  • 67. INTERIM ORDERUnder section 33 of the Act, during the pendency of an inquiry into abuse ofdominant position, the Commission may temporarily restrain any party fromcontinuance with the alleged contravention the offending act until conclusion of theinquiry or until further orders, without giving notice to such party, where it deems itnecessary.APPEALSThe Competition Appellate Tribunal (COMPAT) is established under section 53A ofthe Act, to hear and dispose of appeals against any direction issued or decisionmade or order passed by the Commission under specified sections of the Act.An appeal has to be filed within 60 days of receipt of the order /direction / decisionof the Commission.COMPENSATIONA person may move an application to Competition Appellate Tribunal to adjudicateupon claim for compensation that may arise from the findings of the Commission(Section 53N).The Competition Law and policyThe acquisitions and mergers sometime encourage monopoly rights in production,distribution and marketing of products protected by the IPRS. This would, in turn,adverse impact on the consumers of the products through higher pricing of productsand restrictions on its multiplication. However, there are provisions of compulsorylicenses under the patent regime to balance such monopoly rights. Further, theIndian Patent Act as amended so far provides the flexibilities of abridging rights ofinventors who’s primary or intended use, or commercial use or exploitation, of theirinvention would be contrary to public order or morality, or causes serious prejudiceto human, animal or plant life or health, or to the environment. The Act is alsonotable for its opposition provisions, and for its requirement on the part of a potentialinventor to disclose source, and geographic, origin of the biological material used inan invention. This clause, which is incorporated in Section 10 of the said Act,fortifies the ‘previous approval’ principles enshrined in India’s National BiodiversityAct 2002. Under the Plant varieties and Farmers Rights Act, 2001, the Central 62
  • 68. Government reserves the right to enforce compulsory licensing of protectedvarieties and seeds, in the larger interest of food security, livelihoods and consumerwelfare.The Government of India in pursuit of increasing the economic efficiency of thecountry acknowledged the Liberalization Privatization Globalization (LPG) era byliberalizing the economy and reducing governmental control. Currently theflourishing Indian economy is witnessing aggressive competition in every field.Healthy and fair competition has proven to be an effective mechanism whichenhances economic efficiency. Therefore the purpose of implementing thecompetition law was to curb monopolies and encourage competition. In contrast tothe objective behind formulating the competition law, Intellectual Property (IP) Lawsaim at protecting the research and development inventions carried out by inventorfirms from being used by companies producing similar products and subsequentlymaking a profit on the same. In other words, on one hand, IP laws work towardscreating monopolistic rights whereas competition law battles it. In view of this thereseems to be a conflict between the objectives of both laws.Primarily, competition laws involve the formulation of a set of policies which promotecompetition in the local markets and are aimed at preventing anti-competitivebusiness practices and unwonted government interference. Competition laws arealso framed with the intention of curbing abuse of market power by a dominantcompany. Further, competition law aims at eliminating monopolization of theproduction process thereby encouraging new firms to enter into the market. Themaximization of consumer welfare and an increase in production value are some ofthe main objectives of competition law. On the other hand IP Laws are monopolisticlegal rights granted to the creators and owners of work which are a result of humanintellectual creativity. These can be in varied fields such as industrial, scientific,literary and art. Intellectual Property Rights (IPR) gives the owners the right toexclude others from using their invented subjected-matter for a limited period oftime. Further, IPR laws pertaining to copyrights, patents, trademarks, industrialdesigns and trade secrets prevent commercial exploitation of the innovation byothers. IP rights grant the owner an advantage over the rest of the industry or 63
  • 69. sector. When this advantage or dominant position is abused it creates a conflictbetween IPR and competition law.Recently an issue was raised in the Delhi High Court in the case of HawkinsCookers43.Hawkins Cookers Limited is the owner of the trademark “Hawkins” anduses it on several products including pressure cooker gaskets. MuruganEnterprises, manufacturers, among other things gaskets for pressure cookers anduses the Hawkins trademark in respect of parts of pressure cookers to establishcompatibility. Murugan Enterprises in its arguments before the court opinioned thatit had its own well-established trademark “Mayur” with a prominent peacockdisplayed on its product packaging. The Delhi High Court in this case held that noreasonable person or purchaser could assume a trade connection between the“Mayur” brand of gaskets and the “Hawkins” brand of pressure cookers. Further, thecourt opined that in this case the Murugan Enterprises neither sought to benefit fromHawkins’ trademark nor did it try to show a connection between the two. Additionallythe court opined that the defendants’ use of the “Hawkins” mark was only to showthe suitability of the product to be used as an ancillary product in a Hawkinspressure cooker and that such use would evidently fall within the exception carvedout under Section 30 of the Trademarks Act, 1999. Further, the use of thetrademark in relation to the product is reasonably necessary to indicate the fitnessof the gaskets for the “Hawkins” brand of pressure cookers. In the Hawkins case,Justice Kaul also pointed out that “The object of filing of the suit thus appears to beto create a monopoly over such (gaskets) ancillary items so that no third party isable to sell the same in the market.” The judge also goes on to point out that the useof the “Hawkins” trademark on the gaskets packaging would have been infringing ifit had been used as a trademark. Since Murugan Enterprise’s use of the “Hawkins”mark was only indicative and is not being used as a trademark there would be noquestion of infringement. The Delhi High Court judgment in the Hawkins casereflects on the fact that dominant firms cannot be encouraged by courts if they arefound to abuse their dominance by creating a monopoly in the market therebyaffecting the market share of smaller and/or firms who are in direct competition withsuch dominant firms.43 Hawkins Cooker Ltd v. M/s Murugan Enterprises [2008(36) PTC 290(Del)] 64
  • 70. Additionally under Competition law, the unavailability of substitutes in the marketmay establish dominance in the market. Likewise a comparison of market sharesbetween dominant firm and their competitors is useful in determining dominance aswell as monopoly. Even then, there seems to be a difficulty in determining theminimum percentage of the market share that could establish dominance and/ormonopoly of a particular firm in the market. Various judgments vis-à-vis dominancehas also not been able to establish a minimum percentage that indicates dominanceof a firm.Anti-competition laws in order to combat the IPR monopolies often include twoimportant measures namely compulsory licensing and parallel imports. Acompulsory license is where an IPR holder is authorized by the state to surrenderhis exclusive right over the intellectual property, under article 31 of the Trade-Related aspects of Intellectual Property Rights (TRIPS). Compulsory licenses aregranted under certain circumstance such as in the interest of public health, nationalemergencies, nil or inadequate exploitation of a patent in the country, and for anoverall national interest. A parallel import on the other hand includes goods whichare brought into the country without the authorization of the appropriate IP holderand are placed legitimately into a market.In addition, provisions like Section 3 of the new Competition Act, 2002 (the Act)deals with anti- competitive agreements which cannot be used by IPR holders sincethey are in conflict with the competition policies. Firstly, patent pooling is a restrictivepractice wherein firms of a particular manufacturing industry decide to pool theirpatents and agree not to grant licenses to third parties, simultaneously fixing quotasand prices. Secondly, a clause that restricts competition with respect to researchand development or which prohibits a licensee to use rival technology is consideredanti-competitive under the law. Thirdly, a licensor under the law is prohibited fromfixing the price at which the licensee should sell his goods. The above mentionedexamples are not by any means exhaustive, but are a few illustrationsdemonstrating anti-competitive provisions applicable to IPR under the Act.Furthermore, under Section 27 of the Act, the Competition Commission of India (theCommission) has the authority to penalize IPR holders who abuse their dominantposition. Further, under Section 4 of the Act the Commission is also authorized to 65
  • 71. penalize the parties to an anti-competitive agreement, which is in contravention ofSection 3 of the Act.A constellation of pro-active legislations serves including IPRs to ensure thatcompetition may not impaired. India’s IPR regimes, whilst affording protection toinnovators do still carry with it the elements for regulating anti-competition.However, to continuous watch of the concerning laws and policies need to beneeded and stakeholder meeting attracted if required in order to implement thesame in a manner that is sustainable and economically advantageous.Competition laws involve the formulation of a set of policies which promotecompetition in the local markets and are aimed at preventing anti-competitivebusiness. Competition laws are also framed with the intention of curbing abuse ofmarket power by a dominant company. Further, competition law aims at eliminatingmonopolization of the production process thereby encouraging new firms to enterinto the market. The maximization of consumer welfare and an increase inproduction value are some of the main objectives of competition law.The Competition Act, 2002 (as amended), [the Act], follows the philosophy ofmodern competition laws and aims at fostering competition and at protecting Indianmarkets against anti-competitive practices by enterprises. The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises, and regulatescombinations (consisting of mergers, amalgamations and acquisitions) with a viewto ensure that there is no adverse effect on competition in India.The preamble of the Act which lays out the objectives of the Competition Act anddefines the role and scope of the Commission leaves much thought whenenforcement and implementation are involved.The preamble: “An Act to provide, keeping in view of the economic development ofthe country, for the establishment of a Commission to prevent practices havingadverse effect on competition, to promote and sustain competition in markets, toprotect the interests of consumers and to ensure freedom of trade carried on byother participants in India …..” 66
  • 72. The Competition Act 2002 specifically refers also some intellectual property rightsissues. Section 3(5) of the Act states that agreements entered into for imposingreasonable conditions or restraining infringements of IPRs conferred underrespective IPRs laws would not be actionable under the Act, 2002. The Act, 2002applies to IPRs in relation to abuse of dominant position and combinations.Therefore, abuse of dominance due to an IPR is liable for action under the IndianCompetition Act just as IPR-related dealings in combinations leading to an anti-competitive effect. Thus, the issues involved are technical and multifarious andneed to be dealt with in diverse ways.The Competition Act, 2002 was enacted in 2002 keeping in view the economicdevelopments that resulted in opening up of the Indian economy, removal ofcontrols and consequent economic liberalisation which required that the Indianeconomy be enabled to allow competition in the market from within the country andoutside. It was subsequently amended in 2007. The Competition Act, 2002, interalia, provides for the following, namely:—(A) establishment of the Competition Commission of India, which shall be an expertbody and would function as a market regulator for preventing and regulating anti-competitive practices in the country in accordance with the provisions of the Act andit would also have advisory and advocacy functions in its role as a regulator whichcan also impose a penalty in certain cases specified in the Act;(B) establishment of the Competition Appellate Tribunal, which shall be a threemember quasi-judicial body headed by a person who is or has been a Judge of theSupreme Court or the Chief Justice of a High Court to hear and dispose of appealsagainst any direction issued or decision made or order passed by the CompetitionCommission and to adjudicate claims on compensation and for passing of orders forthe recovery of compensation from any enterprise for any loss or damage sufferedas a result of any contravention of the provisions of the Act.2. Sub-section (1) of section 66 of the Act provides for repeal of the Monopolies andRestrictive Trade Practices Act, 1969 (MRTP Act) and dissolution of the MonopoliesandRestrictive Trade Practices Commission (MRTPC) established thereunder.However, the MRTPC was allowed to continue under the said sub-section to 67
  • 73. exercise jurisdiction and powers under the repealed Act for a period of two yearsfrom the date of the commencement of this Act in respect of all cases orproceedings filed before the commencement of this Act.A number ofrecommendations can be made to India and other developing countries, namely:-- establish or strengthen competition laws in order to control, inter alia, possibleabuses emerging from the acquisition and exercise of IPRs;- consider the competition implications of various policies and regimes thatdetermine market entry, such as marketing approval of pharmaceutical andagrochemical products;- ensure an adequate coordination among the competition law agency and otheragencies whose decisions may influence market structure and operation, with theaim of maintaining a competitive environment;- fully use the flexibilities allowed by the TRIPS Agreement to determine the groundsfor granting compulsory licences to remedy anti-competitive practices relating toIPRs;- consider, in particular, the granting of compulsory licences in cases of refusals todeal;- conceptualise and apply the essential facilities doctrine as required to addresssituations of control of essential technologies, taking into account the relevantmarket conditions and public needs;- develop policies, including guidelines, to prevent and correct abuses in theacquisition and enforcement of IPRs;- address situations that may normally lead to anti-competitive conduct such as“package” and “thicket” patents;- adopt guidelines for use at the patent offices to prevent the granting of frivolous orlow quality patents, as well as patents containing overly broad claims, which may beused to unduly restrain legitimate competition and block innovation;- avoid “linkage” provisions and data exclusivity in order to promote competition inmarkets of regulated products;- Clear provisions on IPR and competition must be implemented at the national levelto take full advantage of the flexibility built into TRIPs, to stem the tide of anti-competitive arrangements.Important provisions under Competition Act 2002 including the Penalty provisions - 68
