Licensing of Copyright and Abuse of Dominant Position in the EU

Introduction

The endeavor to guarantee that corporations do not preserve a monopoly over their respective markets through unacceptable means is at the heart of antitrust regulation. When intellectual property rights conflict with competition law, even so, the European Commission prefers to retain market access to the European Union (EU) above protecting intellectual property rights that may obstruct it. Despite the fact that a company equipped with a particularly effective intellectual property right can sometimes make it difficult for competitors to enter a market, it seems instinctively wrong to lump legitimate means — particularly the use of a legitimate intellectual property right — into the category of abusive behavior.

In reality, an intellectual property right that originates in market domination is merely doing its job to a large extent. To consider it oppressive when a dominant corporation refuses to license intellectual property to competitors undermines the intellectual property right’s foundation, which is the right to exclusivity in and of itself. Furthermore, undermining the property right through forced licensing obliterates it, for what is an intellectual property right if not a guarantee of exclusivity? In essence, an intellectual property right is a method for preventing competition in the market for a particular commodity or service. As a result, intellectual property law tends to be at odds with competition law at first glance.

Competition Law’s Statutory Structure

Intellectual property rights are evaluated in the EU in two ways: one is based on their purpose of safeguarding the integrity of the protected innovation, while the other is based on its use. The earlier is governed by national law, whereas the latter is governed by the Treaty’s competition provisions and hence might be contested under EU rules governing the free movement of products. The competition provisions of the Treaty are Articles 81 and 82, which control the use and potential abuse of intellectual property rights.

Article 81 of the Treaty prohibits agreements that have a negative impact on commerce between member states by restricting competition. Article 81 is a reasonably broad restriction that relates to the EU’s free market policy and aims to prevent partnerships that may prevent the entry or feasibility of other market competitors. When examining the competitive impact of intellectual property licensing, EU legislation takes into account both the intellectual property right and its licensing at the same time.

The abuses associated with individuals who have already attained dominating position in the market are prohibited by Article 82 of the Treaty. Although market domination is permitted under the Treaty, individuals who do so must stay acutely aware of the consequences of their position on the rest of the market.

Both of these clauses, as well as the Treaty in general, aim to promote the free movement of products and services among member nations, eliminating isolation, whereas Article 82 handles the licensing of intellectual property rights more precisely.

What the Future Holds for Block Exemption?

The Technology Transfer Block Exemption Regulation (“TTBE Regulation”), which was adopted in 1996, governs intellectual property licensing. The rule effectively acts as a statutory mandate, requiring people possessing intellectual property rights to use them in conformity with the Treaty’s competition articles, particularly Article 81.

In considering the implementation of the TTBE Regulation, it’s vital to define markets once more. The Commission recognizes that defining the market can be complex, particularly when it comes to intellectual property rights that are linked to technological breakthroughs. In this vein, the Commission will go so far as to require the licensing of intellectual property rights in cases where a dominant company’s reluctance to license is judged oppressive and results in competitive restrictions.

Dealing with IPR and Competition Law Contradicting Each Other

The formation of the EU-wide intellectual property rights could be a viable solution to the impasse between EU-wide competition legislation and state-endowed intellectual property rights. This would establish consistency and, at the very least, provide enterprises doing business in the EU more clarity and notice.

Companies may nevertheless be hesitant to publish their technology or services where their growth, and subsequent market dominance, may subject them to competition law scrutiny, depending on the nature and degree of intellectual property protection. More narrowly tailored intellectual property rights, on the other hand, would have the dual effects of being easier to comply with competition laws — possibly encouraging the abandonment of policies like forced licensing — and the public policy benefit of facilitating technological advancement by allowing innovation to build upon predecessors in the EU climate.

A correct legal proportion between the breadth of the right and the time constraints around its exclusivity would benefit a variety of parties. First, it would give exclusivity to increase the incentive to create while explicitly defining where the intellectual property right will be subject to competition law review. It would also meet the interests of offering market participants with the required exposure and chance to stimulate the product or device’s further development. This is especially true in the field of fledgling technologies, which are still in the early stages of development.

In the same way that an innovator requires an incentive to develop a technique or product that will be protected by an intellectual property right, the Commission requires an incentive to defend it. The judgment that the nature of the right and its holder are such that new innovations will arise from the right provides this incentive.

This creates an incentive, for example, to protect an innovator who can most economically continue to develop a technology or product that has already been protected. However, if the intellectual property right possessor is not in a capacity to most effectively advance or distribute the innovation, the Commission will be less likely to determine that it has an incentive to ensure that the right is protected. This subjective evaluation of an intellectual property right in light of competition law — arguably demonstrated in IMS — presents a problem. This subjective approach can “create uncertainty” about the enforceability of an intellectual property right, forcing an evaluation of whether one equally valid right is protected while another is not.

Conclusion

A company’s market dominance can be daunting to those looking to enter the industry, yet it is never permanent. Although this is a minor consolation for enterprises seeking quick market involvement, excessive judicial and legislative interference in market processes could be harmful in the long run by disincentivizing innovation. This is because “undoing” what the judiciary or legislature does takes time, whereas the market can correct itself rather quickly if left alone.

Contributed by:– Nidhi Jha, Legal intern at LLL