Antitrust and Intellectual Property Rights: Assessing the Link Between Standards and Market Power

Interoperability, Competition Policy and Antitrust and Standards

Article Snapshot

Author(s)

Anne Layne-Farrar

Source

Antitrust, Vol. 21, No. 3, page 42, 2007

Summary

This paper looks at recent cases assessing how patents affect competition within a standard setting context.

Policy Relevance

Courts that require firms to share their intellectual property could discourage innovation, even if they are trying to protect competition.

Main Points

  • The owners of patents or trade secrets have a legitimate right to stop others from using the technology, but this can restrict competition.
 
  • Standards include technology everyone wants to use; problems arise when technology protected by patents or trade secrets becomes a part of the standard.
 
  • The European Commission argued that Microsoft’s technology became a standard just by being used so much (a “de facto” standard) and that Micosoft’s patents and trade secrets were harming competition.
 
  • When courts require patent and trade secret holders to share technology (“compulsory licensing”) because it is part of a standard, it discourages innovation or makes firms reluctant to help set standards.
 
  • One option for courts is to make competitors to pay a reasonable price for the license (RAND), but prices are hard for courts to get right.

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