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Competition Law and Intellectual Property Rights: Is the Property Rights’ Approach Right?

Published online by Cambridge University Press:  27 October 2017

Extract

The intersection between competition law and intellectual property has been a contentious issue since the very beginnings of European Communities (EC) competition law. Both intellectual property and competition law pursue the aim of enhancing economic welfare and innovation, but their direct objectives seem to be in conflict. Whereas intellectual property focuses on the reward of inventive effort and the inventor’s incentives to innovate by conferring an exclusive right on the use of the invention, competition law emphasises the dissemination of innovation by ensuring diffusion and access.

Type
Research Article
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Copyright © Centre for European Legal Studies, Faculty of Law, University of Cambridge 2006

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References

1 The European Courts initially drew a distinction between the existence and the exercise of an IP right (Cases 56 & 58/64 Consten and Grundig [1966] ECR 299 at 345; Case 24/67, Parke Davis [1968] ECR 55 at 62). In principle, the existence of the IP right, its ‘specific subject matter’ or ‘essential function’ should not be affected by competition law. However, the distinction does not provide a safe harbour for IP rights as the ECJ has also considered abusive practices that fall within the scope of the ‘specific subject matter’ of the IP right in certain ‘exceptional circumstances’. The Court also gives a broad definition to the term ‘exercise’, thus keeping an important discretion as to the scope of the application of competition law.

2 Promoting innovation is one of the objectives of competition law. See Commission Notice—Guidelines on the application of Article 81 of the EC Treaty to technology transfer agreements OJ 2004 C 101/2, para 7.

3 Rahnasto, I Intellectual Property Rights, External Effects and Anti-trust Law (Oxford, OUP, 2003) 64 Google Scholar.

4 The ‘literary property’ debate of the 18th century and the ‘patent controversy’ of the 19th century, which highlighted the collision of copyright and patents with the common law and the principle of free trade, engendered an important debate on the theoretical underpinnings of intellectual property. On the ‘literary controversy’ see, May, C and Sell, S K Intellectual Property Rights—A Critical History (London/Boulder, Colo, Lynne Rienner, 2005) 87-97Google Scholar; Sherman, B and Bently, L The Making of Modern Intellectual Property Law (Cambridge, CUP, 1999) 11 Google Scholar. On the ‘patent controversy’ see Machlup, F and Penrose, EThe Patent Controversy in the Nineteenth Century’ (1950) 10 Journal of Economic History 1 CrossRefGoogle Scholar.

5 Sherman, B and Bently, L above n 4, 206.

6 Nevertheless, it is also clear that property is not an absolute right. European Union law emphasises the ‘social function’ of property, according to which, property rights can be restricted for reasons of public interest. See Case 265/87, Herman Schräder HS Kraftfutter GmbH v Hauptzollamt Gronau [1989] ECR 2237, para 15. Competition law constitutes a ‘general interest’ objective that could justify a restriction on the scope of property rights. See Case T–65/98, Van den Bergh Foods Ltd v Commission [2003] ECR II–4653, para 170.

7 Rahnasto I. above n 3, 57 (‘[p]art of the property theory is that the rights, duties and privileges accompanying the property are absolute and universal’).

8 See, for instance, Commission Decision, Microsoft/W2000 (COMP/C–3/37.792), 24 March 2004, available at www.europa.eu.int/comm/competition/antitrust/cases/decisions/37792/ en.pdf (last visited 20 March 2006) para 550; See also US Dept. of Justice and FTC Antitrust Guidelines for the Licensing of Intellectual Property (6 April 1995) §2.1, available at www. usdoJgov.atr/public/guidelines/0558.pdf (last visited 20 March 2006).

9 Ullrich, H. ‘Expansionist Intellectual Property Protection and Reductionist Competition Rules: a TRIPS Perspective’ in Maskus, K (ed) International Public Goods and Transfer of Technology (Cambridge, Cambridge University Press, 2005) 726-57Google Scholar.

