Refusal to Deal and ``Essential Facilities’’: Does Intellectual Property Require Special Deference Compared to Tangible Property?

Abstract

This article is based on the twofold premise that (a) refusal to supply cases such as Commercial Solvents and later ``essential facility’’ cases belong to the same line of case-law, meaning that a ``first-time refusal’’ and the termination of an existing supply relationship should be treated under the same test; and (b) ECJ judgments such as Magill and IMS suggest that plaintiffs have to meet a stricter test in refusal to license cases than in cases involving a refusal to supply tangible products or to give access to a tangible facility. On this basis, I argue that it is unwise to treat refusal to license cases and refusal to supply cases under different tests. As part of the analysis, I confront the conventional view that a ``duty to license’’ necessarily has a negative impact on innovation. I provide several arguments to the effect that (a) the defendant’s innovation incentives are unlikely to be significantly affected by a legal rule on the duty to license; (b) industry-wide innovation may actually benefit from such a rule; and (c) in any event, one cannot assume that dynamic efficiency considerations always trump immediate gains in static efficiency