• IPTT Team

Copyright law and Competition law: Arch Enemies or Alter Egos?

Updated: May 6

Roscoe Pound in his book, Outline of Jurisprudence [1] observed that ‘in a civilized society man must be able to assume that they may control what they have discovered and appropriated to their own use, what they have created by their own labour, and what they have acquired under the existing social and economic order’. This can b

e considered as the whole idea behind the existence of Intellectual Property Rights, while Competition Laws were introduced to end the ‘License Raj’ from the Country and prevent failure of market.

These laws therefore, on the face of it look like they have conflicting goals, but the idea of this paper is to highlight and show reasons why the authors believe that both the laws are indeed complementary to each other. Our focus for the paper is however limited to the scope Copyright and Competition Law. The ideas discussed in this paper are not being raised for the very first time, but in fact date back to so far as 1933. Mr. Chief Justice in Appalachian Coals v United States [2] observed that

“the idea of Sherman Anti-Trust Act is to prevent undue restraints of interstate commerce, to maintain its appropriate freedom in the public interest, to afford protection from the subversive or coercive influences of monopolistic endeavor. As a character of freedom, the act has a generality and adaptability comparable to that found to desirable in Constitutional provisions.”

And the same has also been incorporated under Section 3(5) of the Competition Act, 2002. The case of Micromax v Ericson [3] pending before the Competition Council of India is a crucial interpretation of this provision.

On one hand where IPR is a tool to provide exclusive monopoly to the creator of an asset, Competition laws try to neutralise monopolization of markets, through unfair means. It is this unfair means that is the key subject of discussion. Copyright or IPR in general seems to narrow down the free and competitive market while competition law revolves on the pivot of promoting market efficiency and preventing distortion in the market.

We can thus say where IPR is a reward theory, Competition is a protective theory. Competition law aims to prevent unfair competition in the market while IP laws prevent the interest of the creator by protecting his labour, skills and efforts put in for innovation. Thus, Competition law comes into play where IPR falls short.

The idea of Competition law is not to stop monopoly in the first case, it is to stop monopoly achieved through unfair means. While Copyright protects the way of expression rather than protecting the idea itself. Which means, for example, the concept of ‘motion pictures’ could not be Copyrighted, it is the script of such motion picture that can be copyrighted, thus allowing different firms to compete in the field of producing motion pictures while each of them has a unique script. So, we can say that Copyright is the negative law, while Competition is the positive law.

Landes and Posner in their article [4] stated that copyright is necessary to avoid free riding and thus essential for a free and competitive market economy to function properly. It might seem that competition and copyright cannot go hand in hand since statutorily speaking during the period of copyright, there is no existence of competition. But the essential point here is that in no circumstances copyright can interfere in the realm of competition.

In United States v Microsoft [5] the Court said that the owner of an IP does not have unrestricted and unhindered power to use its property, there are certain restrictions which they have to abide by in order to not violate competition law norms. Therefore, the grant of IP illegally or wrongfully in such cases in an attempt to gain monopoly in the market the Company violates competition laws (Sherman’s Act) which could not be allowed.

IPR is granted by the State to restrict competition, however, one of the major reasons behind this is to encourage competitive minds to create and innovative thus benefiting the society and act in furtherance of competition law. Which is another reason we can say that it is in fact Copyright Laws which encourages competition between rivals in a sector and Competition Laws that later regulates this ‘dominant’ position that the copyright holder is in.

This brings us to the discussion of abuse of dominance. Section 4 of the Competition Act of India gives a detailed explanation of this concept of dominant position. It says the position which gives an enterprise or group ‘a position of strength to operate independently of competitive forces prevailing in the relevant market’. This concept lays down these basic tests:

  • Whether the provision of law makes is too simple for the competing firms to be classified as dominant.

  • Whether the law does not control prices charged by the dominant firms.

  • Whether the law contains provisions so as to not give rise to predatory practices

Copyright or IPR in general may create legitimate exclusivity but is does not actually confer dominant position in the market, which is why it safeguards the competition law at the same time it does not impose on the IP holder to license his property to another. Copyright abuse also occurs when the owner refuses to license its work or when such licenses are subject to certain provisions.

Another reason why we say that competition law is not violated is because the same is mainly concerned with abuse of such dominant position, and not achieving the same. It therefore differs from a case to case basis. [6]

Therefore, we can safely say that the copyright laws do not curb competition, contrary to that, they promote free and fair competition and carry the same object as competition law which is consumer and social welfare. And it is seen in maximum instances when the Courts face questions of confliction between the two laws, the Courts usually uphold this Consumer welfare and decide accordingly.

Thus, the Author’s would like to conclude that both copyright and competition law have the same common goal of protecting consumer interest and promoting consumer welfare. Thus, both these laws are indeed complementary to each other and should be dealt in a compatible manner for the growth and encouragement of the market. This helps in the growth of the economy which in turn helps the nation to grow.

[1] Pound Roscoe, Outline of Jurisprudence, in Stone Julius, Social Dimension of Law 1st Indian reprint (Universal, New Delhi). 1999

[2] 288 U.S. 344 (1933)

[3] Case No. 50/2013

[4] W. Landes and R. Posner, “An Economic analysis of copyright law” (1989)

[5] 253 F.3d 34 (D.C. Cir. 2001)

[6] Mahindra & Mahindra Ltd v Union of India AIR 1959 SC 798

Prepared by:
Shruti Tibrewal (BA LL.B, Sem 8, ALSK)
Nikita Sultania (B.Com LL.B, Sem 6, ALSK)

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