When intervening in intellectual property rights (IPR) related markets, it is important to strike a careful balance so as to not undermine incentives to innovate, Ashok Chawla, Chairman, Competition Commission of India (CCI), said.

 

“It is a challenge to mark the exact boundaries/ limits of intellectual property, unlike the walls of a factory. This makes it difficult to ascertain whether a competitor is competing legitimately or illegitimately,” he said.

 

Chawla was speaking at an Assocham conference on ‘Interface Between Intellectual Property and Competition Law’ here on Friday.

 

He maintained that while IPR and competition law may appear divergent in their objectives, they are essentially complementary and both aim to promote innovation.

 

While the Indian competition law takes cognisance of IPR, the protection isn’t absolute and there is no blanket shield. “If terms and conditions adversely affect competition, CCI can investigate,” he said.

 

 

With respect to patents, the CCI Chairman said standardisation of Standard Essential Patents is a complex area. “Standards which are agreed and entered into reduce barriers of entry and foster inter-operability, but at the same time ownership of IPR essential to standards can call for, and is likely to call for, marquee power,” he maintained.

 

The competition watchdog also needs to see that markets remain truly open to new entrants and that mergers and acquisitions do not reduce the incentive for firms to innovate. “One area in particular is the ‘non-compete clause’ whereby companies formally agree not to compete in a relevant product market. This can not only affect present competition but future innovation also,” Chawla said.

 

CCI maintains that non-compete clauses should cover only products either being manufactured or under development and be reasonable with respect to duration.

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