Research Handbook on Intellectual Property and Competition Law

RESEARCH HANDBOOK ON INTELLECTUAL

PROPERTY AND COMPETITION LAW

Research Handbook on

Intellectual Property and

Competition Law

Edited by

Josef Drexl

Director, Max Planck Institute for Intellectual Property,

Competition and Tax Law, Munich, Germany

Edward Elgar

Cheltenham, UK • Northampton, MA, USA

© Josef Drexl 2008

All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system or transmitted in any form or by any means, electronic, mechanical

or photocopying, recording, or otherwise without the prior permission of the

publisher.

Published by

Edward Elgar Publishing Limited

The Lypiatts

15 Lansdown Road

Cheltenham

Glos GL50 2JA

UK

Edward Elgar Publishing, Inc.

William Pratt House

9 Dewey Court

Northampton

Massachusetts 01060

USA

A catalogue record for this book

is available from the British Library

Library of Congress Control Number: 2008932899

ISBN 978 1 84542 047 5 (cased)

Typeset by Cambrian Typesetters, Camberley, Surrey

Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall

Contents

List of contributors vii

List of abbreviations ix

Preface xv

PART 1 OVERARCHING POLICIES AND ECONOMIC THEORIES

1 Competition law and intellectual property rights – outline of an

economics-based approach 3

Olav Kolstad

2 Is there a ‘more economic approach’ to intellectual property

and competition law? 27

Josef Drexl

3 The contestability of IP-protected markets 54

Andreas Heinemann

4 Assessing the effects of intellectual property rights in network

standards 80

Mark-Oliver Mackenrodt

PART 2 CONTRACTUAL ARRANGEMENTS

5 The new EC competition law framework for technology transfer

and IP licensing 107

Steve Anderman

6 Patent pools – policy and problems 139

Hanns Ullrich

7 The competitive effects of patent field-of-use licences 162

Mark R. Patterson

8 Patent and know-how licences under the Japanese Antimonopoly

Act 201

Junko Shibata

PART 3 UNILATERAL RESTRAINTS

9 Unilateral refusal to license indispensable intellectual property

rights – US and EU approaches 215

Beatriz Conde Gallego

v

10 Patent power and market power: rethinking the relationship

between intellectual property rights and market power in

antitrust analysis 239

Clifford A. Jones

11 Making antitrust and intellectual property policy in the United

States: requirements tie-ins and loyalty discounts 258

Warren S. Grimes

PART 4 MERGER CONTROL

12 New technologies and mergers 283

Josef Bejcˇek

PART 5 THE EFFECT OF IP LAWS AS SUCH ON COMPETITION

13 Limiting IP protection for competition policy reasons – a case study

based on the EU spare-parts-design discussion 313

Annette Kur

14 One, none, or a hundred thousand: how many layers of protection

for software innovations? 346

Gustavo Ghidini and Emanuela Arezzo

15 Development of the economics of copypright 373

Christian Handke, Paul Stepan and Ruth Towse

PART 6 NATIONAL IP RIGHTS AND CROSS-BORDER

COMPETITION

16 Intellectual property, the internal market and competition law 405

Stefan Enchelmaier

17 The exhaustion/competition interface in EC law – is there

room for a holistic approach? 427

Ole-Andreas Rognstad

18 Competition policy and intellectual property in the WTO:

more guidance needed? 451

Robert D. Anderson

Index 475

vi Research handbook on intellectual property and competition law

Contributors

Steve Anderman, BA (CUNY), JD (Yale), MSc London, Professor of Law at

the University of Essex, UK.

Robert D. Anderson, Counsellor, Intellectual Property Division, WTO

Secretariat, responsible for government procurement and competition

policy issues.

Emanuela Arezzo, Dott. (LUISS), LL M (Erasmus University Rotterdam),

Research Fellow at the Libera Università Internazionale degli Studi Sociali

(LUISS) Guido Carli in Rome.

Josef Bejcˇek, JUDr., CSc, Professor at Faculty of Law, Masaryk University,

Brno, former dean of Masaryk University Faculty of Law, Brno

(1995–2001).

Beatriz Conde Gallego, Dr. iur. (Munich), LL M (Würzburg), Research

Fellow at the Max Planck Institute for Intellectual Property, Competition

and Tax Law, Munich.

Josef Drexl, Dr. iur. (Munich), LL M (Berkeley); Director of the Max Planck

Institute for Intellectual Property, Competition and Tax Law, Munich,

Honorary Professor of Law at the University of Munich.

Stefan Enchelmaier, Dr. iur. (Bonn), LL M (Edinburgh), MA (Oxon.),

Professor of Law at the University of York.

