Implementing Competition Law in Patent License: Issues and Challenges for Malaysia

Abstract

Patent license is established when the patent owner allows the other party to exercise rights granted under the patent grant based on the terms specified in the patent license contract. However, there is no standard form of patent license contract and hence, parties are left with their own discretion to decide the terms to be included in the patent license. The freedom to include terms in the patent license led parties to expand their rights via inclusion of anti-competitive provisions in the patent license. Thus, competition law authority plays its role in determining whether terms included in the patent license affects competition process. In fact, patent license is expected to comply with regulations set by the competition law authority if it contains provisions which are anti-competitive in nature. This research evaluates the legal mechanisms employed by the Malaysia and EU competition authority in order to establish whether the mechanisms have adequately address issues relating to competition law in patent license. It also seeks to identify problems surrounding the patent license contract and explores how it affects the competition law. The findings indicate that while Malaysia has the basic legal mechanism to implement competition law in patent license, which is Competition Act 2010, but review of the Competition Act 2010 and additional legal mechanisms such as Guidelines are necessary to cater the needs arising from the patent license.

DOI: 10.5901/mjss.2015.v6n3p564