Protection of industrial property in the context of free competition

Protection of industrial property in the context of free competition BELLAROU Kamel University of Constantine 1, [email protected] Received: 10/04/2026 Accepted: 07/06/2026 Published:10./06/2026 Abstract: This study examines industrial property protection within the framework of free competition. Industrial property consists of temporary exclusive rights granted by law, allowing owners to monopolize the exploitation of their intellectual creations. These rights encompass novel innovations such as patents, utility models, layout designs, various trademarks, and trade names. Due to the intense rivalry to acquire these assets for commercial operations, some enterprises may resort to illicit practices. Consequently, a balanced legal approach is essential to ensure fair competition under legitimate rules. To resolve this tension, mechanisms like licensing and the "essential facilities" doctrine are utilized, providing optimal protection against counterfeiting and infringement. Keywords: Industrial Property, Monopoly, Free Competition, Counterfeiting, Licensing. BELLAROU Kamel, e-mail: [email protected]. 9

In a market economy, most institutions seek to make a profit by acquiring as many customers as possible and marketing their products and services more, The latter are developed and updated by various institutions through continuous innovation and invention of new products and services. The new market economy is rapidly moving towards becoming a knowledge-based economy based on knowledge and innovation, where the strength of institutions today is measured by the amount of creativity and innovation they possess. The criteria for differentiation between institutions now focus on their industrial property rights. The importance of this study lies in demonstrating the effectiveness of institutions' reliance on their creativity and innovation to compete with each other by introducing new products and services to the market. Institutions have the right to monopolise their knowledge and innovations that help in the production of goods and products. However, fierce competition causes some institutions to resort to illegal methods to harm institutions that own industrial property rights or to survive and continue their commercial activities by producing or marketing counterfeit products that compete with the original products in the market. The aim of this study is to clarify the definition of industrial property and free competition, as well as to reveal the nature of the relationship between industrial property and free competition, in addition to researching the mechanisms through which free competition can be maintained and the necessary protection of industrial property rights achieved. Therefore, unlawful behaviour may be justified by the need to remain in the market, an objective that requires a review of how industrial property rights are protected in order to reconcile the requirements of protection on the one hand with the need for some institutions to continue to compete in the market on the other. This leads us to pose the following key question: How can industrial property rights be protected in the context of free competition? 10

In order to answer this question, we relied on different approaches in our research, including: the descriptive approach, with the aim of defining one or more concepts of industrial property and free competition; and the analytical approach, with the aim of analysing the nature of the relationship between industrial property and free competition, how they affect the contemporary economy, and the extent to which they contribute to the creation of new industrial and commercial activities; and the mechanisms through which the requirements of protection and the need to maintain competition in the market can be reconciled. We have divided the subject of the study into two sections. The first section is devoted to defining the nature of the relationship between free competition and industrial property, followed by a discussion of licensing and basic facilities, and the mechanism for protecting industrial property in the second section. We conclude our study with a summary of the most important findings and recommendations

competition and industrial property : Defining the nature of the relationship between free competition and industrial property requires knowledge of both. Legal scholars consider industrial property to be a type of intellectual property, which is "a direct authority granted by law to a person, giving them the right to monopolise all financial returns related to their industrial activity, such as industrial designs and models, invention privileges and fees (Al-Kaswani, 1998, p. 15)." Therefore, industrial property is a branch of intellectual property, which is everything that is the product of human thought and creativity, including various inventions and innovations, such as literary and artistic works such as books, songs and paintings, or commercial or industrial works. Industrial property refers to a specific movable asset or patent, and 11

the layout designs of integrated circuits. As for patents, an invention is an idea of an inventor that provides a practical solution to a specific problem in the field of technology. A patent is a document issued to protect the invention by the competent authority, which is the Algerian National Institute of Industrial Property(patents, 2003). The document contains information about the owner of the invention (a natural or legal person) and a complete description of the invention, as well as the right of use granted to the owner in accordance with the legal rules governing industrial property(Zoubir, 2006, p. 15), which in this case are the rules set out in Decree 03-07 on patents. As for industrial designs and models, an industrial design is any combination of lines or colours intended to give an external appearance to an industrial or traditional craft product(models, 1966). i.e. any arrangement and coordination of lines in a specific and innovative way that gives goods and merchandise a beautiful and attractive appearance that attracts the attention of consumers, such as designs for carpets, textiles, ceramics,etc(al- Din, 2006, p. 35). An industrial design is any shape that can be formed and assembled with or without colours, or anything industrial or specific to traditional industry. A design differs from a drawing in that it is not represented on a flat surface, but necessarily includes volume, i.e. a model, which is the mould used to manufacture goods and products(Saleh, 2001, p. 285). Trademarks: are all symbols that can be represented linearly, in particular words, including names of persons, letters and numbers, drawings or images, distinctive shapes of goods or their packaging, and colours, either alone or in combination, which are used to distinguish the goods or services of a natural or legal person from those of others (trademarks, 2003). Designations of origin are defined as the geographical name of a country, region, part of a region, district or place that identifies a product originating there, and the quality or characteristics of the product are exclusively or mainly attributable to the geographical environment, including natural and human factors. A geographical name is also 12

