Intellectual Property and Antitrust Limitations on Contract

Abstract

In a consistent framework, both the antitrust and intellectual property laws should point toward the same goal: the maximization of social welfare. The attainment of this goal suggests that both sets of laws should be harmonized to attain this common goal and come to a joint solution with respect to the use/creation tradeoff. This paper examines the state of antitrust and intellectual property right protection for software, and finds little evidence that both sets of laws are being applied in a consistent manner. An examination of how the antitrust laws are applied to intellectual property industries finds little consideration of the unique appropriability and free riding problems that face intellectual property owners. As a result, antitrust enforcement has been hostile to intellectual property contracting and intellectual property industries, and to the maximization of dynamic efficiency. Further, static, ex-post competition arguments are now being used in support of weakening copyright protection. The outcome of this two-pronged attack is unlikely to yield a rational solution to the use/creation tradeoff.