Competition Law's Role in Regulating Intellectual Property Rights

This report provides a comprehensive overview of the relationship between competition law and intellectual property rights (IPR) in the United Kingdom. It begins with an introduction to the concepts of market competition and the role of competition law in regulating anti-competitive conduct, particularly within the UK and the influence of EU law. The report then delves into the specifics of intellectual property rights, including trademarks, copyrights, patents, and design rights, explaining their individual protections and the concept of infringement. The core of the report analyzes the intersection between IPR and competition law, highlighting potential tensions between exclusive rights and the promotion of market competition. It examines how competition law regulates the behavior of companies in the market and how licensing agreements and the abuse of dominant positions are treated under UK law. A case study is provided to illustrate the practical application of these principles, concluding with a summary of the key issues and the ongoing interplay between IPR and competition law to ensure consumer welfare and innovation.

COMPETITION LAW

Table of Contents
INTRODUCTION ..............................................................................................................3
MAIN BODY.......................................................................................................................3
Market place and competition...................................................................................3
Competition law.........................................................................................................4
Intellectual property rights ........................................................................................5
IPR and competition law............................................................................................6
Relationship between IPR and competition law by using an example- ................10
CONCLUSION ................................................................................................................13
REFERENCES............................................................................................................................14

INTRODUCTION
Trading at both national and international level has been a major aspect of
uplifting the economy for the country. It is important for the nation to regulate its market
competitiveness through an effective legislation. United Kingdom has been a major hub
of trading where laws are designed to regulate the working of trade. The Competition
law of United Kingdom regulates the anti competitive conduct and ensures that the
market is competitive (Marco Colino, 2019). It is strictly a national law but if effects of
corporation reaches beyond the national borders, the laws of European Union are
applied and the European Commission has the competency to deal with the issues of
international trade. This report shall cover the role of competition law in regulating the
intellectual property rights.
MAIN BODY
Market place and competition
The term relevant market can be defined as the place where the business is
done among the companies. It is a behaviour which is taken into account on relevant
market. In order to appropriately define the relevant market, it is important to see the
starting point of it which is the products which are in the competition and if the market is
described as the wide one then it is an anti competitive conduct which will have adverse
effect on it. There are competition which exist between the companies in market, out of
which the most common one is the intra brand where the competition exist between the
distributors of same brand. The competition law regulates the activities of the business
in the market (Jones, 2017).

Competition law
The competition law of UK is affected by both the European and British elements.
The Competition Act of 1998 is one of the most important statute at the national level
which regulates the trade of goods and service within borders. Section 60 of
Competition Act states the legislation of UK must be applied with the European
jurisprudence. The United Kingdom have three task like all competition law which
includes firstly that it prohibits the practices and agreements which curb trading which is
free and the competition among the companies. Second is banning the abusive
behaviour of company which dominates the market or the practices that are anti
competitive which tends to lead the dominant position. Third is supervising the
acquisitions and mergers if the large companies which involves joint ventures. The
transactions which threaten competitive process may be prohibited altogether
(Ferguson, 2017).
The competition and the Markets Authority have the power to enforce the
competition law on behalf of the public. The main aim of this legislation is to promote
consumer welfare and public interest which includes industrial policy, running of public
service, regional development and protection of environment.
The nation legislation, that is competition act of 1998 is administered by Office of
fair trading and UK competition Commission and their decision can be heard by the
Competition Appeal Tribunal in first instance. This law is closely modelled with the EU
competition law as the national statute is enacted in 1998 which allows the consistent
enforcement and has greater level of legal certainty in business community.

The EU competition law falls under the economic and social pillar of Treaty. After
the Treaty of Lisbon was introduced, the pillar structure was abandoned and the law on
competition was subsumed in Treaty on Functioning of European Union (TFEU). The
national statute is been enacted which is consistent with the EU competition law. For
instance, if a business carries on any unfair business practice across the border of UK,
then the Commission of European Union shall have the enforcement power and the EU
competition law shall apply (Slot and Farley, 2017).
Intellectual property rights
Intellectual property are those rights which are granted to the parties for creation
of their minds. This mainly gives the individual a sole right for the usage of its creation
for a particular time period. There are different kinds of intellectual property rights which
are available in UK and each of the right has its own formality, duration period and level
of protection. These mainly fall under four main areas which includes trademarks,
copyrights, patents and design rights. The people have got the right to protect their
intellectual property from infringement. It is basically a situation when any person tries to
imitate or steal the intellectual property of any other person. Various types of IPR are
discussed below- Copyright- This type of protection deals with wide range of work like literary and
writing works, photography and art by films, web content, music, television and
sound recordings. This list is not exhaustive, rather it includes many other forms
of idea. This IP basically protects the idea of an individual.

