WIPO Journal - World Intellectual Property Organization

Competition Law and IP Abuse Prevention in Australia 231
efficiencies” and “incentives to innovate”. 84 By contrast, the existing Australian competition laws (both
statutory laws and case laws) have not provided a clear principal guideline for helping the ACCC or courts
to determine any potential IP abuse in the ICT and other technology sectors.
On the other hand, unlike the US law, Australian law has not provided sufficient legal guarantees for
ICT companies to exercise their legitimate IPRs within competition law. The United States does not have
a EU-style competition enforcement regime which takes into account the desire of preserving future
innovation (including innovation incentive/opportunity of IP users/licensees) when determining IPR abuse.
However, it does have some general legal doctrines to balance innovation stimulation and legitimate use
of IPRs, which focus on protecting innovation incentive of IP holders.
First, in SCM Corp v Xerox Corp, 85 the US court held that, with respect to patents, “competition law
cannot be used to require a patent holder to forfeit its basic right to exclude others from exploiting the
patent”. 86 In other words, the legitimate use/exploration of the IPRs under the IP laws would be protected
even if such use/exploration may conflict with the provisions in competition law, such as prohibitions on
exclusive dealing and refusal of licences. However, in Australia, the combined effect of s.51(1) and s.51(3)
(discussed above) provides little legal certainty for IPR holders to exercise their basic right under the IP
legislation. As mentioned above, it seems that s.51(1)(a) directly “rules out an approach that gives the
rights set out in IP statues precedence over competition law”. 87 Section 51(3) only provides limited
exemptions for IP holders, and some exemptions are either uncertain or less enforceable in practice, such
as the exemptions for the condition in copyright licences or assignments (see above). The court has been
silent on the nexus of basic IPRs and competition enforcement. Although in Transfield Mason J. held that
the legitimate use of IPR should be protected, he has not clarified whether the legitimate exploitation of
IPRs may override certain prohibitions under competition law.
Secondly, Australia does not have a US-like judicial presumption on validity of IPR holders’ action in
excluding others from using its IPR works (validity presumption doctrine), which was adopted by the US
court in Data General Corp v Grumman Systems Support Corp. 88 In that case, the US court adopted this
“rebuttable presumption” to manage the interface of IP protection and competition enforcement. 89 The
court took into account the importance of protecting authors’ economic incentives under copyright law,
and held:
“The desire of an author to be the exclusive user of its original work is a presumptively legitimate
business justification for the author’s refusal to license to competitors.” 90
Australia does not have a similar judicial presumption. As mentioned above, the refusal to license will
face the full force of the prohibition for misuse of market power under s.46, and the s.51(3) exemption
does not apply to s.46. 91
84 It is also noteworthy that, in recent Guidelines to the Enforcement Priorities in Applying Article 82 EC Treaty to Abusive Exclusionary Conduct
by Dominant Undertakings, the EC Competition Commission has indicated that it will differentiate between these two types of fact situations and
adopt a consumer harm test in refusal to supply cases including IPRs. It states that refusal to supply will be given enforcement priority if three cumulative
circumstances are present: see http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2009:045:0007:0020:EN:PDF [Accessed March 30,
2011].
85 SCM Corp v Xerox Corp, 654. F.2d 1195 (2d Cir. 1981) 1204.
86 See Hanks, “Intellectual Property Rights and Competition in Australia” in The Interface Between Intellectual Property Rights and Competition
Policy, 2007, p.332.
87 Hanks, “Intellectual Property Rights and Competition in Australia” in The Interface Between Intellectual Property Rights and Competition Policy,
2007, p.332.
88 Data General Corp v Grumman Systems Support Corp 36 F. 3d 1147 (1st Cir.1994).
89 Hanks, “Intellectual Property Rights and Competition in Australia” in The Interface Between Intellectual Property Rights and Competition Policy,
2007, p.332. See also Data General 36 F. 3d 1147 (1st Cir.1994) at [64] (the court held: “Wary of undermining the Sherman Act, however, we do not
hold that an antitrust plaintiff can never rebut this presumption, for there may be rare cases in which imposing antitrust liability is unlikely to frustrate
the objectives of the Copyright Act”).
90 Data General 36 F. 3d 1147 (1st Cir.1994) at [134].
91 As Hanks criticised, the operation of s.46 does not “invite the importation of the polices that underlie IP”: Hanks, “Intellectual Property Rights
and Competition in Australia” in The Interface Between Intellectual Property Rights and Competition Policy, 2007, p.332.
(2011) 2 W.I.P.O.J., Issue 2 © 2011 Thomson Reuters (Professional) UK Limited