This recent chapter – which can be found here – provides an overview of the IP-antitrust field. It begins by noticing that Government enforcers and private plaintiffs have recently advanced a wide range of antitrust claims against IP rights holders. These include, among others, the alleged abuse of a standard setting process by a patentee, joint price setting by means of a blanket license for copyrighted musical works, and anticompetitive settlements of patent litigation. The author notes that: “These examples arise distinctively in the context of IP. They can be viewed as a kind of special-purpose antitrust law, although the principles applied are more general.”
The paper seeks to provide an overview of the interaction between IP and antitrust. While excluding some sectors – e.g. mergers and vertical licenses – it covers most relevant examples of such interactions. The paper’s ultimate argument is that, beyond its core right to exclude rivals from the scope of an IP right, IP restricts antitrust law less than one might expect. This conclusion is reached as follows:
- Section 2 describes two pathways through which IP limits antitrust law – by statute and by policy.
First, IP limits the scope of antitrust by operation of statute (at least in the US). Statutory provisions define an “exclusionary scope” for IP rights. Some specific IP provisions arguably permit conduct that ordinarily violates antitrust law: for example, US patent law grants a right to refuse to deal, which might immunize certain refusals that otherwise violate antitrust law. Applying the scope-of-IP-right concept beyond the core case of excluding rivals from relying on a specific IP right is not straightforward, however. Three issues arise: (i) whether a particular IP entitlement includes the privilege to act anticompetitively (e.g. territorial restrictions); (ii) whether the IP holder’s conduct offends an explicit statutory limit on the IP right; and (iii) [to me, the hardest question] how to treat conduct expressly covered by an IP provision when it is paired with conduct that is not so covered.
Second, IP might limit antitrust law as a matter of policy: “the very existence of a conflicting statutory scheme might argue in favor of narrower antitrust liability. In particular, IP policy might be an input into the cost-benefit analysis that underpins antitrust law, thereby altering the antitrust result as a matter of economic policy.(…) The pro-monopoly perspective on innovation, as reinforced by IP policy, might be taken to alter the internal cost-benefit calculus of antitrust law. In particular, the dynamic benefits of innovation, to the extent they require protected profits, might furnish an argument for narrowing the scope of antitrust law.”
- Section 3 and 4 review potentially anticompetitive practices that are related to IP law. Section 3 analyses collusion claims against IP rights holders, including market division, settlements of patent litigation (i.e. reverse settlements), price-restricted licenses, blanket licenses, and patent pools. Each of these practices is reviewed in turn. Section 4 then addresses exclusionary practices including sham litigation, fraudulent acquisition of IP rights, assertion of IP rights to weaken competition in a second market, refusals to deal, product design (e.g. product hopping), manipulation of a standard setting organization, and collective exclusion. Again, each of these practices is reviewed in turn.
- Section 5 then focuses on IP law, and on the doctrine of patent misuse in particular. This doctrine is said to be a limitation on IP exploitation that mirrors antitrust law in important respects: “Misuse is a defence to enforcement of an IP right where the rights holder seeks to evade the limits of the right. The consequence of a misuse finding is unenforceability of the right, without any additional liability for damages. In this sense, misuse is antitrust law “lite”.” In particular: “Patent law’s internal hostility to evasions of scope has been incorporated into antitrust law” and “An important source of convergence between misuse and antitrust is the requirement that a patentee must have market power in the tying market to be found guilty of misuse, and the mere possession of a patent does not establish market power.”
- Finally, Section 6 contains a brief assessment of how antitrust law limits the exercise of IP rights by reinforcing limitations on the scope and duration of the right. It concludes that the limitations that IP places on the ordinary operation of antitrust law are fairly narrow, and largely limited to patent law. “Meanwhile, antitrust law constrains the exercise of IP rights. The main effect, which antitrust law shares with misuse doctrine, is to rigorously enforce limitations on the scope of the grant (…)The inclusion of IP policy in the internal cost-benefit calculation of antitrust law has not produced a sharply distinctive body of IP-specific antitrust law [and] antitrust has internalized the argument about ex ante incentives to innovate.”
This paper provides a comprehensive overview of the interaction between IP and antitrust law – and concludes, a bit like other papers, that antitrust has neatly digested IP law. This is fine as far as it goes, but it also leaves the main questions unaddressed. These questions – which are not only unaddressed here, but tend to be ignored in general – revolve around: (i) what exactly is the scope of IP rights (i.e. how far can antitrust go into IP law)? and, relatedly (ii) whether there are, or should be principles governing the assessment of IP considerations within specific antitrust assessments? Nonetheless, these are questions which have evaded a simple answer for over 100 years now, so it is unfair to expect this paper to address them successfully in 30 pages.