The difficult marriage of IP & competition law

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The relationship between IP and competition law has certainly not been a bed of roses. Initially, the two regimes were regarded as separate (inherency theory). One could argue that the primary goal of IP is to promote innovation, while the primary goal of competition law is to promote competition. This is of course a somewhat simplified picture of the two regimes, since also other important objectives could be stressed, but this simplification helps to underscore that a certain tension between the regimes could be observed. Given the potential of conflict between objectives, it was argued that competition law only should play a role in situations where the IP holder goes beyond the exclusive right.

However, in the 1990s things started to go in a different direction in Europe, when the CJEU handed down a few landmark decisions (Magill, Bronner), and in essence held that the exercise of IP rights in certain exceptional circumstances could be considered a violation of competition law. This reflects the emergence of a more modern view on the relationship between IP and competition law, where the two regimes are rather considered to complement each other (complementarity theory). In line with this theory, the regimes need each other to function and the objectives are not necessarily considered to be too divergent.

None of the above theories are however unproblematic. If the inherency theory is stretched to mean that competition law could never interfere if IP is involved, this may give rise to certain questions and concerns. For example, what if the IP right is de facto invalid or non-existent? If these considerations are not recognized, there is inter alia a risk that some entities are unjustifiably shielded against intervention from competition authorities. Additionally, application of the inherency theory may rule out interference in special and exceptional cases, where the IP holder should perhaps be subject to competition law scrutiny for some pressing reason. But despite its deficiencies, the inherency theory should also be recognized for its strengths, since it does, in a quite clear and simple manner, rule out ‘unjustified’ interference by competition law by simultaneously recognizing the value of IP rights. That is, if it is not stretched too far.

Also the currently dominating complementarity theory has led to some quite problematic conclusions. Namely, there is a clear risk that some of the distinctive main objectives of either regime are disregarded or their value is diminished in favor of the other. It should openly be recognized that there are situations in which the objectives of the regimes will clearly clash. Sometimes these conflicts have however been disregarded or disguised by asserting that the regimes actually complement each other e.g., by asserting that competition law also promotes innovation. This may or may not be true in casu. At times, it appears that the proponents of each regime speak a different language, and, sometimes, as though the same terms are used but with a totally different meaning. In a sense, the complementarity theory as applied in practice suffers from certain degree of schizophrenia, when IP rhetoric is used to justify intervention of competition law. In the EU, it appears that IP objectives either directly or indirectly from time to time need to cave in for competition law objectives, which are considered more important e.g., from a policy perspective. In defense of the complementarity theory, it is from sometimes argued that holding an IP right does not ‘immunize’ an entity from competition law intervention. But does this mean that IP objectives and considerations should be totally disregarded? It certainly should not.

Given that the marriage between IP and competition law raises many problems based on the above theories, this begs the question whether a new theory should be discussed or the existing theories clarified and polished to ensure enhanced harmony? If so, this author asserts that such efforts should strive to achieve mutual recognition and respect.

Vilhelm Schröder

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