10 Joined Cases C–241/91 and C–242/91, Radio Telefis Eireann v Commission (Magill) [1995] ECR I–743.

11 Case C–418/01 IMS Health GmbH v NDC Health (IMS ) [2004] ECR I–5039.

12 Microsoft, above n 8.

13 DG Competition discussion paper on the application of Art 82 of the Treaty to exclu sionary abuses (hereinafter referred as DG Discussion Paper) December 2005, available at www.europa.eu.int/comm/competition/antitrust/others/discpaper2005.pdf (last visited 20 March 2006).

14 Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (hereinafter referred as Directive 96/9/EC), OJ 1996 L 77/20.

15 Rahnasto, I above n 3, 36.

16 Spence, MThe Mark as Expression/The Mark as Property’ (2005) 58 Current Legel Problems 491, 494 Google Scholar.

17 Landes, WM and Posner, RA The Economic Structure of Intellectual Property Law (Cambridge, Mass, Harvard University Press, 2003) 34 Google Scholar (the doctrine of adverse possession may limit the duration of a normal property right. However, the effects of the adverse posses sion are different to the extent that ‘adverse possession shifts ownership from one person to another, whereas the expiration of a fixed-duration intellectual property right eliminates own ership and makes the work a part of the public domain’).

18 Cornish, W and Llewelyn, D Intellectual Property 5th edn (London, Sweet & Maxwell, 2003) 173 Google Scholar.

19 Landes, W and Posner, R above n 17, 415. Contra Meiners, RE and Staaf, RJPatents, Copyrights, and Trademarks: Property or Monopoly?’ (1990) 13 Harvard Journal of Law and Public Policy 911, 916917 Google Scholar (‘patents, copyrights, and trademarks granted recognition by the State are essentially the same as recognition by the State of claims in real property’).

20 In the UK, the specialist patent courts are the Patents Court of the Chancery Division of the High Court and the Patents County Court.

21 Landes, W and Posner, R above n 17, 418; Jaffe, AB and Lerner, J Innovation and Its Discontents (Princeton, NJ, University Press, 2004) 9-16Google Scholar and Lunney, GS ‘Patent law, the Federal Circuit, and the Supreme Court: a Quiet Revolution’ (2004) 11 Supreme Court Economic Review 1.

22 According to the efficiency theory of the common law: Posner, R Economic Analysis of Law 6th edn (New York, Aspen, 2003), 25-27Google Scholar.

23 Landes, W and Posner, R above n 17, 417 (common law refers to ‘any body of Law that is judged created’). The same claim that physical property rights benefit from a superior presump tion of efficiency has also been made for civil law systems by Bouckaert, BWhat is Property?’ (1990) 13 Harvard Journal of Law and Public Policy 775, 790 Google Scholar (‘the origin of intellectual prop erty rights has its historical roots in deliberate interventions by political authorities rather than in a spontaneously evolved continental legal tradition’. Therefore, the ‘presumption of rightness’ that exists for tangible property, which incurred a long process of evolution, cannot be extended to IP).

24 Hovenkamp, H The Antitrust Enterprise—Principle and Execution (Cambridge, Mass, Harvard University Press, 2005) 250251 CrossRefGoogle Scholar (giving examples of interest-group capture of IP protection).

25 See Easterbrook, FIntellectual Property is Still Property’ (1990) 13 Harvard Journal of Law and Public Policy 108, 113 Google Scholar.

26 Peritz, RJThe Rule of Reason in Antitrust Law: Property Logic in Restraint of Competition’ (1989) 40 Hastings Law Journal 285, 336 Google Scholar (‘history of early antitrust law chron icles a confrontation between property and competition logic’).

27 Demsetz, HProperty Rights’ in Newman, P (ed) The New Palgrave Dictionary of Law and Economics (London, Macmillan, 1998) 144, 145 Google Scholar.

