The Intersection of Competition Law and Intellectual Property Rights

Intellectual Property Rights (IPR) and Competition Law may appear to pull in opposite directions. IPR gives creators exclusive rights over their inventions, while competition law tries to prevent market dominance and unfair practices. Interestingly, both areas of law share the same ultimate goal, promoting innovation, consumer welfare, and economic growth. Understanding the intersection of these two fields is essential because it helps explain how the legal system balances creativity and competition.

IP laws grant a temporary monopoly to creators. For example:

• A patent gives exclusive rights to make and sell an invention.

• A trademark protects brand identity.

• Copyright protects creative and literary works.

This exclusivity is necessary to reward innovation. However, monopoly rights can be misused to block competitors, charge excessive prices, or restrict market access.

That is where Competition Law steps in. It ensures that IPR owners do not exploit their market power in a way that harms consumers or prevents healthy market competition.

So the key question becomes, Where does legitimate IP protection end, and anti-competitive behavior begin?

The Ericsson SEP Case [CS (COMM) 65/2016]

One of the most discussed examples in India is the dispute between Ericsson and various smartphone manufacturers like Micromax, Intex, and Lava.

Ericsson held patents considered “Standard Essential Patents (SEPs)” for 2G/3G/4G technology. These patents must generally be licensed on FRAND terms (Fair, Reasonable, and Non-Discriminatory).

What was the issue?

Several Indian manufacturers complained to the Competition Commission of India (CCI) that Ericsson:

• demanded unreasonably high royalties

• imposed unfair licensing conditions

• charged royalties based on the final device price, not the cost of the chip used

Question before the Delhi High Court:

Was Ericsson using its monopoly over SEPs to unfairly dominate the market?

The CCI held that Ericsson’s behavior could amount to abuse of dominance under Section 4 of the Competition Act, 2002 and ordered an investigation.

This case shows how competition law can prevent misuse of patent rights especially in industries where one patent is essential for everyone.

In the United States, the Microsoft case is a famous example of competition law restricting the use of intellectual property.

Microsoft bundled its Internet Explorer browser with Windows OS, making it difficult for competitors like Netscape to survive. Was Microsoft using its copyright over Windows to maintain an unfair monopoly? The court ruled yes and held Microsoft liable for anti-competitive conduct. This demonstrates that even when a company owns its product, IP cannot be used as a shield for anti-competitive behaviour.

The pharmaceutical industry often sees tension between IPR and competition law.

The Novartis Glivec Case [(2013) 6 SCC 1]

Although this case involved patentability rather than competition law, it highlights how public welfare influences IP decisions.

Novartis sought a patent for its cancer drug “Glivec,” but it was rejected under Section 3(d) of the Patents Act to prevent “evergreening.”

Had the patent been granted, Novartis could have charged very high prices, possibly limiting access to life-saving treatment. India’s restrictive approach indirectly supported competitive pricing.

When IP Licensing Becomes Anti-Competitive

Licensing is a normal part of IP, companies license patents, software, or trademarks to others. But sometimes licenses may contain anti-competitive terms, such as:

• Restricting the buyer from dealing with competitors

• Fixing resale prices

• Tie-in agreements (forcing the purchase of one product with another)

• Exclusive supply contracts

These can violate Section 3 of the Competition Act 2002 which states that anti-competitive agreements are void.

Imagine Company A owns the patent for a popular educational software. It licenses the software to schools on the condition that they also buy A’s computers, no other brand allowed. This tie-in restricts competition in the computer market.

Refusal to License – Legitimate or Anti-Competitive?

An IPR owner generally has the right not to license their product. But refusal becomes problematic when:

• the IP is indispensable for competing in the market

• the owner is dominant

• the refusal harms consumer interest

  
  

Magill TV Guide Case

Leading broadcasters refused to license TV listing copyrights to Magill, preventing it from publishing a comprehensive guide. The court held this refusal abusive, forcing licensing in public interest. This case shows how IP rights may sometimes need to give way to competition concerns.

How Do Courts and Regulators Balance IPR and Competition?

Courts generally follow these principles:

(1) Protect IP, but only to a reasonable extent: IP owners can enjoy exclusivity but cannot use it to harm competition.

(2) Look for abusive conduct, not mere dominance: Holding a patent does not automatically imply abuse.

(3) Check if the behaviour affects consumers: If the patent owner’s actions raise prices, reduce choices, or block innovation, competition authorities may intervene.

(4) Evaluate the industry: High-tech and pharmaceutical sectors receive greater scrutiny because they affect public welfare.

Why This Intersection Matters for the Future

India’s digital economy, pharma growth, and technological advancements make the relationship between IP and competition more important than ever. Some emerging challenges include:

• AI-generated inventions

• licensing of essential software

• access to life-saving medicines

• dominance of big tech

• cross-border IP disputes

Regulators must balance innovation incentives with fair competition to protect consumers and encourage new entrants.

Competition law and intellectual property are not enemies, they complement each other. IPR encourages innovation by giving creators exclusive rights. Competition law ensures this exclusivity is not abused. Together, they create a system that rewards innovation without allowing monopoly power to harm society.