The relationship between intellectual property law and competition law: an economic approach

Abstract

Introduction The purpose of this chapter is to present an economic analysis of intellectual property right (IPR) law and its relationship with competition policy. The relevant economic literature on this subject is enormous and complex. Here, we will strive for simplicity, trying to extract the main concepts and proposing simple principles that might help to guide the application and design of both intellectual property and antitrust laws. While our analysis does not account for every single aspect of intellectual property law or every single competitive situation, we do believe that the analysis does derive useful general principles. The overriding thesis of this chapter will be the separation of intellectual property and competition law. This separation will apply to the design of the law: IP law should limit itself to properly assigning and defending property rights while competition law should be concerned with the use of such property rights. More precisely, competition law should be concerned only with the use and abuse of property rights that are sources of monopoly power. This principle of separation also applies to the enforcement of the law. The main theme here is the equality of treatment of various sources of monopoly power, i.e. of the use of various property rights. We will argue that once property rights of various types have been properly assigned, there is no reason for competition policy to further distinguish between the sources of monopoly power.