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New International Arrangements in Intellectual Property and Competition Law

  • John H. Barton
Chapter

Abstract

Intellectual property plays an increasingly important role in the international Intellectual Property1 (IP) law and antitrust law can no longer be viewed separately. Technology has become so important that IP incentives to research must be maintained in order to benefit the consumer. There will be no investment in research unless there is a chance of recouping the investment through supranormal profits, i.e. profits based on sales at prices above marginal cost. At the same time, this dynamic efficiency goal must be balanced against a more traditional static efficiency goal, in order to ensure appropriate allocation of non-research resources and to avoid the inflation of prices to the consumer. The balance between these dynamic and static goals must be reflected in the supporting bodies of IP and competition law. It may today be among the most important issues in antitrust law, both because of the growth in the scope of intellectual property, especially of patents,2 and because of the fundamental importance of technology to the future of the economy. If this is true domestically, it is even more true internationally. Because economic growth is heavily dependent on technology,3 encouragement of technology can only accelerate the global consumer benefits of free trade.4 Moreover, nations often attempt to compete through encouraging their technologically-advanced industries. By negotiating the TRIPS Agreement, the world has now chosen to recognize the importance of IP in world trade. At a static level, TRIPS implies that the developing nations will pay royalties to developed nations, who are the current leaders in technology. This, of course, is a broadly discussed phenomenon, particularly with respect to pharmaceuticals.5 But, of far greater importance to the future, the dynamics of the new system may be likely to favor the industries of developed nations. The IP rights which these developed-world industries hold may sometimes prove anticompetitive by enabling these industries to slow entry of others into the market and thus prolong their period of market dominance. Evaluation of this possibility requires a much deeper analysis of the way that intellectual property rights are used. A response to it is likely to require the definition of certain specific antitrust principles, and possibly their harmonization, as in the form of a World Trade Organization (WTO) Code.6 This paper explores three specific contexts in which IP rights may prolong developed-world market dominance, and generally describes the IP/competition law principles likely to be helpful. It concludes by exploring whether these principles need to be harmonized through an international code and defining first steps to be taken.7

Keywords

Intellectual Property World Trade Organization Competition Policy Federal Trade Commission Trips Agreement 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

  1. 2.
    See T. Maris (Chairman, U.S. Federal Trade Commission), “Competition and Intellectual Property Policy: The Way Ahead”, before American Bar Association, Antitrust Section Fall Forum, Washington, D.C., Nov. 15, 2001.Google Scholar
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Copyright information

© Springer Science+Business Media Dordrecht 2003

Authors and Affiliations

  • John H. Barton
    • 1
  1. 1.Law SchoolStanford UniversityStanfordUSA

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