 Trademark- This is intended to prevent the confusion in the market. It can be the
name, design, logo, symbol or any other unique device which can help in
identifying the organization or product. Design- This applies to the physical product, i.e. appearance of offering like its
shape, colour, texture, contour, etc.
 Patents- These are applied mainly to the industrial inventions and processes and
protect the owner against any unauthorised implementation of invention.
The intellectual property licence agreement is basically a contract in which the
owner of the intellectual property permits the other person to engage in such activity
which would have infringe the legal rights of the licensor if there is absence of licence
agreement.
The United Kingdom have widest range of licences which can frequently help the
industries and the sectors to facilitate exploitation of the intellectual property. There is
no specific statute which deals with licensing but its reference is embodied in different
legislations such as under section 28- 31 of Trademark Act, 1994, under section 90 of
Copyright Designs and Patents Act, 1988 and Patents Act, 1977 (McMahon, 2019).
IPR and competition law
The law of competition and the intellectual property law have different field
occupied and are enacted for different objectives. The intellectual property rights are
used as the tool which creates the exclusive monopoly rights to holder and on other
side deter other people from offering the product in the same market which can reduce
the competitiveness in market.

There has been an inevitable tension among the creation of the exclusive IPR
and the policy of competition policy that promotes the competitive market so that
efficiencies for benefit of consumers can be created. The competition law regulates the
behaviour of the companies in market and the competition between the corporations will
provide advantage to the consumers as the firms will continuously innovative new
offerings, will be able to charge more prices and make those offerings available which
will help in meeting the demands of the customers. The innovation in any product or the
business of any individual or group of individual can be protected through different
intangible rights which includes copyright, trademark or patents. The intellectual
property rights are those exclusive rights which are given to the owner for a period of
time that imposes legal barriers on the creation and protect and prevent the competitors
from adapting, taking or adopting it. This concept gives central power to the owner
which gives them exclusivity to the owner which includes the ability to control the usage
of creation and also its exploitation (Som, 2018). There are many circumstances when
the owner of the right can enjoy a significant power in market because of the result of its
creation or the result which involves entering into the agreement with some other terms
and conditions in the market with other businesses. The competition law of 1998
regulates the free trade of good in the whole UK and the European Union competition
law regulates the trade across the borders. It is enforced by the EC and the assigned
national competition authority of any of the member state.
The IP and the competition law altogether have new standards relating to
intangible rights like intellectual property. There are new policies being formed by the
European Commission in order to increase collaboration between intellectual property

and the competition law. They both have the common objective behind their
collaboration which is to bring innovation in the market which is for the welfare of the
consumers, subject to a limitation that the competitors shall not misuse or exploit it
without permission.
The owner of the intellectual property rights can use the licensing agreements in
order to attempt the accomplishment of the goals which are not anti competitive and ate
probably the pro competitive. For instance, the licensing agreements may have the
terms to operate the permit of the licensor in order to increase the sales of its
innovation. This activity describes the efforts of the licensor in order to increase its
profitability of exploitation of the intellectual property rights (Claassen and Gerbrandy,
2018).
In UK, the patent and the other licensing agreements are subject to certain
statutes like restrictive Trade Practises Act, 1976, Fair Trading Act, 1973 and the
Competition Act of 1980. whenever there is trading of goods and services and the
intellectual property rights has been present in relation to such business, then the
competition law takes place and influences its working.
There is the most common concern form the perspective of competition law that
it may violate this statute due to presence of IPR like copyrights, patents and
trademarks which gives the sole power which may be misused by the holder of IPR to
the detriment of the customer welfare and the invention. Hence the legislation of
competition is applicable to area of the IP and can be invoked by customers or any third
party which is affected or interested in order to ensure that the holder of intellectual
property rights is not abusing its dominant position. On other side, the IPR holder must

rely on the competition law in order to protect itself from the competition which is unfair
and work on to promote more of the competition in marketplace (Geiger and Izyumenko,
2020).
The issues in the competition law may originate in any area of intellectual
property such as copyright, patent or trademark. In many cases, the owner or holder of
the intellectual property rights which have a strong market power has to be cautious
about the implications of the competition law in its practice. It is not different to the
competition law regulation that a firm holds the dominant position, rather the
undertaking must enjoy the dominant position in the special responsibility that they must
not engage in the conduct which may distort the competition. The organizations which
have the intellectual property rights are the one which are perceived as the dominant.
In the case of AB Volvo v. Erik Veng (UK) Ltd, Volvo have registered its design
for front wings of the Volvo series 200 cars. Erik Veng imports the body panels which
are similar to it and manufactured it without the permission of plaintiff and started its
marketing in UK. As a result, Volvo have initiated the proceedings against the company
for infringement of its sole rights. The court held that if there is lack of harmonisation of
the laws, the national laws must determine the procedures and conditions under which
the protection of model or design is granted and which products can bring benefit from
the protection even when they form the part of the unit which is protected already. So
the court held that it is the exclusive rights of proprietor to prevent the third-party from
selling, importing and manufacturing any product which incorporate their design without
the consent. It is an obligation on proprietor to grant the license which can deprive it of

