Interface Between Competition and Intellectual Property

1. Interface Between Competition and Intellectual Property Compulsory Licensing, Essential Facilities and Duty to Deal

2. General Principles (I) • Importance of Protecting Property Rights • Intellectual Property as subset of Property Rights with Which Firms Compete • Consumer Welfare Maximization Achieved when Inter-Platform/Inter-Brand Competition is Maximized • Firms Competing for Temporary Monopolies over Distinct Platforms

3. General Principles (II) • “The Intellectual Property Laws and the Antitrust Laws share the common purpose of promoting innovation and enhancing consumer welfare” (Antitrust Guidelines of Licensing of Intellectual Property, DOJ/FTC, 1995) • Cost to Innovation of Limiting IP rights for competition reasons significant • “Allowing Competition Policy to trump property rights is in all but the most egregious of situations, an extraordinary result…” (Robert Taylor, 2000) • Intellectual Property does not necessarily confer Market Power • The Need for Accurate Market Definition

4. General Principles (III) • Restrictions By Owner of Third Party Use of Intellectual Property may serve pro-competitive ends • Refusals to Deal, Compulsory Access and Essential Facilities Doctrines must be analyzed in light of Pro-Competitive Efficiencies • Invalidly Granted Rights • Scope of Patent Protection

5. Licensing Issues • Focus on Compulsory Licensing • Roots of the Compulsory Licensing Remedy • Dawson v Rohm & Haas – “a rarity in our patent system…” • TRIPS Article 31 requirements • EU Submission to WTO Trade and Competition Group (1998) • “Core rationale for [IPR] protection…create dynamic efficiency that is pro-competitive and outweighs any short term allocative efficiency gains… • Advocates very limited grounds for finding of anti-competitive abuse of a monopoly right which supports grants of compulsory license. • Danger of court-imposed compulsory access • Impracticality of Remedy

6. Duty to Deal and Essential Facilities • Origin of Essential Facility Doctrine • Not Accepted by Supreme Court • Meaning of Essentiality • Leading cases -- Aspen Skiing, Trinko, Linkline; Diminishing Role for Doctrine • Never Used in IP context in US courts • Twin Labs – The Role of Public Subsidy • Danger of Courts Acting as Regulators, Trinko, Linkline, AT&T Divestiture

7. Antitrust Duty to Deal • When does it apply? • Requirement for “Anticompetitive action by a monopolist that is intended to limit competition in the downstream market.” (Intel v. Intergraph) • “No court should impose a duty to deal that it cannot explain or adequately and properly supervise” (Trinko) • Law of Unintended Consequences • Ensure that Pro-Competitive Behavior is not discouraged • Limited nature of duty

8. Duty To Deal/Regulatory Framework • Interface with Regulatory Framework • Telecom as example • Duty to Deal Imposed by Regulatory Framework • Telecoms – Differing Goals of 1996 Telecom Act and Sherman Act • Risk of False Positives • Difference Between Presentation of Antitrust Claim and General Regulatory Obligations

9. Summary • Competition and Intellectual Property have same innovation enhancing goal • Impact of technology is to put substantial pressure on costs and drive firms to seek temporary monopoly over platforms which compete • Consumer welfare is enhanced by maximization of inter-platform competition • Competition agencies should be cautious in implementing solutions that disrupt inter-platform competition

10. Presentation to Chinese Inter-Agency Delegation Shanker Singham Squire Sanders & Dempsey, L.L.P. Delivered at US Chamber of Commerce March, 2009