MyCC Guidelines on Intellectual Property Rights and Competition Law Enforced

The MyCC Guidelines on Intellectual Property Rights and Competition Law (“IPR Guidelines”) were launched by the Minister of Domestic Trade and Consumer Affairs earlier today. It should however be noted that the IPR Guidelines have in fact come into force since 6 April 2019.

The IPR Guidelines provide that intellectual property (“IP”) refers to ‘creations of the mind’, such as inventions, literary and artistic works, designs, and symbols, names and images used in commerce and comprises patents, copyright, integrated circuits, industrial design, trade marks, confidential information, plant variety and geographical indication.

The MyCC’s position is that IP falls within the purview of the competition law and any dealings involving intellectual property rights (“IPR”) may fall within the restrictions imposed by the Competition Act 2010 (“Act”). Generally, the MyCC considers the licensing of IP to be pro-competitive but may be concerned if:
  • an enterprise that owns IP enters into an anti-competitive agreement (section 4 of the Act); or

  • any dominance created by the IPR is abused by the enterprise that owns the IP (section 10 of the Act).

The IPR Guidelines explain and illustrate how certain conduct involving IPR may be anti-competitive or be an abuse of dominant position by the owner of the IPR.

For example, the fixing of a minimum retail price, tying, grant-backs, sharing of market or sources of supply may in certain circumstances be anti-competitive or have the effect of significantly preventing, restricting or distorting competition. Certain terms or practices, such as tying and bundling, margin squeeze and purchasing of scarce supply without reasonable commercial justification by a dominant enterprise in connection with its IPR may amount to an abuse of dominant position.

The IPR Guidelines are welcomed as they provide greater clarity and guidance on how certain terms and practices in relation to conduct, dealings or arrangements involving IPR may run afoul of the prohibitions contained in sections 4 and 10 of the Act.

The IPR Guidelines do not, however, provide guidance on the application of the Act to specific industries or arrangements on which the Act arguably has a greater impact such as the franchise industry, technology transfer and research and development agreements.  We will need to wait and see if further guidelines will be issued in this regard. 

As an enterprise that infringes the prohibitions in section 4 or section 10 of the Act can be subject, among other sanctions, to a financial penalty of up to 10% of its worldwide revenue over the period during which an infringement occurred, it would be prudent for IPR owners to seek guidance from intellectual property and competition law practitioners to assist them in preparing and negotiating agreements for arrangements or dealings involving IPR.

The IPR Guidelines should be read together with the other guidelines issued by the MyCC, such as the Guidelines on Market Definition, the Guidelines on Chapter 1 Prohibitions (Anti-Competitive Agreements) and the Guidelines on Chapter 2 Prohibitions (Abuse of Dominant Position).
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