  • 74. Section 3 of the Competition Act 2002 relates to prohibition of anti-competitiveagreements involving IPRs; this section deals with anti- competitive agreementswhich cannot be used by IPR holders since they are in conflict with the competitionpolicies.(4) Any agreement amongst enterprises or persons at different stages or levels ofthe production chain in different markets, in respect of production, supply,distribution, storage, sale or price of, or trade in goods or provision of services,including- (a) tie-in arrangement; (b) exclusive supply agreement; (c) exclusivedistribution agreement; (d) refusal to deal; (e) resale price maintenance, shall be anagreement in contravention of sub-section (1) if such agreement causes or is likelyto cause an appreciable adverse effect on competition in India.(5) nothing contained in this section shall restrict :(i) the right of any person to restrain any infringement of, or to impose reasonableconditions, as may be necessary for protecting any of his rights which have been ormay be conferred upon him under :(a) the Copyright Act, 1957 (14 of 1957) (b) the Patents Act, 1970 (39 of 1970)(c) the Trade and Merchandise Marks Act, 1958 (43 of 1958) or the Trade MarksAct, 1999 (47 of 1999)(d) the Geographical Indications of Goods (Registration and Protection) Act, 1999(48 of 1999)(e) the Designs Act, 2000 (16 of 2000)(f) the Semi-conductor Integrated Circuits Layout-Design Act, 2000 (37 of 2000).Section 4 of the Competition Act 2002 relates to the cases of “abuse”. Theexpression “abuse” in Sec 4 may include:-  Exclusive licensing;  Cross licensing;  Patent pooling;  Tie-in-arrangements;  Demand of royalty for know-how even after the expiry of the term;  Package licensing;  Restricting sub-licensing;  Trademarks issues;  Legal suit (infringement) indemnification; 69
  • 75. Conditions Compatible with Competition Law -1. An obligation on the licensor not to licence other undertakings to exploit thelicenced technology in the licenced territory.2. An obligation on the licensor not to exploit the licenced technology in the licencedterritory himself.3. An obligation on the Licencee not to manufacture or sell the licenced product interritories which are licenced to other Licencees.4. An obligation on the Licencee to use only the licensors trade mark to distinguishthe licenced product during the term of the agreement.5. An obligation on the Licencee not to divulge to others, the know-howcommunicated by the licensor.6. An obligation on the Licencee not to grant sub-licences or assign the licence.7. An obligation on the Licencee not to exploit the licenced know-how or patentsafter the termination of the agreement as long as the know-how is secret or thepatents are in force.8. An obligation on the Licencee to observe minimum quality specifications includingtechnical specifications for the licenced product.9. An obligation on the Licencee to inform the licensor of infringement of IP rights.10. An obligation on the Licencee to restrict his exploitation of the licencedtechnology to one or more technical fields of application covered by the technology.11. An obligation on the Licencee to mark the licenced product with an indication ofthe licensors name or the licenced patent.12. An obligation on the Licencee not to use the licensors technology to constructfacilities for third parties.APPLICABILITY OF COMPETITION LAW ON IPR STATUTES -In the Competition Act, 2002, section 3(5) thereof in the Chapter relating toProhibition of Agreements (Anti –Competitive Agreements) states that:-“Nothing contained in this section shall restrict -(I) the right of any person to restrain any infringement of, or to impose reasonableconditions, as may be necessary for protecting any of his rights which have been ormay be conferred upon him under:- 70
  • 76. (a) the Copyright Act, 1957 (14 of 1957)(b) the Patents Act, 1970 (39 of 1970)(c) the Trade and Merchandise Marks Act, 1958 (43 of 1958) or the Trade MarksAct, 1999 (47 of 1999)(d) the Geographical Indications of Goods (Registration and Protection) Act, 1999(48 of 1999)(e) the Designs Act, 2000 (16 of 2000)(f) the Semi-conductor Integrated Circuits Layout-Design Act, 2000 (37 of 2000).REASONABLE CONDITIONSSection 3(5) of the Act declares that “reasonable conditions as may be necessaryfor protecting” any IPR will not attract section 3. The expression “reasonableconditions” has not been defined or explained in the Act. By implication,unreasonable conditions that attach to an IPR will attract section 3. In other words,licensing arrangements likely to affect adversely the prices, quantities, quality orvarieties of goods and services will fall within the contours of competition law aslong as they are not in reasonable juxtaposition with the bundle of rights that go withIPRs.For example, a licensing arrangement may include restraints that adversely affectcompetition in goods markets by dividing the markets among firms that would havecompeted using different technologies. Similarly, an arrangement that effectivelymerges the Research and Development activities of two or only a few entities thatcould plausibly engage in Research and Development in the relevant field mightharm competition for development of new goods and services. Exclusive licensing isanother category of possible unreasonable condition. Examples of arrangementsinvolving exclusive licensing that may give rise to anti-competition concerns includecross licensing by parties collectively possessing market power, grant backs andacquisitions of IPRs. A few such practices are described below -1. Patent pooling is a restrictive practice, which will not constitute being a part of thebundle of rights forming part of an IPR. This happens when the firms in amanufacturing industry decide to pool their patents and agree not to grant licensesto third parties, at the same time fixing quotas and prices. They may earn supra-normal profits and keep new entrants out of the market. In particular, if all the 71
  • 77. technology is locked in a few hands by a pooling agreement, it will be difficult foroutsiders to compete.2. Tie-in arrangement is yet another such restrictive practice. A licensee may berequired to acquire particular goods (unpatented materials e.g. raw materials) solelyfrom the patentee, thus foreclosing the opportunities of other producers. Therecould be an arrangement forbidding a licensee to compete, or to handle goodswhich compete with the patentees.3. An agreement may provide that royalty should continue to be paid even after thepatent has expired or that royalties shall be payable in respect of unpatented know-how as well as the subject matter of the patent.4. There could be a clause, which restricts competition in R & D or prohibits alicensee to use rival technology.5. A licensee may be subjected to a condition not to challenge the validity of IPR inquestion.6. A licensee may require to grant back to the licensor any know-how or IPRacquired and not to grant licenses to anyone else. This is likely to augment themarket power of the licensor in an unjustified and anti-competitive manner.7. A licensor may fix the prices at which the licensee should sell.8. The licensee may be restricted territorially or according to categories ofcustomers.9. A licensee may be coerced by the licensor to take several licenses in intellectualproperty even though the former may not need all of them. This is known aspackage licensing which may be regarded as anti-competitive.10. A condition imposing quality control on the licensed patented product beyondthose necessary for guaranteeing the effectiveness of the licensed patent may bean anti- competitive practice.11. Restricting the right of the licensee to sell the product of the licensed know-howto persons other than those designated by the licensor may be violative ofcompetition. Such a condition is often imposed in the licensing of dual usetechnologies.12. Imposing a trade mark use requirement on the licensee may be prejudicial tocompetition, as it could restrict a licensees freedom to select a trade mark.13. Indemnification of the licensor to meet expenses and action in infringementproceedings is likely to be regarded as anti-competitive. 72
  • 78. 14. Undue restriction on licensees business could be anticompetitive.For instance, the field of use of a drug could be a restriction on the licensee, if it isstipulated that it be used as medicine only for humans and not animals, even thoughit could be used for both.15. Limiting the maximum amount of use the licensee may make of the patentedinvention may affect competition.16. A condition imposed on the licensee to employ or use staff designated by thelicensor is likely to be regarded as anticompetitive.The above list is not exhaustive but illustrative.PENALTY PROVISIONSThe Commission is empowered to inquire into any unreasonable conditionsattached to the IPR agreements and can impose penalty upon each of such rightholder or enterprises which are parties to such agreements or abuse, which shall benot more than ten percent of the average turnover for the last three precedingfinancial years. In case an enterprise is a company its directors/officials who areguilty are liable to be proceeded against and punished.In addition, the Commission has the power to pass inter alia any or all of thefollowing orders (Section 27):(i) direct the parties to discontinue and not to re-enter such agreement;(ii) direct the enterprise concerned to modify the agreements;(iii) direct the enterprises concerned to abide by such other orders as theCommission may pass and comply with the directions, including payment of costs, ifany; and(iv) pass such other order or issue such directions as it may deem fit.In case of abuse of dominant position under section 4 by virtue of an IPR by anenterprise, in addition to the above penalties, the Commission has the power toorder division of enterprise under section 28.CONFLICT BETWEEN COMPETITION LAW AND INTELLECTUAL PROPERTYRIGHTSCompetition laws involves in formulating a set of policies which promote competitionin the market. These are aimed at preventing unfair trade practices. It is also framedwith the intention of curbing abuse of monopoly in the market by the dominant 73
  • 79. company. Consumer welfare and a healthy competition in the market are the mainobjectives of the Competition Law.On the other side IP Laws are monopolistic in nature. They guarantee an exclusiveright to the creators and owners of work which are a result of human intellectualcreativity. Also they prevent commercial exploitation of the innovation by others.This legal monopoly may, depending on the unavailability of substitutes in therelevant market, lead to market power and even monopoly as defined undercompetition law. It is an advantage granted to the owner over the rest of the industryor sector. When this advantage or dominant position is abused it creates a conflictbetween IPR and competition law.The provisions of the Competition Act, 2002 prohibits the exercise of anti-competitive agreements by the IPR holders since they are in conflict with thecompetition policies. Further the Act authorizes4 the Competition Commission ofIndia to penalise the IPR holders who misuse their dominant position. Furthermore,Section 45 of the Act the Commission is also authorized to penalize the parties toan anti-competitive agreement, which is in contravention of Section 3 of the Act.In order to combat with IPR monopolies anti-competition laws often include twomajor measures like parallel imports and compulsory licensing. A compulsorylicense is where an IPR holder is authorized by the state to surrender his exclusiveright over the intellectual property, under the provisions6 of TRIPS. On the otherhand a parallel import includes goods which are brought into the country without theauthorization of the appropriate IP holder and are placed legitimately into a market.Innovation has always been a cause in a growing economy resulting in moreinnovation. The advent of fresh innovations gives rise to healthy competition atmacro as well as micro economic levels. IP laws help protect these innovations frombeing exploited unlawfully. In view of this IP and Competition laws have to beapplied in tandem to ensure that the rights of all stake holders including theinnovator and the consumer or public in general are protected.The common objective of both policies is to promote innovation which wouldeventually lead to the economic development of a country however this should not 74
  • 80. be to the detriment of the common public. For this the competition authorities needto ensure the co-existence of competition policy and IP laws since a balancebetween both laws would result in an economic as well as consumer welfare.44Conditions not compatible with competition Law -1. Patent pooling is a restrictive practice, which will not constitute being a part of thebundle of rights forming part of an IPR. This happens when the firms in amanufacturing industry decide to pool their patents and agree not to grant licencesto third parties, at the same time fixing quotas and prices. They may earn supra-competitive profits and keep new entrants out of the market. In particular, if all thetechnology is locked in a few hands by a pooling agreement, it will be difficult foroutsiders to compete.2. Tie-in arrangement is yet another such restrictive practice. A Licencee may berequired to acquire particular goods (unpatented materials e.g. raw materials) solelyfrom the Patentee, thus foreclosing the opportunities of other producers. Therecould be an arrangement forbidding a Licencee to compete or to handle goods,which compete with the Patentees.3. An agreement may provide that royalty should continue to be paid even after thepatent has expired or that royalties shall be payable in respect of unpatented know-how as well as the subject matter of the patent. This will be regarded asunreasonable in the context of Competition Law.4. There could be a clause, which restricts competition in R&D or prohibits aLicencee to use rival technology. This is likely to be frowned upon by the RegulatoryAuthority under Competition Law.5. A Licencee may be subjected to a condition not to challenge the validity of IPR inquestion. This will be regarded as unreasonable from the competition perspective.6. A Licencee may require to grant back to the licensor any know-how or IPRacquired and not to grant licences to anyone else. This is not likely to pass thecompetition test, as it is likely to augment the market power of the licensor in anunjustified and anti-competitive manner.7. A licensor may fix the prices at which the Licencee should sell. This is likely to be44 CONFLICT BETWEEN COMPETITION LAW AND INTELLECTUAL PROPERTY RIGHTShttp://www.tmpsearchers.com/intellectual-property-rights/174/conflict-between-competition-law-and-intellectual-property-rights/ 75
  • 81. held anti-competitive.8. A Licencee may be coerced by the licensor to take several licences in intellectualproperty even though the former may not need all of them. This is known aspackage licensing which is regarded as anti-competitive.9. A condition imposing quality control on the licenced patented product beyondthose necessary for guaranteeing the effectiveness of the licenced patent is an anti-competitive practice.10. Imposing a trade mark use requirement on the Licencee is prejudicialto competition, as it could restrict a Licencees freedom to select a trade mark.11. Indemnification of the licensor to meet expenses and action in infringementproceedings is likely to attract Competition Law.12. Undue restriction on Licencees business could be anti-competitive. Forinstance, the field of use of a drug could be a restriction on the Licencee, if it isstipulated that it should be used as medicine only for humans and not animals, eventhough it could be used for both.Apart from parallel imports another area where the Competition Act has failed to usethe flexibility provided by TRIPs (Trade Related Aspects of Intellectual PropertyRights) is “compulsory licensing.” The agreement vide Article 31 allows compulsorylicensing under certain conditions. One of them is to control anti-competitivepractices by IPR owners.Most importantly, even the licensee is allowed to export the protected product,which otherwise is meant predominantly for supply in the domestic market. Thiscould be highly relevant to certain sectors in India, namely, the pharmaceuticalsector, which would be able to export drugs to countries with national healthemergencies.Another condition for grant of compulsory licensing and where the competitionauthority has a role is in case of “refusal to deal”. An example of how a compulsorylicense can be based on “refusal to deal” is provided by a 1995 decision of theEuropean Court of Justice in the Magill case. The Court held that Radio TelefisEireann (RTE) and Independent Television Publications Limited (ITP), who were theonly sources of basic information on programme scheduling, could not rely onnational copyright provisions to refuse to provide that information to third parties.The Court opined that such a refusal constituted the exercise of an IPR beyond its 76
