Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, June 6, 2012

The Essential Facilities Doctrine – What was Wrong in Microsoft?

Posted by D. Daniel Sokol

Liyang Hou, KoGuan Law School, Shanghai Jiao Tong University asks The Essential Facilities Doctrine – What was Wrong in Microsoft?

ABSTRACT: The essential facilities doctrine is designed to oblige dominant undertakings to make available their important facilities, including intellectual property rights, for other undertakings. It requires a delicate balance of, on the one hand, protecting the exclusivity of ownership and on the other hand encouraging other undertakings’ incentive to innovate. The balance that was nicely struck in the previous cases nevertheless was abandoned in the Microsoft judgment. In that case, the General Court made two mistakes: First, it wrongly defined the primary market as client PC operating systems that was in no accordance with the request of Sun, i. e. the interoperability information with Windows client PC operating system. This broader market definition made the General Court struggle in justifying the increasing market shares of Linux products through unnecessarily expanding the scope of ‘‘eliminating all the competition’’ from the requesting undertakings to ‘‘eliminating all effective competition’’. Secondly, the General Court improperly interpreted ‘‘new products’’ hindered by a refusal to grant a license as also including products with ‘‘technical development’’. This arbitrary extension encroaches upon the very substance of the system of intellectual property rights.

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