28 On the distinction between the legal and the economic definitions of monopoly see, Mason, ESMonopoly in Law and Economics’ (1937) 47 Yale Law Journal 34 CrossRefGoogle Scholar.

29 Kitch, EWPatents: Monopolies or Property Rights?’ (1986) 8 Research in Law and Economics 31, 33 Google Scholar.

30 Meiners, RE and Staaf, RJPatents, Copyrights, and Trademarks: Property or Monopoly?’ (1990) 13 Harvard Journal of Law and Public Policy 911 Google Scholar; Kitch, EWElementary and Persistent Errors in the Economic Analysis of Intellectual Property’ (2000) 53 Vanderbilt Law Review 1727, 1734 Google Scholar.

31 Concerning the US see Illinois Tool Works Inc v Independent Ink Inc, 547 US (2006). The Supreme Court abandoned the presumption that a patent confers market power upon the patentee. See also, US Dept of Justice and FTC, above n 8, § 2.2.

32 Case 78/70, Deutsche Grammophon Gesellschaft mbH v Metro-SB-Grossmärketete GmbH & Co [1971] ECR 487, para 16.

33 Case 40/70, Sirena Srl v. Eda Srl [1971] ECR 69, para 16.

34 Magill, above n 10, para 46.

35 See Case 85/76, Hoffmann-LaRoche v Commission [1979] ECR 461, paras 42D and 48; Case T–51/89, Tetra Pak Rausing SA v Commission [1990] ECR II–309, para 23. See also Govaerea, I The Use and Abuse of Intellectual Property Rights in EC Law (London, Sweet & Maxwell, 1996) 245246 Google Scholar.

36 Case 53/87, CICCRA v Renault [1988] ECR 6039; Case 238/87, Volvo v Veng [1988] ECR 6211.

37 Case 53/87 Renault above n 36, para 9 (the ECJ addressed the issue of the possible mono polisation by the automobile manufacturers of the spare parts they were producing, because of the exclusivity conferred on them by the design rights. The examples of abusive conduct that the ECJ gave (arbitrary refusal to supply spare parts to independent repairers, the fixing of prices at an unfair level or a decision no longer to produce spare parts for a particular model) reflect its concern that, by purchasing an automobile (which is a substantial investment), con sumers are locked in to a specific automobile manufacturer for a substantial period of time. The manufacturer will therefore be able to exploit its position and extract monopolistic profits. However, the ECJ’s concern is sector specific, as the locked in effect is particularly important regarding automobiles, but not for other products. My position is therefore that these sector specific and consumer protection–like concerns are better addressed by IP law than by competition law, which applies to all sectors and for all types of IP rights. This seems also to be the recent approach of the Commission, which excluded spare parts for complex products from the IP protection of designs).

38 Tetra Pak above n 35.

39 Case T-504/93, Tiercé Ladbroke SA v Commission [1997] ECR II–923 (the objective of the French racecourses was not to extend their monopoly in Belgium (leverage theory) but to protect their monopoly in the French market, which could be threatened if the Belgian companies were able to take bets for French races).

40 For a more detailed analysis of the EC case law on refusals to license see Korah, V Intellectual Property Rights and the EC Competition Rules (Oxford, Hart Publishing 2006) 133167 Google Scholar; Fine, F The EC Competition Law on Technology Licensing (London, Sweet & Maxwell, 2006) 124150 Google Scholar; Anderman, S EC Competition Law and Intellectual Property Rights: The Regulation of Innovation (Oxford, OUP, 1998) 147220 Google Scholar.

41 United States v Terminal RR Ass’n, 224 US 383 (1912); Associated Press v United States, 326 US 1 (1945); Otter Tail Power Co v United States, 410 US 366 (1973).

42 MCI v AT&T, 708 F2d 1081 (7th Cir, 1983).

43 Hovenkamp, H Janis, MD and Lemley, MA. ‘Unilateral Refusals to License in the US’ in Lévêque, F and Shelanski, H (eds) Antitrust, Patents and Copyright—EU and US Perspectives (Cheltenham and Northhampton, Mass, Edward Elgar, 2005), 12 and 18 Google Scholar.

