Global Antitrust Trends in the Context of Refusal to License Iprs

Posted by Social Science Research Network

Global Antitrust Trends in the Context of Refusal to License Iprs Gergana Miteva (University of Turin) & Gvantsa Duduchava (University of Turin)

Abstract: State-granted intellectual property rights serve to encourage innovation by granting the IPR holder a reward better than what a competitive market could offer. Some IPR owners seek to maximize this reward by either not licensing at all or blocking certain competitors from accessing the IP. Refusal to license is not only permissible under intellectual property incentive policies, but it is in their core. However, this practice may misbalance intellectual property systems by overemphasizing stimuli to invest in future invention and authorship at the expense of short-term allocative inefficiencies and lower consumer welfare. Each of the possible direct short-term and indirect long-term consumer effects such as pushing up of prices, restricting range and availability of IP-based products or lowering their quality, is believed to reduce consumer welfare. What justifies tolerating negative side-effects of absolute exclusivity of IPRs is that the policy boosts investment in risky innovation projects which in turn could benefit consumers by increasing the variety of products on the market. Both developed and developing countries have struggled with where to draw the line of IPR exclusivity so as to fine-tune inventor incentives to consumer welfare. To date, this balancing act is very much an unsettled matter on which the two leading IP systems – those of the US and the EU – converge.

This research paper seeks to outline current competition policy trends in the context of refusal to license IPRs and discuss their effect on developing countries. The paper focuses on the two leading policy-driving jurisdictions – that of the EU and the US, with analysis on the general directions in which they seem to be headed as well as their territorial and extraterritorial effects. Finally, this paper reviews the available remedies for unlawful refusal to license IPRs.