Gustavo Ghidini, Professor of Intellectual Property Law at the Università

Statale di Milano and at the Libera Università Internazionale degli Studi

Sociali (LUISS) Guido Carli in Rome; attorney in Milan.

Warren S. Grimes, BA (Stanford), JD (Michigan), Irving D. and Florence

Rosenberg Professor of Law, Southwestern Law School, Los Angeles,

California, USA.

Christian Handke, BA (London), MA (Linköping), Junior Lecturer at the

Erasmus University Rotterdam.

Andreas Heinemann, Dr. jur. (Munich), Dipl.-Ök. (Hagen), DIAP (ENA,

Paris), Professor of Law at the University of Zurich.

Clifford A. Jones, JD (Okla.); M.Phil., Ph.D. (Cantab.), Levin College of

Law, University of Florida, USA.

Olav Kolstad, Dr. jur., Professor at the Department of Private Law,

University of Oslo.

Annette Kur, Dr. iur., Research Fellow at the Max Planck Institute for

Intellectual Property, Competition and Tax Law, Munich, Associate

Professor at the University of Stockholm.

vii

Mark-Oliver Mackenrodt, LL M (NYU), Research Fellow at the Max

Planck Institute for Intellectual Property, Competition and Tax Law,

Munich.

Mark R. Patterson, BSEE (Ohio State), MS (Ohio State), JD (Stanford),

Professor of Law, Fordham University School of Law, New York, NY,

USA.

Ole-Andreas Rognstad, Dr. jur., Professor of Law at the University of Oslo,

Department of Private Law.

Junko Shibata, Assistant Professor of Law at the University of Kagawa.

Paul Stepan, Mag. rer.soc.oec., Assistant for Cultural Economics and

Creative Industries at the Erasmus University Rotterdam.

Ruth Towse, BA Political Economy (Reading, UK), MSc (Econ) (LSE),

Ph.D. (Rotterdam), Reader in Cultural Industries at the Erasmus

University, Rotterdam and Bournemouth University, UK.

Hanns Ullrich, Dr. iur. (Berlin), M.C.J. (N.Y.U.), Emeritus Professor of

Competition Law, Intellectual Property Law, Universität der Bundeswehr

München, Professor at the European University Institute (EUI) in Florence

(2003–6).

viii Research handbook on intellectual property and competition law

Abbreviations

ABA American Bar Association

aff’d affirmed

AG Advocate General (ECJ)

AIDA Annali italiani del diritto d’autore

Alb. L.J. Sci. & Tech. Albany Law Journal of Science and Technology

All E.R. All England Reports

AMA Antimonopoly Act (Japan)

Am. Econ. Rev. American Economic Review

Antitrust Bull. Antitrust Bulletin

Antitrust L.J. Antitrust Law Journal

ASCAP American Society for Composers, Authors and

Publishers

B. E. J. Econ. Anal. The Berkeley Electronic Journal of Economic

& Pol’y Analysis and Policy

BER Block Exemption Regulation (EC)

Berkeley Tech. L.J. Berkeley Technology Law Journal

BGH Bundesgerichtshof (German Federal Supreme Court)

BIOS biological open source lines

Boston U. L.J.Rev. Boston University Law Journal Review

BT-Drucks. Bundestags-Drucksache (documents of the German

Parliament)

Bull. WHO Bulletin of the World Health Organization

CAFC US Court of Appeals for the Federal Circuit

Cal. L. Rev. California Law Review

Can. Bus. L.J. Canadian Business Law Journal

Cardozo Art & Cardozo Arts and Entertainment Law Journal

Enter. L.J.

C.D.E. Cahiers de Droit Européen

CDPA Copyright, Designs and Patents Act (UK)

CDR Community Design Regulation; compact disc

recordable

cert. certiorari

CFI Court of First Instance

Ch. Chapter

CII computer-implemented invention

Cir. US Circuit Court of Appeals

ix

C.M.L. Rev. Common Market Law Review

Col. J. L. & Arts Columbia Journal of Law and the Arts

Col. L. Rev. Columbia Law Review

COM European Commission

Comp. L. Rev. Competition Law Review

Comp. Pol’y Competition Policy Newletter

Newsletter

CRi Computer und Recht International

C.T.L.R. Computer and Telecommunication Law Review

D. US District Court

D.C. Cir. US Court of Appeals for the District of Columbia

DG Directorate General (European Commission)

Dir. Aut. Il Diritto d’autore

Dir. Inf. Il Diritto dell’informazione e dell’informatica

DMCA US Digital Millennium Copyright Act

DoJ US Department of Justice

DRM digital rights management

E.B.L.R. European Business Law Review

EC European Community; Treaty establishing the

European Community (as amended by the Treaty of

Nice 2001)