44 Magill above n 10.

45 Hovenkamp, H Janis, M and Lemley, M above n 43, 18.

46 AG Jacobs’ Opinion, Case C–7/97 Oscar Bronner [1998] ECR I–7791 para 50.

47 Commission Decision 2001/165, NDC Health/IMS Health (Interim measures), OJ 2002 L 59/18, paras 63–74.

48 IMS above n 11 paras 34–35.

49 Ibid, para 38.

50 Case C–7/97, Oscar Bronner [1998] ECR I–7791, para 41. See also Korah, V above n 40, 142

51 Ibid, para 49, emphasis added.

52 See also Korah, V above n 40, 145 (‘the remarks of the ECJ in Volvo were not necessary to the decision, whereas those in IMS were’).

53 Opinion of AG Tizzano in Case C-418/01 above n 11, para 62.

54 See the criticisms of Ridyard, DCompulsory Access Under EC Competition Law—A New Doctrine of “Convenient Facilities” and the Case for Price Regulation’ (2004) 25 European Competition Law Review 669 Google Scholar; Temple Lang, J ‘The Application of the Essential Facility Doctrine to Intellectual Property Rights under European Competition Law’ in Lévêque, F and Shelanski, H (eds), above n 43 56, 69.

55 See in the Netherlands the decision of the College van Beroep voor het bedrijfsleven, 15 July 2004, in Nederlandse Omroep Stichting (NOS) v Rechtbank Rotterdam, Case Note, Baumé, T (II February 2005) e-Bulletin available at http://concurrences.fr (last visited 20 March 2006).

56 See in France, Conseil de la concurrence, Rapport Annuel 2004, 141–52 (it is possible to apply the essential facilities doctrine to IP rights) available at www.conseil-concurrence.fr/user/index.php (last visited 20 March 2006); Conseil de la concurrence, Decision 05–D–25, 31 March 2005, Yvert & Tellier (the existence of a potential consumer demand makes the product ‘new’) available at www.conseil-concurrence.fr/user/avis. php?avis=05-D-25 (last visited 20 March 2006); Cour d’appel de Paris, 31 January 2006, NMPP v MLP, RG n° 2005/14782 (the new product rule is not mentioned) and in Germany, Bundesgerichtshof, 13 July 2004, n° KZR 40/02, Standard-Spundfaß (the norm or quasi-norm nature of the patent triggers antitrust liability, without it being necessary to prove the emer gence of a new product), Case note, Herrlinger, J and Buch, M (II February 2005) e-Bulletin available at http://concurrences.fr (last visited 20 March 2006).

57 Ahlborn, C Evans, D and Padilla, JThe Logic & Limits of the Exceptional Circumstances Test in Magill and IMS Health’ (2004) 28 Fordham International Law Jornal 1109, 1146-9Google Scholar.

58 Ibid at 1149.

59 Commission Decision, Microsoft/W2000, above n 8.

60 Ibid, para 779.

61 Ibid, paras 999–1010.

62 See on the distinction paras 568–572.

63 Ibid, paras 546 and 1004.

64 Ibid, para 555.

65 Ibid, paras 772 and 788.

66 Ibid, para 556. The discontinuance of previous supply was a factor that the ECJ took into consideration in Case 6/73, ICI & Commercial Solvents/Commission [1974] ECR 223.

67 Volvo v E Veng above n 36, para 9 and CICCRA v Renault above n 36 para 17.

68 Cf Korah, V above n 40, 144 (the exceptional circumstances in IMS/NDC Health are exhaustive) with Anderman, SDoes the Microsoft Case Offer a New Paradigm for the Exceptional Circumstances Test and Compulsory Copyright Licenses under EC Competition Law?’ (2004) 1 Competition Law Review 7, 13-14Google Scholar (exceptional circumstances in IMS were not exhaustive).