  • 82. specific subject matter and, thus, an abuse of a dominant position under Article 86of the Treaty of Rome.Even though the US patent law does not provide for compulsory licenses, this isprobably the country with the richest experience in the granting of compulsorylicenses to remedy anti-competitive practices. According to one study more than100 such licenses have been granted.The provisions of compulsory licensing should be used with utmost caution else itwould have a negative impact on investment in R&D, evolution of new technologiesetc. But the provisions should not remain unimplemented either, should the needarise. Interestingly, a statistical study by Scherer relating to 70 companies showedno negative effect on R&D in companies subject to compulsory licenses but, on thecontrary, showed a marked rise in their R&D relative to those of comparable sizenot subject to such licenses.That said, before any government can act on Article 31 of the TRIPs Agreement togrant a compulsory license, it has to follow due administrative or judicial process. Acompetent authority has first to determine that the anti-competitive practice isprevalent before the government can grant a license to others. Again the best-suitedauthority here would, of course, be the competition authority and hence this needsto be reflected in the new competition law.The provision indicates that for the purpose of determining whether enterpriseenjoys a dominant position, the authority would take into account inter alia “technicaladvantages enjoyed by the firm, which could include patents, know-how andcopyright.”Clear provisions on IPR and competition must be implemented at the national levelto take full advantage of the flexibility built into TRIPs, to stem the tide of anti-competitive arrangements.4545 Need for clearer norms on IPR in new competition Bill; Published on: The Financial Express, 13 June, 2001; By Pradeep S Mehta & Ujjwal Kumar,CUTS Centre for International Trade, Economics and Environment 77
  • 83. NEED FOR CLEARER NORMS:Constitution of India provides various concern provisions such as –Article 19. Protection of certain rights regarding freedom of speech, etc.— whichprovides freedom to practice any profession, or to carry on any occupation, trade orbusiness;Article 301. Freedom of trade commerce and intercourse.— which providesfreedom from laws which go beyond regulations which burdens, restricts or preventsthe trade movements between states and within states;National Competition Policy (NCP)Ministry of Corporate Affairs had constituted a Committee under the Chairmanshipof Shri Dhanendra Kumar46, for framing of National Competition Policy47 andrelated matters. This Committee has submitted a draft National Competition Policyis aimed at laying down an overarching policy framework for infusing competitionprinciples in various policies, statutes and regulations and promoting a competitivemarket structure in the economy, thereby striving to achieve maximum economyefficiency in various spheres, and public welfare.It is essential to increase the degree of competition between firms in the domesticmarket so that there are adequate incentives for raising productivity, improvingefficiency and reducing costs. Competition policy is a broad concept which includesall such governmental policies that affect the functioning of markets.“Strong competition policy is not just a luxury to be enjoyed by rich countries, but areal necessity for those striving to create democratic market economies”4846 Former Chairperson of Competition Commission of India47 http://www.mca.gov.in/Ministry/pdf/DraftNationalCompetitionPolicyForIndia-28th_July2011.pdf48 The Nobel Prize (2001) winner Joseph Stiglitz 78
  • 84. Aim and the objective behind the National Competition Policy (NCP):-  to unlock fuller growth potential of Indian economy;  to promote good governance by transparency, accountability through competing responses;  to prevent practices having adverse effect on competition;  to promote and sustain competition in the market;  to protect the interests of consumers;  to ensure freedom of trade carried on by participants in markets.  to develop a broad industrial base to achieve speedy economic self-reliance and promoting social justice;  to reduce costs, innovate in processes and products, invest in technology and better managerial practices and increase;  to achievement of static, dynamic as also resource/allocative efficiencies, sustainable economic growth, development, and poverty alleviation;  to imbibe the principles of competition in various endeavours of the Government, of course in alignment with the national strategic objectives, alongwith social, environmental, public safety, and other considerations;The State exercised control over the direction, pattern and quantum of investmentsthrough Industries (Development & Regulation) Act, 1951, Monopolies andRestrictive Trade Practices Act, 1969 (MRTP Act) etc.However, it can be said that “Competition law alone is not sufficient for realizing thegains from greater competition”. Therefore, a need required to engage in advocacywith stakeholders, including public institutions, in order to build a culture ofcompetition that is receptive to and supportive of the new competition regime.Competition has a two-way linkage with various policies of the Government such as:fiscal policy, trade policy, investment policy, labour policy, consumer policy,environment policy, policy on intellectual property rights, sectorial regulatory policiesetc.Economic theories suggest that if inter brand competition exists, then restrictions on 79
  • 85. intra brand competition should not be capable of restricting competition and theefficiency enhancing effects of vertical agreements would outweigh any possiblerisks. Yet experience reveals that vertical agreements could have anticompetitiveeffects which outweigh their pro-competitive effects, and hence they have to bebrought within the purview of antitrust law. Countries are still searching for theperfect way to regulate vertical agreements.The Indian Act, which has very recently come into force, has several ambiguitieswith respect to vertical restraints. The Indian law is similar to the US law, inasmuchas there is clear scope for application of the rule of reason to vertical agreements.However as US experience shows there cannot be a uniform application of the ruleof reason, since different vertical agreements would call for different standards. TheIndian Act also has similarity with EC law in the sense that it lays down severalcriteria which can be taken into account for testing ‘adverse effects’ on competition.However unlike the EC, the competition authority in India is free to take into accountall or any of the mentioned criteria. This is a dangerously open ended provision.It can be said that one of the main obstacles to economic growth and povertyreduction in many countries is the policies that distort competition such as-Anti-competitive Agreements –These are agreements between entities in respect of production, supply,distribution, storage, acquisition or control of goods or provisions of services, whichcause or are likely to cause an appreciable effect on competition within India.Some of the anti-competitive practices/Abusive practices undertaken by dominantentities are-  price fixing/ predatory pricing,  bid rigging or Collusive bidding,  joint boycotts,  Limiting and controlling production, supply, markets, technical development, investment or provisions for services;  Allocating market/ Market sharing cartel,  abusive conditions of supply, 80
  • 86.  Bundling/ leveraging,  Tying agreement  Exclusive dealing/exclusive territory  Price discrimination  Refusal to deal  Resale price maintenance/ mark-ups  Margin squeezing,  Regulation of combinations etc.Such an agreement need not be in writing and can be at any stage of production orsale. It may be a horizontal agreement (eg. Cartels) at the same level ofproduction/supply or it may be a vertical agreement.Following are some of the most common examples of anti-competitive agreements:• Agreement to limit production & supply• Agreement to allocate marketsAbuse of Dominant Position –Dominant position means a position of strength enjoyed by an enterprise in therelevant market in India which allows it to:Operate independently of competitive forces prevailing in the relevant market; orAffect its competitors or consumers or the relevant market in its favour.However, dominance per se is not considered bad by the statute. Its the abuse ofthis position of dominance that is prohibited. That statute lays down an exhaustivelist of actions which will be considered to be abuse of dominance. These are:• Imposing unfair or discriminatory condition or price in purchase or sale of goods orservices; or• Limiting or restricting:- Production of goods or provision of services or market therefore;- Technical or scientific development relating to goods or services to the prejudice ofconsumers;- Indulging in practices which amount to denial of market access; 81
  • 87. - Making unrelated supplementary obligations a condition precedent for entering intoa contract; and- Using the dominant position in one relevant market to enter into or protect itsposition in another relevant marketThe principles laid down under the draft NCP are as following:  Fair market process;  Institutional separation between policy making, operations and Regulation;  Competitive neutrality’;  Fair pricing and inclusionary behaviour;  Third party access to ‘essential facilities’;  Public Policies and programmes to work towards promotion of competition in the market place;  National, regional and international co-operation.Institutional Arrangement to Enforce the NCP: 1. Competition Commission of India; 2. Competition Appellate Tribunal; 3. National Competition Policy Council (proposed)The annexure-II in the draft NCP, 2011 provides an illustrative list of parameterswhich may be considered to limit the competition, which need to be taken inconsideration to formulate the NCP.As many of the anti-competitive activities in India are contract based and may havelegal validity too as a valid contract. Thus, in view of simultaneous presence of anti-competitive activities in India and the monopoly rights in IPRs etc suggest a greyarea in the said legal and competition matter. It can be an opportunity to suggest thelegislation to enact the new laws for the same or make amendments in the existingenactments in order to remove the anomalies.The legal authority should be given broad powers for restraining anti-competitiveactivities and penalizing the precursor of such activities. 82
  • 88. Portuguese Industrial Property CodeMoreover, up until the recent reform of the Portuguese Industrial Property Code inJuly 2008, this legislation still provided that trademark registrations could beannulled if and when the owner of that registration engaged in or could potentiallyengage in unfair competition whether intentionally or not. In Portugal, the concept ofunfair competition has been developed in a way which sanctions unfair competitivebehaviour contrary to common practice in commerce and covers conduct causingeconomic injury to the market as a whole through a deceptive or wrongful businesspractice.To be characterised as unfair competition, an act must be distinguished from otherspecific acts prohibited by law (eg, patent or trademark infringement), but the twoactions are not incompatible if distinct facts exist. In certain conditions, a legal actionagainst an act of unfair competition can also afford protection to those that cannotassert IP rights under a patent, design, trademark or copyright. For these reasonsmuch controversy and legal debate has taken place on whether unfair competitioncorrectly belongs in the domain of IP law.It is argued that this legal principle falls within the legal framework of the IndustrialProperty Code and is therefore an intrinsic part of IP law. Secondly, it is said thatunfair competition conduct relates to IP Rights given that its subjects are usuallyregistered owners of trademarks or other IP rights. Others take the view that we aredealing with two distinct areas of law.As stated above, the provision regarding the grounds for annulment of trademarkregistrations, by including unfair competition as one of the grounds has inevitablyadded to this confusion and uncertainty.Indeed, it has been argued that unfair competition should only be a reaction againstconduct resulting in unfair competition and not a form of extinguishing certaintrademark registrations, particularly since the unfair competition rules operate byimposing fines.Fortunately, and as stated above, the provisions of the Industrial Property Codepermitting the annulment of a registered IP right on the basis of unfair competitionwere revoked in July 2008.This means that currently, unfair competition can only be relied upon as a groundfor a refusal to register IP rights and not the annulment of existing ones, although itmay still be auctioned against conduct which violates general rules and customary 83
  • 89. practices of honesty which may harm the economy and market.Spain introduced unfair competition legislation in 1991, which is proving to be highlyeffective in practice. The Portuguese Industrial Property Code regulates both privateindustrial property rights and the principle of unfair competition.TRIPS Agreement:The competitive balances sought to be attained by TRIPS are contained in theobjectives and principles. First, Members may, in formulating or amending theirlaws, adopt appropriate measures to prevent the abuse of IPRs, restraint of trade orinternational transfer of technology. Second, is an interpretive principle in favour ofadopting measures necessary for prevent monopoly abuse by IPR holders andanticompetitive licensing arrangements, which is put into operation by Article 40 (alex-specialis provision to the general provision in Article 8.2), which establishes aregime for controlling such practices.Article 40 specifically provides for the possibility of regulating anticompetitivepractices in licensing agreements. This is crucial to ensure the right balancebetween competition and the protection of IPRs.Provisions included in the TRIPS Agreement in connection with unfair competitionare grouped into two categories: 1. undisclosed information such as trade secret, and 2. anti-competitive practices in contractual licenses.The TRIPS Agreement requires undisclosed information - trade secrets or know-how - to benefit from protection.According to Article 39.2, the protection must apply to information that is secret,which has commercial value because it is secret and that has been subject toreasonable steps to keep it secret. The Agreement does not require undisclosedinformation to be treated as a form of property, but it does require that a personlawfully in control of such information must have the possibility of preventing it frombeing disclosed to, acquired by, or used by others without his or her consent in amanner contrary to honest commercial practices. “Manner contrary to honestcommercial practices” includes breach of contract, breach of confidence andinducement to breach, as well as the acquisition of undisclosed information by third 84
