The Application of Competition Law to Intellectual Property Rights

Prior to 5 April 2023, the Commerce Act contained three limited exceptions for certain conduct in relation to intellectual property. These exemptions have now been removed, meaning that all anti-competitive conduct relating to intellectual property is capable of breaching the Commerce Act’s provisions prohibiting anti-competitive conduct.

We have published the Guidelines on the Application of Competition Law to Intellectual Property Rights to assist businesses to understand how competition law applies to intellectual property rights. The Guidelines explain how the Commission will assess conduct relating to intellectual property under the Commerce Act.

How competition law applies to intellectual property generally

Intellectual property law and competition law are complementary. They share the common purpose of promoting innovation and dynamic efficiency and enhancing consumer welfare. Intellectual property law confers exclusive rights on rights holders, and this can provide an important incentive for parties to invest in innovation and commercialisation. The process of competition also encourages businesses to innovate to provide better goods and services. However, anti-competitive conduct involving intellectual property, like any other conduct, may breach the Commerce Act.

The characteristics of intellectual property can differ from other property. However, these characteristics can be taken into account by standard competition analysis, and do not require the application of fundamentally different principles. The Commission will therefore apply the same general competition law principles to the assessment of conduct involving intellectual property that it applies to conduct involving any other form of property when considering whether conduct may contravene the Commerce Act.

What types of conduct involving intellectual property may breach the Commerce Act?

The key provisions of the Commerce Act that may apply to anti-competitive conduct involving intellectual property are set out below, and are described in more detail in the Guidelines:

• Section 27 – Contracts, arrangements, or understandings that substantially lessen competition
• Section 30 – Entering into or giving effect to cartel provision
• Section 36 – Misuse of market power
• Sections 37 and 38 – Resale price maintenance.

We have identified in the Guidelines some conduct that is at increased risk of harming competition, and therefore breaching the Commerce Act. This conduct includes:

• refusals to license intellectual property
• restrictive licensing of intellectual property
• practices that extend the market power associated with patents beyond the expiry of the patent protection
• settlement of intellectual property disputes.