Technology Protection and Competition Policy for the Information Economy. From Property Rights for Competition to Competition Without Proper Rights?

31 Pages Posted: 27 Sep 2019 Last revised: 5 Feb 2020

See all articles by Hanns Ullrich

Hanns Ullrich

Max Planck Institute for Innovation and Competition

Date Written: January 14, 2020

Abstract

Over the years, the focus of competition law enforcement regarding the anticompetitive exercise of intellectual property rights has changed considerably. It first shifted from restrictive licensing to the control of refusals to license by market dominating owners of intellectual property (IP). However, it was only in view of exceptional circumstances that competition authorities and courts have considered refusals to constitute an abuse of market power within the meaning of Art. 102 TFEU. The shift became more pronounced when open innovative standardization led to conflicts between market dominating holders of patents reading on interface standards and standard implementers who did not (yet) have or did not have asked for a license. Under the rules of institutionalized open standardization, the holders of patents that are essential for the use of the standard are subject to an obligation to grant licenses at FRAND conditions, thus limiting the availability of injunctive relief from the infringement of their standard essential patents (SEPs). However, the scope and operation of such FRAND commitments, in particular their impact on the patentee’s right to exclude, was controversial under both patent law and competition law. It was by way of an SEP-specific reading of Art. 102 TFEU that the Court of Justice of the EU sought to calm down the conflict. Thus, in its Huawei/ZTE decision, it subjected the holders of SEPs and the implementers of standards to a mandatory, quasi-regulatory framework for FRAND negotiations. For all systems technologies whose operation depends on open interface standardization, this FRAND negotiation framework supersedes the former exceptional circumstances test for assessing abusive refusals to license. Therefore, the shift regarding the implementation of competition policy is a systematic one, albeit one that is limited to IP covering standardization.

By contrast, the needs of data accessibility that characterize the digital economy seem to ask for yet another, even broader shift of competition policy and law enforcement. Most lawyers in the fields of both intellectual property and competition law assume that in cases of refusal of access based on some form of IP, in particular on the protection of trade secrets and/or on technical protection measures (TPM), competition law will already provide the necessary remedies for ensuring sufficiently broad access to data. Therefore, they assume that, contrary to the ideas of a minority of academics and the views of some industries, there is not only no need for creating any specific form of “data ownership” or “data producer rights” , but that such additional category of IP would hinder the free development of and innovation in the data economy. The question, however, precisely is whether trade in and sharing of data might benefit from access rules that are not tied to the narrow criteria of controlling the anticompetitive exercise of market power, but instead form part of a broader regulatory framework that would overcome the present de facto distribution of control over and access to data by establishing a proper balance between the rights and duties of data controllers and data users, in particular by providing for a genuine complementarity between individual entitlement and third party access rights. Among the many difficult issues the design of such a new framework will raise, the notion of “property” stands out as a major hurdle to conceptualizing a rights-based regime that combines incentives for the creation and curation of data with such broad rights to access as are needed for the efficient use of multi-purpose data, for transparent trade in and sufficient sharing of data in a dynamic digital economy. The study is not aimed at overcoming that hurdle. It assumes that much of the necessary concepts already exist. However, quite some research is still needed for putting these pieces of a puzzle into the picture of a market order that as a matter of law guarantees all market actors a level playing field by providing for an adequate and efficient distribution of rights, limitations and duties between the holders and the users of data on the one hand, and, on the other, ensures freedom of competition by virtue of rules outlawing anticompetitive practices. After all, it is not the objective and not the function of competition law to order markets, but only to prevent practices that unduly distort or restrict competition. The market order itself is a matter of a framework regulation by general law.

Keywords: intellectual property, competition law, restrictive licensing, abuse of market power, refusals to license, open standardization, patented standards, abusive patent enforcement, FRAND commitments, digital economy, access to data, data ownership, property concepts

Suggested Citation

Ullrich, Hanns, Technology Protection and Competition Policy for the Information Economy. From Property Rights for Competition to Competition Without Proper Rights? (January 14, 2020). Max Planck Institute for Innovation & Competition Research Paper No. 19-12, Available at SSRN: https://ssrn.com/abstract=3437177 or http://dx.doi.org/10.2139/ssrn.3437177

Hanns Ullrich (Contact Author)

Max Planck Institute for Innovation and Competition ( email )

Marstallplatz 1
Munich, Bayern 80539
Germany

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