69 Order of the President of the CFI in Case T–201/04, R, Microsoft Corporation v Commission [2005] 4 CMLR 406, para 206.

70 Microsoft/W2000, above n 8, para 584.

71 Ibid, para 588.

72 Hovenkamp, H Janis, M and Lemley, M above n 43, 34; Ahlborn, C, Evans, D and Padilla, J above n 57, 1146.

73 Microsoft above n 8 para 694.

74 Ibid, para 700.

75 Ibid, para 709.

76 Ibid, para 710.

77 US v Microsoft Corp., 253 F 3d 34, 63 (DC Cir, 2001) (Microsoft’s argument that the exercise of an intellectual property right cannot give rise to antitrust liability ‘borders on the frivolous’).

78 Microsoft above n 8, para 712.

79 Ibid, para 783.

80 Ibid, para 725.

81 Ibid, para 725.

82 Ibid, para 550.

83 Oscar Bronner, above n 50 para 41.

84 DG Discussion Paper above n 13 paras 237–42.

85 Ibid, para 213.

86 Ibid, para 217.

87 Ibid, para 227.

88 IMS, above n 11 paras 44–45.

89 DG Discussion Paper above n 13 para 236.

90 Ibid.

91 Ibid, para 239.

92 Ibid, para 240.

93 Dreyfuss, RUnique Works/Unique Challenges at the Intellectual Property/Competition Law Interface’ in Ehlermann, CD and Atanasiu, I (eds) European Competition Law Annual 2005 (Oxford, Hart Publishing, 2006) 19 Google Scholar, available at http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=763688 (last visited 20 March 2006).

94 DG Discussion Paper above n 13 paras 241–42.

95 Ibid.

96 Ahlborn, C Evans, DS and Padilla, J above n 57, 1129.

97 Ibid, 1141.

98 Ibid, 1156 (‘a similar approach should be applied to the assessment of unilateral refusals to provide access to physical infrastructure or to any other tangible or intangible property’).

99 Ibid, 1143–1144.

100 Ibid, 1143.

101 Ibid.

102 Ibid.

103 Ibid, 1129.

104 For a more extensive analysis of this argument, see Ritter, CRefusal to Deal and Essential Facilities: Does Intellectual Property Require Special Deference Compared to Tangible Property?’ (2005) 28 World Competition 281, 294-7Google Scholar.

105 Ahlborn, Evans, DS and Padilla, AJ above n 57, 1141.

106 May, C and Sell, SK above n 4, 143.

107 See the examples quoted by Jaffe, A and Lerner, J above n 21, 32–35 (eg, a patent on ‘sealed crustless sandwich’ or a patent on a ‘method of exercising a cat’, which obviously are not examples of meritorious investment and ‘risk taking’).

108 Ritter, C above n 104, 287.

109 May, C and Sell, SK above n 4, 145–9.

110 Dreier, TBalancing Proprietary and Public Domain Interests: Inside or Outside of Proprietary Rights?’ in Dreyfuss, R Zimmerman, D and First, H (eds) Expanding the Boundaries of Intellectual Property (Oxford, OUP, 2001) 295, 312 Google Scholar (antitrust remedies ‘should be reserved for exceptional situations where intellectual property law has failed’).

111 Directive 96/9/EC above n 14.

112 Art 3 (1) of ibid.

113 Art 7(1) of ibid.

114 First Evaluation of Directive 96/9/EC on the legal protection of databases (2005) available at www.europa.eu.int/comm/internal_market/copyright/docs/databases/evaluation_report_ en.pdf, at 9 (last visited 25 March 2006).

115 Hugenholtz, PB ‘Abuse of Database Right: Sole-Source Information Banks under the EU Database Directive’ in Lévêque, F and Shelanski, H (eds), above n 43, 203.

