With the beginning of open economies around the world countries, the legislations also altered accordingly. Liberalisation and globalisation are two methods which made multi-national companies to invest in many countries around the world. There came the aspect of protecting the original ideas of the people who propagated them in first place in the form of Intellectual Property Right laws (Hereinafter referred to as IPR). The three main types of i.e. Copyright, Trademark and Patent have different circumstances in the matter of monopoly rights. In the matter of Copyright, copyright isn’t a monopoly because of the existence of close substitutes, but there are several theorists who have stated that even with the presence of some substitutes there can be a major change in the price market, thereby affecting the other players in the market. In the matter of Trademarks, it has been stated that the trademark is used in connection with a specific good or service, and different companies can use similar marks in connection with different goods or services. But again the same differs according to situations at hand in terms of the market. In the case of Patent, where there have been various situations that have resulted in price change in the market due to a monopoly by one player. Thus, in this particular research article, the intricacies related to IPR and monopoly will be discussed.
As per World Intellectual Property Organization (WIPO), Intellectual property refers to creations of the mind, inventions, literary and artistic works and symbols, names and images used in commerce which is broadly divided into four main categories i.e. patent, trademark, trade secret and copyright. With the initiation of the IPR legislations around most countries of the world, there were several theorists who stated that IPR protection would increase monopoly of the owners in the market. Legislations and economist attempted to absolve disparate theories to explain the angles of IPR and monopoly. Countries also stated that introduction to international obligations may go against the interest of developing and under-developed countries. According to economist Edmund Kitch and Robert Merges, who attended that a patent grants exclusive rights on an idea and does not grant a monopoly which is protection from competition. While we discuss about monopoly, it in terms of competition in the market refers to a market situation in which there is only one seller of a commodity. Though there can be instances of monopoly in a market economy but the IPR regime ensures that competition is fair in nature.
The Story of IPR
Intellectual property is the legal right over the original intellect of individuals and organisations. Generally speaking, intellectual property law aims at safeguarding creators and other producers of intellectual goods and services by granting them certain time-limited rights to control the use made of those productions. After the conclusion of WIPO in Stockholm, intellectual property was defined under Art. 2(viii) as rights related to literary, artistic and scientific works, performances of performing artists, phonograms and broadcasts, inventions in all fields of human endeavour, scientific discoveries, industrial designs, trademarks, service marks and commercial names and designations, protection against unfair competition, and all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.” While GATT and WTO were primarily organisation to discuss on the subject of IPR but WIPO enhanced connections among the countries. As for India, A significant feature of the IP environment in India is the large number of small players infringing IP rights. This means that seizures tend to be small, which requires a sustained and financially draining effort in order to make an impact. Another important aspect of the Indian market is that most small sector players are unaware of IPR procedures due to which big companies often manipulate unfair pricing on them to generate higher profit. This act is also an enforcement of monopoly by the financial giants. Thus, there is a close nexus between IPR protection and maintaining fair competition in the market.
IPR and Monopoly
India since the very inception has attempted to protect the identity of its players in the market. The Patent Act, 1970 has been amended thrice in the road to adjusting with the international needs of the growing economy. The 10th Lok Sabha, ushering in a period of disturbance for India’s IPR laws. During this time of political uncertainty, India was twice taken to the WTO dispute settlement resolution panel, by the US and EU respectively, that resulted in pronouncements against India. At this point, the legal fraternity made several amendments to contractual negotiations that would not result in further confusion among the parties. Further, it also inserted Section 3(d) into its amended law of Patent Act, 1970 that set a higher standard for patentability. This was specifically intended to prevent the possibility of patent layering, a strategy that involves the extension of patent monopolies, most often through frivolous incremental changes to a product. The provision under the above section merely states that mere discovery of a known substance will not be patentable until there is no result of enhancing of the efficacy of the substance. It is often understood that this exclusive right awards the inventor the ability to charge a monopolistic price for the invention that exceeds what would be charged in a perfectly competitive market with several suppliers. There is a double way road to the same, as, on one hand, it protects the interests of the inventor and while on the other hand, it might also create an environment of unfair pricing in the economy. This might result in competition for the small sector players in our country who do not have sufficient means to compete. Here arrives the debate on whether monopolies or competition is more conducive to innovation as a general matter. Since the purpose of the antitrust laws was to prevent monopolies and constrain the exercise of monopoly power, whereas the very object of the patent laws is a monopoly, it was thought that the two bodies of law were inherently in conflict. We thereby observe that in matters of Monopoly, Patent protection may result in intricacies of conflict for the newly inducted competitors in the market due to the price-determining powers of the party in control over the patent. The idea of a perfect competition market might seem like a dream for some players.