  • 90. parties who knew, or were grossly negligent in failing to know, that such practiceswere involved in the acquisition.The TRIPS Agreement also contains provisions on undisclosed test data and otherdata whose submission is required by governments as a condition of approving themarketing of pharmaceutical or agricultural chemical products which use newchemical entities. In such a situation the Member government concerned mustprotect the data against unfair commercial use. In addition, Members must protectsuch data against disclosure, except where necessary to protect the public, orunless steps are taken to ensure that the data are protected against unfaircommercial use.Article 40 of the TRIPS Agreement recognizes that some licensing practices orconditions pertaining to IP rights which restrain competition may have adverseeffects on trade and may impede the transfer and dissemination of technology(paragraph 1). Member countries may adopt, consistently with the other provisionsof the TRIPS Agreement, appropriate measures to prevent or control practices inthe licensing of IP rights which are abusive and anti-competitive (paragraph 2).The TRIPS Agreement provides for a mechanism whereby a country seeking totake action against such practices involving the companies of another Membercountry can enter into consultations with that other Member and exchange publiclyavailable non- confidential information of relevance to the matter in question and ofother information available to that Member, subject to domestic law and to theconclusion of mutually satisfactory agreements concerning the safeguarding of itsconfidentiality by the requesting Member (paragraph 3). Similarly, a country whosecompanies are subject to such action in another Member can enter intoconsultations with that Member (paragraph 4).TRIPS and anti-competitive practices-Appropriate measures, provided that they are consistent with the provisions of thisAgreement, may be needed to prevent the abuse of Intellectual Property Rights byright holders or the resort to practices which unreasonably restrain trade oradversely affect the international transfer of technology. 85
  • 91. Article 40 of section 8:Article 40.1 - Members agree that some licensing practices or conditions pertainingto intellectual property rights which restrain competition may have adverse effectson trade and may impede the transfer and dissemination of technology.Article 40.2 - Nothing in this Agreement shall prevent Members from specifying intheir legislation licensing practices or conditions that may in particular casesconstitute an abuse of intellectual property rights having an adverse effect oncompetition in the relevant market. As provided above, a Member may adopt,consistently with the other provisions of this Agreement, appropriate measures toprevent or control such practices, which may include for example exclusive grant-back conditions, conditions preventing challenges to validity and coercive packagelicensing, in the light of the relevant laws and regulations of that Member.Articles 27 and 31 of TRIPS permits compulsory licensing under conditions ofnational emergency or other circumstances of extreme importance or in cases ofpublic, non-commercial use as embodied under Sections 84 and 92 of the IndianPatents Act of 1970. The provision of the Indian Patents Act is in line with Article 31of TRIPS as it allows the use of the patents within certain terms and conditions.Transfer and dissemination of technology is the central focus of the TRIPSAgreement’s objectives as articulated in Article 7.Article 8.2 notes that abuse of intellectual property rights may adversely affect theinternational transfer of technology.Operationalizing these provisions is important because providing developingcountries with access to technologies identified by them as appropriate is anessential way to accelerate their economic and social development.Article 66.2: Developed country Members shall provide incentives to enterprises andinstitutions in their territories for the purpose of promoting and encouragingtechnology transfer to least-developed country Members in order to enable them tocreate a sound and viable technological base. 86
  • 92. Article 66.2 acknowledges that special difficulties may be faced by least developedcountries, and that additional measures over and above the implementation ofArticles 7, 8 and other provisions of the Agreement that promote technology transferwould be required. It reflects that, unless the price of the technology can be broughtwithin manageable limits, the high cost of technology will impose a burden on thelocal economy of these countries.Despite the importance of technology transfer, developing countries seem to befacing increasing barriers to access to technology as a result of a number of factorsincluding the changing pattern of international economic activity, strengthenedintellectual property rights required by the TRIPS Agreement, and inadequatecounterbalancing policies and measures to promote technology transfer.Strengthened intellectual property rights required by the TRIPS Agreement mayalso inhibit technology transfer. Many prospective technology seekers in developingcountries face serious difficulties in their commercial dealings with technologyholders in developed countries. Stronger intellectual property rights increase thebargaining power of firms, allowing them to raise royalties and impose moreonerous conditions.Increasing control over core technologies, the consolidation of patent portfolios, andincreasing vertical and horizontal integration and new strategic alliances allow asmall number of large corporations and countries to dominate the technologies thatare required for the development of many WTO Members, and heighten the barriersfacing these countries when seeking new technologies.These problems are exacerbated by an absence of policies and measures topromote technology transfer. There is concern that the provisions of the TRIPSAgreement that refer to the dissemination and transfer of technology areinadequate.Little effort has been made to operationalize Articles 7 and 8, raising questionsabout the capacity of the Agreement as currently drafted to promote technologytransfer. 87
  • 93. Moreover, efforts by developed countries to implement Article 66.2 have beenlimited.While some developed countries have submitted information about nationalschemes that may promote technology transfer to least-developed countries, furtherinformation is required to ensure that these meet the requirements of Article 66.2and are effective.Together, these factors are widening the gap between technologically rich and poorcountries, with the latter facing increasing barriers to sharing in the benefits oftechnological development. They illustrate the need to address in the WTO issuessuch as transfer, dissemination and innovation. Previous proposals, made in theCommittee on Trade and Environment and the General Council, have called forowners to sell environmentally sound technology and products at fair and mostfavourable terms and conditions as suggested in the 1992 Rio Declaration, in manymultilateral environmental agreements and in other discussions of sustainabledevelopment. Increased technology transfer on fair commercial rates is alsoimportant in the areas of electronic commerce.To the extent that intellectual property rules do not promote technology transfer,WTO Members should consider the establishment of additional mechanisms tofacilitate access by developing and least-developed countries to technologies on areasonable basis in order to fully implement the TRIPS Agreement. Whileintellectual property rights may occasionally serve as a tool to enhance competition,strengthened intellectual property rights may have adverse impacts on competitivemarkets. WTO Members may wish to examine the implementation of the TRIPSAgreement to ensure that strengthened intellectual property rights are not having anadverse effect on competition, especially in developing countries that do not haveestablished rules and institutions for addressing anti-competitive conduct.The TRIPS Agreement includes provisions on competition. Article 40 notes,Members agree that some licensing practices or conditions pertaining to intellectualproperty rights which restrain competition may have adverse effects on trade andmay impede the transfer and dissemination of technology. 88
  • 94. Similarly, Article 8.2 notes that appropriate measures may be required to addressabuses of intellectual property rights.Intellectual property rights, by nature, restrict competition. In addition, abuses ofintellectual property rights may give rise to problems of cartels, including price fixing,restrictions on supply, and market and customer divisions. In the internationaleconomy, this tendency is exacerbated by the practice in some industrializedcountries towards granting over-broad patent claims, the acquisition and strategicuse of patent portfolios to prevent competition by similar but non-infringing products,and the continued blurring of the lines between invention and discovery.When reviewing the implementation of the TRIPS Agreement, WTO Membersshould examine the potential anti-competitive effect of strengthened intellectualproperty rights, and ensure that Members retain the right to fully implement Article40 and take other measures, including those referred to in Article 8.2, to prevent theabuse of intellectual property rights by right holders. WTO Members, particularlydeveloping countries, may also wish to consider how to cooperate on a bilateral,regional or multilateral level to address anti-competitive effects of large internationalmergers and acquisitions, especially those that involve consolidation of control overintellectual property rights. WTO Members should also maintain significant flexibilityto use measures such as compulsory licensing, as permitted by Article 31.USE WITHOUT AUTHORIZATION OF RIGHTS HOLDER (ARTICLE 31)Article 31 acknowledges the right of WTO Members to establish as part of theirnational legislation an entitlement for third parties and the government to usepatented subject matter without the authorization of the rights holder. Use withoutauthorization, through compulsory licenses and other measures, is fundamental tothe notion of balance included in the TRIPS Agreement. As part of the Article 71.1review, WTO Members should assess the implementation of the TRIPS Agreementwith a view to clarifying and extending the provisions Article 31.Article 31 provides that where the law of a Member allows for other use of thesubject matter of a patent without the authorization of the right holder, including use 89
  • 95. by the government or third parties authorized by the government, the followingprovisions shall be respected.This is followed by a series of requirements, listed in Article 31(a) to (l), that apply tothe use of compulsory licenses.Virtually all WTO Members have established procedures permitting use of patentedsubject matter without the authorization of the rights holder. In the United States, forexample, literally thousands of uses without authorization have been granted toaddress violations of antitrust legislation. Although often used to remedy antitrustviolations, Article 31 does not restrict the grounds upon which a compulsory licensecan be granted. Compulsory licensing can be offered in relation to nationalemergency, situations of extreme urgency, public non-commercial use, secondpatents, and anticompetitive conduct, as noted in Article 31, as well as on othergrounds, including abuses of patents such as refusal to deal, and other casesaffecting the public interest.Developing countries place great importance on the compulsory licensing provisionsin the TRIPS Agreement. Compulsory licensing provides an important way to securethe balance of rights and obligations sought by the TRIPS Agreement. It may beused to accelerate the transfer and dissemination of technology, to safeguard thesupply of essential products to the poor at reasonable rates, and to address theabuse of intellectual property rights. Compulsory licenses may serve an importantrole in encouraging technological innovation by improving access to researchprocesses and promoting follow-on and incremental research, thereby helping toensure the mutual benefit of technology producers and users, as required by Article7. It may help ensure that patents do not adversely affect access to the drugsthereby helping to achieve sound public health and nutrition, and promoting thepublic interest in sectors of vital importance to socio-economic and technologicaldevelopment in a manner consistent with the TRIPS Agreement, as required byArticle 8.1. It may also be used to address abuses of intellectual property rights andpractices that restrain trade or affect technology transfer, as suggested in Article8.2. 90
  • 96. In the TRIPS Agreement, the importance of balancing rights and obligations isunderlined in Article 7. Article 8.2 similarly acknowledges that WTO Members mayneed to develop appropriate measures to prevent the abuse of intellectual propertyrights by rights holders, or the resort to practices that unreasonable restrain trade oraffect the international transfer of technology.Empirical evidence on the role of intellectual property protection in promotinginnovation and growth remains inconclusive. Diverging views also persist on theimpacts of intellectual property rights on development prospects. Some point outthat, in a modern economy, the minimum standards laid down in TRIPS will bringbenefits to developing countries by creating the incentive structure necessary forknowledge generation and diffusion, technology transfer and private investmentflows. Others stress that IP, especially some of its elements, such as the patentingregime, will adversely affect the pursuit of sustainable development strategies by:raising the prices of essential drugs to levels that are too high for the poor to afford;limiting the availability of educational materials for developing country school anduniversity students; legitimizing the piracy of traditional knowledge; and underminingthe self-reliance of resource-poor farmers.It continues to be urgent, therefore, to ask how developing countries can use IPtools to advance their development strategy. What are the key concernssurrounding the issues of IP for developing countries? What are the specificdifficulties they face in IP negotiations? Is IP directly relevant to sustainabledevelopment and to the achievement of agreed international development goals?How we can facilitate technological flows among all countries? Do they have thecapacity, especially the least developed among them, to formulate their negotiatingpositions and become well informed negotiating partners? These are essentialquestions that policy makers need to address in order to design IP laws and policiesthat best meet the needs of their people and negotiate effectively in futureagreements. 91
  • 97. ICTSD Programme on Intellectual Property and Sustainable DevelopmentTo address some of these questions, the ICTSD Programme on IntellectualProperty and Sustainable Development was launched in July 2000. One centralobjective has been to facilitate the emergence of a critical mass of well-informedstakeholders in developing countries – including decision makers, negotiators butalso the private sector and civil society – who will be able to define their ownsustainable human development objectives in the field of IP and effectively advancethem at the national and international levels.This study is an additional contribution to the debate on IP and sustainabledevelopment and particularly in responding to the need for increased awarenessand better understanding of the interface between IP and competition policy. Anunderlying assumption of work on IP has been the pursuit of a proper balancebetween the different interests at stake in designing appropriate regimes compliantwith international commitments. These regimes, as in the case of countries withstrong traditions in IP, are designed taking into account adequate checks andbalances. Competition law and policies are essential components of these checksand balances.US Anti-trust Law or Competition lawAnti-trust law is concerned with the preservation of the freedom of competition bycombating restraints on trade and abuses of economic power, while unfaircompetition law is concerned with ensuring fairness in competition by forcing allparticipants to play according to the same rules. Both laws are equally important,although in different respects, and supplement each other.Anti-trust laws or competition laws are to promote a business environment insupport of sound competition for further innovation and economic efficiency.Agreements between corporations, whether they may or may not include IPaspects, are likely to discourage further innovation and increase prices of theproducts concerned, if such agreements contain arrangements or obligations whichrestrict marketing, prevent follow-on improvements of technologies, control the priceof the product and abuse the licensor’s dominant position in the market. Anti-trustlaws or competition laws are intended to correct such restrictive and abusive 92
