Abuse of Dominant Position and IPR

Abuse of Dominant Position: Copyright and IPR
 The most common concern from a competition law perspective is the possible violation
of competition law due to the existence of patents/trademarks/copyright, which grant
exclusive power that may potentially be abused by the Intellectual Property right (IPR)
holders to the detriment of consumer welfare, as well as innovation.
 Competition law is applicable to the area of IPR and may be invoked by the
consumers, and/ or affected third party against abuse of dominant position.
 IP rights holders may rely on competition law to protect themselves from unfair
competition and encourage more competition and innovation in the market.
 An undertaking enjoying a dominant position is under a special responsibility not to
engage in conduct that may distort competition. Companies that have IP rights are
perceived as dominant.
Copyright provides some sort of economic power in the market, which may potentially be
abused by way of tying, refusal to license, foreclose competitors, as well as using excessive
royalties, if implemented by a dominant company. The most prominent example includes the
Microsoft (refusal to deal and tying), Intel (loyalty rebates) and Google (‘favouring your own
content’) cases, in all of which the companies-copyright owners were found to be abusing their
market position via various practices.
The laws in force in India, more specifically the Competition Act does not prohibit companies
from maintaining a dominant position but what is prohibited is the abuse of such dominant
position. Transparency is the hallmark of fairness and it applies to conduct of business as well.
Anti-Competitive Agreements:
Copyright Act offers protection qua commercial exploitation of copyright, like Patents Act
and other IPR legislations. Furthermore, Section 3 of the Competition Act prohibits
Agreements which are anti-competitive. The Section prohibits any agreement in respect of
production, supply, distribution, storage, acquisition or control of goods or provision of
services, which causes or is likely to cause an appreciable adverse effect on competition within
India. Such agreements are rendered void.
However, Section 3(5) of the Competition Act provides an exception of anti-competitive

agreements and provides that nothing contained in Section 3 of the Act shall restrict "the right of
any person to restrain any infringement or to impose reasonable condition, as may be necessary for
protecting any of his rights...."
Sec. 3(5) Nothing contained in this section shall restrict— (i) the right of any person to
restrain any infringement of, or to impose reasonable conditions, as may be necessary
for protecting any of his rights which have been or may be conferred upon him under—
(a) the Copyright Act, 1957 (14 of 1957);
(b) the Patents Act, 1970 (39 of 1970);
(c) the Trade and Merchandise Marks Act, 1958 (43 of 1958) or the Trade Marks
Act, 1999 (47 of 1999);
(d) the Geographical Indications of Goods (Registration and Protection) Act,

1999 (48 of 1999);
(e) the Designs Act, 2000 (16 of 2000);
(f) the Semi-conductor Integrated Circuits Layout-Design Act, 2000 (37 of 2000)
The question remains if the holder of copyright can impose any condition under the exception
provided u/s 3(5) of the Competition Act. In such scenario where the holder of a copyright,
while utilizing his dominant position, imposes condition(s) (for example in a license
agreement), which the other party may find anti-competitive or alleges to be an abuse of such
dominant position, the CCI is empowered to investigate the “reasonableness” of such
condition(s).
Scenario in EU:
The European Commission is generally reluctant to condemn abuses of a dominant position

when they arise from excessive prices, particularly in competitive open markets, because they
tend to self-regulate. This reluctance is also understandable, given the practical difficulties in
certain circumstances of establishing the excessive nature of pricing.
Notable Cases:
Microsoft Case, 2004:
In Microsoft case in 2004, the European Commission found that the company was dominant
and held a copyright for a computer program. The investigation commenced based on a
complaint filed by Microsoft’s competitor to whom Microsoft refused to provide information on
interoperability that would enable competitors to develop competing programs for workgroup
servers compatible with the Windows platform. The refusal to provide information on
interoperability that would enable competitors to develop competing programs for workgroup
servers compatible with the Windows platform, was found to be anticompetitive, since
Microsoft is a dominant player and such information was indispensable (essential facility) for
the smaller players to enter/stay the relevant market.
Following the investigation the EC fined Microsoft €497 million for abusing its dominant
position in the personal computer (PC) operating systems and work group server services, as
well as multimedia player market.
Intel Case, 2000:
The Intel case started with a complaint before the EC brought by the Advanced Micro Devices
(AMD) against Intel. Following the investigation, the EC found that Intel indeed infringed
Article 102 of the TFEU, i.e. abused its dominant position, in particular by granting (i) rebates
on condition that original equipment manufacturers (OEMs) would purchase from it all or
almost all of their x86 central processing units (CPUs) for use in their computers, and (ii)
payments to the largest desktop computer distributor in the EU, Media-Saturn-Holding, on
condition that it would be selling exclusively computers containing Intel’s x86 CPUs and (iii)
provided payments to the OEM’s for the postponement or cancellation of the launch of AMD
CPU-based products or put restrictions on their distribution. The gravity of the infringements
which affected the ability of Intel’s competitors to compete justified the fine imposed by the EC.
Google Case, 2017:
Following an investigation, the EC decided to penalise Google €2.42 billion for an abuse of
dominance by way of promoting its own comparison shopping service (favouring its own
content) in its search results. In other words, Google’s advertisements enjoyed higher number of
clicks as a result of better display/visibility—i.e. Google’s own services appeared at the top of
the search results, while even the most highly ranked rivals’ services appeared on average only
on page four or so of Google’s search results. According to the EC, such practices significantly
affected competition in the market for comparison shopping and allowed Google to make
significant gains in traffic at the expense of its competitors and to the detriment of consumers.

Abuse of Dominant Position and IPR

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Abuse of Dominant Position: Copyright and IPR

However, Section 3(5) of the Competition Act provides an exception of anti-competitive

(a) the Copyright Act, 1957 (14 of 1957);

(b) the Patents Act, 1970 (39 of 1970);

(d) the Geographical Indications of Goods (Registration and Protection) Act,

(e) the Designs Act, 2000 (16 of 2000);

The European Commission is generally reluctant to condemn abuses of a dominant position

Microsoft Case, 2004:

Intel Case, 2000:

Google Case, 2017:

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