• Intellectual property rights

Intellectual property rights

The relationship between competition law and intellectual property rights (IPRs) policy is sometimes mistakenly regarded as pure contradiction. This working paper examines the interface between competition law issues and the protection of IPRs both complementarities and conflicts. The paper notes that IPRs create a form of monopoly. The creation of that legitimate exclusivity, however, does not necessarily establish the ability to exercise market power.

The paper reviews some cases of IPRs-related abuse of dominance. IPRs may be used as a horizontal restriction and thus contribute to the formation of a cartel. IPRs can also be used by the licensers to obtain many anti-competitive objectives. In addition, national IPRs regulators may choose to restrict parallel imports to ensure the legitimate benefits of right owners. Nevertheless, the paper suggests pooling and cross-licensing practices as a possible solution.

Concerning developing countries (DCs), the situation is rather less optimistic. In general, DCs do not have a competition law. DCs normally tailor competition policies to their own conditions and goals. The paper states that IPRs and competition policies need to be simpler in DCs than in developed countries to be enforceable by much weaker states, and to promote long term growth of productivity.

The paper concludes that competition is not the end goal of competition law, just as intellectual property protection is not the end goal of IPRs policy. Both are just means to achieve improved efficiency and better welfare in the long run. Thus, rather than being antithetical to each other, they can complement each other. Related to this, the paper presents some ideas:

• IPRs provide economic agents with the incentives to engage in efforts that produce technological innovation. This will create more inputs for competition on the future market
• competition may drive a race for innovation, as firms compete to exploit first-mover advantages, as well as to gain IPRs protection
• when IPRs confer market power, deterring entry to compete, competition laws can help IPRs protection to be fair and on the right track of its virtue towards the welfare goal

The paper notices that a multilateral framework within the WTO on competition issues with relevance to the regulation of IPRs may help to control abuses. Yet, it also may be an abuse of control against less developed countries. Therefore, a challenge for both policies is to find the proper balance of competition and innovation protection.

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