ECJ European Court of Justice

ECLR European Competition Law Review

Econ. J. Economic Journal

ECR European Court Reports

EEA European Economic Area

EEC European Economic Community

EIPR European Intellectual Property Review

E.L. Rev. European Law Review

Emory L.J. Emory Law Journal

EPC European Patent Convention

EPEC European Policy Evaluation Consortium

EPO European Patent Office

EPOR European Patent Office Reports

EU European Union

EuZW Europäische Zeitschrift für Wirtschaftsrecht

EWS Europäische Zeitschrift für Wirtschafts- und

Steuerrecht

F. Federal Reporter (US)

Fed. Cir. US Court of Appeals for the Federal Circuit

Fordham Intell. Prop., Fordham Intellectual Property, Media &

Media & Enter. L.J Entertainment Law Journal

x Research handbook on intellectual property and competition law

Fordham Int’l L.J. Fordham International Law Journal

Fordham L. Rev. Fordham Law Review

Foro It. Il Foro italiano

FRAND conditions fair, reasonable and non-discriminatory conditions

F. Suppl. Federal Supplement (US)

FTC US Federal Trade Commission

GATT General Agreement on Tariffs and Trade

Geo. L.J. Georgetown Law Journal

Global Econ. J. Global Economy Journal

GRUR Gewerblicher Rechtsschutz und Urheberrecht

GRUR Int. Gewerblicher Rechtsschutz und Urheberrecht

Internationaler Teil

Harv. J. L. & Harvard Journal of Law and Public Policy

Pub. Pol’y

Harv. J. L. & Tech. Harvard Journal of Law and Technology

Harv. L. Rev. Harvard Law Review

Hastings L.J. Hastings Law Journal

H.L. House of Lords

ICTSD International Center for Trade and Sustainable

Development

IIC International Review of Intellectual Property and

Competition Law

IJIO International Journal of Industrial Organization

Inf. Econ. & Pol’y Information Economics and Policy

Int’l J. L. & Econ. International Journal of Law and Economics

IP intellectual property

IPQ Intellectual Property Quarterly

IPR(s) intellectual property right(s)

J. Cultural Econ. Journal of Cultural Economics

J. Econ. Persp. Journal of Economic Perspectives

J. Econ. Surv. Journal of Economic Surveys

JFTC Japan Fair Trade Commission

J. Ind. Econ. Journal of Industrial Economics

J.I.E.L. Journal of International Economic Law

J. Inf. Techn. Th. Journal of Information Technology Theory and

& Appl. Application

JITE Journal of Institutional and Theoretical Economics

J. Leg. Stud. Journal of Legal Studies

J. L. & Econ. Journal of Law and Economics

J. L. Econ. & Org. Journal of Law, Economics and Organization

J. Pat. & Trademark Journal of the Patent and Trademark Office Society

Off. Soc’y

Abbreviations xi

J. Pol’y Anal. & Journal of Policy Analysis and Management

Manag.

J. Polit. Econ. Journal of Political Economy

JZ Juristen-Zeitung

K.C.L.J. King’s College Law Journal

L.Ed. Lawyer’s Edition

Leg. Iss. Econ. Integr. Legal Issues of Economic Integration

Marquette Intell. Marquette Intellectual Property Law Review

Prop. L. Rev.

Minn. L. Rev. Minnesota Law Review

N.Y.U. Ann. Surv. New York University Annual Survey of American

Am. L. Law

N.Y.U. L. Rev. New York University Law Review

OECD Organization for Economic Co-operation and

Development

OECD J. Comp. OECD Journal of Competition Law and Policy

L. & Pol’y

OEM original equipment manufacturer

OHIM Office for Harmonisation in the Internal Market

OJ Official Journal (EC, EU)

Okla. Bar J. Oklahoma Bar Journal

Pacific Rim L. The Pacific Rim Law and Policy Journal

& Pol’y J.

PD Proposed Directive (EC)

PTO US Patent and Trademark Office

Q. J. Econ. Quarterly Journal of Economics

RAND conditions reasonable and non-discriminatory conditions

RAND J. Econ. RAND Journal of Economics

RERCI Review of Economic Research on Copyright Issues

Res. in L. & Econ. Research in Law and Economics

Rev. Ind. Org. Review of Industrial Organization

Riv. Dir. Ind. Rivista di Diritto Industriale

RIW Recht der internationalen Wirtschaft

RPC Reports of Patent Cases (UK)

Rutgers Comp. & Rutgers Computer and Technology Law Journal

Tech. L.J.

