This document discusses the relationship between intellectual property rights (IPRs) and competition law. It provides definitions of competition law and IPRs. It describes how the European Commission established a committee to create a single market for IPRs in Europe. It discusses the inherent tension between IPRs and competition laws, as IPRs provide monopoly protections while competition laws aim to eliminate monopolies. It analyzes various articles of European Union law regarding licenses of IPRs and technology transfer agreements. Finally, it examines case law related to IPRs and competition laws.

1. The Relationship Between Intellectual
Property Rights and Competition Law
This article deals with the relationship between IPRs and Competition Law.

2. Definitions
● Competition Law can be defined as the set of laws protecting a fair state of market
practices. The laws ensure that both the producers and the consumers are provided with a
market with ethical practices and which garners real competition among the participators
of the market.
● Intellectual Property Law protects creations of the mind and ensures that the creators earn
benefits of their own creation. The protection tools are generally, trademarks, patents,
copyrights, etc.

3. Intellectual property rights and the single market
In 2011, the European Commission set up a committee for carrying out single market operation for
Intellectual Property. This committee was created to make a single market for Intellectual Property in
Europe. Initially, the operations used to be such that, creators had to apply for claiming IPRs separately
for separate markets. A single market will enable a person to avail of Intellectual Property Rights in the
entire market of Europe.

4. The reasons for doing that was:
1. Fragmented Rights: The rights could now be claimed over the entire market of Europe instead of
separate systems.
2. Parasitic Copies: Since there were separate laws for separate markets, there was a good chance
that the creator’s ideas could easily be copied in some other market, where the rights could not be
availed.

5. Is there an inevitable tension between intellectual
property rights and competition law?The inherent conflict between IPR and Competition Laws is the fact that the IPR seeks to provide protection
and monopoly to the creator of a product whereas, Competition Laws seek to provide fair and free
competition by eliminating any cartels or monopolies in the market. The IPRs are not abusive of dominant
position, but ironically also does form a legitimate upper position in the market.
The inherent tension between the rights may be eliminated if they serve in inherent purpose in the market.
The Laws certainly have a common objective of creating a fair market place, but also entail different
approaches and perspectives to the same. They do have an inevitable tension between them, but as far the
Laws mark their own importance in the market and the lawmakers must make such laws that are not in
contravention of each other.

6. Licenses of Intellectual Property Rights: Article 101
TFEU
Article 101 of the Treaty of the Functioning of the European Union prohibits the system of Cartel, which
means,
1. There must not be any practice of fixing prices in the market.
2. There must be no sharing markets or fixing areas of distribution of products.
3. Ascertainment of perfectly competitive prices and competitive market.
4. There must be no supplementary obligations form any competitor in the market.

7. Typical terms in-licenses of intellectual property
rights
Territorial exclusivity
Territorial exclusivity is an agreement wherein under the certified license, the licensee ensures that the use of the license will happen only
in a particular specified territory, and use its best efforts to not distribute or deliver in any other geographical territory.
Royalties
Royalties are payments that are made to the owners who lend their property for use for a specific purpose
Duration
The duration of the Licenses’ validity is decided and agreed upon by the parties at the time of formation of the Contract.
Field of use restrictions
Field of Use Restriction (FOUR) is a limitation on the use of intellectual property. This is majorly used in technological properties, where
given technologies can have multiple uses. The limitation is with regards to the use of the type of property.

8. Best endeavors and non-competition clauses
Best Endeavor Clause states that the person licensing an IP must take all steps that a prudent and reasonable person would do
to protect the use of that IP.
No-challenge clauses
The No-challenge clause refers to an agreement not to take matters up for dispute in some areas which are agreed in the
contract.
Improvements tying and bundling
Tying agreements refer to the agreement of buying one thing along with buying some products. Similarly, Bundling refers to
selling products in a pack.
Prices, terms and conditions
Terms and conditions in an IPR arrangement differ from contract to contract and jurisdiction to jurisdiction.

9. The Application of Article 101(1) to Licenses of
Intellectual Property Rights
Licenses of the IPR must follow the guidelines under Article 101(1), as mentioned above. They must not indulge in
any Cartel related activities. The licenses related to the cartel activities shall be declared invalid under Competition
laws, in this case, Article 101(1).

10. Patent licenses: territorial exclusivity
1. Exclusive Licence: These grant access to use the property in whichever way, required by the
purpose.
2. Non - exclusive License: These grant access for the usage of rights only to a certain extent.
3. Partly exclusive License: These grant access to use the license but the terms and conditions as to
the exclusivity as specified in the license itself.

