Patents, Antitrust, and the WTO/GATT: Using TRIPS as a Vehicle for Antitrust Harmonization. (World Trade Organization, Agreement on Trade-Related Aspects of Intellectual Property Rights)

By Marschall, Richard H. | Law and Policy in International Business, Summer 1997 | Go to article overview

Patents, Antitrust, and the WTO/GATT: Using TRIPS as a Vehicle for Antitrust Harmonization. (World Trade Organization, Agreement on Trade-Related Aspects of Intellectual Property Rights)


Marschall, Richard H., Law and Policy in International Business


I. INTRODUCTION

In 1994, Microsoft, the world's largest computer software company, was accused of abusing its dominant position in the market through licenses with computer manufacturers.(1) As a result, Microsoft eventually entered into agreements with the U.S. Department of Justice (DOJ) and the competition enforcement authorities of the European Commission, consenting to end "unfair monopolistic practice."(2) The head of the Antitrust Division of the DOJ, Anne Bingaman, called the collaboration between the two agencies an "unprecedented, historic cooperative action [that] sends a powerful message to firms around the world that the [two] antitrust authorities . . . are prepared to move decisively and promptly" to remedy violations of the law.(3) The efforts that led to the agreement with Microsoft consumed 14,000 attorney-hours, 5,500 paralegal-hours, 3,650 economist-hours and roughly one million pages of documents in the United States alone.(4) Given the vast resources of the U.S. government and its ability to draw from a century of antitrust law, a question arises: what could a developing country without such resources or antitrust laws do to stop such unfair practices? The lack of an adequate answer suggests a need for international antitrust standards to help (or to force) developing countries to establish enforcement mechanisms. This need becomes most apparent when a company such as Microsoft, with significant intellectual property rights, attempts to push the envelope of what it can lawfully demand under those rights.

By their nature, intellectual property rights raise antitrust concerns because they grant owners the right to exclude others from using the "property" without permission--and possibly with anti-competitive effects. These concerns can arise with any form of intellectual property, including patents, trademarks, and copyrights. However, the need for an effective antitrust system may be most compelling in the midst of a strong patent system. A patent owner is granted the right to exclude others from making, using, importing, offering to sell or selling the patented invention,(5) while the aim of antitrust laws is to keep this "legal monopoly" in check by preventing attempts by the patent owner to extend the monopoly beyond the permissible scope granted by the government.(6) In the United States, patent and antitrust law are well established. Many other developed countries have similar legal structures, but the amount of protection in each field varies.(7) Critics have argued for harmonization of intellectual property and antitrust standards in order to promote predictability for companies that deal in an international environment.(8)

The most comprehensive international harmonization of intellectual property law, of which patent law is a part, occurred during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) and resulted in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).(9) With this agreement, all member countries agreed to provide a mechanism for obtaining intellectual property rights and for enforcing those rights in their courts.(10) Even developing countries with little or no prior experience in enforcing intellectual property rights will be required to comply, although these nations may qualify for grace periods of up to ten years to comply fully.(11)

International harmonization of antitrust laws has been less successful.(12) The joint effort of the United States and European Commission in the Microsoft ordeal was an "unprecedented" event in international antitrust law.(13) Some developing countries provide little protection from anticompetitive practices by corporations and cannot readily turn to international organizations for help. The deficiencies in this system will be exacerbated when developing countries with weak antitrust systems begin to comply with the competing requirements of TRIPS. Strong antitrust laws generally prevent the monopolization of incus tries in which one corporation obtains enough market power to charge prices higher than it otherwise could--an overcharge for which consumers pay. …

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