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Intellectual property rights under the Fair Competition Act PDF Print

Printed in the "Business Monday" newspaper on August 10, 2009

 The Crop-Over season always produces its share of controversy, and this year was no exception. Very often these controversies relate to intellectual property rights infringements, for example, the issue of piracy or the unauthorised reproduction and distribution of local music.

The Commission has received complaints with regard to this type of activity, but the fact is that individual copyrighted material is rarely the source of significant monopoly power. However where a considerable concentration of copyrighted material lies with a single individual or group there is the potential for abuse or exploitation of that copyright-based market power. The question therefore that must be asked is how the Fair Competition Act CAP. 326C addresses the power inherent in the ownership of intellectual property rights, and the potential exploitation of those rights.

An intellectual property right is an exclusive right over creations of the mind, both artistic and commercial (for example, the writing of a song), and includes copyrights, trademarks and patents. Intellectual property rights serve as incentives for inventors to develop by giving them property rights over their creations. The intellectual property rights legislations in Barbados are the Copyright Act, the Trademarks Acts and the Patents Act.

Subsection 3(1) (c) of the Fair Competition Act (“Act”) states very broadly that the Act shall not apply to agreements which contain a provision relating to the use, license or assignment of rights existing by virtue of any copyright, patent or trademark. Additionally, an enterprise shall not be treated as abusing a dominant position if that enterprise is seeking to enforce any right under an existing copyright, patent, registered design or trademark.

However, Section 16(4) goes on to stipulate that where the Commission is satisfied that the exercise of those rights has the effect of lessening competition substantially, the related conduct is no longer exempted.

The approach adopted by the Fair Competition Act is therefore quite interesting. The Act under Section 16 (1) does not prohibit a dominant or monopoly position, including where that position has been realised by the exclusive ownership of an Intellectual Property Right. A fundamental principle of the Act is that only the abuse of a dominant position is prohibited, never simply the possession of that dominance.

The Act goes further however in determining that an enterprise shall not be treated as abusing a dominant position insofar as its conduct is the result of it enforcing an Intellectual Property Right. This makes it clear that in addition to maintaining a position of dominance, the enterprise supported by an Intellectual Property Right can also undertake conduct that might otherwise be condemned as abusive, because of the possession of that property right.

Some restraint however is placed on the conduct of enterprises which possess a monopoly position as a consequence of an inherent Property Right. The Act determines that where the exercise of those rights is likely to substantially lessen competition, then the related practices are no longer exempted.

The Fair Competition Act therefore appears designed to support the development of artistic and technologically nascent industries. Individual copyright for particular songs even copyrights on blockbuster releases will hardly help their holder to corner the market for the season. An individual possessing such copyrights could engage in the range of anti-competitive conduct, including, resale price maintenance – that is dictating the resale price of the product; excessive pricing – charging prices beyond the economic value of the product; market restriction – restricting who can and cannot get access to the product; exclusive dealing – dictating which distributors have the opportunity deal with the product and such.

These would all be exempted practices when undertaken in an attempt to enforce an Intellectual Property right, where only a small amount of copyrighted material is involved. This degree of intellectual power is not likely to impact competition substantially because of its limited size. In addition where one possesses the patent for the creation of a particular product, during its early stages of development, one may be free to engage in any type of conduct that would allow one to establish oneself and begin to flourish, without fear of legislative reprisal.

Once however an artist or a company possesses control of a large volume of copyright material or their patent or trademark business begins to occupy a more significant place within the market and its impact becomes more pervasive, they will have to manage their behaviour more carefully. There will now be great potential to affect competition substantially so the same range of anti-competitive conduct listed above may no longer be exempted.

The approach of the Fair Competition Act in respect of Intellectual Property Rights therefore may be viewed as one supportive of the initial development of artistic and technological investment undertaken under the ownership of an Intellectual Property Right, by exempting conduct otherwise viewed as anti-competitive. It however will prohibit similar practices undertaken by an enterprise when its activity affects a wider proportion of an industry and that enterprise’s conduct is likely to lessen competition substantially.

If you have any questions email us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or call us at 424-0260. We can also be contacted at our offices at ‘Good Hope’, Green Hill, St. Michael. 

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