The Probable Future of IPR and Monopoly
The European Court of Justice has made clear that the possession of an IPR does not itself confer a dominant position. In India, The abuse of dominant position is prohibited by Section 4 of the Competition Act is defined means any enterprise that enjoys the position and power in the Indian market which enables it to operate independently of competitive forces in the relevant market and affect its competition, consumer or the relevant market in its favour. It can be understood that IPR is mere protection of the propagator and it does not necessarily mean that the party having the patent will automatically have a dominant position. In the United States, for example, courts often refer to the rights conferred by a patent as a “monopoly” or a “patent monopoly.”In Walker Process, a 1965 US Supreme Court case cited with approval in the US Guidelines, the Court held that fraud on the Patent Office can be an unlawful act of monopolisation where the other elements, such as possession of monopoly power, are met. Under US law, enforcement of an IPR procured through fraud on the patent office can be an act of monopolisation or attempted monopolisation if monopoly power or a dangerous probability of achieving it is also established, which was stated in Walker case. Thus, it is concluded that countries around the world have different procedures in terms of IPR and Monopoly.
We can conclude from the above discussion that the statement of the research problem stands current. IPR is a protection of the rights of the producer which can be manipulated by other players. Whereas on the other hand, proper government regulation can ensure that patentability does not lead to a monopoly in the market so as to ensure fair competition. Though it is country-specific in nature it can be refuted that the mere presence of patent will result in a monopoly.
- Rufus Pollock, Copyright is a Monopoly, And isn’t like normal property, (January 31, 2011) <https://rufuspollock.com/2011/01/31/copyright-is-a-monopoly-and-isnt-like-normal-property/>
- Donna Ray Berkelhammer, “Trademarks are not monopolies”, LEXIS NEXIS, 4 June, 2013 <https://www.lexisnexis.com/legalnewsroom/intellectual-property/b/copyright-trademark-law-blog/posts/trademarks-are-not-monopolies
- Report of World Intellectual Property Organisation on What is Intellectual Property, As forreference <https://www.wipo.int/edocs/pubdocs/en/intproperty/450/wipo_pub_450.pd
- EDMUND KITCH, 1966, “THE NATURE AND FUNCTIONS OF PATENT SYSTEM”)pp-293-346.,(Journal of Law and Economics 2000).
- CLEMENT ALLAN TISDELL & KEITH HARTHLEY, MICROECONOMIC POLICY: A NEW PERSPECTIVE,pp.190-222, (Ed. 2nd, Edward Elgar 2008)
- Report of WIPO Intellectual Property Handbook on Policy, Law and Use, 3rd January 2004. As for reference <https://www.wipo.int/about-ip/en/iprm/>
- Aman Raj Khanna & Hemant Krishan Singh, India’s IPR Regime: Reconciling Affordable Access with Patent Protection, ICRIER,4-35, ( August 2015).
- Report OECD Policy Roundtables on Competition Policy and Intellectual Property Rights, 1997. As for reference <http://www.oecd.org/competition/abuse/1920398.pdf>
- DeutcheGramophon GmbH v. Metro-SB-Grossmarkte GmbH (78/80) 8 June 1971; ECR 487, .
- Section 4, Competition Act, 2002
- Int’l Wood Processors v. Power Dry, Inc., 792 F.2d 416, 426 (4th Cir. 1986)
- Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 US 172 (1965)
Student, Symbiosis Law School NOIDA
Mr Anupam Pandey is a Second Year Learner from Symbiosis Law School Noida and is an enthusiast in reading and writing. His interest lies in Indian Criminal Law, Intellectual Property Law and Energy Law’s. He loves reading books and writing on various legal issues, researching and writing creations of his mind. For any Clarifications, Feedback, and Suggestion, you can reach him at firstname.lastname@example.org