a region, district or named place, but is related to a specific geographical area for the purposes of certain products(origin, 1976). Finally, there are figurative designs and integrated circuits. A figurative design is any three-dimensional arrangement, regardless of the form in which it appears, of elements, at least one of which is an active element, and all or some of the connections of an integrated circuit or a similar three-dimensional arrangement of an integrated circuit for manufacturing purposes. An integrated circuit is a product in its final form or in its selective form, at least one of whose elements is an active element and all or part of whose connections are an integral part of the finish and/or surface of a piece of material, and which is intended to perform an electronic function (layouts, 2003). Therefore, industrial property is a type of intellectual property that applies to new inventions and innovations in the field of design plans, integrated circuits, industrial models, designations of origin and trademarks, It enables its owner, whether a natural or legal person, to monopolise the use of their designs, marks or industrial designs and exploit them in their economic or commercial activities. Hence, the relationship between industrial property and monopoly emerges, which is a term derived from "monopoly and monopoly in the sense of confinement, and monopoly of a thing, i.e., confining it from people. Monopoly in its general sense is the confinement of a thing from supply(Al-Hadi, 2012, p. 204)." Monopoly in its economic sense is the monopoly of a single producer or institution over a commodity for which there is no close substitute(Latif, 2012, p. 41), meaning that it is an institution that faces no competition in the market, neither from an institution that produces the same commodity nor from an institution that produces substitute goods. Therefore, based on the above definitions, a monopoly exists when two basic conditions are met: there is a single company in the market that produces all goods and products that are not produced by any other institution or company operating in the same market(Muhammad, 2008, p. 13

unique and distinctive product for which there is no substitute in the market. Monopolies arise for many and varied reasons. For example, a monopoly may be legal, resulting from certain laws and regulations that grant an institution the right to monopolise the production of certain goods or products to the exclusion of other institutions. The reason for the emergence of monopoly here is that an institution enjoys industrial property, i.e. the company or institution owns patents or fees, industrial models, facility names, trademarks, and the formal designs of integrated circuits. Monopolies take several forms, the most prominent of which is absolute monopoly, which is when a single company has a monopoly on the production or sale of a product or commodity that has no equivalent in the market. The second type is simple monopoly, which is when an institution has a monopoly on the supply of a relatively small number of products or commodities in the market(Al-Hadi, 2012, p. 205). Monopoly is therefore a situation that is contrary to free competition, which legal scholars define as: "a situation in which there is free, complete and honest competition between all economic actors in terms of the supply and demand of goods, services, production outputs and capital(Bouhlaïs, 2017, p. 29) . It is also: "the principle that allows every individual the freedom to engage in economic activity while respecting the requirements of the basic system of trade and the rules of economic control(Vignal, 2017, p. 43)." Therefore, the relationship between competition and industrial property is based on their incompatibility and the impossibility of their convergence due to the conflict between their respective objectives. Industrial property is based on monopoly, a principle that is not entirely compatible with free competition, which is based on opposing and combating monopoly. Free competition rejects all forms of practices and behaviours, foremost among which is monopoly, which may affect the normal functioning of the market. The general rule is free competition and avoidance of all forms of monopoly, even if it results from industrial property rights. 14

