The interface between competition policy and intellectual property in the context of the international trading system

Abstract

The author reflects on the relationship between intellectual property rights and competition law. The emergence of a new prospective among economists on this relationship is stressed, suggesting that a dynamic view of the role of IPRs in promoting economic welfare gains generally leads to the conclusion that IP protection is compatible with economic principles favoring competitive markets. The current attitude of competition law authorities toward IPRs in Canada, the European Union, Japan and the USA is described. This attitude reflects a shift away from a more critical approach to IPRs followed by competition authorities in the 1970s. It is postulated that these authorities have accepted a new dynamic view of the economic role of IPRs. The rules of the WTO TRIPS Agreement which address anti-competitive practices are also described. The circumstances in which IPRs may nevertheless facilitate economic outcomes adverse to public welfare are considered. There are certain market segments (e.g., the network environment) in which risks of abuse may be greater than in others. Also, there are risks that overprotection may lead to suboptimal economic outcomes. The exhaustion of rights/parallel imports question is touched on briefly, suggesting that it may not be practicable to extend the EU role of exhaustion to the multilateral arena, but also suggesting that regional rules of exhaustion may be useful.