  • 98. business practices and activities. To balance anti- trust laws or competition laws onone hand, and the IP laws on the other requires constant review of all the relevantlaws and case-by-case analysis of contractual agreements.Anti-trust authorities in some jurisdictions49 tried to codify guidelines for IP licensingagreements.These guidelines reflect their different approaches to the issues but often providecoherent rules. For example, concerning grant back (an arrangement under whicha licensee agrees to extend to the licensor of intellectual property the right to usethe licensees improvements to the licensed technology), exclusive grant backs aregenerally considered anti-competitive. In other words, non-exclusive grant back isconsidered pro- competitive and permissive under anti-trust laws and competitionlaws, because “non-exclusive grant back arrangements provide a means for thelicensee and the licensor to share risks and reward the licensor for making possiblefurther innovation based on or informed by the licensed technology, and bothpromote innovation in the first place and promote the subsequent licensing of theresults of the innovation.”50It is a basic principle that in the event of an irreconcilable conflict between measuresto protect fundamental policy considerations (such as protecting human health), andthe rules of the multilateral trading system (such as non-discrimination), the formershould in certain circumstances prevail.49 US Fair Trade Commission;http://www.usdoj.gov/atr/public/guidelines/0558.htmEC Technology Transfer Block Exemptions;http://www.ipit-update.com/compec04.htmJapan Fair Trade Commission’s Guidelines for the Use of Intellectual Propertyunder the Anti-monopoly Act;http://www.jftc.go.jp/e-page/legislation/ama/070928_IP_Guideline.pdf50 Unfair Competition, Anti-trust Law and IPR 93
  • 99. Other National LawsMost countries with special laws on unfair competition have adopted the same orsimilar definitions for their general provision—using such terms as “honest tradepractices” (Belgium and Luxembourg), “the principle of good faith” (Spain andSwitzerland), “professional correctness” (Italy) and “good morals” (Germany,Greece and Poland).In the absence of specific legislation, the courts have defined fair competition withphrases like “the principles of honesty and fair dealing” or “the morals of themarketplace” (United States of America). 94
  • 100. CASE LAWSEntertainment Network (India) Ltd. v. Super Cassette Industries Ltd.MANU/SC/ 2179/2008The Hon’ble Supreme Court in the case observed: When the owner of a copyright orthe copyright society exercises monopoly in it, then the bargaining power of theowner of a copyright and the proposed licence may not be same. When an offer ismade by an owner of a copyright for grant of licence, the same may not haveanything to do with any term or condition which is wholly alien or foreign therefore.An unreasonable demand if acceded to, becomes an unconstitutional contractwhich for all intent and purport may amount to refusal to allow communication to thepublic work recorded in sound recording....The word “public” must be read to mean public of all parts of India and not only aparticular part thereof. If any other meaning were assigned, the terms “on termswhich the complaints considers reasonable” would lose all significance. The veryfact that refusal to allow communication on terms which the complainant considersreasonable have been used by the Parliament indicate that unreasonable termswould amount to refusal. It is in that sense the expression “has refused” cannot begiven a meaning of outright rejection or denial by the copyright owner...What would be reasonable for one may not be held to be reasonable for the other.The principle can be determined in a given situation. We wish the statute had beenclear and explicit. But only because it is not, the Courts cannot fold its hands andexpress its helplessness.This scheme shows that a copyright owner has complete freedom to enjoy the fruitsof his labour by earning an agreed fee or royalty through the issuance of licences.Hence, the owner of a copyright has full freedom to enjoy the fruits of his work byearning an agreed fee or royalty through the issue of licences. But, this right, torepeat, is not absolute. It is subject to right of others to obtain compulsory licence asalso the terms on which such licence can be granted.... 5151 Intellectual Property and Competition Law, P.N. Parashar, Competition Law Reports, Jul. 2010 - Sep. 2010 95
  • 101. Gramophone Company of India Ltd. v. Super Cassette Industries Ltd.MANU/DE/1801/2010 (Decided On 01.07.2010)The Hon’ble High Court of Delhi in this case observed that at the outset, Section 16 of theAct may be noticed. Section 16 provides that no copyright can be acquired in respect of anywork except in accordance with the provisions of the Act. Therefore, copyright is a statutoryright. Only those rights which the copyright Act creates; to the extent it creates, and subjectto the limitations that the Act imposes, vest in the owner of the copyright in the work,whether it is a primary work such as a literary, dramatic or musical work, or a derivate worksuch as a sound recording or cinematograph film. No right, which the Copyright Act doesnot expressly create can be inferred or claimed under the said Act.It further observed that the rights conferred by Section 14 are “subject to the provisions ofthis Act”. Therefore, Section 14 has to be read in the light of, and subject to the otherprovisions of the Act. It is seen that the copyright in derivative works viz. cinematograph filmand sound recordings are limited right when compared to the rights in primary works viz.literary, dramatic or musical works.If the statute that confers the copyright itself is read down in cases involving purelycommercial work, the provisions of the Competition Act, 2002 cannot be applied/interpretedin a manner that excludes an anti-competitive agreement which supposedly seeks toprotect any, and all copyrights whether or not conferred by the statute. The exemptionunder Section 3(5) of the Competition Act is not a blanket one and must be available to onlysuch cases where the restrictions imposed are reasonable and necessary for protecting therights conferred by the Copyright Act.There is no tension in the goals sought to be achieved by intellectual property rights andcompetition law. In fact to the contrary, the goals in both cases are broadly the same i.e.wealth maximisation and public interest.Therefore, an agreement which is anticompetitive in nature is not exempt from Section 3purely on the ground that it involves protection of intellectual property rights. For theexemption to be available in a particular case, it is necessary that the consequences of theanti-competitive conditions be outweighed by the necessity to protect the IP rights involved.There may on occasion exist, therefore, a fine line between actions protecting the legitimateinterest of a patent owner and antitrust law violations. On the one hand, the patent ownermust be allowed to protect the property right given to him under the patent laws. On theother hand, a patent owner may not take the property right granted by a patent and use it toextend his power in the marketplace improperly.5252 Intellectual Property and Competition Law, P.N. Parashar, Competition Law Reports, Jul. 2010 - Sep. 2010 96
  • 102. BAYER VS NATCO (Nexavar case)Indias First Compulsory License (CL) Granted in relation to Bayers patented anti-cancer drug (Nexavar) by Controller General Kurian who issued the order on 9thMarch 2012.The Compulsory License Order is a thoroughly well researched and logicallyreasoned one. After a 3 day hearing, the Controller General (CG) found in favour ofNatco on all counts and issued a license in their favour.Natco is now free to manufacture and sell a generic version of Nexavar (akidney/liver cancer drug that goes by the generic name of Sorafenib Tosylate), butwill have to pay a 6% royalty on the net sales (every quarter) to Bayer. Further, itcan only charge Rs 8800 for a monthly dose (120 tablets) of the drug (in itscompulsory licensing application, Natco committed to sell at this price). In its writtensubmission, Natco also committed to donating free supplies of the medicines to 600needy patients each year and this commitment has also been recorded in thecompulsory licence (CL) order.In order to appreciate the order, one must begin with section 84 of the IndianPatents Act, which reads as below:Section 84:“(1) At any time after the expiration of three years from the date of the 1[grant] of apatent, any person interested may make an application to the Controller for grant ofcompulsory licence on patent on any of the following grounds, namely:— (a) that thereasonable requirements of the public with respect to the patented invention havenot been satisfied, or (b) that the patented invention is not available to the public ata reasonably affordable price, or (c) that the patented invention is not worked in theterritory of India.”The Controller found that all the 3 criteria above were satisfied in this case, namely:1. that since Bayer supplied the drug to only 2% of the patient population, thereasonable requirements of the public with respect to the patented drug (Nexavar)were not met.2. that Bayers pricing of the drug (2.8 lakhs for a months supply of the drug) was 97
  • 103. excessive and did not constitute a "reasonably affordable" price.3. that Bayer did not sufficiently "work" the patent in India.Each of these grounds are explicated below:1. Reasonable Requirements of the Public not being met:Based on Bayers own admission, the Controller found that only 2% of the totalnumber of kidney and liver cancer patients were able to access the drug:"By his own admission, the Patentee has submitted the number of patients eligiblefor Sorafenib is 8842 per year. Hence, the Patentee has made available the drugonly to a little above 2% of the eligible patients. .... Accordingly I hold that thereasonable requirements of the public with respect to the patented invention havenot been satisfied in this case and consequently a compulsory license be issued tothe Applicant under section 84 of the Act."In order to make its drug more accessible to the general public, Bayer argued that itmust be given some more time to work the patent. Bayer offered to amend itsexisting patient assistance programme (where a patient would have to buy 1 monthsdrug supply at the regular price (Rs 2.8 lakhs) and would get it free for theremaining 3 months) such that a patient would only have to pay Rs 30,000 permonth for the drug. In this way, it hoped to match Ciplas pricing and thereby thwarta compulsory licensing order.However, the Controller rightly found that this proposed philanthropy, whilenoteworthy did not enable Bayer to escape the issuance of a compulsory license.He noted: "the proposal of the patentee appears to be philanthropic in nature, asper the submission of the patentee. In the present proceedings, we are notconcerned with philanthropy, which no doubt is appreciable. Such actions cannot beconstrued as steps to work the invention on a commercial scale to an adequateextent."2. Excessive Pricing:The Controller found that the price of the drug was not "reasonably affordable" tothe public: "During the last four years, the sales of the drug by the Patentee at aprice of about Rs 2.8 lakhs (for a therapy of one month) constitute a fraction of the 98
  • 104. requirement of the public. It stands to common logic that a patented article like thedrug in this case was not brought by the public due to only one reason, i.e. its pricewas not reasonably affordable to them."He further countered Bayers argument that "reasonably affordable" price had to beconstrued with reference to the public and the patentee (in other words, thepatentees R&D costs must be considered): "I am of the view that reasonablyaffordable price has to be construed predominantly with reference to the public."The order also castigates Bayer for adopting a "two faced" stand before the tribunal.Bayer argued that since Cipla sells cheaper generic versions in the market (at Rs30,000 per monthly dose of Sorefanib), there was no need for a compulsory license.The controller rightly dismissed this argument, since Bayer had challenged Ciplasright to sell the generic version in the market through a patent infringement law suit,and was now relying on this alleged illegality to ward off a compulsory licensingorder.Further, it has observed that "The Patentee appears to be indulging in two-facedness by adopting one stand before this tribunal and another stance before theHonble High Court of Delhi, in order to defend the indefensible. M/s Cipla is analleged infringer, as per the patentees own submissions, and accordingly cannotdischarge the obligations of Patentee under the Act. The Patentee appears to havetreated M/s Cipla, in this case, as if they are their licensee."3. Non-working of the Patent:The Controller found that mere importation of Bayers drug into India did not amountto "working" and held in pertinent part that: "I am therefore convinced that worked inthe territory of India" means manufactured to a reasonable extent in India."This part of the decision is likely to prove controversial, since almost 90% of allpharmaceutical patents are only imported into India. Therefore, under the terms ofthis order, all of these drugs are now susceptible to compulsory licenses in India.The Controller convincingly argues that the Indian patents act endorses a "local"working provision and that such a provision is compatible with TRIPS and the ParisConvention. 99
  • 105. Section 83 of the Act makes clear that patents are not granted only for the purposeof “importation” of the patented product. In fact, the Act uses the terms "working"and "importation" quite distinctly throughout the Act, making it evident that "working"as used in the Act cannot include "importation".Some argue that a local working provision contravenes the mandate under Article27 to not “discriminate” between locally produced and imported patented products.Given the fact that in the WTO Canada case, the panel stated that discriminationmeant “unjustified differentiation”, one could argue that “local working” is a “justified”differentiation. For one, the Paris Convention clearly stated that “importation” wouldnot amount to working of a patent, and that if a patent wasn’t worked, this could betreated as an “abuse”. Secondly, TRIPS is premised on the promise of technologytransfer to developing countries. And a local working provision is geared towardsencouraging such technology transfer. By forcing patentees to “work” their patentsin India, the regime encourages local use/transfer of the said technology. A similarprovision on “local working” in Brazil’s regime was challenged by the US—however,the case was later withdrawn and there was no ruling.Royalty RatesPerhaps the only part of the order that was not as elaborately reasoned out as therest of the order was the portion relating to a determination of royalty rates. But thiscould stem from the fact that the Controller himself had very less material to go by.After discussing the not so complete figures submitted by the patentee, he endorsedthe UNDP proposal for 6% royalty rate in cases of good therapeutic value.He noted: "I have also carefully analysed the royalty practices/guidelines generallyadopted globally. United Nations Development Program (UNDP) specificallyrecommended that rates normally be set at 4% and adjusted upwards as much as2% for products of particular therapeutic value....In the present case, I am satisfiedthat anything lesser than 6% would not be just and reasonable given the facts andcircumstances of this case as discussed above. Hence I hereby settle that theroyalty be paid to the patentee in this case shall be 6% of the net sales of the drugby the licensee. 100
