The Overview
In nature, competition laws have primary aims to enhance the national economy efficiency by securing balances of either business actors or public interests. It has adhered in The Law Number 5 of the Year 1999 concerning the prohibition on monopoly practices and unfair competition (“UU No. 5/1999”). Another law regime which has objectives to maintain efficiency is Intellectual Property Rights (IPRs). IPRs give rewards and incentives to the holder of rights to develop both inventions and creativities over the exclusive right. Through this right, protection of the holder is inevitable due to be constituted by the law.
However, on the point of view of competition law, IPRs frequently stand in conflict. IPRs with its exclusive rights may hinder another party to cultivate such rights when it has never been granted by the holder. It will possibly restrict the fair competition between them. Nonetheless, It’s understandable that the rights holder is the mere owner protected by the law, this characteristic raises some prospects to restrict competition through the bad faith of the holder. Moreover, the IPRs’s holders may have never deliberately consented to restrict competition will face opportunities to deter the aims of these laws both, therefore, necessary to regulate those in explaining the linkage between competition law and IPRs.
Although each has other aims, both pursue the common aim of improving efficiency and consumer welfare. In turn, we need several policies and regulations to fulfill that imbalance between two sets of law. Indonesia acknowledges that effort by regulating on Law No.5/1999 concerning Prohibition on Monopolistic Practices and Unfair Business Competition (“UU No. 5/1999”) which bridges between competition law and IPRs locked in only one provision. Unfortunately, such provision in such law is incomplete and not comprehensive, therefore, will disclose some fatigue interpretations over this. This article will depict these relevant provisions existing in Indonesia hitherto.
Thus So Far in Indonesia
Article 50 [b] UU No. 5/1999 set forth that:
All the agreements interrelated to intellectual property rights such as license, patents, trademarks, copyright, industrial product designs, integrated electronic circuits and trade secret as well as agreements interrelated to franchising shall be exempted from UU No. 5/1999.
The elucidation for such provision is sufficiently clear without any additional regulation behind it.
Moreover, Article 47 of Law Concerning Copyright is identified as one of provision which stands in the framework to balance competition law and IPRs. It states that a licensing agreement shall not contain which may cause a detrimental effect on the economy of Indonesia or to contain unfair business practices as provided for in the prevailing laws and regulations. Furthermore, Patent Law in article 71 [1] depicts on consistency to maintain a balance between those laws even though not directly refer to specific laws. Article 71 [1] of Patent Law regulates that licensing agreement shall not contain any provisions both directly and indirectly that may cause economy of Indonesia or contain restrictions which obstruct the ability of the Indonesian people to master and develop technology in general and in connection to inventions granted by such Patent in particular.
Such provisions above in IPRs seem to be opposite of Article 50 [b] UU No. 5/1999 which exempts the scope of competition law from IPRs. Without an elucidation of article 50 aforementioned has raised multi-interpretations. To attain conformity in Indonesia, Business Competition Supervisory Commission (“KPPU”) brought into existence “KPPU Regulation No. 2 of the Year 2009 concerning Guideline for the Exemption on Implementation of UU No. 5/1999 in connection to IPRs” (“Guideline”)
The Guidelines aims to elaborate article 50 [b]. It tends of fallacies that 2 sides of such laws stand in diametrical each another. It seems likely adopted from US law when the federal antitrust agencies have expressed their own views regarding these laws, US Department of Justice and Federal Trade Commission released Antitrust Guideline for the Licensing of IPRs. Uniformity views are one of the concerns may be able to be reached by this approach.
Inside the Guideline
In that Guidelines divided into six sections, as follows: background, objectives, article 50 [b] in Competition Law, Elucidation of article 50 [b], cases study and Conclusion. The background emphasized that article 50 [b] is the gateway to harmonize between competition law and IPRs. On top of that, KPPU keeps maintaining that IPRs will not be contra-productive with the goals of competition law. It is something that on the track if IPRs make synergy with competition law to attain welfare society.
As mentioned in Guideline, law’s systems in Indonesia recognize harmonization between competition laws and IPRs. The Guideline basically contains regarding two kinds of explanations, either literally meanings for article 50 [b] itself or extended-interpreting of article 50 [b] to harmonize it with the other provisions in IPRs on the uniformity of legal system in Indonesia.
First, clumsy legal terms in such provision that has to be our concerned are trademarks, license, and integrated electronic circuits. The Guideline said that trademarks should refer to marks. As we know, marks divided into trademarks and service marks. This extended interpretation will create a wide coverage of article 50 [b].
The term “license” should be viewed as the license in the scope of IPRs which not as a single term included IPRs. The license is a generic term which means the formal authority to do something that would otherwise be unlawful (see Elizabeth A. Martin (Ed.).5th edition. Oxford Dictionary of Law). Meanwhile, The Law Concerning Marks defines license as a permission granted by the owner of a registered mark to another party by means of an agreement based on the grant of right (not the transfer of right) to use the relevant mark, either for all or some that are registered within a certain both period of time and requirement.
License in the context of IPRs shall meet the specific requirements. Licensing agreement which not comply with such Laws shall not be a part of the exemptions based on Article 50 [b]. With this kind understanding, The Guideline creates a harmonization with the other law’s provisions to avoid a legal fallacy.
The license agreement will not instantly express unfair business practices. By the means of the Guideline, these practices have intentionally prevented. Exemptions from competition law will be only imposed, unless license agreement demonstrates the nature of anti-competitive.
The next important issue is to refuse to license. Refuse to license is allowed as far as essential facilities are not discovered. However, The Guideline does not give further details explanation about the essential facilities that may cause some miss-interpretations. European Court of Justice (ECJ) went on to clarify the circumstances under which the refusal to license may nonetheless violate Article 82 EC. Three cumulative conditions must be satisfied:
(1) The refusal must prevent the emergence of a new product for which there is a potential consumer demand;
(2) It must be unjustified; and
(3) It must exclude any competition on a secondary market
Furthermore, the Law no. 32 of the Year 2000 arranges layout designs of integrated circuits should be used in the term of article 50 [b] to replace integrated electronic circuits. The Guidelines bring a stressing regarding this term to make it suitable with such Law.
The Last Statements
With this Guideline, the holder of IPRs shall not undertake a intellectual property misused in interpreting of Article 50 [b] as justification to infringe Competition Law. In the light of The Guideline, any presumptions that the ownership of IPRs merely takes a form to obstruct the objectives of competition law have not a legal basis.
_________________________
References:
Andi Fahmi Lubis, et.al.2009. Hukum Persaingan Usaha antara Teks dan Konteks. Jakarta : KPPU RI
Gallego, Beatriz Conde . 2007. Unilateral refusal to license indispensable intellectual property rights – US and EU approaches, p.215
Martin, Elizabeth A. (Ed.).5th edition. 2001. Oxford Dictionary of Law. UK : Oxford University Press
Peraturan KPPU RI No. 2 Tahun 2009 Tentang Pedoman Pengecualian UU No. 5 Tahun 1999 Terhadap Perjanjian yang Berkaitan dengan Hak atas Kekayaan Intelektual