A Proposed Roadsign at the IP-Antitrust Intersection
1 November 2002
By Dr. Phillip Beutel et al.
The balance between protecting intellectual property (IP) and promoting competition has always been a tenuous one, and when the two converge on the same issue, it can be a highly volatile one as well. This article explores how antitrust rules can be applied to certain behavior undertaken by IP owners. The authors suggest that the main reason for the tension between these two bodies of law is that their fundamental means of benefiting society are directly at odds with one another. Antitrust law aims to preserve and enhance relatively short-term competitive vigor, while IP protection remains focused on the premise that society benefits in the longer-term from the creation of short-run barriers to entry and competition that are thought to protect and encourage innovation. As a result, there is some tradeoff between fostering innovation and enforcing antitrust laws. The authors note that in recent years, there has been an increasing number of cases in which patent owners are alleged to have "crossed the line" by engaging in behavior that, on balance, is more likely to harm consumers than to promote further innovation.
The article outlines two hypothetical cases to illustrate the situations in which IP owners' behavior may cross the antitrust line. Primarily, these situations involve behavior that is alleged to have the same functional effect as tying but does not include all the traditional elements of a tie. The authors propose that for these types of behavior, a conventional antitrust inquiry about the extent of a patent owner's market power may provide the best means of restraining these IP-generated competitive concerns.
