Singapore Issues IP Guidelines Under Competition Act

by Mary Swire, for LawAndTax-News.com, Hong Kong

12 October 2005

The Singapore Competition Commission has released its draft guidelines on the Treatment of Intellectual Property Rights dealing with the position of agreements dealing with IP rights under Singapore's Competition Act 2004.

The guidelines are open for public consultation which the Commission aims to complete this month. The guidelines are then due to be gazetted by November. The Commission says it will engage in public outreach programmes to explain its implementation and enforcement approach.

The draft guideline on the Treatment of Intellectual Property Rights (IPRs) sets out how the CCS views the interface between the Competition Act 2004 (Act) and IPRs, and indicates some of the factors and circumstances that the CCS may consider when assessing agreements and conduct which concern IPRs.

The Competition Act 2004 was passed by Parliament on 19 October 2004. On 1 January 2005, the provisions establishing the Competition Commission of Singapore (CCS) were brought into force. On 1 January 2006, the provisions on anti-competitive agreements, decisions and practices; abuse of dominance; investigation, enforcement; appeal process; and miscellaneous areas will come into force. The remaining provisions relating to mergers and acquisitions will likely come into force at least 12 months after Phase II.

For competition law purposes, the CCS says it will regard IPRs as being essentially comparable to any other form of property. The right to exclude is the basis of private property rights. An IPR bestows on the IP owner certain rights to exclude others, and the CCS recognises that these rights are necessary in order to allow IP owners to recover the costs of their investments and profit from the use of their property. However, says the CCS, as with other forms of private property, certain types of agreements or conduct with respect to IP may have anti-competitive effects which come under the purview of competition law.

The Guidelines continue:

'Although there are clear and important differences in the purpose, extent and duration of protection provided under the IP regimes mentioned in paragraph 1.2, the general analytical principles to be applied are the same. This guideline addresses mainly issues relating to technology transfer and innovation. In evaluating the specific circumstances of each case, the differences between the various forms of IPRs will be taken into account.

' The possession of an IPR does not necessarily create market power in itself. While an IPR may confer a ‘legal’ monopoly over a product, process or work, it does not necessarily confer an ‘economic’ monopoly. While the IPR may confer the right to exclude with respect to the specific product, process or work in question, there may be sufficient actual or potential close substitutes that constrain the exercise of market power by the IP owner.'

The draft guidelines say that if two competitors who have a combined market share of 25% or less sign a licensing agreement, then the Commission will generally deem the deal as having no real adverse effect on market competition. For non-competitors, the threshold will be 35%. The normal market-share test for deals not involving IP rights is 20%.

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