Academic journal article Journal of Corporation Law

Antitrust and Patent Law as Component Parts of Innovation Policy

Academic journal article Journal of Corporation Law

Antitrust and Patent Law as Component Parts of Innovation Policy

Article excerpt

  I. PATENT POLICY AS INNOVATION POLICY
 II. ANTITRUST POLICY AS INNOVATION POLICY
III. PATENT AND ANTITRUST ARE INTERDEPENDENT PARTS OF INNOVATION POLICY
     A. Comparing Patent and Antitrust Responses to Invalid Patents
        1. The Patent System's Response to Invalid Patents
            a. Invalidity Defense
            b. Declaratory Judgment Actions
        2. Antitrust's Response to Invalid Patents
            a. Sham Patent Infringement Litigation
            b. Agreements That Conceal Invalid Patents
     B. Inequitable Conduct Versus a Walker Process Claim
     C. Patent Misuse Versus a Tying Claim
     D. Summary
 IV. STRIKING THE PROPER BALANCE BETWEEN PATENT AND ANTITRUST
  V. CONCLUSION

Antitrust law and patent law have long been considered in tension. On a very simplistic level, antitrust law was seen as anti-monopoly, whereas "[t]he very object of [the patent laws] is monopoly." (1) Antitrust law condemns exclusionary conduct and patent law grants exclusionary rights. These exclusionary rights are seen as the price of rewarding--and thus encouraging--innovation. But a reward that restrains competition seems at odds with antitrust's goal of removing trade restraints from the marketplace. Consequently, courts historically have discussed the "conflict between the patent laws on the one hand, which encourage monopoly power by granting patent holders the right to exclude and be free from competition, and the antitrust laws, on the other hand, which generally proscribe monopoly and encourage competition." (2)

In response to this saga of laws in tension, courts and commentators began to argue that antitrust and patent law were more properly viewed as complementary, because "both are aimed at encouraging innovation, industry and competition. (3) In their recent report on antitrust, IP, and innovation, the antitrust enforcement agencies argued that:

   [A]ntitrust and intellectual property are properly perceived as
   complementary bodies of law that work together to bring innovation
   to consumers: antitrust laws protect robust competition in the
   marketplace, while intellectual property laws protect the ability
   to earn a return on the investments necessary to innovate. Both
   spur competition among rivals to be the first to enter the
   marketplace with a desirable technology, product, or service. (4)

So antitrust and patent law both try to stimulate innovation: the former by stimulating competition, and the latter by temporarily suppressing it. (5)

We have two conceptions of the relationship between antitrust and patent: in tension or complementary. In reality, both conceptions have an element of truth, but antitrust and patent are neither always in tension nor always complementary. Rather, the relationship is multidimensional. Antitrust law and patent law are in tension in some contexts, particularly in the short run. For example, a patent holder can exclude infringing competitors from the market, even if the competitors can make the product more efficiently. In the long run, after the patent expires, consumers can purchase the innovation in a competitive marketplace.

The relationship between antitrust law and patent law involves a series of trade-offs: How much should competition be suppressed in the short run in order to encourage innovation in the long run? Are there instances and industries where intellectual property rights are unnecessarily expansive, such that competition is suppressed more than needed to incentivize innovation? These trade-offs between antitrust and patent take place in the context of broader innovation policy.

Instead of thinking about patent policy versus antitrust policy, we should be discussing an innovation policy that has two constituent parts: IP and competition law. IP law may be a cornerstone of innovation policy, but the patent system--as currently constructed--cannot maximize innovation without the assistance of a strong antitrust regime. …

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