Our current reality seems to be undergoing constant change. Anything that is brand-new today quickly becomes out dated. Every business, appears to be engaged in a race to attract customers in this rapidly evolving and intensely competitive environment by either introducing brand-new, cutting-edge goods or services or by raising the standard of existing ones while lowering associated costs to maximizing profits.
Indeed, utilising technological knowledge, such as information expressed in physical objects and codified in blueprints, plans, skills, expertise, techniques, know-how, technical articles, including licencing and management arrangements, technological assistance, purchasing machinery equipment and assembling apparatus, hiring foreign specialists, etc., are key components of economic progress in all economies.
Due to a lack of resources for development and the availability of a wide pool of foreign technology for transmission and dispersion, developing countries began obtaining such technology from developed countries, giving rise to the notions of ‘Technology Transfer’. The creation, purchase, and/or acceptance of new technology has turned into a need for all nations and large and medium sized businesses craving for to achieving or maintaining a competitive advantage in the global market, especially after the COVID-19 era.
A written contract must be signed by the exclusive rights holder and the business acquiring those rights before any exclusive technology rights can be transferred. Although the exclusive rights holder have the right to prevent unauthorized use of the technology that is protected and to utilize it however they see fit, these exclusive technology rights do not shield inspite being Intellectual Property Rights (‘IPR’) from the application of the Competition Law. Hence, the interaction between the two legal disciplines influences the marketplace’s current competitive dynamics.
Technology Transfer Agreements (‘TTA’)
The transfer of technology may be accomplished through contractual arrangements, or TTA, between the source of the technology and the recipient. The terms and conditions for the transfer of technology are spelled out in writing in such TTA, which also confers enforceable rights and obligations upon the parties.
TTA mainly consists of consents, exchange of technology or technical information, and predetermined financial consideration. In essence, a supplier or licensor grants a licence to a licensee under such TTA in exchange for technical support and know-how, as well as IPR. The licensee can then use the licenced technology to produce and sell the goods within a specified region.
If the licensor and licensee are both located in the same nation, TTA may be used for domestic transactions. The International TTA may be utilised when both parties are located in different nations.
Technology Transfer – IPR & Competition
IPR guards against infringement and makes sure that creators profit from their works. Trademarks, patents, and copyrights are a few of the IPR protection mechanisms. Whereas the Competition Law regulates / controls market competition and guarantees the consumers and producers have access to a moral marketplace that encourages genuine competition.
IPR comprises of a collection of legal privileges granted to the holder that enable them to make profits from their creation. The holder of the IPR are compensated for their efforts in generating it during the period of exclusivity and are free to use it as they see fit. The IPR essentially gives the holder a temporary monopoly right together with the ability to seek judicial redress for infringement of those rights.
Yet, when rivals are engaged and prices are controlled, output is restricted, or markets are consolidated, partitioned, or closed, such transfer of IPR can negatively impact the competition. As a result, even while the IPR do not abuse their dominant position, they do have a legitimate competitive advantage.
To ensure that there is unwaveringly fair competition in the market, the Competition Law is invoked in this situation. Whether it is coordinated or carried out independently, it tries to stop anti-competitive behaviour.
Any business can acquire monopoly power and gain dominance over a certain segment of the market. While this isn’t necessarily illegal per se and doesn’t harm the market, abusing this position can. If the relevant market is defined narrowly, an enterprise tends to become dominant, and if it is defined broadly, it tends to lose its dominance.
Despite the fact that the basic concept of competition is the driving force behind both IPR and Competition Law, the term “competition” has different interpretations within the legislations. IPR encourages fierce competition among innovators while simultaneously stifling that competition in a variety of ways so that the rights are vested in to the public domain at the end of the specified period.
Contrarily, the Competition Law safeguards the freedom to market competition while preventing unfair business activities, preserving competition, and ensuring that consumers have access to high-quality, competitively priced goods and/or services.
Because IPR tries to protect creators and grant them monopoly privileges while the Competition Law aims to dismantle any cartels or monopolies in the market, these two legal systems are inherently at odds with one another.
Despite this, it is clear that the goals of both laws share a lot of similarities if we take a close look at them, especially the goal of balancing the interests of right holders, consumers, and society at large. IPR aims to grant a monopoly, however the Competition Law argues that innovation should be promoted while maintaining market competition.
In fact, IPR promote technical advancement, which eventually aids in the economy’s dynamism. The competition policy’s primary goal is also this. It follows that the monopoly privileges and market competition are evidently somewhat complementary to one another in several ways.
IPR and the Competition Law in India
The last few decades have seen remarkable technological growth in India, but IPR and the Competition Laws are still being evolved. Like several other developing nations, India focuses on utilising its own technology advantages rather than adopting the same development strategies as that of the industrialised world. In India TTA usually incorporates provisions from numerous statutes viz. the Trademarks Act, 1999, the Design Act, 2000, the Patents Act, 1970, and others.
Also, India initially adopted a highly conservative stance towards overseas technology transfers and imposed a variety of onerous rules. To encourage more global technology transfers, the regulatory environment has recently been increasingly liberalised. The IPR legislation, however, is still lacking to address problems brought on by global technology transfers.
The first piece of legislation to place limitations on the abuse of market dominance in India was the Monopolies and Restrictive Trade Practices Act, 1969. As of September 1, 2009, it was repealed and replaced with the Competition Act, 2002. To demonstrate that the Competition Act, 2002 does not conflict with IPR’s policies, Section 3(5) of the Competition Act, 2002 provides a broad exception for IPR. It, however, addresses abusive use of dominant positions that violates IPR under Section 4. In this approach, the Competition Law enhances IPR rather than competes with it and actually works in concert with IPR rather than in opposition to it.
Concluding Thoughts
IPR and the Competition Law are two independent regimes that share a common objective but employ different strategies to get there. They were developed as a result of changes throughout time. IPR’s dominant position itself does not violate the Competition Law; rather, it is how that advantage is used that does. Hence, TTA must be negotiated “Striking a Balance between IPR & Competition,” whether they are domestic or international.
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