Comment I: Competition Law as a Means of Containing Intellectual Property Rights

Summary

The past decades have seen an expansion in the reach of intellectual property rights (IPRs). This has occurred both over time, as IPRs are adapted to new areas of technology and to new ways of using technology, and across countries, as international intellectual property (IP) treaties, such as the WTO's Agreement on Trade Related Intellectual Property Rights (TRIPS), are extended to developing countries. There is a virtual consensus among lawyers and economists that competition law plays an important role in regulating markets characterized by strong IPRs ownership. Yet, how precisely is this role defined?

The most ambitious view is that competition law may be able to contain “excessive” protection of IPRs, or levels of protection that go beyond those which would optimally balance incentives for innovation and competitive access to goods and services. A corollary to this view is the notion that the expansion of IPRs has occurred, not because policymakers, after careful analysis, have concluded that societies as a whole would benefit from stronger IPRs, but because of political economy influences – notably the weight of narrow interest groups that stand to gain from strengthened protection.

From the perspective of public policy, assigning such a containment role to competition law does not appear to be first best. If IP standards do not optimally serve the needs of societies, it seems best to adjust those standards to more appropriate levels. But if this is not possible – for example, due to political economy influences – can competition law become a second-best instrument to correct a non-optimal policy?