Intellectual Property and Competition Law
Exploring Some Issues of Relevance to Developing Countries
Intellectual Property and Sustainable Development Series Series • Issue Paper 21
Intellectual Property and Competition Law is one further contribution of the ICTSD Programme on Intellectual Property Rights and Sustainable Development to a better understanding of the proper role of intellectual property in a knowledge-based economy. The objective of the study is to generate and increase understanding of the relationship between intellectual property (IP) and competition law and policy. The study explores a number of issues that could be relevant to developing countries in addressing the interface between these two disciplines where the understanding of law and economics poses unique analytical challenges to policy-makers.
As stressed in the study, the relationship between intellectual property and disciplines regulating competition has attracted growing attention, particularly as a result of the expansion and strengthening of IP protection at the global scale. While IP law deliberately subjects intellectual assets to the exclusive control of right owners, competition law seeks to avoid market barriers and benefit consumers by encouraging competition among a multiplicity of suppliers of goods, services and technologies. Such challenges are particularly complex in developing countries, the majority of which have little or no tradition in the application of competition law and policies. In fact, in most of these countries intellectual property rights have been expanded and strengthened in the absence of an operative body of competition law, in contrast to developed countries where the introduction of higher levels of IP protection has taken place in normative contexts that provide strong defences against anti-competitive practices.
This study commissioned to Professor Carlos Correa (University of Buenos Aires), notes that the TRIPS Agreement (Article 40) specifically provides for the possibility of regulating anticompetitive practices in licensing agreements. As highlighted in the paper, this is crucial to ensure the right balance between competition and the protection of intellectual property rights (IPRs). However, it does not specifically address this issue, as there is abundant literature on national experiences on this matter, as well as on the interpretation of the TRIPS Agreement and the legal approaches that developing countries may adopt. The paper, on the contrary, explores a number of issues where not much work has yet been done in developing countries but that could be of relevance in tackling the interface between IP and competition policies. Notably, the paper deals with some competition law issues specifically relating to technology markets, as distinct from product or service markets. It thus discusses the extent to which the refusal to license an intellectual property right to a third party may be deemed anti-competitive. The paper considers, further, anti-competitive situations arising from the acquisition and enforcement of intellectual property rights. The use of compulsory licences to remedy anti-competitive practices is also examined together with a number of state interventions that determine key aspects of their competition policies.
The premise of ICTSD’s work in this field, together with its joint project with UNCTAD, is based on the understanding that IPRs have never been more economically and politically important – or controversial – than they are today. Patents, copyrights, trademarks, industrial designs, integrated circuits and geographical indications are frequently mentioned in discussions and debates on such diverse topics as public health, food security, education, trade, industrial policy, traditional knowledge, biodiversity, biotechnology, the Internet, and the entertainment and media industries. In a knowledge-based economy, there is no doubt that a better understanding of IP is indispensable to informed policy making in all areas of development. The relationship between competition law and policy and IP stands high in the WIPO Development Agenda recently adopted by the WIPO General Assembly.
Empirical evidence on the role of intellectual property protection in promoting innovation and growth remains inconclusive. Diverging views also persist on the impacts of intellectual property rights on development prospects. Some point out that, in a modern economy, the minimum standards laid down in TRIPS will bring benefits to developing countries by creating the incentive structure necessary for knowledge generation and diffusion, technology transfer and private investment flows. Others stress that IP, especially some of its elements, such as the patenting regime, will adversely affect the pursuit of sustainable development strategies by: raising the prices of essential drugs to levels that are too high for the poor to afford; limiting the availability of educational materials for developing country school and university students; legitimising the piracy of traditional knowledge; and undermining the self-reliance of resource-poor farmers.
It continues to be urgent, therefore, to ask how can developing countries use IP tools to advance their development strategy? What are the key concerns surrounding the issues of IP for developing countries? What are the specific difficulties they face in IP negotiations? Is IP directly relevant to sustainable development and to the achievement of agreed international development goals? How we can facilitate technological flows among all countries? Do they have the capacity, especially the least developed among them, to formulate their negotiating positions and become well informed negotiating partners? These are essential questions that policy makers need to address in order to design IP laws and policies that best meet the needs of their people and negotiate effectively in future agreements.
To address some of these questions, the ICTSD Programme on Intellectual Property and Sustainable Development was launched in July 2000. One central objective has been to facilitate the emergence of a critical mass of well-informed stakeholders in developing countries – including decision makers, negotiators but also the private sector and civil society – who will be able to define their own sustainable human development objectives in the field of IP and effectively advance them at the national and international levels.
We hope you will find this study an additional contribution to the debate on IP and sustainable development and particularly in responding to the need for increased awareness and better understanding of the interface between IP and competition policy. An underlying assumption of our work on IP has been the pursuit of a proper balance between the different interests at stake in designing appropriate regimes compliant with international commitments. These regimes, as in the case of countries with strong traditions in IP, are designed taking into account adequate checks and balances. Competition law and policies are essential components of these checks and balances.