Incorporation of competition‐related TRIPS flexibilities in the domestic law: A case study of India

• DOI: http://doi.org/10.1111/jwip.12137
• Published date: 01 March 2020
• Author: Shirin Syed
• Date: 01 March 2020

© 2019 The Authors. The Journal of World Intellectual Property © 2019 John Wiley & Sons Ltd

J World Intellect Prop. 2020;23:2–20.2

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wileyonlinelibrary.com/journal/jwip

DOI: 10.1111/jwip.12137

ORIGINAL ARTICLE

Incorporation of competition‐related TRIPS

flexibilities in the domestic law: A case

study of India

Shirin Syed

Department of Law, KBC North Maharashtra

University, Maharashtra, India

Correspondence

Shirin Syed, 137, Motiwalanagar, Near MGM

Hospital, Aurangabad‐431001, India.

Email: shirinsyed511@gmail.com

Abstract

Abuse of patent rights can hit the three pillars of the

competition law viz., agreements, abuse of dominant position

and combination (mergers and acquisitions). In the context of

the interface between competition law and patented inven-

tions, the following acts can strike hard at the different pillars

of competition law. First, the licensing agreements containing

conditions, which may prevent competition, can attract the

provisions of competition law to regulate agreements. Second,

high prices on patented products can be treated as an abuse of

dominant position. Third, refusal to license an intellectual

property right may be anticompetitive under certain conditions

such as refusing to license the second/dependent patent over

the existing patented invention, and refusal on reasonable

terms to the competitors. The TRIPS Agreement does contain

flexibilities offering remedies to address the public interest

aspects including the abuse of patents. This paper examines the

implementation of competition law‐related flexibilities in the

Indian Patents Act and the Competition Act in the context of

pharmaceutical product patents. It argues that though competi-

tion law flexibilities are incorporated in both statutes, there is

further scope for optimising the scope of these flexibilities.

KEYWORDS

competition law, Indian patents act, patent thicket, TRIPS

flexibilities

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Shirin Syed, a scholarship awardee from Texas A&M University of Law, US for the fall of 2020.

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INTRODUCTION

A patent gives the owner of the patented invention the right to prevent others from its making, using, selling,

offering for sale or importing for these purposes. Generally speaking, patent prevents competition by preventing

from making or placing patented products or products produced through patented invention. However, patents are

treated as an instrument to promote research and development for new products. From this perspective, a patent is

viewed as a tool for inducing innovation and encouraging competition through limited monopoly. Patent also

facilitates to recoup the cost of R&D by extending exclusivity (Aghion, Howitty, & Prant, 2016). In theory, this may

provide an adequate social offset to the anticompetitive function of the patent.

Patent is an instrument to set the equilibrium between two objectives, viz., rewarding creators and inventors,

and promoting the interests of business and public at large in securing access to science, technology and culture

(Gervais, 1998). This equilibrium is possible only if the balance between these two objectives is maintained, or else,

there will be a negative effect, which would stifle innovation and access to the patented products. However, in

reality, as noted by a group of academics, “Patents are increasingly used as strategic assets to influence the

conditions of competition rather than as a defensive means to protect research and development outcomes”(MPI,

2014). Thus patents would often function as a monopoly and compromise access to patent‐protected products such

as medicines. Further, patent owner uses the monopoly to charge high prices, especially in situations where there

are no other alternatives resulting in new and efficacious health technologies, affecting the people at large.

The main strategy available to the World Trade Organization (WTO) Member States to address the critical

public health concerns emanating from the common minimum standard of patent protection is using the flexibilities

within and outside the Trade‐Related Aspects of Intellectual Property Rights (TRIPS) Agreement. Competition law

offers an opportunity to address the public policy concerns on patent protection. To use the TRIPS flexibilities,

WTO Member States can incorporate them into the Patents Act or in the Competition Act or in both. Thus the

remedies within the competition law can be treated as flexibility available within the TRIPS Agreement to address

abuse of patent rights. In the absence of any international law or treaty at the multilateral level to spell out the

common standards, competition law offers much more freedom to the WTO Member States to shape their

competition law and policy. The UN Secretary General’s High Level Panel on Access to Medicines and the Global

Commission on HIV and the Law recommended the greater use of competition law to ensure access to medicines

(UNDP, 2016).

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Further, The Report on The Global Commission on HIV and the Law states, Governments may also use competition

law and policy to remedy abuses of IP rights. This paper examines how far the Indian Patents Act incorporated

measures to check anticompetitive practices emanating from patents rights. Even though the paper makes reference to

the Indian Competition Act 2002 (Competition Act), its focus is the Indian Patents Act, 1970 (Patents Act).

In the second section, the paper discusses the interface between patents and competition law in the context of

access to medicines. While the third section explains the TRIPS flexibilities related to the anticompetitive practices

with regard intellectual property (IP), the fourth examines the remedies available against such abuses under the

Patents Act by focusing on three areas viz., excessive prices, refuse to deal and restraining license. The paper

analyses the major advantages and constraints in using the competition law to address the public policy concerns in

the context of access to medicines emanating from the patent monopoly in the fourth section, while the last section

concludes the discussions.

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PATENTS AND COMPETITION LAW INTERFACE IN THE CONTEXT

OF ACCESS TO MEDICINES

As discussed above, the patent system is devised primarily on two objectives viz., the innovators should receive

incentives to disclose their technologically advanced innovations to the public and as an instrument to incentivize

SYED

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