11. Case law of the EU CourtsGroupe Canal + v European Commission
Canal+ was a broadcasting company in France, which had exclusive rights over the broadcasting of content from American
Studios in France (Exclusive territory). The European Commission (EC) opened an investigation relating to the violation of
Article 101(1) TFEU. Canal+ argued that the broadcasting did not raise any competition concerns because instead of the
violation, there was a promotion of cultural diversity through these agreements and adequate remuneration was being
provided. The EC made a two-fold analysis of the plea.
1. The court analyzed its own jurisdiction over the matter and found that it was restricted to only adjudicating over the
fact whether the license agreement was against the working of Article 101(1). The matters relating to specific
territorial exclusivity were to be decided by the commission only.
2. The agreement did raise competition concerns in the market and was violative of TFEU 101(1) because this
agreement was dividing the market. TFEU aims at creating a single competitive market.
It was held that the exclusivity agreements are violative of the objectives set by TFEU. However, the courts have said that
exclusivity agreements can be concluded for a fixed period of time.

12. Patent licenses: non-territorial restrictions
Patent licenses also contain non-territorial restrictions which include:
1. Know-how Licenses;
2. Copyright Licences;
3. Software Licenses;
4. Trademark Licenses;
5. Licenses of plant breeders’ rights;
6. Subcontracting agreements;

13. Application of Article 101(3) TFEU to licenses of
intellectual property rights
The provisions of paragraph 1 may, however, be declared inapplicable in the case of:
1. any agreement or category of agreements between undertakings,
2. any decision or category of decisions by associations of undertakings,
3. any concerted practice or category of concerted practices,

14. Technology transfer agreements: Regulation
316/2014
Article 1: Definitions
The article defines the various definitions, including the definition of an ‘agreement’, ‘technology rights’, ‘transfer
agreements’, ‘reciprocal agreements’ etc.
Article 2: Block Exemption
There is a block exemption of the applicability of Article 101(1) TFEU on the technology transfer agreements.
Article 3: The Market Share Cap
The market share cap is a restriction under competing undertakings, the exception will be provided up to 20% only.

15. Article 4: Hard-core restrictions
Hard-core restriction, according to Article 4 is applicable to competing and non-competing undertakings in a market.
Article 5: Excluded Restrictions
Article 5 mentions that the exception under Article 2 shall not be given to:
1. The innovations made to the property and the changes made by the licensee.
2. Any property held in a union, in case of an exclusive license.
3. Non-competing parties as indirect obligation unless such restriction is indispensable to understand the know-how to third parties.
Article 6: Withdrawal in Individual Cases

16. Article 7: Non-Application of the Regulation
The application of this regulation will not be valid if more than 50 percent of the relevant market contains technology transfer
agreements on that market.
Article 8: Application of the market share thresholds
Application of Article 3 will happen in the following way:
1. Market share shall be calculated on sales value.
2. Market share will also be calculated in relation to the preceding calendar year.
3. The market share held by the undertakings referred to in point (e) of the second subparagraph of Article 1(2) shall be apportioned
equally to each undertaking having the rights or the powers listed in point (a) of the second subparagraph of Article 1(2).
4. Calculations will be made on the basis of the present technological resources present in the market.
5. If the market share referred to in Article 3(1) or (2) is initially not more than 20 % or 30 % respectively, but subsequently rises
above those levels, the exemption provided for in Article 2 shall continue to apply for a period of two consecutive calendar years
following the year in which the 20 % threshold or 30 % threshold was first exceeded.

17. Articles 9 to 11: Other Block Exemptions, Transitional Period and Period of Validity
1. Article 9: The exemption will not apply to those agreements that come under the scope of Regulation (EU) No
1217/2010.
2. Article 10: The prohibition laid down in Article 101(1) of the Treaty shall not apply from 1 May 2014 until 30 April
2015 to agreements already in force on 30 April 2014.
3. Article 11: This Regulation shall enter into force on 1 May 2014. It shall expire on 30 April 2026.

18. Application of Article 101 to other agreements
relating to intellectual property rights
Technology pools
Technology pool is a collection of resources that are kept ready for general use. When clients approach these pools for resources, the
resources are provided to them. However, instead of leasing them or selling them, these resources are returned after use.
Effect of technology pools
Technology pools have both pro-competitive effects as well as anti-competitive effects. The effects are listed down below:
Pro-competitive effects
The competition is boosted in the market because the resources are readily available for the use of all the competitors in the market. This
provides equal opportunity to all the competitors which will induce fair competition in any single market.
Anti-competitive effects
The competition is also hampered because it provides exceptions which leave a way to create a divide in the markets. It may also lead to
the creation of separate markets and restriction on the dynamic growth of the market.

19. Regulation 316/2014
This regulation, as discussed above, provides certain exceptions related to technology transfer agreements. These
exceptions are provided to bring them in compliance with Intellectual Property laws and Competition law.
Assessment of the formation and operation of technology pools
1. Reliability and risk analysis
The reliability and risks are checked and the market is checked whether it is fit to acquire the technology pools or not.
1. Economic analyses
The market is also assessed through its market economic analysis so that the formation of operation of technology pools is
checked and then formed.

