Competition Policy and Abuses in the Trips Agreement

The TRIPS Agreement recognizes abuses inherent in the IP monopoly along with the fact that competition policy plays a significant role in dealing with such abuses. The relationship of competition policy with intellectual property rights has three important dimensions: (a) where the abuse originates from the IPR per se and the remedies lie in the patent act itself, (b) where the IPR abuses originate from the IPRs but the remedy lies in the anticompetitive implications and the (c) the situations where the patenting monopoly is used to extend the areas of exclusivity which can be remedied by the use of competition policy although quite often such distinction is blurred. The use of competition policy to deal with the abuse of IP monopolies requires a discussion of abuse of the dominant position and whether the patenting monopoly automatically put the right holder in the dominant position. The issue of parallel trade also has anti-competitive implications which are evident from the treatment of parallel imports in Korean and Japanese provisions in their competition policies. While developed countries have a long history of competition policy although its significance keeps changing, developing countries only recently started introducing competition provisions in their legislation. The IPRs have as much innovation generating incentives as innovation stifling effect which makes it imperative for developing countries to have a competent and effective competition law. The direct abuses coming out of IPR monopolies are high prices, non-working or insufficient working and restrain on parallel imports. This article concludes high prices can be dealt with both as an IPR abuse by allowing compulsory licensing or through the use of anti-competition laws. The issue of non-local working and its resolution into refusal to deal are also important examples of abuse of patenting monopoly. The issue of exhaustion of rights has been transformed into an attempt to prohibit parallel imports and to introduce discriminatory pricing establishing absolutism in market control, market segregation and market exclusion. Recent efforts of the EC, WTO, WHO, World Bank and scholars like Danzon, Wilder and Barton to introduce discriminatory pricing point in this direction. This article concludes that the implication of such move would be the elimination of compulsory licensing options for a large number of countries and would lead to a virtual abrogation of Article 6 of the TRIPS Agreement. It suggests that the question of exhaustion of rights should be left to the area of contract where monopolistic abuses can be dealt directly either through the use of competition provisions or through unconscionability and other provisions in normal contractual arrangements