Federalism, Substantive Preemption, and Limits on Antitrust

Bruce H. Kobayashi; Joshua D. Wright

doi:10.1017/CBO9780511974984.018

17 - Federalism, Substantive Preemption, and Limits on Antitrust

An Application to Patent Holdup

Published online by Cambridge University Press: 05 June 2012

Bruce H. Kobayashi and

Joshua D. Wright

Edited by

Geoffrey A. Manne and

Joshua D. Wright

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Bruce H. Kobayashi: Affiliation:
George Mason University School of Law
Joshua D. Wright: Affiliation:
George Mason University School of Law
Geoffrey A. Manne: Affiliation:
International Center for Law and Economics (ICLE) and Lewis and Clark Law School
Joshua D. Wright: Affiliation:
George Mason University School of Law

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Summary

Introduction

In Credit Suisse v. Billing, the Court held that the securities law implicitly precludes the application of the antitrust laws to the conduct alleged in that case. The Court considered several factors, including the availability and competence of other laws to regulate unwanted behavior, and the potential that application of the antitrust laws would result in “unusually serious mistakes.” This chapter examines whether similar considerations suggest restraint when applying the antitrust laws to conduct that is normally regulated by state and other federal laws. In particular, we examine the use of the antitrust laws to regulate the problem of patent holdup of members of standard-setting organizations (SSOs). While some have suggested that this conduct illustrates a gap in the current enforcement of the antitrust laws, our analysis finds that such conduct would be better evaluated under the federal patent laws and state contract laws.

The patent holdup problem has become one of the most controversial issues in antitrust policy. The basic economics of patent holdup in the standard-setting context are generally well understood and related to the more general problem of holdup in the presence of relationship-specific investments: After an SSO has adopted a standard, and investments have been made to commit to the new technology, a patent holder may “hold up” users in a variety of ways that result in more favorable licensing terms than those contracted for ex ante.

Type: Chapter
Information: Competition Policy and Patent Law under Uncertainty
Regulating Innovation
, pp. 479 - 530

DOI: https://doi.org/10.1017/CBO9780511974984.018 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2011

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17 - Federalism, Substantive Preemption, and Limits on Antitrust

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