Significance of IPR and competition law in commercial environments: An overview
In today's day and age, IPR plays a critical role in facilitating the trade and economy of every nation while ensuring that intangible properties such as creative works, trademarks and inventions are not exploited by unauthorized parties. Particularly, in a digitalized world like ours, ideas and innovations are susceptible to exploitation. Intellectual Property systems ensure that such ideas and innovations are not duplicated or stolen. Moreover, Intellectual Property also impacts the commercial growth of a business. Firstly, protecting your IP (such as trademarks, inventions and trade secrets) may add to the uniqueness and distinctiveness of a particular brand. Consequently, a business can use these IPs to obtain franchise agreements from other corporations. Obtaining franchise agreements may eventually contribute to the commercial growth of a company. Secondly, Intellectual Property systems can be used to obtain profits. For instance, patenting of innovations may lead to incentivizing the creators which forms a consistent stream of income. This stream of income can also be invested in further research and development, thus boosting the scope for innovation.
On the other hand, competition law lays down regulations and laws concerning the market competition in order to regulate anti-competitive practices that companies may partake in. Anti-competitive practices may include predatory pricing (imposing exorbitant prices on products or services that the consumer has limited choice other than to purchase it), price fixing (a collusion between competitors to set similar prices for products or services) and bid rigging (selection of winners of a contract in advance). The origin of competition law can be traced back to the Roman Empire in 50 B.C wherein competition laws were imposed in order to protect the grain industry and to prohibit the blockage of supply ships.
An outline on the linkage between IPR and competition law
Ensuring competitiveness in commercial environments
The rapid development of commercial environments have resulted in establishing a relationship between competition law and Intellectual Property Rights. As discussed earlier, IPR regulates the exclusive rights that a business or an individual may have over intangible assets pertaining to a business such as trademarks, innovations, trade secrets and creative works. Competition law, on the other hand, regulates acquisitions and mergers and safeguards commercial environments from anti-competitive practices. Moreover, IP is pro-competitive. This means that IP systems would help consumers make conscious choices with respect to the goods and services among competing brands that are available in the market. IP ensures that each brand is distinctive in nature and without IP enforcement, brands would attempt to copy each other's business models and other aspects. In sum, it can be said that IP ensures that there exists competition in commercial environments. Facilitating competition in commercial environments is also one of the main roles of competition law. Hence, it can be said that IP and competition law may cumulatively ensure competition among brands in business environments.
Exploring the coexistence between IP and competition law
While both IP and competition law facilitate similar goals, the interface between IP and competition law also poses several issues. For one, when IP laws are enforced upon non-differentiating features of a brand such as patents, trade secrets or other aspects of a business that does not add to the distinctiveness of a business, exclusivity follows. This essentially means that, enforcing IP laws on such features would grant exclusivity or monopoly over them. Typically, the principles and policies of competition law disagrees with the unduly extension and imposition of IP laws on all the facets of a business. At the same time, inadequate IP enforcement can also pose several issues in commercial environments. For instance, inefficient IP enforcement may negatively impact competitiveness among businesses. When the aspects that add to the distinctiveness of a business are not protected with the help of IP laws, duplication and imitation of the same may follow. The imitation and duplication of the various distinctive aspects that are linked to a business will result in inadequate competition between businesses which inherently goes against the principles of competition law. Thus, an inference can be drawn that there is a need to draw a balance between IP and competition law for both its principles to co-exist. IP is pro-competitive. Hence, IP enforcement that would balance the interests of both competitors as well as inventors and creators will facilitate adequate competition in commercial environments.
Legalities concerning the interface of IP and competition laws
The role of the TRIPS agreement in IPR and competition law
The agreement on Trade-Related Aspects of Intellectual Property Rights is an international agreement between all the signatory countries of the World Trade Organization. The primary purpose of the TRIPS Agreement is to allow its member countries to provide an extensive level of protection over their IP. The TRIPS Agreement also elucidates upon the regulation of unfair competition and its relationship with IP rights. Article 40 of the TRIPS Agreement explains that any licensing practice or conditions that are related to Intellectual Property Rights may have a severe impact on trade and it may also act as a barrier when it comes to the transfer of technology. Moreover, Article 40.2 of the TRIPS Agreement permits its members to specify any form of abuse of IP rights that may have a negative impact and to adopt measures to prevent such adverse effects. Article 40.2 of the Agreement also permits its members to adopt measures against practices that may include (but is not restricted to) exclusive grant backs and coercive package licensing. However, the practices enlisted under Article 40.2 are not exhaustive.
Indian scenario with respect to competition and IPR laws
Section 3 of the Indian competition act explains that no enterprise or association of enterprises or person or association of persons can enter into any agreement with respect to the production, supply, distribution, storage, acquisition or control of goods or provision of services that are likely to cause an adverse effect on competition within India. In India, the conflict between IP laws and competition laws can be noted through section 3(5) and section 4 of the Act. Section 3(5) of the Act deals with a blanket exception on IPR which implies that IP policies and competition laws do not interfere with each other. However, section 4 of the Act elucidates upon the abuse of dominant position which is interlinked to IP rights.
IPR and competition laws aim to regulate commercial environments while facilitating a common aim. IP laws ensure that each business is unique in nature while ensuring that the creators are adequately incentivized. Whereas, competition law ensures to strike a balance between the rights of manufacturers and the customers while restricting anti-competitive practices. It has been noted that IP laws may lead to the monopolization of a particular innovation or a creation and that this may be contrary to what competition law policies stand for. However, there are laws and agreements in place to regulate this. Thus, it can be concluded that inherently, IP laws and competition laws can coexist in commercial environments.
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