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Russian IT industry asked to save IP monopoly

The Russian antitrust service has proposed to apply antitrust regulations in relation to intellectual property deals in Russia, in other words it was proposed to diminish monopoly provided by intellectual property.

The Russian law clearly provides exception from antitrust regulation for activity of collective management organisations, and newly proposed regulations don’t address such exception. Regulations concerns only deals. Certainly owners of intellectual property dislike such proposal. Stakeholders from Russian IT industry believe such regulation could destroy it.

Russian IT companies don’t like intention of Russian Federal Antitrust Service (FAS) to include intellectual property in proposed regulation; they believe it could lead to decreasing in quantity of market players and reduce innovation. The companies, including association of computer and informational technologies companies (APKIT), association of software developers (ASD), have sent the letter to Russian ministry of communication (MinCom) with request to abandon support of FAS’s proposal. The associations unite more than 300 IT companies in Russia.

What FAS has proposed actually? FAS has proposed amendments to Russian law “On protection of competition”. These amendments deprive software developers of so called immunity from antitrust regulation in relation to deals with intellectual property.

According to the FAS’s proposal the agreements concerning IP rights in software would be regulated by antitrust law. The software developers would not have right to set up the price they wish. The last depends on purposes, regions and other circumstances of deal and its conclusion. The amendments would equal most terms of deals regardless of circumstances affecting the deal price.

According to the explanation note, the FAS believes the intellectual property can be used in order to monopolize the market place and to restrict the competition, in other words the monopoly inherent to IP, has as negative consequences for market place and competition as well as positive consequences for innovational development.

FAS has mentioned antitrust practice in relation to Microsoft, and Amazon. Explanation note also states that according to TRIPS nothing in the agreement prevents member states to provide in national legislation license practice and conditions which could be treated as misuse of IP rights under certain circumstances.

The FAS underlines that the article 10 of Russian Civil Code excludes opportunity to exercise civil rights, and IP rights are the part thereof, in order to restrict competition. From the other side the law on protection of competition states that provision, curbing the monopoly activity, is not applied to the exercising of IP rights.

Such situation of legal regulation creates unjustifiable advantage to the right holders misusing their IP rights to the detriment of competition in Russian internal marketplace and excludes any appliance of antitrust law. Therefore the proposed law as declared by FAS, developed and drafted in order to ensure protection of competition in Russian internal marketplace and securing consumer interests in cases when the right holders misuse their IP rights.

The draft law provides antitrust requirements to the agreements and deeds towards to assignment or granting exclusive rights in intellectual property objects or means of individualization of legal entity, goods, services or work (so, these requirements concerns not only software, as you can see). The parties, if they sell goods, produced with help of IP rights the parties own, within one marketplace, are prohibited to conclude those agreements which could lead to:

  • setting prices on goods, produced thanks to IP rights in intellectual property or software for computers and databases;
  • to the fragmentation of market place by territorial principle, volume of sales or purchases, range of products, offered for sale, or by personal (sellers or buyers).
  • reducing of production of goods or software
  • and other certain other requirement you could read here.

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