This old paper – which can be found here – deals with a constant concern in Hovenkamp’s work, namely the interaction between IP and antitrust. He notes that: “The primary purpose of antitrust law is to promote competition. However, both antitrust law and intellectual property law for large parts of their history have worked so as to undermine innovation competition by protecting too much. Antitrust policy often has reflected exaggerated fears of competitive harm and responded by developing overly protective rules that shielded inefficient businesses from competition at the expense of consumers. By the same token, the intellectual property laws have often undermined rather than promoted innovation by granting intellectual property holders rights far beyond what is necessary to create appropriate incentives to innovate.”
Given this, what should antitrust’s stance be as regards innovation in general, and IP in particular? Hovenkamp offers “a few principles for antitrust analysis in innovation-intensive markets, particularly those claims that involve the exercise of patent rights.”
- First, it is not the purpose of antitrust to fix defects in other regulatory regimes. Antitrust law was designed as a corrective to failures by private markets, not IP regimes. However, where intellectual property law does not expressly regulate a matter, antitrust policy should feel free to seek the most competitive outcomes as long as it does not frustrate the underlying regulatory regime.
- Second, administrability is key. Public intervention is only justified when a public body has a defensible reason for thinking that intervention will lead to more competition in the case of antitrust, or more innovation in the case of intellectual property law.
- Third, not every apparent conflict between antitrust law and intellectual property law is real. In many cases, IP and competition law actually push in the same direction and there is no conflict between them. When they conflict, the special regulatory regime – IP law – should prevail. Of course, in the middle are a few cases, such as direct challenges to innovation itself, where true conflicts between competition policy and innovation policy can emerge. This is where the main difficulties lie.
- Fourth, economic growth theory, which examines the sources of increased productivity and wealth, is a topic of intense debate and controversy. Nevertheless, there seems to be broad consensus that the gains to be had from innovation are larger than the gains from simple production and trading under constant technology. The strong version of this view suggests that we should give the nod to innovation in cases where serious trade-offs are to be made between innovation and competitiveness. On the other hand, when there is evidence that the only reasonable purpose of a practice was to keep competitors’ innovations from being developed or marketed, antitrust has an obligation to step in.
- Fifth, innovation is not the same thing as patent or copyright law. Further, the intellectual property law that we have hardly represents legislation “at its best.” Just because something is protected under the intellectual property regime, one should not assume that it serves to incentivize innovation. As a result, when practices seem quite clearly anticompetitive and the intellectual property statutes do not speak to them with clarity, the nod should be given to antitrust.
- Sixth, antitrust is not the exclusive protector of competition in innovation intensive markets. Many competition issues can be addressed more effectively through the IP statutes themselves, either alone or coupled with the prudent application of the antitrust laws. Problems such as “interconnection” and lack of neutrality in networked communications are often best addressed by antitrust together with intellectual property.
- Seventh, intellectual property law can take some important lessons from the road that antitrust has taken toward reform and redemption. Intellectual property law would profit by continuously examining its root motivations as antitrust law does.
In conclusion, Hovenkamp considers that even if one follows these principles a lot of work remains to be done. This is an exciting area of antitrust law, and an exciting time to be working on it. I agree with this, even if I’d emphasise that the devil is indeed in the details here.