Intellectual Property Rights (IPR), very broadly, are legal rights granted to creators and owners of works that are results of human intellectual creativity. These can be in the industrial, scientific, literary and artistic domains. They give their owners the right to exclude others from access to or the use of protected subject matter for a limited period of time. This also gives them the subsequent right to license others to exploit the innovation when they themselves are unable to engage in large-scale commercial exploitation or for other reasons.
(iv) Industrial designs; and
(v) Trade secrets.
IPRs may create a race for innovation, as firms compete to exploit first-mover advantages so as to gain IPR protection. Therefore, both IPRs and competition policy are necessary to promote innovation and ensure a competitive exploitation thereof. It is necessary therefore to ensure their co-existence.
The WTO’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs), sets down minimum standards for many forms of intellectual property (IP) regulation. Competition policy involves putting in place a set of policies that promotes competition in local and national markets, as well as legislation (competition law), judicial decisions and regulations specifically aimed at preventing anti-competitive business practices and unnecessary government interventions, avoiding concentration and abuse of market power. Competition law prevents artificial entry barriers and aims to remove monopolisation of the production processes by encouraging entrance into industries by new players. The objectives of competition policy include the maximization of consumer and producer welfare, as well as maximizing efficiency in production. Well designed and effective competition laws promote the creation of an enabling business environment, which improves static and dynamic efficiencies and leads to efficient resource allocation and in which the abuse of market power is prevented mainly through competition.
IPRs and Competition policy objectives
IPRs and competition are normally regarded as areas with conflicting objectives. The reason is that IPRs, by designating boundaries within which competitors may exercise legal exclusivity (monopolies) over their innovation, they appear to be against the principles of static market access and level playing fields sought by competition rules, in particular the restrictions on horizontal and vertical restraints, or on the abuse of dominant positions. This legal monopoly may, depending on the unavailability of substitutes in the relevant market, lead to market power and even monopoly as defined under competition law. However, ensuring the exclusion of rival firms from the exploitation of protected technologies and derived products and processes, do not necessarily bestow their holders with market power given that it is not dominance per se that is prohibited in terms of competition laws, but the abuse of such dominance. There are rare cases where the protected technology can be totally divorced from the process that has been in existence, such that there often exist other technologies, which can be considered potential substitutes to confer effective constraints to the potential monopoly-type conduct of IPR holders. Rather than conflicting, there are areas where IPRs and competition complement each other. By creating and protecting the right of innovators to exclude others from using their ideas or forms of expression, IPRs provide economic agents with the incentives for technological innovation and/or new forms of artistic expression. This will create more inputs for competition on the future market, as well as promote dynamic efficiency, which is characterized by increasing quality.