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Interplay Between Intellectual Property Rights and Competition Law in the USA

08

SEP

2022

The relationship between intellectual property (IP) and disciplines regulating competition has attracted growing attention, particularly as a result of the expansion and strengthening of IP protection at the global scale. While IP law deliberately subjects intellectual assets to the exclusive control of right owners, competition law seeks to avoid market barriers and benefit consumers by encouraging competition among a multiplicity of suppliers of goods, services and technologies. Such challenges are particularly complex in developing countries, the majority of which have little or no tradition in the application of competition law and policies. The analysis of the relationship between IP and competition disciplines may be limited to the interactions between laws relating to the acquisition and exercise of IP, on the one hand, and competition law, on the other. However, this perspective ignores the impact of a number of regulations linked to the acquisition and exercise of IPRs that directly influence market entry and contestability.

The Supreme Court in Atari Games Corp. v. Nintendo of America, Inc. has held that both patent rights and antitrust laws are complementary to each other. Both the bodies encourage innovation and competition. If there are no intellectual property rights, the idea of investment and innovation would be diminished, that would oppose the very need of antitrust laws which is to promote the well-being of consumers by spurring efficiency, innovation, and investment.

Legal Aspects related to IP in the US

Intellectual property (IP) is a term referring to a brand, invention, design or other kind of creation, which a person or business has legal rights over. Almost all businesses own some form of IP, which could be a business asset. The USA has been a World Trade Organization (WTO) member since 1995. WTO member nations must include some IP protection in their national laws. The USA is a signatory to certain international IP agreements such as the Paris Convention, the Berne Convention, the Madrid Protocol and the Patent Co-operation Treaty. However, the USA is not a signatory to the Hague Agreement, which allows the protection of designs in multiple countries through a single filing.

Copyright protection in the US is granted automatically as long as it is both original and fixed in a tangible form. Copyright only protects the tangible form of your creative work - it does not protect the idea itself, only the form it takes. Although, copyright registration is not mandatory, yet it is advisable It establishes a public record of ownership and strengthens your position in the case of copyright infringement. As the copyright owner, only you have the right to copy, change, distribute or publicly display the work, or authorise others to do so.

A patent is a governmental grant that allows someone to protect an invention. In the USA, the United States Patent and Trademark Office (USPTO) issues three kinds of patents: Utility patents, Design Patents and Plant patents. A non-disclosure weekend along with provisional patent application has to be filed. The US law also allows a one-year grace period for an inventor to register a patent from the date of public disclosure.

Unlike copyright, trademarks are not automatic and are generally only protected if registered in the USA. In most countries, trade mark rights are established through registration - this is known as ‘First to File’. However, in the USA, the ownership of a trade mark is established by whoever first uses it in commerce. This is known as the ‘First to Use’ system and requires an owner to actually use the mark in connection with goods or services in order to protect his/her trademark.

IP and Competition Law

Antitrust laws also referred to as competition laws, are statutes developed by the U.S. government to protect consumers from predatory business practices. The antitrust notion of exclusion relies on a picture of occupying a competitive sphere and policing that sphere to prevent the incursion of potential rivals. The antitrust image of exclusion relies on the notion that a firm with power during a very competitive sphere keeps out people who would enter the sphere to compete. A patent will grant the right to exclude; however, the notion of exclusion in patent law is totally different from that in antitrust. A patent doesn’t confer any affirmative rights in any respect. Rather, a patent offers the right to exclude others from creating, exploiting the invention, with the caveat that a number of those others could have their claim to exclude.

For example, let’s say John discovers that a substance cures brain tumour. John can get a patent covering the use of the substance for the specific purpose of treating brain tumours. Now, the original inventor holds a patent that covers any use of the product. John holds a patent covering a particular use of the product. Each can exclude the other, and anyone who wants to use the product to treat brain tumours must negotiate with both patent holders. Additionally, neither patent holder can use the product to treat brain tumours without the consent of the other.

The general sentiment is that patent rights are getting overprotected, whereas the standards to grant patents are lower. Scholars argue that excessively expansive patent protection and excessively excessive patents weaken innovation; unnecessarily narrowing the public domain and hindering the innovative ideas of others. There are widespread and growing issues concerning the patent application method. The skyrocketing variety of issued patents may have negative effects on competition and innovation. However, it’s fairly straightforward to get a patent, including “questionable” ones and provided that it is accepted that the majority of patents have very little industrial prospective and the inventor doesn’t even have an obligation to use the granted patent, and the inventor can simply get a patent and accept it only to harm competitors.

Conclusion

The connection between antitrust laws and patent rights are complementary to each other means both these notions encourage innovation and competition. That being said, when we talk about competition between these two areas of law, it can be difficult to understand the idea behind both areas because both patent rights and antitrust laws use similar terminology. Even though words are similar the notion behind them differs which confuses. Conflict arises because of this mainly and the laws are generic rather than specific. A case study has been explained which talks about inequitable conduct and walker process claims.

Author: Tanya Saraswat - a student of Narsee Monjee Institute of Management Studies (NMIMS), in case of any queries please contact/write back to us via email chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

About the Firm

Khurana and Khurana, Advocates and IP Attorneys
Address E-13, UPSIDC, Site-IV, Behind-Grand Venice, Kasna Road, Greater Noida - 201310, UP, National Capital Region, India.
Tel 91-120-4296878, 91-120-4909201, 91-120-4516201
Fax 91-120-4516201
Email info@khuranaandkhurana.com
Link www.khuranaandkhurana.com

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