Wagging the Dog? Reconsidering Antitrust-Based Regulation of IP-Licensing

By Schindler, Gosta | Marquette Intellectual Property Law Review, Winter 2008 | Go to article overview

Wagging the Dog? Reconsidering Antitrust-Based Regulation of IP-Licensing


Schindler, Gosta, Marquette Intellectual Property Law Review


INTRODUCTION

I. TTBER AND ANTITRUST GUIDELINES
    A. Articles 81(1) and (3) ECT and Block Exemption
       Regulations
    B. The New TTBER
       1. Market-Share Thresholds
       2. Hardcore Restrictions-Article 4 TTBER
       3. Excluded restrictions-Article 5 TTBER
       4. Analysis
          a. Substantive Issues
          b. Institutional Issues
       5. Conclusion
    C. U.S. Antitrust Guidelines
       1. Antitrust Challenges to IP Licensing Prior to 1995
       2. 1995 U.S. Antitrust Guidelines
          a. The Rule of Reason
          b. Differentiation between Horizontal and Vertical
               Relationships of Licensing Parties
          c. Licensing Arrangements Involving Exclusivity
          d. Efficiencies and Justifications
          e. Antitrust "Safety Zone"
       3. Analysis
    D. Comparison
       1. Formal Setup and Binding Force
       2. Content
       3. Institutional Context
    E. Conclusion
II. IP APPROACH TO IPR LICENSING
    A. Adequate Recognition of Antitrust Concerns in IP Law
         Interpretation
       1. Acknowledgement of Public Interests in IP Laws
       2. Public Interest Considerations Through "Property"
            Notion of IPRs
    B. Testing the Assumptions
       1. Example 1--Same Results (Price Fixing)
       2. Example 2--Different Results (Use of Licensee's
            Technology)
    C. Implications of the IP Approach
       1. General Benefits
       2. Institutional Implications
       3. Costs
    D. Conclusion
SUMMARY AND FINAL REMARKS

INTRODUCTION

This Article aims to add another piece to a so far still puzzling picture at the interface of intellectual property and antitrust laws. While past and current discussions mostly revolve around the notion that only one--either Antitrust or IP laws--can prevail, the author favors a differentiated understanding.

This Article compares how IP licensing is scrutinized by antitrust regimes in the European Union (EU) and the United States. The result of that comparison leads to the conclusion that any attempted resolution of the IP-Antitrust "dilemma" will remain inadequate as long as it is "antitrust-based," that is, regulated by antitrust laws or guidelines designed by antitrust-agencies. Unlike by other current approaches, the overall validity of substantive antitrust concerns regarding IP licensing is not called into question, however. It is the institutional setup in which the antitrust policies regarding IP exploitation are designed and enforced that is proposed to be in need of change. The author argues that antitrust concerns can and should be accounted for through proper construction and application of the IP laws themselves.

The proposed "IP-based" approach to IP licensing is claimed to be beneficial in at least two respects: it maintains the dogmatic clarity of the IP laws while preserving the bargain underlying the grant of intellectual property rights. Furthermore, this Article suggests that an "IP-based" regulation of licensing activities will--despite initially increased costs--in the long run be more cost efficient than current approaches and therefore also be economically preferable.

Intellectual Property Rights (IPRs) (1) confer exclusive rights to their owner. This exclusivity of IPRs is often described as providing "monopoly-power," which, were it true, would stand in opposition to antitrust legislation aiming at the control or even breakup of monopolies and at the promotion of competition. It has been shown more than once, however, that this view on IPRs is based on a misconception of the term "monopoly." (2)

Nevertheless, questions traditionally dealt with in antitrust laws frequently arise when IPRs are exploited, especially by licensing. It is almost inherent in license agreements that the licensor imposes restrictions, for instance, as to the territory in which the licensee may use the IPR. Such restrictions in general trade (e. …

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