Intellectual Property and Competition: State of the Law on the Relationship Between Two Institutions in the Service of Welfare

61 Pages Posted: 3 May 2022

Date Written: April 27, 2022

Abstract

Intellectual property law and competition law are two key institutions that promote and safeguard welfare. Intellectual property law grants exclusive rights to authors, inventors and trademark holders, among others. The exclusive nature of these rights sets in motion a process whereby, through the smooth operation of supply and demand, market forces will provide rights holders with a reasonable remuneration for their activity. Economic theory guides the basic legislative choices on the temporal and substantive scope of protection afforded by each type of intellectual property right. The infinite number of distinctive signs justifies the open-ended protection of trademarks against similar signs that give rise to a likelihood of confusion. Likewise, the infinite number of forms that works of human intellect and art can take justifies copyright protection for a long, but not indefinite, period. The general interest requires that, after a reasonable amount of time, these works become the common property of humanity. A similar, albeit stronger, public interest requires the protection, for a more limited period, of technological innovations, their value decreasing over time and their teachings being useful to follow-on progress.
That being so, the exclusive nature of the rights granted cuts across the other basic institution governing the functioning of economic activities. The law of undistorted competition. The smooth functioning of competition allows supply and demand to yield 'appropriate' remuneration for the right holder, as opposed to rents extracted through abusive conduct. The fundamental guiding principle is that the application of the two branches of law should leave intact the core legal features of each of them.
Patent rights are an integral part of modern open economies. They should operate without hindering the application of provisions designed to protect competition as another factor of progress. However, if patent rights are not to become an obstacle to the functioning of the economy, the legal framework governing their award and the associated enforcement measures must feature three main characteristics. First, they must guarantee the granting and renewal of patents for inventions that genuinely meet the criteria of novelty and non-obviousness. Second, they must adequately disclose the protected invention. Third, remedies must not distort the application of competition rules.
Practices that aim at guaranteeing a remuneration derived from undistorted market forces lie within the core protection of intellectual property and should be immune from antitrust scrutiny. Competition law is not supposed to “adjust” choices made by the legislature when shaping the contours of property protection. Antitrust is there to prevent the abusive exercise of property rights in accordance with long established principles.

Keywords: EU Law; US Law; Competition Law; Intellectual property; Internal Market; Copyright; Trade Marks; Patents; Value chain; Reasonable royalties; Apportionment; Standard-essential patents; Reverse payments; FRAND; Remedies

JEL Classification: K11; K21

Suggested Citation

Gryllos, George, Intellectual Property and Competition: State of the Law on the Relationship Between Two Institutions in the Service of Welfare (April 27, 2022). Available at SSRN: https://ssrn.com/abstract=4095409 or http://dx.doi.org/10.2139/ssrn.4095409

George Gryllos (Contact Author)

European Court of Justice ( email )

Luxembourg, L-2925
Luxembourg

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