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Thursday, January 15, 2009

Reflections on the Antitrust Modernization Commission's Report and Recommendations Relating to the Antitrust/IP Interface

Posted by D. Daniel Sokol

Tom Cotter of the University of Minnesota Law School provides some Reflections on the Antitrust Modernization Commission's Report and Recommendations Relating to the Antitrust/IP Interface.

ABSTRACT: The Antitrust Modernization Commission's (AMC's) recommendations relating to the IP/antitrust interface reflect what has become the consensus view among mainstream commentators that IP and antitrust are, for the most part, complementary rather than antagonistic bodies of law. In this article, I argue that this consensus view is largely correct, and that the AMC's consensus-based recommendations are both commendable and persuasive. In addition, however, I argue that the consensus view nevertheless fails to capture some remaining tensions that could become acute in certain ongoing disputes lying along the antitrust/IP interface. These areas of potential conflict can be grouped into three broad categories. "Category 1" comprises cases in which IP law does not provide what some market participants believe to be an adequate solution to a free-riding problem that in theory could undermine the participants' incentive to invest in innovation. When such cases arise, courts may have to determine whether self-help efforts on the part of such participants to inhabit IP's "negative space" violate IP or antitrust norms, and if so whether the two sets of norms themselves conflict. Second, and of greater significance to antitrust policy at present, joint efforts on the part of potential IP users to facilitate the adoption and use of a particular technology may give rise to antitrust problems. The report briefly discusses one recurring situation falling within this latter category ("category 2"), relating to SSOs. Third, antitrust enforcers from time to time may perceive IP law as falling far short of attaining the optimal incentives/access tradeoff. In this third category of cases ("category 3"), questions may then arise whether antitrust should come to the rescue by constraining the exercise of unduly broad IPRs. In all three categories of cases, the risk will be present that antitrust intervention may overshoot its mark, thus undermining both the incentive structures embedded within the IP laws and efforts to reform those IP laws, when necessary, from within. Problematically, it remains unclear how antitrust enforcers can weigh the procompetitive benefits of challenged conduct that substitutes for IPRs (in category 1), restricts the exercise of IPRs (category 2), or exploits those IPRs to the maximum degree (category 3), against the potential corresponding harms to the integrity of the IP incentive scheme or to social welfare generally; and yet to describe the costs and benefits as in some sense incommensurable does not make the problem go away.

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