Non-Per Se Treatment of Buyer Price-Fixing in Intellectual Property Settings

Abstract:     
The ability of intellectual property owners to earn monopoly rents and the inability of horizontal competitors to price fix legally are two propositions that are often taken as givens. This article challenges the wholesale adoption of either proposition within the context of buyer price-fixing in intellectual property markets. More specifically, it examines antitrust law’s role in protecting patent holders’ rents through its condemnation of otherwise ostensibly efficient buyer price fixing. Using basic economic analysis, this article refines the legal standards applicable at this point of intersection between antitrust and patent law. In particular, the author recommends the limited abandonment of per se condemnation of buyer price-fixing within pure intellectual property contexts. As an alternative, a coarse screen which accounts for both price and innovation effects is proposed. This recommendation represents one example of how antitrust law can better account for the complicated and imperfectly understood effects of the patent system on social welfare.

Number of Pages in PDF File: 45

Keywords: Antitrust, Sherman Act, Competition Policy, Intellectual Property, Patents, Innovation, Licensing, Concerted Action, Buyer Price-Fixing, Per Se Analysis

JEL Classification: K21, L40, L41

Accepted Paper Series