Businesses with any significant intellectual property arrangements with third parties will, from 13 September 2019, need to ensure such arrangements do not have an anti-competitive effect.
The Competition and Consumer Act 2010 (Cth) (Act) is amended from that date, so that a longstanding exemption for intellectual property arrangements will no longer apply. Anti-competitive conduct involving intellectual property rights will now be treated in the same way as all other anti-competitive conduct.
To the extent that intellectual property arrangements involve any of the following, they may fall foul of the amended Act:
- cartel conduct – such as agreements between competitors on intellectual property arrangements involving price fixing, territorial restraints or output restrictions on the use of those rights
- exclusive dealing substantially lessening competition – such as exclusive intellectual property licences that block competitors, and
- contracts or concerted practices substantially lessening competition – such as an owner of intellectual property imposing harsher licensing rights for some market competitors.
In many instances, the licensing of intellectual property promotes competition. Common intellectual property practices will therefore in most cases not be anti-competitive.
However, care should be taken in intellectual property arrangements with competitors, involving exclusive licensing arrangements or having the effect of locking competitors out of a market.
Companies with significant intellectual property arrangements should review those arrangements and, if needed, make changes to them prior to 13 September 2019.
Please contact us if you would like any assistance with these issues.