Competition Law and Intellectual Property Law Compared

An intellectual property right is a statutory exclusivity granted to induce creation and disclosure; competition law is directed against exclusivity that harms the market. The two are said to conflict, and at the level of principle they do not: both aim at innovation and consumer benefit by different means. The real difficulty in India is narrower and procedural, namely which authority examines the conduct of a patentee, and that question is unsettled.

1. The Comparison

2. The Statutory Saving and Its Limits

1. The grant is not the objection. Competition law does not quarrel with the exclusivity conferred; what it examines is the manner of its exercise.
2. The saving is conditional. Section 3(5)(i) protects the right to restrain infringement and to impose reasonable conditions as may be necessary for protecting the right. A condition beyond the scope of the right, or beyond what its protection requires, is not saved.
3. Ordinarily within the saving: field of use restrictions, quality control in a trade mark licence, confidentiality obligations, restrictions on sub-licensing, and territorial limits corresponding to the right.
4. Ordinarily outside it: tying unpatented goods to a licence, royalties continuing after the term, prohibitions on challenging validity, exclusive grant-back of improvements, and restrictions on the licensee dealing in unrelated competing products.
5. Section 4 has no equivalent. An enterprise dominant by reason of its intellectual property is subject to the abuse provisions in full, which is why most Indian litigation in this field has concerned abuse rather than agreement.

3. The Jurisdictional Question

Whether the Commission may examine a patentee's conduct at all has divided the Delhi High Court. A single judge held in 2016 that the Patents Act and the Competition Act operate in different fields and that the Commission's jurisdiction was not ousted, a view followed in Monsanto Holdings (P) Ltd. v. Competition Commission of India in 2020. A Division Bench held on 13 July 2023 that Chapter XVI of the Patents Act is a special and later enactment constituting a complete code for the conditions attaching to a patent licence, so that it prevails and the Commission lacked jurisdiction; it added that the private settlements reached between the informants and the patentees had removed the factual substratum of the proceedings.

4. Standard Essential Patents

The field in which the conflict is sharpest. A patent that must be infringed to implement a standard confers a position no competitor can challenge, which is why standard setting organisations require a commitment to license on fair, reasonable and non-discriminatory terms. The competition complaints are hold-up, where the holder exploits the lock-in created by the standard; patent ambush, where the existence of the patent was concealed while the standard was settled; excessive or discriminatory royalties; and disputes about whether the royalty should be computed on the price of the device or on the value of the component implementing the standard. The complaint from the other side is hold-out, the implementer using the technology and refusing to take a licence.

5. Related Topics and Provisions