Intellectual Property Legislation and Antitrust Legislation

in Vietnam: Friends or Foes?

Attorney Le Quang Vinh - Bross & Partners

Email: vinh@bross.vn

Intersection between intellectual property law ("IP Law 2022") and antitrust law ("Competition Law 2018") is a complex issue. Bross & Partners briefly outlines the relationship between these two laws to warn IP right holders who own many IP assets, especially patents, of the risk of being "scrutinized" for their ability to misuse their market dominance – an anti-competitive conduct prohibited by Competition Law 2018.

Intellectual Property 2022 and Competition Law 2018: harmony or conflict?

The IP Law 2022 protects intellectual property rights (property rights), such as the form of expression of ideas in the form of literary, artistic, and scientific works (copyright), technical creations (inventions, industrial designs, plant varieties), or commercial origin indications (trademarks, geographical indications, trade names). Legal protection of intellectual property rights is essentially legalizing the exclusive right to use, commercially exploit products bearing intellectual property rights.

Through a system of granting exclusive protection with a fixed term of protection (e.g. the term of exclusivity of a patent for invention is 20 years),[1] the IP Law 2022 is believed to help stakeholders, on the one hand, be able to recover enough material value to compensate for their research investment process, and on the other hand, it helps encourage businesses to continue innovating to create differentiation in the market. Justification for significance of legal protection of IP assets, WIPO argues that intellectual property allows consumers to choose products sold by competing businesses. Therefore, IP is inherently pro-competitive as it ensures the protection of differentiated, intangible business assets. Without intellectual property protection, less efficient businesses will try to copy products from more efficient competitors. As such, more efficient competitors will lose their incentive to improve or provide new products. In that context, intellectual property only plays an important role in ensuring that competition when it protects genuine differences.[2] Thus, the goal of IP Law 2022 is to encourage businesses to innovate in order to enjoy the exclusive right to use that innovation. At the same time, the IP Law 2022 also has the target of helping consumers access different genuine products or services.

Competition Law 2018 has the task of combating monopoly, promoting competition, ensuring the right to free competition, preventing, and controlling anti-competitive practices including acts of abusing monopoly position that may cause harm to competition and consumers.[3] From a consumer perspective, if Competition Law 2018 works effectively, consumers will have more choices of goods and services as well as be able to access quality products at more reasonable prices. From a production and service supply perspective, producers clearly must work harder to reduce production costs, increase labor productivity through continuing research and innovation in technology and production processes. Accordingly, Competition Law 2018 has the same objective as the IP Law 2022 in that they jointly promote innovation and jointly protect the interest of consumers.

However, although the two laws have the same goal, the reality shows that there are certain conflicts and contradictions between them. Particularly, a business having a lot of intellectual property (especially patents) often has significant market power. Competition Law 2018 defines enterprises with a market share of 30% or more in the relevant market to be considered enterprises with significant market power to be classified in the group of businesses with a market dominant position.

And once they have significant market power, they may abuse their marker dominant market positions through the imposition of buying and selling prices of goods and services, fixing prices for resale, or applying different commercial terms in similar transactions that result in or are likely to prevent other enterprises from entering the market. Professor Mark A. Lemley (Stanford Law School) contends that antitrust law serves the goal of competition by ensuring that markets are not unfairly dominated by a single firm, and by ensuring that competing firms do not collude to avoid competitive impact. In that sense, intellectual property rights seem to run counter to free market competition in that they limit other competitors from copying or imitating the intellectual efforts of authors or inventors. The existence of intellectual property rights may allow rights holders to charge monopoly prices or restrict competition, such as by controlling the use of ideas in subsequent products.[4]

When are they friends and when are they foes?

The IP Law 2022 and the Competition Law 2018 are friends of each other when and only when they achieve the common goal of encouraging innovation, creativity and protecting the interests of consumers. Conversely, they can become enemies of each other (as many people think) if intellectual property rights are not properly protected or their scope of protection is not correctly determined, such as a patent is wrongly granted, a registered trademark that is protected wider than the scope it would deserve. The IP Law 2022 also becomes an enemy of Competition Law 2018, if intellectual property rights are misused, namely, a patentee overprice their inventions when negotiating licensing, or refuse to license, or grants a license in violation of the FRAND terms (fair reasonable and non-discriminatory), or pharmaceutical companies use "ever-green" tactics to extend the protection term of their about-to-expire patents to prevent competitors, especially generic pharmaceutical companies, from entry into the market.

Many countries such as the EU, US, China[5] have issued their own policies to address the conflict between competition law and intellectual property law, especially the legal tool to control the abuse of intellectual property rights. Is it time for Vietnam to have a legal tool to combat intellectual property monopolies that harm the Competition Law 2018?

Bross & Partners, an intellectual property company ranked Tier 1 in 3 consecutive years (2020-2022) by Legal 500 Asia Pacific, has rich experience in resolving complicated IP disputes including trademarks, copyrights, patents, plant varieties.

Please contact: Vinh@bross.vn; mobile: 0903 287 057; Zalo: +84903287057; Skype: vinh.bross; Wechat: Vinhbross2603.