its exclusive rights and therefore a refusal to grant the license cannot constitute the
abuse of dominant position (Zhuang, 2017).
Relationship between IPR and competition law by using an example-
Abuse of dominant position
It comes when the dominant company in the market gets involved in the conduct
which is conscious to get rid of the competitor or which may deter the entry of the new
competitors with a outcome that the competition is diminished or prevented. Article 102
of the TFEU prohibits the abuse by one or more company of the dominant position
within the market which is as different with the marketplace as it might impact the trade
between the EU member state.
In case of Microsoft Corporation v. Commission of European Union, the lawsuit
began when the Sun Microsystems have filed the complaint against the Microsoft for
licensing practices in the year 1993 and EU ordered the company to disclose some
content about the products and also release the version of the windows of Microsoft
without the window media player. EU reached the preliminary decision in 2003 and
ordered plaintiff to offer the versions of windows without the media player and moreover
order to pay fine of €497 million. This case have resulted to place the significant effect
on IPR and the power of the dominant companies to innovate (Danieli, 2021).
The main concern raised in this case was the products of Microsoft are subject to
tying. It is that process where the company which is in the dominant position in the
market of one offering may harm the consumer benefit by tying which foreclose the
market of other products. The European Commission found that Microsoft had tied its

product window media player with its other operating system which is a strong evidence
of abuse of dominant position.
Abuse of market power
There are many intellectual property rights holders who wants to lock the
competitor's offering from entering into market which is on the basis of smartphone
patent wars (SEP) which also thereby breaches the competition law. It protects the
technology which is necessary to these standard. Sep is such technology out of which
no other technology can be developed. For instance, the swipe to unlock the phone is
not SEP as there may be different technologies which may be developed in order to
unlock the screen of smart phone. The SEP is relevant not only for telecommunications
but also for security an biometrics, logistics, industrial equipments, audio video and
many other.
The smartphone patent war confers the significant power of market on the
owners and the potential to abuse the market by following some standardisation which
can exclude the rivals or may exclude the increased royalty fees. The SEP mainly
protects the innovation that is essential and the standard for use of technology. As
owners of SEP have been using the market power and also retaining the innovation by
their licensing demands which are discriminatory, the standard Setting Organization
have required the owners of SEP to commit the licensing on FRAND which is fair,
reasonable and non discriminatory terms which will aim to bring balance in licensing. In
order demonstrate this issue, the case of Motorola and Samsung negotiations with the
Apple in order to license their mobile telecom SEP is relevant and relates truly
(Dreyfuss and Pila, 2018).

The negotiations broke down which caused Motorola and Samsung to bring the
p[proceedings of patent infringement against the company Apple in the court of
Germany. The interim injunction was applied for their SEP respectively. As a result, this
promoted the EC to start the formal investigation against the company Samsung and
Motorola in order to ascertain as to whether they have violated the provisions of
competition law, that is, whether they have abused the dominant position.
In the case of Apple v. Motorola, EC found out that Motorola have violated the
statute of competition law of European Union despite that the fact that seeking the
interim injunction is a legitimate remedy for SEP holders in the cases of patent
infringement. Article 102 is being violated by Motorola which prevents the abuse of
dominance. Motorola have declared that the patent on which the injunction is been
sought is essential for implementing the 2G European telecommunications standards
Institute. Apple agreed to this and stated that in case of dispute in courts of Germany,
the court shall decide the rate of royalties and Apple shall pay accordingly. EC found
this as anti competitive as Motorola insisted the company Apple to give its right to
challenge infringement or validity of the SEP of Motorola. Hence, In this case, EC
applied the exception and did not impose any fine as it is divergent to the decision of
EU members sates and there is also absence of case law of EU (Colomo, 2018).
In another case of Apple v. Samsung, the European Union have decided to
accept the legally binding commitment which is offered by Samsung that they will not
seek any injunction in relation to future and present SEP for the next five years for
mobile phones and will not proceed for the action of infringement.