Rutgers L.J. Rutgers Law Journal

R&D research and development

S. Cal. L. Rev. Southern California Law Review

S.Ct. Supreme Court Reporter

SIAE Società Italiana degli Autori ed Editori

SIEC significant impediment to effective competition

xii Research handbook on intellectual property and competition law

SLC substantial lessening of competition

SME small and medium-sized enterprise

SPC supplementary protection certificate

SSNIP Small but Significant Non-transitory Increase in Price

Sw. U. L. Rev. South Western University Law Review

Temp. J. Sci. Tech. The Temple Journal of Science, Technology and

& Envtl. L. Environmental Law

Tex. Intell. Prop. L.J. Texas Intellectual Property Law Journal

Tex. L. Rev. Texas Law Review

Topics in Econ. Topics in Economic Analysis and Policy

Anal. & Pol’y

TRIPS Agreement on Trade-related Aspects of Intellectual

Property Rights

TT technology transfer

TTBER Technology Transfer Block Exemption Regulation

No. 772/2004 (EC)

U. Balt. L. Rev. University of Baltimore Law Review

UCC Uniform Commercial Code (US)

UCD Unregistered Community Design

U. Chi. L. Rev. University of Chicago Law Review

UCLA L. Rev. University of California at Los Angeles Law Review

UMTS Universal Mobile Telecommunications System

UNCTAD United Nations Conference on Trade and

Development

U. Pa. L. Rev. University of Pennsylvania Law Review

U. Pitt. L. Rev. University of Pittsburgh Law Review

US United States

U.S. United States Reports (Supreme Court)

USC United States Code

USCA United States Code Annotated

U.S.P.Q. United States Patent Quarterly

v. versus

Va. L. Rev. Virginia Law Review

Vand. L. Rev. Vanderbilt Law Review

Wash. U. L.Q. Washington University Law Quarterly

WIPO World Intellectual Property Organization

WL Westlaw

W.L.R. Weekly Law Reports

WRP Wettbewerb in Recht und Praxis

Wm. and Mary William and Mary Law Review

L. Rev.

WTO World Trade Organization

Abbreviations xiii

WuW Wirtschaft und Wettbewerb

Yale J. Reg. Yale Journal on Regulation

Yale L.J. Yale Law Journal

Y.E.L. Yearbook of European Law

ZEuP Zeitschrift für Europäisches Privatrecht

ZEuS Zeitschrift für Europäische Studien

ZHR Zeitschrift für das gesamte Handelsrecht

ZWeR Zeitschrift für Wettbewerbsrecht (Journal of

Competition Law)

xiv Research handbook on intellectual property and competition law

Preface

The application of competition law to intellectual-property-related cases may

well be regarded as one of the most complex and critical fields of competition

policy. Whereas in the past intellectual property and competition were mostly

considered as contradictory concepts, it is today widely admitted that both

fields of law, intellectual property and competition law, are meant to promote

complementary goals, namely innovation based on dynamic concepts of

competition. Still it largely remains disputed whether and under which condi￾tions competition law may intervene and restrain the use of an intellectual

property right. At this very moment this dispute also seems to be mirrored by

transatlantic disagreement. In September 2007 the European Court of First

Instance upheld the decision of the Commission to order Microsoft inter alia

to provide competitors with interoperability information on its operating

system despite possible intellectual property rights involved. Thomas Barnett,

Deputy Assistant Attorney General of the Antitrust Division of the US

Department of Justice, reacted immediately and accused the Court of ‘harm￾ing consumers by chilling innovation and discouraging competition’.

Concern about expanding and possibly ‘anti-competitive’ intellectual prop￾erty rights, blocking patents and patent ambush cases, network effects, espe￾cially in information technology industries, and the growing need for

standardization compel those practising in these areas of law to request more

fundamental research on the interface of intellectual property and competition

law. Such research, however, in both economic theory and legal studies, is still

in a stage of infancy. Economics can well explain and advise how markets

work when it comes to price and output, but the field still lacks operational

models for intervention in order to guarantee that the use of very roughly hewn

IP systems does not harm the delicate dynamics of competition and, ulti￾mately, consumer welfare. Meanwhile lawyers have to struggle with the grow￾ing number of IP-related competition law cases and discuss the most

appropriate ways to draw the line between the exclusivity of the right and

competition law intervention with a view to enhancing innovation.

This Handbook, bringing together 18 chapters by lawyers and economists

from different countries, responds to this need for further research. All the

contributions are the result of a research project organized and financed by the

Max Planck Institute for Intellectual Property, Competition and Tax Law in

Munich, Germany. The project ran for several years. A first meeting took

place in 2003 at Kloster Seeon (Bavaria), where initial papers were discussed

xv