  • 106. Referencing Reports and Academic Submissions-Lastly, this is one of the very few government orders to attribute and acknowledgeacademic contributions and reference material.The order states: "Present case is the first of its kind in the history of Patents Act,1970....As such, there is no precedent to guide this tribunal. Relevant persuasivematerial has been submitted by both parties. In order to appreciate all the issuesinvolved..., the hearings went on for three days for a total of eighteen hours.Reasonable research has also been conducted by the tribunal to study, inter alia,the provisions of the International Agreements and Conventions on IntellectualProperty Rights as well as laws of other TRIPS member countries to arrive at thisorder. This includes the articles published by WHO, UNDP, Mr Carlos M Correa,University of Buenos Aires and Professor Shamnad Basheer."Conclusion: This is effectively Indias first patent compulsory licensing order in thepost TRIPS era.In many ways, it sets the tone for future cases and will spur many other generics toresort to this route. To this extent, it will certainly be music to the ears of severalpatient groups and NGOs that have been battling pharmaceutical patents andexcessive prices for many years now. Many have been puzzled by the lack ofinitiative shown by generic companies in availing of the extremely wide compulsorylicensing grounds articulated in Indias patent regime.Perhaps Natcos baby step in this regard may pave the way for a giant leap of sorts,where many more drug patents are subjected to this "stick" so as to help bring downwhat are by most standards, highly excessive prices for a country like India. In fact,given that more than 90% of MNC drugs are imported into India, this order maypave the way for wholesale compulsory licenses to be issued against a widespectrum of drugs in the near future. This interpretation of "working" to mean "localworking" (local manufacture within India) may in fact prove the most controversialpart of the order and may perhaps attract a TRIPS challenge as well.This order may also prompt other countries, particularly developing countries toadopt similar provisions and issue similar orders. Lastly, one hopes that it prompts 101
  • 107. innovator drug companies to engage in more significant differential pricingschemes and introduce drugs at much cheaper prices in countries with a significantnumber of extremely poor patients such as India.However, this may not be the end of the story for Bayer. It is likely to appeal theorder and will no doubt adopt creative legal strategies to block the Controllers orderfrom being implemented, as it has done in the past.Further, it must be noted that both Cipla and Natco have challenged the validity ofBayers patent in a separate proceeding before the Delhi High Court (and the IPAB).If this challenge is successful, then the compulsory license by Natco becomesinfructuous. All generics are then free to manufacture this drug without paying anyroyalty to Bayer.53Hawkins Cookers Limited v. M/s Murugan Enterprises54The Delhi High Court was of the opinion that dominance of firms could not beencouraged by Courts if such dominance was abused by the companies by creatinga monopoly in the market with respect to the "trade-marks" thereby affecting themarket share of other firms who are in direct competition with such dominant firms.Here the Murugan enterprise’s use of the Hawkins trademark to show compatibilityof the gasket is not unlawful.MAHYCO-MONSANTO CASEIn another case of Mahyco-Monsanto was found guilty of price gouging (pricingabove the market price when no alternative retailer is available) in a Bt-cotton casefiled by the Andhra Pradesh Government and some civil society organisationsbefore the Monopolies and Restrictive Trade Practices Commission of India.Mahyco–Monsanto was charging an excessively high royalty fee for its Bt gene,which made the seed too expensive for the farmers. As there was no competitiondue to their IPR on Bt cottonseeds, Mahyco-Monsanto had a monopoly and hadacted arbitrarily.53 Shamnad Basheer at blog spicyIP54 Hawkins Cooker Ltd v. M/s Murugan Enterprises [2008(36) PTC 290(Del)] 102
  • 108. There have been cases such as Mahyco-Monsanto which prove that this subjectdeserves more attention than it has received in the past. In that case, Mahyco-Monsanto was found guilty of price gouging (pricing above the market price whenno alternative retailer is available) in a Bt cotton case filed by the Andhra PradeshGovernment and some civil society organizations before the Monopolies andRestrictive Trade Practices Commission of India. Mahyco-Monsanto was chargingan excessively high royalty fee for its Bt gene, which made the seed too expensivefor the farmers. As there was no competition due to their IPR on Bt cottonseeds,Mahyco-Monsanto had a monopoly and had acted arbitrarily.Vallal Peruman and Another v. Godfrey Phillips (India) Limited. (MRTPCommission, 1994) andManju Bhardwaj v. Zee Telefilms Ltd (MRTP Commission, 1996)Both the aforementioned judgments clearly said that where a trademark is misusedby manipulation, distortion, contrivances and embellishments so as to mislead theconsumers, he would be exposing himself to an action.US v. S C Johnson & Sons (c iv. No. 4089 - 59 fed. reg. 43, 859, 25th August,1994)Bayer AG was a major global supplier of insecticides except in USA. It developed anew unique and potent active ingredient for insecticides for household use andsecured a patent for the technology. It licenced the new technology to S C Johnson& Sons, a dominant market leader in pesticides market, the market share being 50-60 per cent. The Antitrust Division of the US challenged in the US Court, thislicensing arrangement which reduced incentives of Bayer to compete with Johnsonin manufacture and sale of household insecticides and which further helpedJohnson to increase its dominance in the US market. The Court decided that Bayershould offer the patented ingredient to other pesticide manufacturers on reasonableterms. Further, Johnsons competitors were allowed access to active ingredientsthat Bayer may introduce later. Through this decision, the court sought themaintenance of competitive markets while protecting the IPR. 103
  • 109. Radio Telefis Wireann (rte) vs European Commission {c 241 - 242/91p, (1995)IECR 743, (1995) 4 CMLR 718}TV stations in UK and Ireland published weekly TV guides covering theirprogrammes exclusively and claimed copyright protection. Magill TV guide wantedto publish a comprehensive guide of TV programmes, but was prevented by TVstations on the ground of copyright infringement. By this prevention, the TV stationssought to ensure that third parties did not reproduce their programme listing. Thismatter went up to the European Court of Justice (ECJ).ECJ concluded that only those restrictions on freedom of competition inherent inprotection of IPR could be permitted. It observed that refusal to grant a licence inexercising an Intellectual Property Right would not by itself be an abuse of adominant position but would be, where special circumstances existed. The refusal ofthe TV stations based on their reliance on copyright provisions prevented thecreation of a new product (Magills comprehensive guide), for which there wascustomer demand. The TV stations by such refusal to deal excluded competition inthe market. This, according to the ECJ constituted an anti-competitive practicetrenching consumer interest.US v. Pilkington, Civ No. 94-345, 59 Fed. Reg.30604, 1994Pilkington is a famous well-known British glass manufacturer. It entered into patentand licensing arrangements with several manufacturers worldwide. The licencesrestricted manufacture in specific territories, shipment by each Licencee of glassoutside designated territories and sublicensing and imposition of field-of-use. Whatis more, the licences provided for grant backs to Pilkington on improvements doneby the Licencees. Pilkingtons patents on float glass process had expired in early1980s but the Licencees were still subject to the restrictions unless the Licenceescould prove that all of the licenced technologies were publicly known. If theLicencee was a US company or firm, it was restricted from exporting its eon glassmanufacturing technologies and was also prevented from taking overseas bids. Inthis scenario, the over claim on the part of Pilkington came in the wayof competition. In particular, the secret behind its technology was over claimed by 104
  • 110. Pilkington in such a way that it deterred or prevented the Licencees from inventingaround Pilkingtons patents. Pilkington, through the restrictive licences limited andcontrolled competition in the world market.Eastman Kodak Co. v. Image Technical Services, 112 S. Ct.2072 (1992)Kodak tied the service agreement with its printers to exclude the other from themarket who also provided the services for the printers.Hartford-Empire Co. V. United StatesA case came up before the Supreme Court of that country, wherein competitorsindulged in what is known as cross-licensing. They cross licenced their patents inthe field of glass manufacturing equipment. This resulted in the creation ofmonopoly. Consequent on acquisition of patents and cross-licensing, pooling actedas a barrier for others, particularly new entrants. Pooling of patents through cross-licensing excluded competitors and potential entrants from manufacturing glassproducts and vending the same. Competition was restricted and consumer interestadversely affected. Merging of patents into a pool controlled the market. The Courtnoted that more than 90 per cent of the glass containers were on the machinerylicenced under the pooled patents. The Supreme Court ruled that Sherman Act wasviolated by the pooling and cross-licensing practice.Union of India v. Cynamide India Ltd. and Anr.Essential and life-saving drugs do not fall out of price control". "Pricing of patentedand branded generics outside the scope of price control is a major concern.Director-General (Investigation and Registration) v. Indian DrugsManufacturers Association and Anr.The inquiry related to an increase in the price of drug owing to an agreementbetween the manufacturers acting as sellers on the one hand and the chemists anddruggists acting as purchasers on the other for fixing a uniform discount price overwhole-sellers and retailers. The Tribunal held that any agreements between the 105
  • 111. buyer and sellers would not be restrictive practice under the MRTP Act. Althoughthis is not a case under theCompetition Act.Director General (Investigation and Registration) v. Parke Davis India Ltd. andOrs.It was alleged that a Loan Licence Agreement was entered by Parke Davis with aSmall Scale Unit ("SSU") for manufacturing the impugned formulations with thepurpose of circumventing the need for obtaining prior approval of price fixationunder the Drugs Price Control Order (DPCO). The MRTP Commission held thatSection 2(o) of the MRTP Act was not attracted as the alleged trade practice wasnot restrictive and did not have the effect of preventing, distorting orrestricting competition. 106
  • 112. CHAPTER (VII) ANALYSIS AND INTERPRETATIONSThe interface between IPRs and competition law has evolved several types ofrestraints on competition. While no one has sought to contend that licensingagreements are per se anticompetitive, the focus of these restraints is typically alicensing agreement which could adversely affect competition by artificially dividingmarkets among enterprises and possibly impeding the development of new goodsand services.More specifically, the phenomenon of exclusive licensing, manifested throughseveral unilateral market tactics by enterprises such as tie-in arrangements,exclusive dealing, licensing restrictions (covering grant back clauses, extensions ofIPR terms and field of use restrictions) as well horizontal agreements (like poolingand cross-licensing by parties collectively possessing market power), have attractedthe attention of competition regulation authorities across the world. Competition Policy Principles: Taking into account the needs of and priorities for promoting a healthy competition culture the principles of the National Competition Policy are: a. Fair market process: Market regulation procedures should be rule bound, transparent, fair and non-discriminatory. Public interest tests are to be used to assess the desirability and proportionality of policies and regulations, and these would be subject to regular independent review. b. Institutional separation between policy making, operations and regulation i.e. operations in and regulation of a sector should be independent of the government branch which deals with policy formulation in the sector and is accountable to the Legislature. c. ‘Competitive neutrality’, such as adoption of policies which establish a ‘level playing field’ where government businesses compete with private sector and vice versa. d. Fair pricing and inclusionary behaviour, particularly of public utilities and intellectual property rights holders, which could be imbued with 107
  • 113. monopolistic characteristics and a large part of the consumers could be excluded. e. Third party access to ‘essential facilities’, i.e. requiring dominant infrastructure owners to grant to third parties access (e.g., electricity, communications, gas pipe lines, railway tracks etc) to their infrastructure on agreed terms and conditions and at regulated prices, aligned with competition principles. Such treatment can be given to intellectual property rights as well if the IPR concerned possesses essential infrastructure characteristics. f. Public Policies and programmes to work towards promotion of competition in the market place; and g. National, regional and international co-operation in the field of competition policy enforcement and advocacy.Under Competition law, the unavailability of substitutes in the market may establishdominance in the market. Likewise a comparison of market shares betweendominant firm and their competitors is useful in determining dominance as well asmonopoly. Even then, there seems to be a difficulty in determining the minimumpercentage of the market share that could establish dominance and/or monopoly ofa particular firm in the market. Various judgments vis-à-vis dominance has also notbeen able to establish a minimum percentage that indicates dominance of a firm.Anti-competition laws in order to combat the IPR monopolies often include twoimportant measures namely compulsory licensing and parallel imports. Acompulsory license is where an IPR holder is authorized by the state to surrenderhis exclusive right over the intellectual property, under article 31 of the Trade-Related aspects of Intellectual Property Rights (TRIP). Compulsory licenses aregranted under certain circumstance such as in the interest of public health, nationalemergencies, nil or inadequate exploitation of a patent in the country, and for anoverall national interest. A parallel import on the other hand includes goods whichare brought into the country without the authorization of the appropriate IP holderand are placed legitimately into a market. 108
  • 114. In addition, provisions like Section 3 of the new Competition Act, 2002 (the Act)deals with anti- competitive agreements which cannot be used by IPR holders sincethey are in conflict with the competition policies. Firstly, patent pooling is a restrictivepractice wherein firms of a particular manufacturing industry decide to pool theirpatents and agree not to grant licenses to third parties, simultaneously fixing quotasand prices. Secondly, a clause that restricts competition with respect to researchand development or which prohibits a licensee to use rival technology is consideredanti-competitive under the law. Thirdly, a licensor under the law is prohibited fromfixing the price at which the licensee should sell his goods. The above mentionedexamples are not by any means exhaustive, but are a few illustrationsdemonstrating anti-competitive provisions applicable to IPR under the Act.Furthermore, under Section 27 of the Act, the Competition Commission of India (theCommission) has the authority to penalize IPR holders who abuse their dominantposition. Further, under Section 4 of the Act the Commission is also authorized topenalize the parties to an anti-competitive agreement, which is in contravention ofSection 3 of the Act.It was contended that competition law continues to be a vital means of ensuringcontinued innovation and economic growth. Competition policies generally doingadvocacy concerned with anti-competitive practices such as abuse of dominantposition whatever be the source of such practices, including abuse of IPRs.Intellectual property rights may be protected by unfair competition legislations too.Unfair competition rules also deal with know-how by defining as unfair competitionthe disclosure or exploitation of industrial or other business secrets obtained lawfullyon the understanding that they would be kept confidential, without the consent oftheir owner. The difference between these private rights (IPRs) and unfaircompetition has been strengthened and safeguarded consistently over the years.It seems that the relationship between intellectual property and subject regulatingcompetition need attention, particularly as a result of the expansion andstrengthening of IP protection at the global scale. While IP law deliberately subjectsintellectual assets to the exclusive control of IPRs owners, competition law seeks toavoid market barriers and benefit consumers by encouraging competition among a 109