116 Proposal for a Council Directive on the Legal Protection of Databases, COM(92)24 final, OJ 1992 C 156/4, Art 8(1) and (2).

117 Case C-46/02, Fixtures Marketing Ltd v Oy Veikkaus AB [2004] ECR I–10365; Case C–203/02 The British Horseracing Board Ltd and Others v William Hill Organisation Ltd [2004] ECR I–10415; Case C–338/02 Fixtures Marketing Limited v AB Svenska Spel [2004] ECR I–10497; Case C–444/02 Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou AE—OPAP [2004] ECR I–10549. For an analysis of national courts’ decisions, see First Evaluation of Directive 96/9/EC, above n 114, 11.

118 Hugenholtz, PB above n 115, 211–3; Derlaye, E, Databases Sui Generis Right: Should We Adopt the Spin-off Theory?’ [2004] European Intellectual Property Review 402 Google Scholar.

119 Fixtures Marketing Ltd v Oy Veikkaus Ab above n 117 para 34.

120 The British Horseracing Board Ltd and Others v William Hill Organisation Ltd above n 117, para 35; Davison, MJ and Hugenholtz, PBFootball Fixtures, Horseraces and Spin Offs: The ECJ Domesticates the Database Right’ [2005] European Intellectual Property Review 113 Google Scholar; Derclaye, EThe Court of Justice Interprets the Database Sui Generis Right for the First Time’ [2005] European Law Review 420 Google Scholar.

121 First Evaluation of Directive 96/9/EC on the legal protection of databases, above n 114, 5.

122 Feist Publications v Rural Telephone Service Company, 499 US 340 (1991) (the Supreme Court refused to accept that information contained in a telephone directory could be protect ed under copyright laws. A database may be copyrighted only if it possesses some ‘minimal degree of creativity’).

123 Westkamp, GProtecting Databases under US and European Law: Methodical Approaches to the Protection of Investments between Unfair Competition and Intellectual Property Concepts’ (2003) 34 International Review of Industrial Property and Copyright Law 772 Google Scholar.

124 The adjustment of the duration of the IP protection is another option. See, Kaplow, LThe Patent–Antitrust Intersection: A Reappraisal’ (1984) 97 Harvard Law Review 1813, 1840 CrossRefGoogle Scholar (‘setting the patent life and determining patent-antitrust doctrine are interdependent endeavors; in other words, the system of equations that defines the optimization process must be solved simultaneously’ and at 1841: ‘the ideal institutional arrangement would involve a single entity with control over both policy instruments’). However, this is unlikely to happen as the duration of the IP protection is usually determined by international treaties, which is impossible or extremely difficult to amend.

125 Directive 98/71/EC on the legal protection of design, OJ 1998 L 289/28.

126 Proposal for a Directive of the European Parliament and of the Council amending Directive 98/71/EC on the legal protection of designs, COM(2004)582 final.

127 Ibid, 9.

128 See above n 36 and 37.

129 See on this point the criticisms of Strauss, JDesign Protection for Spare Parts Gone in Europe? Proposed Changes to the EC Directive: The Commission’s Mandate and its Doubtful Execution’ [2005] European Intellectual Property Review 391, 394-6Google Scholar.

130 Rahnasto, I above n 3, 64.

131 Barnard, C The Substantive Law of the EU (Oxford, OUP, 2004) 158162 Google Scholar.

132 The reverse doctrine of equivalents in US patent law provides an excuse from infringement liability when the subservient innovation adds a considerably important value to the pioneer invention. Merges, RP and Duffy, JF Patent Law and Policy: Cases and Materials (Lexis Nexis, 2002) 1000 Google Scholar; A recent decision of the Federal Circuit (Tate Access Floors, Inc v Interface Architectural Res, Inc, 279 F.3d 1357, 1368 (Fed Cir 2002)) has cast doubt on the continuing validity of the doctrine but, in the absence of a Supreme Court precedent, it is still good law.

