Wednesday, February 10, 2010
Posted by Ron Cass (Chairman, Center for the Rule of Law and Dean Emeritus, Boston University School of Law)
USDA and DOJ inquiries into competition in agriculture could recast antitrust law as substantially contrary to patent law. A prominent contribution to the inquiries argues that the seed industry needs regulation because one firm (Monsanto) dominates competition for seed types based on that company’s own patented innovation. That is, looking at competition only among seeds based on Monsanto’s patents, Monsanto is too dominant. Taken seriously, the argument would make antitrust a vehicle for eliminating patent holder exclusivity, instead requiring patent licensing on an open basis, as if each patent conferred the equivalent of an essential facility. That approach is destructive of IP rights and also at odds with the basic thrust of antitrust laws, which don’t proscribe every impediment to unrestrained competition in inputs and outputs but instead prohibit specific practices that tend to undermine competition and harm consumers. Those aren’t serious concerns here.
The seed industry is highly competitive. Farmers choose seeds each year (no lock-in problem). Hundreds of firms produce and sell seeds. Other major firms (including firms far larger than Monsanto) invest heavily in developing their own competing seeds and seed traits. In fact, the primary push for regulation here comes from DuPont (a larger firm with a roughly equal share of the overall seed market – but not of every segment of the seed market), along with those looking for short-term reductions in seed costs and professional antitrust advocates interested in expanding the ambit of antitrust law. That should give pause to officials considering intervening in this sector.
The pro-regulatory argument would replace IP-sensitive law like Independent Ink with a version of Terminal Railway on steroids. Terminal Railway is something of a sport, debatable even when limited to its facts. Hopefully, officials at Agriculture and Justice will not make it a template for revising IP laws under antitrust guise.