Antitrust and Innovation: Where We Are and Where We Should Be Going
9 Pages Posted: 18 May 2010 Last revised: 28 Dec 2013
Date Written: January 18, 2012
For large parts of their history intellectual property law and antitrust law have worked so as to undermine innovation competition by protecting too much. Antitrust policy often reflected exaggerated fears of competitive harm, and responded by developing overly protective rules that shielded inefficient businesses from competition at the expense of consumers. By the same token, the IP laws have often undermined rather than promoted innovation by granting IP holders rights far beyond what is necessary to create appropriate incentives to innovate.
Perhaps the biggest intellectual change in recent decades is that we have come to see patents less as a species of monopoly and more as a kind of property. While a good development overall, this makeover in conception has contributed to some less desirable expansions in the patent system. The “propertization” of patent law has not been attended by requirements that apply to other types of property. One principle of property law is that claimants have the obligation to articulate clear boundaries of ownership. Another is that property owners must communicate timely and effective notice of their claims, because the cost of giving notice is typically much lower than the cost of searching.
Although one should not push the point too far, antitrust law, which is judge made, claims relatively more freedom from interest group capture than does statutory IP law. And if antitrust tribunals go too far, Congress can be trusted to respond to the voices of IP holders, who have consistently shown themselves to be a more effective interest group than IP users or consumers. For its part, IP law can take some important lessons from the road that antitrust has taken toward reform and redemption. Roughly 40 years ago antitrust pursued a course of protecting small competitors at consumers’ expense and even condemning such practices precisely because they reduced costs. Then in the late 1970s the Supreme Court dramatically shifted the ground, requiring not only that injury be clearly proven, but also that it be the right kind of injury – that is, injury to competition and not merely injury to the plaintiff. This transformation was accomplished entirely by the Supreme Court, largely in the face of Congressional indifference and in apparent conflict with a private injury statute that guarantees liberal recovery for every kind of injury. Intellectual property law would profit by continuously examining its root motivations as antitrust law does.
Keywords: intellectual property, patents, antitrust, innovation, monopoly, misuse, anticompetitive
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