  • 115. multiplicity of suppliers of goods, services and technologies. Such challenges areparticularly complex in developing countries including India, the majority of whichhave little or no tradition in the application of competition law and policies. In fact, inmost of these countries IPRs have been expanded and strengthened in the absenceof an operative body of competition law, in contrast to developed countries wherethe introduction of higher levels of IP protection has taken place in normativecontexts that provide strong defences against anti-competitive practices.Thus aims and objectives of IPRs and competition laws are seem to becomplementary to each other, as both aims to encourage innovation, competitionand enhance consumer welfare. It is vitally important to preserve competition ininnovation because competition ensures the best outcome for consumers.Indian economy after a slew of measures taken post-1991 is on a high growthpath. In the recent years the Indian economy has been one of the strongestperformers in th e wo rld . However, the f ull gro w potential of the economyremains yet to be realised. Infusion of greater degree of competition can play acatalytic role in unlocking the fuller growth potential in many critical areas of theeconomy, which hitherto has been held back by restriction on competition invarious forms. However, still much is required to be done in several endeavoursof Central and State Government where a well-designed Competition Policyreflecting a broad consensus of major stakeholders, can play very useful andeffective role. It would be desirable to undertake competition assessment ofexisting and proposed public policies that unduly restrict competition and developspecific and transparent criteria for performing competition assessment, includingthe preparation of screening and monitoring mechanism. Greater transparency andadherence to competition principles in different sectors and activities couldultimately boost India’s growth and help our country to attain a double digit growthon an inclusive and sustainable platform. Two decades after the first generationeconomic reforms of 1991 perhaps the National Competition Policy can provide thenecessary push to unlock the fuller growth potential of the Indian economy.The advantages of perfect competition are three-fold: 1. allocative efficiency, which ensures the effective allocation of resources, 110
  • 116. 2. productive efficiency, which ensures that costs of production are kept at a minimum and 3. dynamic efficiency, which promotes innovative practices.The achievement of a healthy competition culture promotes an orderly growth andeconomic democracy, enhances economic development and enables properresource allocation, which is a necessary condition for growth, poverty reductionand sustainable development.In sum, a healthy competition culture thus helps to:• enhance consumer welfare,• promote fair trading,• encourage innovation,• preserve scarce resources,• contribute to environmental conservation,• achieve economic efficiency, and• check concentration of economic powerThe political will seems also in favour of building a competition culture in theeconomy as the on-going process for the formulation of the National CompetitionPolicy reflects. 111
  • 117. CHAPTER (VIII) FINDINGS AND SUGGESTIONSThe 2001-Nobel Prize winner Joseph Stiglitz has rightly said: “Strong competitionpolicy is not just a luxury to be enjoyed by rich countries, but a real necessity forthose striving to create democratic market economies”.The limited monopolies granted by IPRs are not per se anticompetitive orexcessively exploitative—they only become anticompetitive when the IPR holderlooks to extend those rights beyond their intended and proper scope.Innovation has always been a catalyst in a growing economy resulting in moreinnovation. The advent of fresh innovations gives rise to healthy competition atmacro as well as micro economic levels. IP laws help protect these innovations frombeing exploited unlawfully. In view of this IP and Competition laws have to beapplied in tandem to ensure that the rights of all stake holders including theinnovator and the consumer or public in general are protected.The common objective of both policies is to promote innovation which wouldeventually lead to the economic development of a country however this should notbe to the detriment of the common public. For this the competition authorities needto ensure the co-existence of competition policy and IP laws since a balancebetween both laws would result in an economic as well as consumer welfare.IP and Competition laws have to be applied in tandem to ensure that the rights of allstake holders including the innovator and the consumer or public in general areprotected.The common objective of both policies is to promote innovation which wouldeventually lead to the economic development of a country however this should notbe to the detriment of the common public. For this the competition authorities needto ensure the co-existence of competition policy and IP laws since a balancebetween both laws would result in an economic as well as consumer welfare. 112
  • 118. The present IP system, international and national levels, should be evaluated in lightof the crucial need for “balances” in the IP system, to enable both innovation andthe meeting of the public interest and development needs.In recent years, this balance has shifted worldwide too much to the side of IPholders in both international IP frameworks and in national law or practice of manycountries.This is of concern particularly for developing countries as the characteristics andconditions of such countries make them especially susceptible to adverse effects.The global harmonization of IP laws (towards the standards and practices ofdeveloped countries), especially through the WTO, WIPO and bilateral/regionalagreements, has contributed to the imbalances and the spread of conditions thatmake it more difficult for developing countries and their enterprises and institutionsto compete.Thus, a review of the international IP frameworks is required to determine thesources of the imbalances, while a review of national frameworks are also requiredso that the existing flexibilities can be properly made use of.Meanwhile, further harmonization initiatives at international level should be reviewedin light of the need to regain balance.In conclusion, IP law cannot be designed and applied in isolation from other legaldisciplines, particularly competition law. The “competition policy” approach suggeststhat creating and preserving the conditions for competition and market contestabilityin the area of IPRs, is not only the task of “competition law” or “antitrust” authorities.Defining the right balance between competition and IPRs is an objective to beachieved through a diversity of policies and regimes.To the extent that the interface is reflected hereby, it is complex and multifaceted.There are many complementary elements: the IPR system promotes innovation,which is a key form of competition; on the other hand, competition policy, by 113
  • 119. keeping market open and effective, preserves the primary source of pressure toinnovate and diffuse innovation. But there are also conflicts such as when an IPRserves to entrench market power. A regulatory balance, therefore, should bemaintained and simplistic approaches should be avoided at all costs.“Enforcement of competition laws no longer begins with the assumption thatrestrictive use of IP is necessarily anti-competitive. Current enforcement insteadstarts with three basic assumptions about intellectual property: First, intellectualproperty is comparable to other forms of property, so that ownership provides thesame rights and responsibilities; second the existence of intellectual property doesnot automatically mean that the owner has market power; and third, the licensing ofIP may often be necessary in order for the owner efficiently to combinecomplementary factors of production, and thus may be pro-competitive.”55A number of recommendations can be made to developing countries such as inIndia, namely:  Top priorities should be accorded in making the Competition Commission effective and functional  Areas of MSME interest need to be identified, that could be covered (or taken on priority) under the Competition Policy regime  Competition principles need to be embedded in all government policies/ services including industrial policies and public procurement  establish or strengthen competition laws in order to control, inter alia, possible abuses emerging from the acquisition and exercise of IPRs  consider the competition implications of various policies and regimes that determine market entry, such as marketing approval of pharmaceutical and agrochemical products  ensure an adequate coordination among the competition law agency and other agencies whose decisions may influence market structure and operation, with the aim of maintaining a competitive environment fully use the flexibilities allowed by the TRIPS Agreement to determine the grounds for55 William Baer, Director of the US FTC 114
  • 120. granting compulsory licences to remedy anti-competitive practices relating to IPRs consider, in particular, the granting of compulsory licences in cases of refusals to deal conceptualise and apply the essential facilities doctrine as required to address situations of control of essential technologies, taking into account the relevant market conditions and public needs develop policies, including guidelines, to prevent and correct abuses in the acquisition and enforcement of IPRs address situations that may normally lead to anti-competitive conduct such as “package” and “thicket” patents adopt guidelines for use at the patent offices to prevent the granting of frivolous or low quality patents, as well as patents containing overly broad claims, which may be used to unduly restrain legitimate competition and block innovation avoid “linkage” provisions and data exclusivity in order to promote competition in markets of regulated products. 115
  • 121. Annexure I: Genesis of Competition Policy in IndiaThe process of economic reforms which had been initiated in 1980s gathered paceand momentum in 1990s. The Industrial Policy Statement of 1991 noted thatoperating in an over regulated environment was detrimental for competitiveness inthe international economy and technological dynamism. There were majorcomplementary policy reforms in the financial sector, especially in banking,stock market and insurance. The same thread ran through other sectoralreforms like in telecom, civil aviation, manufacturing, and other infrastructuresectors where public private partnership (PPP) was introduced in a big way.Alongside, a new competition law was enacted in 2002 and need for a CompetitionPolicy was also articulated by the Government.National Competition Policy has been taken up for consideration in different forawithin the Government at different points in time during last two decades.The Government of India has expressed its intent and views on the need and formof the National Competition Policy at various occasions. At the time when theGovernment of India was considering to bring in a new competition law,the then Finance Minister, during a debate in Lok Sabha56 in 1999 informed theHouse that the Government will come out with a National Competition Policy. Priorto that, pursuant to WTO’s Singapore Ministerial Declaration in 1996, whichestablished a Working Group on the Interaction between Trade and Competition toostensibly propose the adoption of competition laws by member States, an ExpertGroup was established by the Union Ministry of Commerce in October, 1997 tostudy the interaction between trade and competition policy in India, includinganticompetitive practices and the effect of mergers and amalgamations oncompetition. In its report submitted in January 1999, the Expert Group suggestedenactment of a new competition law and recommended harmonisation ofcompetition principles, competition policy and objectives, and competition law56 Lok Sabha (1999), “Further Discussion on the Insurance Regulatory and Development Authority Bill,1999”, XIII Lok Sabha Debates, Session II (Winter Session), Thursday, December 2, 1999 116
  • 122. enforcement efforts. This laid the ground for future developments in the direction ofushering in a National Competition Policy. A. Raghavan Committee’s Recommendation on National Competition Policy Following the Government’s resolve to enact a new competition law, a High Level Committee on Competition Policy and Law (the Raghavan Committee Report) was set up, which in its report recognised the need for a National Competition Policy and noted that: “An effective competition policy promotes the creation of a business environment which improves static and dynamic efficiencies and leads to efficient resource allocation, and in which the abuse of market power is prevented mainly through competition. Where this is not possible, it requires the creation of a suitable regulatory framework for achieving efficiency. In addition, competition law prevents artificial entry barriers and facilitates market access and complements other competition promoting activities. Trade liberalisation alone is not sufficient to promote competition and there is a need for a separate competition policy.” B. In 2004, the Common Minimum Programme of the United Progressive Alliance (UPA), also recognised the need for promotion of competition across sectors and noted that:“Indian industry will be given every support to become productive andcompetitive. All regulatory institutions will be strengthened to ensure thatcompetition is free and fair. These institutions will be run professionally.” C. Standing Committee on Finance (2006-07) Observations The issue of a National Competition Policy was considered by the Standing Committee on Finance57 (2006-2007) of the Fourteenth Lok Sabha while57 Lok Sabha Secretariat (2006), Forty Fourth Report – Competition (Amendment) Bill, 2006, Standing Committee on Finance (2006-2007) , December2006 117
  • 123. considering the relevant issues in the context of Competition (Amendment) Bill2006. The Committee made a reference to the Competition Policy andrecommended the inclusion of ‘state governments’, in addition to centralgovernment, within the ambit of competition policy provisions.D. CCI Advisory Committee on National Competition Policy (2007)The Ministry of Corporate Affairs had asked the Competition Commission of India(CCI) in 2005-06 to draft a ‘Consultation Paper on Competition Policy’.Accordingly, an Advisory Committee, under the chairmanship of Dr Vijay Kelkarwas set up by the CCI wherein a sub-committee, under the chairmanship of ShriP. G. Mankad, was also set up to finalise a draft ‘Consultation Paper’. Inthe meantime, the Planning Commission Working Group, as referred to in thefollowing para, submitted its report which was accepted by the PlanningCommission in 2007. In September 2007, the CCI Advisory Committee decidedto adopt the report of the Working Group of the Planning Commission as the“final draft Consultation Paper on Competition Policy.E. Planning Commission Discourse on t h e National Competition Policy (2007)The issue has been discussed at the Planning Commission in the context ofTenth and Eleventh Plans. During the mid-term appraisal of the Tenth Plan, itwas recognized that there is an urgent need for articulating a NationalCompetition Policy (NCP) in India, which should fully reflect the national resolve toaccelerate economic growth, improve both the quality of life of the people of thecountry, national image and self-esteem. It further noted that NCP would bringabout a competition culture amongst economic entities to maximize economicefficiency, protect consumer interests and improve international competitiveness.During the Eleventh Plan, a Working Group on Competition Policy submitted itsreport to the Planning Commission. In addition, the Eleventh Plan Document in 118
