WHAT IS THE BALANCE BETWEEN ANTIMONOPOLY REGULATION AND INTELLECTUAL PROPERTY?

In view of the role of intellectual property in economic processes, IP items can be used not only for innovative development, but also to monopolize markets and restrict competition

On 13 March 2020 FAS representatives took part in the Antimonopoly Forum – “Antitrust in the rapidly changing world: modern challenges and new opportunities”. The venue was Congress-Centre of the Chamber of Commerce and Industry of the Russian Federation. The event was organized by the Corporate Counsel Association.

Deputy Head of the Federal Antimonopoly Service Sergey Puzyrevsky highlighted the importance of the FAS-drafted law on antimonopoly standards with regard to agreements and actions for granting or disposing of the right for intellectual property items.

“To establish the balance between antimonopoly regulation and intellectual property is number one task for us now. Otherwise it is practically impossible to protect markets in the digital economy. We see now that nearly entire interaction between buyers and sellers moves into a digital form. When the Law “On Protection of Competition” contains immunities associated with inability to apply the key antimonopoly institutions, the danger of violations is increasing with every day”, emphasized Sergey Puzyrevsky.

Deputy Head of FAS gave several positive examples when Courts took the side of the Antimonopoly Service in disputes with corporations that preinstalled applications on smartphones, imposing additional services upon buyers, or restricted access to procurement of medicinal drugs through assignment of trademarks.

“To start with, these examples happened contrary rather than thanks to the Law “On Protection of Competition”. Why? Because other acts take precedence over it and prevent monopolization of markets regardless of objects. First of all, it is the Constitution of the Russian Federation which states that “economic operations aimed at monopolization are prohibited”. It does not say that market can be monopolized through use of exclusive rights.  Second – the Civil Code: Article 10 does not allow “use of civil rights in order to restrict competition and abuse dominance”. Civil rights also include intellectual property rights”, explained Sergey Puzyrevsky.

FAS suggests to keep the norms on antimonopoly immunities but add Article 11.2 to the Law “On Protection of Competition”, which introduces antimonopoly requirements for agreements and actions on granting and disposing of intellectual property rights. It concerns, in particular, bans of anticompetitive agreements and abusing dominance on the market of goods produced using intellectual property items.

“If an owner of an operational system dominates the market of operational systems, he should not create discriminatory conditions, unreasonably refuse to enter into contracts, and must not conclude agreements with owners of other operational systems”, said Sergey Puzyrevsky.

The discussion at the session on “Antimonopoly regulation and intellectual property: in search of a balance” was moderated by Head of FAS Legal Department Artem Molchanov.