133 According to S 49 of the Patents Act 1977, once a British patent has been granted, the Comptroller has the discretion to grant compulsory licensing after balancing a variety of considerations.

134 The patent misuse doctrine constitutes an affirmative defence to an action for patent infringement, the counter–claimant defendant arguing that the patentee is improperly attempting to extend the scope of the patent or is violating antitrust laws. On the patent misuse doctrine in US law, see ABA Section of Antitrust Law Intellectual Property Misuse: Licensing and Litigation (Chicago, ILL, ABA Publishers, 2000).

135 Dawson Chem Co v Rohm & Haas Co, 448 US 176 (1980). See also S 271(d) of the Patent Act, which was added by the Patent Misuse Reform in 1988 and which provide that ‘no patent owner otherwise entitled to relied for infringement or contributory infringement of a patent shall be denied relied or deemed guilty of misuse or illegal extension of the patent right by reason of his having (4) refused to license or use any rights to the patent’.

136 Bently, L and Sherman, B Intellectual Property Law 2nd edn (Oxford, OUP, 2004) 555 Google Scholar.

137 Federal Trade Commission ‘To Promote Innovation—The Proper Balance of Competition and Patent Law and Policy’ (FTC Report) (October 2003) available at www.ftc.gov/opa/2003/10/cpreport.htm (last visited 20 March 2006) ch 6. A joint report of the FTC and the Department of Justice with final recommendations is expected to be published shortly.

138 Ibid.

139 Tom, WK and Newberg, JAAntitrust and Intellectual Property: From Separate Spheres to Unified Field’ (1997) 66 Antitrust Law Journal 167 Google Scholar.

140 For a definition of this concept, see Drahos, P A Philosophy of Intellectual Property (Aldershot, Dartmouth, 1996) 214 Google Scholar. It should be noted that, contrary to the legal conception of ‘property rights’, economic analysis of law fully adheres to the instrumental approach and considers property rights as a form of collective action in the market place along with other tools such as direct regulation, liabilities, rewards and taxes. See Shavell, S Foundations of Economic Analysis of Law (Cambridge, Mass, Belknap Press of Harvard University Press, 2004) 93-4Google Scholar; Posner, R above n 22, 47 (distinguishing between ‘formal property rights’ and the way economists describe them as ‘every device—public or private, common law or regulatory, contractual or governmental, formal or informal—by which divergences between private and social costs or benefits are reduced’); Krier, JEThe (Unlikely) Death of Property’ (1990) 13 Harvard Journal of Law and Public Policy 75, 76 and 78Google Scholar (‘[regulation and property] are simply variations in a more general category of operational techniques. Property is just a system of regulation and vice versa’).

141 Drahos, P above n 140, 223–4.

142 Picard v United Aircraft Corp, 128 F 2d 632, 645 (2nd Cir 1942), Judge Frank (concur ring opinion)

143 Ibid. 643 (‘the threat from patent monopolies in the hands of such outsiders may create a sort of competition—a David versus Goliath competition—which reduces the inertia of some huge industrial aggregations that might otherwise sluggish’).

144 Ibid.

145 Ibid, 645.

146 See also Anderman, S above n 68, 22 (IP rights can be viewed as ‘a form of licence or leasehold conferred by the state’).

147 See the excellent study by Priest, GThe Origins of Utility Regulation and the ‘Theories of Regulation Debate’ (1993) 36 Journal of Law and Economics 289 CrossRefGoogle Scholar.

148 Ghosh, SPatents and the Regulatory State: Rethinking the Patent Bargain Metaphor After Eldred’ (2004) 19 Berkeley Technical Law Journal 1315, 1351 Google Scholar.

149 On the different meanings of the term ‘regulation’, see Ogus, A Regulation: Legal Form and Economic Theory (Oxford, Hart Publishing 2004) 1-3Google Scholar; Baldwin, R and Cave, M Understanding Regulation (Oxford, OUP, 1999) 1-2Google ScholarPubMed.