20. Assessment of individual restraints in agreements
between the pool and its licensees
The way in which a technology pool is formed, organized and operated can reduce the risk of it having the object or
effect of restricting competition and provide assurances to the effect that the arrangement is pro-competitive. In
assessing the possible competitive risks and efficiencies, the Commission will, inter alia, take into account the
transparency of the pool creation process; the selection and nature of the pooled technologies, including the extent
to which independent experts are involved in the creation and operation of the pool and whether safeguards against
exchange of sensitive information and independent dispute resolution mechanisms have been put in place.

21. Copyright pools
Copyright pools is an arrangement where multiple copyrights are available for use of all the members. It is an
example of IPR based collective rights organizations. This is similar to technology pools and helps the IPR community
to have access to a greater number of copyrights.

22. Settlements of litigation
Since the disputes are very costly and very consuming the parties prefer settlements instead of litigation.
Let us have a look at the settlement agreements.

23. Article 102 and intellectual property rights
Article 102 prohibits the abuse of a dominant position in the internal market. This provision was contained in Article
82 of the EC Treaty. Intellectual property rights may have a conflict in this area because, through the advent of
Intellectual Property Rights, the rights provide the property holder with a dominant position.

24. The Renault and Volvo Judgment
In this case, the geographical markets were ascertained, the dominant position was assessed. Finally,
certain ancillary restrictions were posed:
1. Licenses related to RIV and Renault needed to be contractually obliged.
2. Renault or Volvo were requested to comply with the treatment of ancillary restrictions in order to
smoothen disruptions in traditional lines of supply.
3. The parties had agreed on certain non-compete provisions, whereby Renault undertakes for a
period of five years from completion not to compete with the divested business and not to acquire
certain key RVI employees for a period of one and half year or 18 months.

25. The Magill case
In this case, the broadcasting rights and exclusive business zone demarcation were challenged. Under the United
Kingdom and Irish copyright law, the BBC, ITV, and RTE held the television broadcasting rights. When Magill decided
to acquire the licenses and provide a guide to television programs, he was refused the grant of the license. The case
was taken to the European Commission and was also appealed several times. Ultimately, it was held that the holding
back of licenses and not permitting any new entrant to the market is a violation of Article 86 of the Treaty of Rome.

26. The Microsoft case
The Commission and the General court’s assumption of Microsoft enjoying intellectual property rights
General court’s summary of the applicable law
General court’s benign application of the ‘new product’ requirement
Remedy

27. The Commission’s Guidance on Article 102
Enforcement Priorities
The European Commission guidance related to Article 102 is as follows:
1. Market Power: An assessment of the dominant position is ascertained by the market power that
the product holds.
2. Anti-Competitive Foreclosure: There must be a foreclosure to the consumers that no information
relating to the markets must be withheld from the customers.
3. Price-Based Exclusionary Conduct: There must not be exclusionary conduct on the basis of price.

28. Collecting societies
Collecting societies are organizations that collect royalties on behalf of its members. The members are
generally artists, musicians, etc. who have their property protected under IPR and have given their
licenses, elsewhere.

29. Miscellaneous cases concerning intellectual
property rights
Unlawful acquisition of technology
Demanding excessive royalties
Seeking an injunction to enforce standard-essential patents
Vexatious behavior and abuse of process

30. UK Law
Licenses of intellectual property rights: The Chapter I prohibition
Licenses under the Intellectual Property law of the UK are largely inspired by the laws from the European Union, so the laws
provided in this article mirror those present in the UK laws. Chapter one of the Competition Act, 1998, states the
prohibition regarding intellectual property rights.
Other agreements relating to intellectual property rights
Intellectual property Right Laws contain various agreements such as:
1. Negotiation of licensing agreements;
2. Commercial transfers and technology transfer agreements;
3. Government licensing agreements;
4. Patent licenses;
5. Trademark licenses;

31. Anti-monopoly control of intellectual property rights: The Chapter II prohibition and market
investigations
A monopoly refers to the single standing in the market. Chapter two of the Competition Act,
1998. control over anti-monopoly behavior. This happens because intellectual property rights
tend to provide exclusivity to a certain person. That exclusive license may lead to the formation
of a monopoly in the market.

32. Conclusion
Intellectual Property Laws and Competition Laws have an inherent conflict between them but, with the
advent of laws mentioned in this article have made it easy for them to co-exist. A fair conclusion would be
that such conflicting laws may co-exist only when there is jurisprudence that supports this maintenance.
Such cooperation helps in the growth of the market and its dynamics.