industrial property rights that give it a competitive advantage in the market leads other institutions operating in the same market to try to keep up and compete with it by resorting to illegal methods to infringe on patents or fees, industrial designs, establishment names, trademarks, and the layout designs of integrated circuits through various methods, the most prominent of which is imitation. Counterfeiting, in its general sense, is defined as "the reproduction of literary or industrial products that infringes on the property rights of the owner or owners of these products(La rousse)," or "any manufacture of a product in a manner that makes it appear similar to an original product produced by the institution that owns the industrial property rights." Trademark counterfeiting is the act of creating a mark that is identical to the original mark or creating a mark that is similar to the genuine mark in its entirety, so that the new mark can attract consumers who believe it to be the original mark(Saleh, 2001, p. 270). According to Algerian law, trademark counterfeiting is Any act that infringes on the exclusive rights of a trademark committed by a third party in violation of the rights of the trademark owner. Imitation of a trademark can also occur through similarity, which is the creation of a trademark that is approximately similar to the original trademark, either by analogy, i.e. using a trademark that is similar in pronunciation to the original trademark, or by association of ideas, where the chosen trademark is reminiscent of the original trademark. This creates confusion among consumers, who believe that it is the original mark, and causes economic damage to the owner of the original mark(Saleh, 2001, p. 270). Infringement of a patent by imitation occurs when a patented product is imitated by physically reproducing it without linking it to the idea of use, whether partially or completely. Anyone who conceals, sells, offers for sale or imports into the national territory a product resulting from a patented invention is considered to be imitating that product(Al-Fetlawi, 1984, p. 135). 15

must be met: ‒The invention must be the subject of a patent that has been granted and registered, i.e. there must be a valid and legal patent. ‒The invention must not be licensed for use by the counterfeiter, whether a natural or legal person, and whether the licence is for a limited or unlimited period or in a specific region. ‒The term of protection of the invention must not have expired in accordance with the provisions of Order 03-07. ‒The invention must not be the subject of a waiver in accordance with the provisions of Order 03-07(patents, 2003). Imitation occurs when designations of origin are used without authorisation, either by translating them or reproducing them verbatim. It is also considered imitation if they are accompanied by other words. The offering or sale of a product bearing a counterfeit designation of origin is also considered imitation(Al-Qilubi, 1976, p. 126). We are dealing with counterfeiting of designations of origin when: ‒The right holder shall have a registration certificate for the designation of origin. ‒The designation of origin shall not be contrary to public order or morality. ‒The imitation shall be within the period specified for the protection of the designation of origin(Al-Qilubi, 1976, p. 127). As for industrial designs and models, infringement occurs when registered industrial designs or models are imitated in such a way that it causes confusion and significant similarity between the genuine designs and models and the imitation, to the extent that it is impossible to distinguish between them. where both the original and imitated designs leave an impression on the mind when viewed at the same time. Therefore, if the impression left by the imitated industrial designs on the mind is similar to that left by the genuine designs, then imitation exists(Samir, 2006, p. 08). The imitation of the formal designs of integrated circuits is carried out by copying the protected formal design of the integrated circuit, either 16

other means, unless it concerns the copying of a part that does not meet the conditions of originality(layouts, 2003). The design of an integrated circuit may also be imitated by manufacturing by analogy or manufacturing by performing the design(layouts, 2003). The import, sale or distribution in any other form, for commercial purposes, of a protected design or an integrated circuit whose protected design incorporates the circuit so that it still contains the unlawfully copied design(layouts, 2003) is also considered to be an imitation of the design of integrated circuits.

licence(Hamri, 2004)." Or it is: "a contract or agreement between two parties, whereby the licensor grants the licensee permission to enjoy one or more industrial property rights for a specified period of time in return for a specified fee(Al-Jaghbir, 2012, p. 141). Licensing is a legal procedure provided for in various legislations, including Algerian legislation under Article 9 of Order 03-06, which states that: "... The right to ownership of a trademark entitles its owner to assign it, grant licences for its use and prevent others from using it commercially without his prior authorisation on goods and services identical or similar to those for which the trademark was registered." and also the provisions of Article 11 of Order 03-07 relating to patents, which stipulates that: "... a patent confers on its owner the following exclusive rights ... in the event that the subject matter of the invention is a product ... if the subject matter of the invention is a method of manufacture, the patent owner also has the right to assign it ...". The same applies to the designs of integrated circuits, where Article 5 of Decree 03-08 on the protection of designs of integrated circuits states that: "The protection granted under this Decree ... also gives the owner of the design the right to assign it ...". It is clear from the above that licensing constitutes the optimal protection for industrial property and is a source of care and attention between industrial property rights policy and competition policy. Most modern companies in the market have succeeded and become competitive thanks to industrial property rights licences, particularly patents. Licensing has been and continues to be a powerful tool for acquiring knowledge, experience, creativity and innovation, enabling economic operators and small and medium-sized enterprises to exist and compete in the market in various commercial activities(Al-Kahna, 2015, p. 443). Licensing is a technology transfer agreement, which is why it is particularly important as a practical means of competition between producers and suppliers of goods and services. It allows local industrialists to benefit from protected technology in their own country by applying it to 18

