Innovation and the Domain of Competition Policy

Posted by D. Daniel Sokol

Herb Hovenkamp offers an insightful examination of Innovation and the Domain of Competition Policy in a new article for the Alabama Law Review.

ABSTRACT: Antitrust policy and the IP laws are both concerned with practices that restrain competition unnecessarily by reducing the size of the public domain beyond that which the Constitution contemplates, or as Congress intended for them to be expanded. In fact, antitrust has a dual role as promoter of competition in IP intensive markets. It regulates both restraints on competition and restraints on innovation. The first line protector of the competitive process in innovation is the IP statutes themselves. The Constitutional Mandate to Congress to create intellectual property regimes in order to promote the Progress of Science and useful Arts is expressly tied to creating incentives to innovate. Indeed, the IP Clause is the only place where the Constitution expressly links the scope of a property right to the incentive to develop it. An optimal IP policy creates just enough incentive to cause creative people to innovate at the optimal level, but not so much so as to restrain excessively others who want to build on their work. Maintaining this balance requires a determination of both the optimal duration and the optimal scope, or coverage, of IP rights.

Antitrust should not be too defensive about asserting a broader role in IP/competition disputes. This is so for two reasons. First, the extent of special interest capture is significantly greater in IP law than in antitrust, although today patent is experiencing some important reforms. Second, antitrust has profited greatly from its period in the wilderness, something that the IP laws have yet to experience. While no statute is free of special interest influence, the antitrust laws must be counted among the relatively cleaner substantive statutory regimes in the United States code. Antitrust has the comparative advantage of well behaved doctrine that, at least currently, is reasonable free of special interest pressure. The patent and copyright acts cannot make the same claim to well behaved doctrine, although patent law seems to be entering its own period of self-criticism and reform.