In this paper, we offer an economic perspective on one aspect of the IP-antitrust nexus – the ability of firms to use their IP portfolios to compete with rivals. We recognize, as have the courts, that the grant of IP rights gives the owner of that right substantial leeway to utilize those rights; these rights include (i) the right to license or not in a broad array of circumstances, (ii) the right to change licensing terms,6 (iii) the right to settle patent litigation;7 and (iv) the right to offer package licenses. Nevertheless, we believe that there are and should be limitations to those IP rights. We are concerned with one particular type of strategic behavior – the ability to use one’s IP portfolio to raise one’s rivals’ costs. We will explain that such a strategy can, under some circumstances, serve an anticompetitive goal – either through predation against one or more competitors, or by encouraging competitors to tacitly collude in raising prices.
Antitrust, Patents, and Copyright: EU and US Perspectives
September 18, 2004