national economy(al-Saghi, 2004). Accordingly, jurists consider technology transfer agreements to be the ideal way to use industrial property rights, as they create an environment conducive to competition between different economic operators, since they are business contracts that enable economic operators to be active and present in the market. The proof of this is that most of these contracts involve the acquisition of knowledge and expertise through the commitment of companies that own industrial property rights to train and manage small companies in order to enable them to compete in the market in which they operate(Al-Kahna, 2015, p. 444). The licence agreement is considered the main tool for the international transfer of industrial property rights. It mainly involves the transfer of technical knowledge from the licensor to the licensee, as well as the transfer of the right to exploit patents, industrial designs or trademarks to the licensee. In most cases, the licence agreement includes conditions that impose certain obligations on companies licensed to use industrial property rights, with the aim of enabling the beneficiary companies to make the best use of those rights. For example, the contract may include an obligation on the part of the owner and licensor to supply the raw materials and services necessary for the manufacture of the products to the beneficiary company, or an obligation to advertise and promote the products or to provide technical assistance and expertise to the licensee in the areas of manufacturing and marketing, or an obligation to provide the beneficiary institution with all technical and technological knowledge and information related to quality standards(Al-Kahna, 2015, p. 445), or an obligation to provide the beneficiary companies with knowledge that enables them to deal with customers and market, produce and distribute various goods and services through training and internships, which is necessary to enter and compete in the markets. The licence agreement may also take the form of allowing the use of a trademark, whereby the licence agreement allows companies that own 19

companies that do not own those trademarks and expertise in the market to use them(Al-Kahna, 2015, p. 446). It should be noted here that licensing may be optional, i.e. it may be the result of a consensual agreement between the company that owns the industrial property rights and the company that benefits from them. Licensing may also be compulsory, and compulsory licensing refers to "any situation in which the patent owner receives financial compensation for the infringement of his invention protected by the patent," or: "the exploitation by a person of intellectual property rights belonging to another without the express consent of the owner, in a manner that would normally constitute a patent infringement prohibited by law, were it not for the fact that this exploitation is in accordance with the provisions of the law(Moussa, 2020, p. 700). Compulsory licensing is usually justified in cases of abuse by the owner in exploiting the invention, as a penalty imposed on the patent holder for breaching the obligation to exploit the invention covered by the patent, as stipulated in Article 38 of Order 03-07 on patents under the heading: Compulsory licence for non-use or underuse. Accordingly, this type of licence is a penalty imposed for the patent owner's failure to exploit the patent within a specified period from the date of receipt of the patent, without providing legitimate excuses to justify the non-use. Compulsory licensing may also be based on public interest considerations and is not related to the patent owner's failure to exploit their patent or under-exploitation thereof, but rather to special circumstances that require the preservation of the public interest and the economic development of the state, such as the satisfaction of public needs(Moussa, 2020, p. 701). The Algerian legislator has given the Minister responsible for industrial property the power to grant compulsory licences in the interest of the State or to third parties appointed by him, who may be private or public economic operators, with the aim of eliminating practices that restrict competition and monopolies that may arise in the market for a given 20

patent. However, the legislator has made the granting of compulsory licences in this case subject to administrative or judicial proceedings that have actually determined that these practices are anti-competitive(Moussa, 2020, p. 706). There is no doubt that the Minister responsible for industrial property will seek the assistance of the Competition Council, as the independent administrative authority(competition, 2003) responsible for ensuring the proper functioning of free competition, promoting it and monitoring practices that restrict it, which gives its opinion on matters relating to competition if requested to do so by the government. and makes proposals in the field of competition(competition, 2003). Judicial authorities may also request the opinion of the Competition Council on the handling of cases relating to practices restricting competition(competition, 2003). In addition to the licensing system, the European Competition Commission and the European Court of Justice have introduced another system, namely the essential facilities system. This system focuses on the possibility of exceptional circumstances in which the refusal to grant a licence to exploit a property right is a source of monopoly. These circumstances arise when the refusal to grant a licence prevents the emergence of a new product or the development of another already on the market. Therefore, whenever it becomes clear that the innovation in question is necessary for the production of a specific product, the production and supply of which requires a licence to use industrial property rights, the licence may be imposed(Margadi, 2015, p. 284). Pursuant to this system, the European Commission and courts have forced industrial property rights holders to grant licences against their will in order to avoid the consequences of non-compliance, which would stifle innovation and disrupt free competition. For example, the European Competition Commission ruled that industrial property rights are not absolute rights but are subject to the condition of fair competition. If this condition is not met, the proprietor becomes liable to prosecution 21

