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What to Do About Unilateral Refusals to License?

Jeffrey K. MacKie-Mason

University of Michigan

Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy, Forthcoming

There are well-known circumstances under which unilateral refusals to license will cause harm to competition, that is, will lower consumer welfare. However, when the strategy is profitable, refusals to license also increase the returns to intellectual property, and thus limitations on them will reduce the incentives for firms to invest in innovation. The optimal balance between innovation incentives and protection against static monopoly harm is not knowable to any reasonable degree of precision. Economists may be able to identify some special cases in which the desired rule is unambiguously knowable, but these cases will be few.

Given a policy or legal rule, economists can help interpret and apply the rule. Analysis of recent legal statements on the treatment of refusals to license shows that some of the current confusion and frustration in this area can be attributed to failure to formulate the rules in terms of the economic purposes of the underlying statutes. Some attempts to delineate a boundary between cases in which intellectual property protection is absolute and those in which antitrust restrictions may be imposed are based on logical or semantic distinctions that are not related to the economic issues. These attempts will fail to resolve the confusion.

Number of Pages in PDF File: 12

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Date posted: March 27, 2007  

Suggested Citation

MacKie-Mason, Jeffrey K., What to Do About Unilateral Refusals to License?. Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy, Forthcoming. Available at SSRN: https://ssrn.com/abstract=974922

Contact Information

Jeffrey K. MacKie-Mason (Contact Author)
University of Michigan ( email )
3246B SI North
1075 Beal Ave.
Ann Arbor, MI 48109-1092
United States
734-647-4856 (Phone)
734-764-1555 (Fax)
HOME PAGE: http://www-personal.umich.edu/~jmm/
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