“Revisiting Abuse of Dominance & IPRs: Emerging Jurisprudence of the Indian Competition Law” “Plenary 2: A comparative perspective to IPR and Competition: Lessons and experiences from across the globe” Avinash Sharma Advocate-on-Record, Supreme Court of India Panel Counsel, Competition Commission of India

Competition vis-à-vis IP: Theoretical Foundations Conflicting Relations? Basically, IPRs designate boundaries within which competitors may exercise legal exclusivity (monopolies) over their innovation, therefore, in principle, create market. From a theoretical perspective, IP is a quid pro quo for competition. Competition Law reinforces IPR IPRs are seen as an exception to the general rule promoting free competition. The protection is not meant to continue even after the objectives of IP have been achieved. The attitude of anti-trust to IPR is not hostile. One can argue that in order to prevent abuse, IP laws e.g. compulsory license itself been provided but that that should not and must not restrict the competition authorities to invoke antitrust enforcement.

IP under the Competition Act, 2002 Section 3(5) of the Competition Act 2002 stipulates that: “Nothing contained in this section shall restrict— (i) the right of any person to restrain any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his rights which have been or may 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 Marks Act, 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)”

IP under the Competition Act, 2002 (conti…) Section 3(5) essentially provides two exceptions which have been specifically provided to IP holders under the Competition Act. - IPR owner may stipulate conditions in agreement and may also take any action, such as litigation, to restrain the infringement of his rights conferred by the relevant IP Act. - IPR holder may also impose ‘reasonable’ conditions that are necessary for the protection of such rights. However, the word reasonable is nowhere defined in the Competition Act which calls for scrutinizing conditions in the IP Agreement on case to case basis. The term “reasonable conditions” has not been defined or explained in the Act. However, by implication, we can say that unreasonable conditions that attach to an IPR will attract application of section 3 of the Act. In other words, licensing arrangements likely to affect adversely the prices, quantities, quality or varieties of goods and services will fall within the contours of the Competition Act, 2002 as long as they are not reasonable with reference to the bundle of rights that go with IPRs.

IP under the Competition Act, 2002 (conti…) Any abuse of dominance by the IPR holder and any combination between IPR holders are very much within the ambit of the CCI. Section 3(4) which deals vertical agreements like tie-in arrangement, exclusive supply, exclusive distribution etc. have trappings of section 4 (Abuse of Dominant Position). IPRs has been exempted under section 3 (Anti-competitive agreements) and not under section 4 (Abuse of Dominant Position) or sections 5&6 (Merger Control). Even the exemption clause i.e. section 3(5) of the Act uses the term “reasonable conditions”.

IP and Competition: Few Area of Conflict Exclusionary conduct of a dominant individual owner of IP: ‘refusal to deal’, ‘refusal to license’, ‘refusal to provide necessary technical information’, or ‘tie in’, or ‘bundling’. Anti-Competitive terms of IP licensing agreements. Unreasonable conditions can be relating to royalty for the use of IPR, use of rival technology, granting back to the licensor any knowhow or IPR , indemnification of the licensor, restrictions on licensee’s business or use of staff designated by the licensor, etc. Special behaviour of IP owners & other players e.g, standard setting organizations, research and development agreements, and patent pooling. Ericsson case.

Challenges ahead! Limited Jurisprudence Human resource crunch - Around 50% vacancy in professional staff. Time constraints • In mature jurisdictions, investigation normally takes 2 - 5 years. • Strict time lines have been prescribed by Supreme Court in SAIL v Jindal case - DG to complete investigation ordinarily in 60 days • In contrast, e.g. the European Commission commenced its investigations in 1989 and delivered decision in 1994 in cement cartel –finally decided by ECJ in 2004. Restricted power of search and seizure - Less teeth to DG/CCI. - No general power to make inspection of offices. - Search and seizure can only be done with prior permission of the Chief Metropolitan Magistrate, Delhi. Role of the Appellate Tribunal, High Courts, and the Supreme Court of India