in which the Commission found that Microsoft had refused to provide MicrosystemsSun with the information necessary to enable it to develop its Java operating system, with the aim of restricting compatibility between its Windows operating system and the software used by competing companies so that it could impose its software on the market(Gousm, 2016, p. 180). The same committee also ruled that the refusal to grant a licence constituted an abuse of the right in exceptional circumstances due to the lack of actual or potential alternatives available on the market, such as Motorola's refusal to license Apple to use a patent relating to GPRS technology, which is essential for the operation of mobile phone and tablet networks, with the aim of preventing Apple from manufacturing multifunctional phones and tablets and thus competing in this market(https://eur-lex.europa.eu). Naturally, the owner of industrial property, whether a natural or legal person, is entitled to claim a certain financial compensation for the exploitation of his property, as recognised by the European Commission in the Hilti case, when it considered that the patent owner had the right to request financial compensation for disclosing manufacturing secrets. However, the Commission considered that imposing excessive prices constitutes an abuse of a dominant position resulting from industrial property rights if the sole purpose of this is to freeze the granting of licences or at least to delay them unjustifiably(Rahman, 2015, p. 30).

We concluded from this study that industrial property is a type of intellectual property that entitles its owner to exclusivity over his creations and inventions, giving him the right to exercise a monopoly and allowing him to dispose of it by seizing profit opportunities offered in the market, in return for his efforts and the original and unprecedented invention he has achieved. We also concluded that industrial property takes several forms, 22

names, trademarks, and the layout designs of integrated circuits. It enables its owner, whether a natural or legal person, to monopolise the use of their plans, marks or industrial designs and exploit them in the course of their economic or commercial activities. Industrial property thus enshrines monopoly, which is, in its general sense, the withholding of something from supply, or, in its specific sense, the exclusive right of a single producer or institution to supply a commodity for which there is no close substitute. Monopoly is a situation that is contrary to free competition, This leads us to conclude that the relationship between competition and industrial property is based on their incompatibility and the impossibility of their convergence due to the conflict between their respective objectives. Industrial property is based on monopoly, a principle that is completely incompatible with free competition, which is based on opposing and combating monopoly. Free competition rejects all forms of practices and behaviours, foremost among which is monopoly, which may affect the normal functioning of the market. The general rule is free competition and the avoidance of all forms of monopoly, even if it results from industrial property rights. We have also noted that the monopoly of industrial property rights by certain institutions alone prevents other institutions, companies and economic operators that do not own such rights from competing, given their limited knowledge of the expertise and experience that such rights entail. This pushes them to adopt illegal behaviour and violate the legal protection afforded by such rights through imitation in their quest for economic gains. We have concluded that the protection of industrial property and the prevention of infringement through imitation has led the Algerian legislator to adopt a licensing mechanism, as most companies that own industrial property rights accept the use of their property by other companies with their express permission, as this constitutes the best protection for them. This type of licensing is optional and is carried out under a consensual agreement between the owner of the industrial property rights and the company benefiting from them. The second type is compulsory licensing, 23

owner of the industrial property receives fair financial compensation for the use of their property in exchange for the licence (optional or compulsory). Our study also concluded that the European Competition Commission and the European Court of Justice, in addition to the licensing mechanism, have relied on the essential facilities mechanism, which is a means used in exceptional circumstances where the refusal to grant a licence to exploit industrial property prevents the emergence of a new product or the further development of one already on the market. These findings lead us to make the following recommendations: ‒Raise awareness among industrial property rights holders, whether natural or legal persons, that licensing is the best way to protect their industrial property from infringement through counterfeiting. ‒Encourage industrial property rights holders to license the use of their property in a way that benefits them and the institutions that benefit from it, especially if the latter are small or medium-sized companies. ‒Promote the use of licensing as a means of avoiding disputes over industrial property rights, which have a significant impact on the functioning of economic enterprises and the market in which they operate. ‒ Working to ensure the proper use of the licensing mechanism and exploiting it to transfer technology and increase competition between different economic operators. ‒ Combating the abuse and obstacles imposed by large companies on new companies in the market seeking to obtain licences. ‒ Imposing effective control over the circulation of goods and products by the competent authorities to prevent counterfeit goods that harm economic activity and endanger the lives of consumers

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