Antitrust Liability for Refusal to License Intellectual Property: A Comparative Analysis and the International Setting

Article excerpt

INTRODUCTION

I. LEGAL BACKGROUND: OVERLAPS AND DISTINCTIVENESS OF
      THE EUROPEAN UNION AND UNITED STATES ANTITRUST
      SYSTEMS
II. COMPARING THE ANTITRUST CASE LAW AND POLICY IN THE
      EUROPEAN UNION AND THE UNITED STATES
      A. The European Approach
         1. The Historic al Hostility Towards IP
         2. Antitrust Liability for Refusal to License in
            "Exceptional Circumstances" and Essential Facility
            Argument
         3. The 2005 Discussion Paper on the Application of
            Article 82 of the EC Treaty
      B. The American Approach
         1. The Cycles of Antitrust Applied to Intellectual
            Property
         2. IP Rights as Shield from Antitrust, but a Shifting Test
            Applies to Patents
         3. The 2007 DOJ--FTC Report on Antitrust
            Enforcement and IP Rights
III. OPEN ISSUES AND THE INTERNATIONAL SETTING
      A. The European and American Systems: A Summary
      B. Open Issues
      C. The International Setting
CONCLUSION

INTRODUCTION

Cyclically, with different ups and downs in time, antitrust and intellectual property ("IP") are perceived as complementary, rather than inconsistent, bodies of laws which share the same goals of promoting innovation and enhancing consumer welfare.

Whether this is true or not, potential for conflicts does exist, such as when unilateral refusals to license, sell, use, or share IP rights by dominant firms affect the dynamics of competition. Yet, if and under what conditions this might happen is one of the thorniest facets of the IP and antitrust interface, even though it is crucial in the knowledge-driven economy and global trade in a time of exorbitant IP growth.

On the one hand, the legal monopoly based upon IP laws gives the owner the right to exclude third parties from the protected asset, subject only to the exceptions established for various purposes by the relevant domestic and international laws (e.g., experimental use). On the other hand, when the legal monopoly impacts on market competition, antitrust enforcement can outlaw or limit the exclusivity and serve as the grounds for a compulsory license order.

Three outcomes may result from these conflicting situations: 1) antitrust trumps per se intellectual property, giving ground to an exception to the exclusivity based upon IP laws; 2) IP trumps per se antitrust, justifying anticompetitive behaviors and shielding them from antitrust scrutiny; or 3) antitrust and IP are balanced, the exclusivity being limited depending on specific circumstances to be ascertained case-by-case.

A comparative analysis of the current European and American systems--the two most mature for both antitrust and IP--shows that the former tends to downplay IP rights in favor of competition, whereas the latter tends to curtail the imperative of competition to preserve the exclusivity based upon IP rights. Yet these are only trends, and on the whole the two systems are still largely unsettled on the matter.

The underlying dilemma is that a broad antitrust intervention, also through a high rate of compulsory licensing orders, may reduce the incentives to invest and thus chill the scientific and technological innovation (a risk apparently more clear in the United States). At the same time, failure to scrutinize anticompetitive behaviors can result in foreclosure of markets to the detriment of consumers, competitors, and the efficiency of the economic system (a risk apparently more clear in the European Union).

Broadening the view to the international dimension, so far rather neglected, gives the occasion to wonder whether there is any bias for the one or the other solution, or simply to figure out alternative options to the classical ex-post antitrust enforcement.

Part I of this Article accounts for the legal background on monopolization claims involving IP rights. Part II provides an overview of the European and American case law and policy. …