150 Bouckaert, B above n 23, 805 (IP rights ‘are exogenous to the inner logic of private law’ and ‘the only difference (with government regulation) is that the users of the ideas compensate producers directly without the intermediation of the government’).

151 Ibid, 806.

152 Hovenkamp, H above n 24, 228.

153 Hovenkamp, HAntitrust and the Regulatory Enterprise’ [2004] Columbia Business Law Review 335, 336 Google Scholar.

154 Ibid, 337.

155 Ghosh, S above n 148, 1351.

156 Bently, L and Sherman, B above n 136, 329.

157 Ibid.

158 Burk, DL and Lemley, MAPolicy Levers in Patent Law’ (2003) 89 Virginia Law Review 1575 CrossRefGoogle Scholar (2003).

159 Ibid, 1615–30.

160 Ibid, 1687–1689 (eg, while it is necessary to assure a broad patent protection for biotechnological and chemical inventions, ‘because of their high cost and uncertain development process’, this is not the case with the software industry).

161 Council Directive 87/54/EEC of 16 December 1986 on the legal protection of topogra phies of semiconductor products, OJ 1987 L 24/36; Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, 1991 OJ L 122/42 (hereinafter referred to as Software Directive); Council Regulation 1768/92/EEC of 18 June 1992 concerning the creation of a supplementary protection certificate for medicinal products, OJ 1992 L 182/1; Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions, OJ 1998 L 213/13.

162 Art 6 of the Software Directive above n 161.

163 In particular, according to Art 6(c), the independently created program should not be ‘substantially similar in its expression’ to the de-compiled programs. This requirement is less far-reaching than the ‘new product rule’ of IMS/NDC Health, above n 11, as it does not exclude decompilation for creating independent competing products, which may accomplish the same functions as the decompiled program, without however being substantially similar to the latter.

164 Microsoft/W2000, above n 8, para 750.

165 Ibid, para 743.

166 Ibid, para 744.

167 Ibid, paras 749–62.

168 Ibid, para 763 (interpreted a contrario).

169 On the struggle between ‘procompetition’ forces and strong IP protection proponents and the resulting compromise that led to the adoption of the Software Directive see Palmer, AK and Vinje, TCThe EC Directive on the Legal Protection of Computer Software: New Law Governing Software Development’ (1992) 2 Duke Journal of Comparative and International Law 65 Google Scholar.

170 Hovenkamp, H above n 24, 232–3.

171 Ibid, 232.

172 Cf. Commission Decision 2003/707, Deutsche Telekom AG, OJ 2003 L 263/9 (an action for annulment of this decision was brought before the CFI—Case T–271/03) with Verizon Communications Inc Law Offices of Curtis V Trinko, LLP, 540 US, 398, 413 (2004). See however, Commission decision 2004/207, T-Mobile Deutschland/O2 Germany, OJ 2004 L 75/32, para 95 (the alternative offered by a sector specific regulatory remedy is a factor to be considered).

173 The implementation of the decompilation defence of Art 6 of the Software Directive above n 161, in the UK illustrates the risks of regulatory diversity between Member States. See Bently, L and Sherman, B above n 136, 219–21.

174 On the need to develop informal trans-disciplinary links between competition law and IP, see also Kovacic, WE ‘Competition Policy and Intellectual Property: Redefining the Role of Competition Agencies’ in Lévêque, F and Shelanski, H (eds), above n 43, 1, 9 (advocating ‘the development of new cooperative networks in which competition agencies work with collateral government institutions, such as rights-granting authorities, to study the interaction of these regulatory regimes’).

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Competition Law and Intellectual Property Rights: Is the Property Rights’ Approach Right?
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Competition Law and Intellectual Property Rights: Is the Property Rights’ Approach Right?
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Competition Law and Intellectual Property Rights: Is the Property Rights’ Approach Right?
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