  • 124. chapter 11 made a reference to need for a competition policy. The Chapter 1158 notes that: “To strengthen the forces of competition in the market, both competition law and competition policy are required. The two complement each other. The competition law prohibits and penalizes anti-competitive practices by enterprises functioning in the market; that is, it addresses market failures. Sector regulatory laws mimic competition in the areas of natural monopolies. Other regulatory laws, such as those for intellectual property or anti-dumping or even capital markets, too have an important interface with competition. The aim of the competition policy is to create a framework of policies and regulations that will inform other policies to facilitate competitive outcomes in the market. Competition policy is a critical component of any overall economic policy framework. Competition policy is intended to promote efficiency and to maximize consumer/social welfare. It also promotes creation of a business environment, which improves static and dynamic efficiencies, leads to efficient resource allocation and consumer welfare, and in which abuse of market power is prevented/curbed. It also promotes good governance by restricting rent seeking practices of economic actors. Given the wide canvas of NCP, a suggestion has been made by the Working Group on Competition Policy for setting up an institutional arrangement for monitoring the progress of the implementation of the policy. A small and compact Competition Policy Council of about 25 members could be set up which would be advisory, non-statutory and autonomous in its functioning and be headed by an eminent non-official person and comprising key officials from economic Ministries/Departments, and non-officials from media, academia and civil society. The task of the Competition Policy Council would be to review the progress in the implementation of NCP such as reviews of policies, regulations and practices, and the competition impact assessment of new laws, regulations and policies.”58 Extract from Para 11.23 of Chapter 11 of the Policy Document: “Inclusive Growth” as part of the 11th Five Year Plan adopted by the NationalDevelopment Council in December, 2007 (http://planningcommission.nic.in/plans/planrel/fiveyr/11th/11_v1/11th_vol1.pdf) 119
  • 125. Subsequent to the submission of the Report of the Working Group on Competition Policy, its recommendations, contained in a document titled ‘Inclusive Growth, Vol I, as part of the 11th Five Year Plan, were adopted by the National Development Council in December, 200759. F. The Second Administrative Reforms Commission (ARC) Recommendations (2007) The Second Administrative Reforms Commission (ARC), chaired by Dr M. Veerappa Moily, recommended that: “Each Ministry/Department may undertake an immediate exercise to identify areas where the existing ‘monopoly of functions’ can be tempered with competition. A similar exercise may be done at the level of State Governments and local bodies. This exercise may be carried out in a time bound manner, say in one year, and a road map laid down to reduce ‘monopoly’ of functions. The approach should be to introduce competition along with a mechanism for regulation to ensure performance as per prescribed standards so that public interest is not compromised. Some Centrally Sponsored schemes could be restructured so as to provide incentives to states that take steps to promote competition in service delivery. All new national policies on subjects having large public interface (and amendments to existing policies on such subjects) should invariably address the issue of engendering competition.” G. Committee on National Competition Policy (2011) Continuing the pursuit of the core philosophy of promotion of competition across sectors, Ministry of Corporate Affairs, Government of India, vide notification F.No.5/15/2005-IGC/CS dated 8th June 2011, has now constituted the Committee on National Competition Policy and Related Matters (C-NCP) for:  Framing of a National Competition Policy (NCP)59 Planning Commission (2007), Eleventh Five Year Plan 2007-2012, Vol I – Inclusive Growth. 120
  • 126.  Strategy for competition advocacy with government and private sector  Changes required in Competition Act for fine tuning it and  Any other matter relation to competition issuesThe Committee, after eight meetings, recommended the objectives,principles, initiatives and measures to be taken by the government. 121
  • 127. Annexure II: Illustrative List of Parameters for Undertaking Competition AssessmentAn illustrative list of parameters, some of which may be considered whileascertaining, if government policies or institutions limit competition may include:  Limits on the number or range of suppliers through  Granting exclusive rights for a supplier to provide goods or services  Establishing a license, permit or authorisation process as a requirement of operation  Limiting the ability of some types of suppliers to provide a good or service  Significantly raising cost of entry or exit by a supplier  Creates a geographical barrier to the ability of companies to supply goods services or labour, or invest capital  Creates and fails to address natural barriers, strategic barriers, regulatory and policy barriers or gender-based barriers  Limits the ability of suppliers to compete through  Limiting sellers’ ability to set the prices for goods or services  Limiting freedom of suppliers to advertise or market their goods or services  Setting standards for product quality that provide an advantage to some suppliers over others or that are above the level that some well-informed customers would choose  Significantly raising costs of production for some suppliers relative to others (especially by treating incumbents differently from new entrants)  Reduces the incentive of suppliers to compete through  Creating a self-regulatory or co-regulatory regime  Requiring or encouraging information on supplier outputs, prices, sales or costs to be published  Exempting the activity of a particular industry or group of suppliers from the operation of general competition law  Limits the choices and information available to customers  Limiting the ability of consumers to decide from whom they purchase  Reducing mobility of customers between suppliers of goods or services by increasing the explicit or implicit costs of changing suppliers  Fundamentally changing information required by buyers to shop effectively 122
  • 128. Annexure III: Anti-competitive Dimensions of Licensing ArrangementsContractual Main features Associated competition concernsagreementTerritorial Territorial restraint is an Territorial restraints will be per serestraint agreement between the licenser unlawful only when they are used as a and the licencee that the licenser sham to cover a market allocation or will assign a certain territory to price fixing agreement: the single agreed licencee –  They can facilitate the thereby preserving an exclusive implementation of disguised cartel market for that licencee. arrangements to allocate the market among colluding firms. For Territorial restraint agreements instance, competing firms may cause a reduction in holding a significant proportion of intrabrand competition but may the be a necessary condition to total number of patents specific to enhance inter-brand competition. a particular class of products could agree on issuing exclusive licences to a jointly owned corporation, which would then divide up the market among the associated firms through territorial restraint agreements.  Territorial restraint agreements may also be a direct tool to facilitate collusion among competing licensers by making it easier to monitor downstream violations to cartel agreements.Exclusive . Apart from providing exclusive Competition aspects arising fromDealing rights in a given territory, as in the restrictions on a licencee’s ability to case of territorial restraints, a deal in competing technologies can licensing agreement can also be analysed on the basis of: 123
  • 129. entail commitments by the (i) the duration of the exclusivity; licencee to deal exclusively with (ii) the rationale for the restriction; and the licenser. (iii) the degree of foreclosure caused by . Exclusive dealing arrangements the restriction to rival licensers. prevent licencees from licensing, selling, distributing, or . The anti-competitive foreclosure risk manufacturing products which may be significant when the firms employ technologies supplied by entering into exclusive dealing competitors of the licensers. arrangements already hold a large share . Exclusive dealing agreements of the relevant product market. do It also depends to a large degree on the not always have anti-competitive availability of alternative manufacturing objectives. They may be aimed at capacity for existing or new licensers. avoiding free riding between competing licensers, or promoting the development of the licensed technologies by both parties.Tie-in . Conditioning the ability of a . Tie-in is generally deemed per se licencee to license one or more unlawful if: items of IP on the licencee’s (i) it involves two separate products or purchase of another item of IP or services; and a good or a service has been (ii) the seller has market power in the held in some cases to constitute tying product and has the ability to extend illegal tying. this market power in the tied product, due . Tying requirements may “result to favourable market conditions (high in entry barriers, etc.); significant efficiencies and (iii) the arrangement has an adverse procompetitive benefits”, for effect instance, when they help to on competition in the relevant market for guarantee the effectiveness of the tied product; and the licensed (iv) efficiency justifications for the technology, to reduce the risk arrangement do not outweigh the anti- inherent in the licensing of competitive effects. innovation with uncertain . Tying agreements may facilitate 124
  • 130. commercial value. horizontal collusion among licensers if the licensers use them as a device to detect cheating on a cartel arrangement.Grantback A grant-back requirement is an . The antitrust consequences of a agreement by which a licencee grantback agrees to extend to the licenser depend on a number of factors: of IP the right to use the (1) whether the grant-back includes licencee’s improvement to the technology that goes beyond the licensed technology. originally licensed IP; Grant-backs can have (2) whether the grant-back is in the form procompetitive effects, especially of an if they are non-exclusive. Such assignment, exclusive licence, agreements provide a means for nonexclusive the licensee and the licenser to licence or an option; share risk and reward the licenser (3) the duration of the licencee’s grant- for facilitating further innovation back based on or informed by the obligation; (4) the market power of the licensed technology, thereby parties; (5) whether the parties are promoting innovation as well as competitors; the subsequent licensing of the (6) the effect of the grantback on the result of the innovation. parties’ incentive to innovate; and (7) whether the grantback promotes dissemination of improvements developed by the licencee, etc. . Grant-backs may also raise competition concerns as they facilitate undue enhancement or maintenance of a dominant position. 125
  • 131. Annexure III List of cases BAYER VS NATCO (Nexavar case) Director General (Investigation and Registration) v. Parke Davis India Ltd. and Ors. Director-General (Investigation and Registration) v. Indian Drugs Manufacturers Association and Anr. Eastman Kodak Co. v. Image Technical Services, 112 S. Ct.2072 (1992) Entertainment Network (India) Ltd. v. Super Cassette Industries Ltd. MANU/SC/ 2179/2008 Gramophone Company of India Ltd. v. Super Cassette Industries Ltd. MANU/DE/1801/2010 (Decided On 01.07.2010) Hartford-Empire Co. V. United States Hawkins Cooker Ltd v. M/s Murugan Enterprises [2008(36) PTC 290(Del)] M/S Entertainment Network ... vs M/S Super Cassettes Industries Ltd, 2008 MAHYCO-MONSANTO CASE Manju Bhardwaj v. Zee Telefilms Ltd (MRTP Commission, 1996) Music Broadcast Pvt Ltd vs Super Cassette Industries Ltd Music Broadcast Pvt. Ltd vs. Phonographic Performance Ltd. Music Choice India Pvt. Ltd. - vs- Phonographic Performance Limited NATCO v Bayer (Nexavar case) Radio Telefis Wireann (rte) vs European Commission {c 241 - 242/91p, (1995) IECR 743, (1995) 4 CMLR 718} Union of India v. Cynamide India Ltd. and Anr. US v. Pilkington, Civ No. 94-345, 59 Fed. Reg.30604, 1994 US v. S C Johnson & Sons (c iv. No. 4089 - 59 fed. reg. 43, 859, 25th August, 1994) Vallal Peruman and Another v. Godfrey Phillips (India) Limited. (MRTP Commission, 1994) 126
  • 132. BIBLIOGRAPHY & WEB-LINKS Adam Smith, The Wealth of Nations (1776) Intellectual property, competition and development by Martin Khor, Third World Network WIPO Summer School Reading Material Teaching of Intellectual Property; Chapter 6 Teaching intellectual property, unfair competition and anti-trust law by Thomas Cottier and Christophe Germann, Cambridge University Press 2008 Trade and competition in the primary goods sector: "global problems & solutions", AU: Frederic Jenny & Pradeep S Mehta; The Financial Express, January 13, 2012 Journal of Intellectual Property Rights | 16 (3): 258-266 MAY 2011 The Competition-IP Dichotomy: Emerging Challenges in Technology Transfer Licenses; Kutty, AA | Chakravarty, S; Kutty Intellectual Property Rights and Competition Law: Friends or Foes?, Mihir Naniwadekar WIPO web resources on competition and patents Speech of Mr Vinod Dhall, Member, Competition Commission of India, CUTS International Conference on “Moving the Competition Policy Agenda in India”, 31 January-1 February, 2005 Conflict between competition law and intellectual property rights Need for clearer norms on IPR in new competition Bill; Published on: The Financial Express, 13 June, 2001; By Pradeep S Mehta & Ujjwal Kumar, CUTS Centre for International Trade, Economics and ENVIRONMENT Unfair Competition, Anti-trust Law and IPR Several agencies such as the World Trade Organisation (WTO), the World Bank, UNCTAD etc have attempted to define the terms competition policy. WTO (1999), “The Fundamental Principles of Competition Policy: Background Note by the Secretariat” Working Group on the Interaction between Trade and Competition Policy WT/WGTCP/W/127 Intellectual Property and Competition Law, P.N. Parashar, Competition Law Reports, Jul. 2010 - Sep. 2010 127
  • 133.  Lok Sabha (1999), “Further Discussion on the Insurance Regulatory and Development Authority Bill, 1999”, XIII Lok Sabha Debates, Session II (Winter Session), Thursday, December 2, 1999  Lok Sabha Secretariat (2006), Forty Fourth Report – Competition (Amendment) Bill, 2006, Standing Committee on Finance (2006-2007) , December 2006  Extract from Para 11.23 of Chapter 11 of the Policy Document: “Inclusive Growth” as part of the 11th Five Year Plan adopted by the National Development Council in December, 2007  Planning Commission (2007), Eleventh Five Year Plan 2007-2012, Vol I – Inclusive Growth.WEB-LINKS –http://spicyipindia.blogspot.in/2009/09/intellectual-property-rights-and.htmlhttp://www.wipo.int/patent-law/en/developments/competition.htmlhttp://www.tmpsearchers.com/intellectual-property-rights/174/conflict-between-competition-law-and-intellectual-property-rights/http://www.mca.gov.in/Ministry/pdf/DraftNationalCompetitionPolicyForIndia-28th_July2011.pdfhttp://planningcommission.nic.in/plans/planrel/fiveyr/11th/11_v1/11th_vol1.pdfwww.google.comhttp://en.wikipedia.org/www.patentoffice.nic.inhttp://www.cci.gov.in/http://www.wipo.inthttp://spicyipindia.blogspot.in 128