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Interface Between Competition and Intellectual Property. Compulsory Licensing, Essential Facilities and Duty to Deal. General Principles (I). Importance of Protecting Property Rights Intellectual Property as subset of Property Rights with Which Firms Compete
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Interface Between Competition and Intellectual Property Compulsory Licensing, Essential Facilities and Duty to Deal
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
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
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
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
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
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
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
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
Presentation to Chinese Inter-Agency Delegation Shanker Singham Squire Sanders & Dempsey, L.L.P. Delivered at US Chamber of Commerce March, 2009