The best of both worlds
Are intellectual property rights and competition in market economies compatible?
IP rights grant exclusive rights of often limited duration to their owners, enabling them to gain a competitive advantage on the market. The goal of competition law, on the other hand, is to prevent abusive market practices and encourage market competition. In market economies, both IP rights and competition strive to promote innovation, economic growth, and consumer welfare.
This was explicitly stated in the Recommendation of the Council on Intellectual Property Rights and Competition adopted on 8 June 2023 (OECD/LEGAL/0495). It notes that the interaction between IP rights and competition has become increasingly prominent with the growth of the digital economy, and its expansion beyond goods and services to other areas of the economy. Further, competition issues arising in the digital sector have become increasingly significant for competition authorities, and many of these raise questions concerning IP rights. It recommends OECD Member States to enforce competition law against anti-competitive IP-related business practices where companies have de facto gained monopolistic positions by acquisition, exercise, or licensing of IP rights.
While the effects of this recommendation on enforcement of competition law in the OECD Member States remains to be seen, it is evident that anti-competitive IP-related business practices, such as licensing terms not being fair and reasonable, are now under scrutiny. Thus, the focus of IP rights holders cannot only be on how to ensure critical IP assets, but also needs to be on how to navigate in the increasingly complex landscape where business practices are more frequently being deemed anti-competitive and where governments are now bringing out further tools to reign in such practices.
Companies that have a solid and effective IP strategy, in which such potential risks have been considered in advance, can often free their resources and focus on driving their business and increasing revenue instead. Having a thought-through IP strategy before meeting potential challenges is becoming increasingly important in today’s world.
