MODELOS COGNITIVOS DE LA LECTURA

Against this backdrop of seemingly contrary theories the tools of competition law and IPRs need to be balanced to achieve the mutual aim of encouraging innovation. In Chapter 3 the debate on reconciling the conflict was introduced and the important case of Microsoft has been the focus for commentators in the debate on whether competition law should dictate licensing of IPRs. The anti-interventionists appear to be in the majority, particularly in the USA. Devlin, Jacobs and Peixoto are an example of writers favouring the free market approach that has its origins in the Chicago School.³⁵² They argue in favour of breakthrough innovation for network markets referring to Katz & Shapiro and Liebowitz & Margolis. Their analysis of lock-in is limited to market lock-in and they do not consider the situation where customers are locked-in due to switching costs. They do however recognise that there could still be room for competition law remedies in the new economies when the Schumpeterian process of creative destruction is thwarted. This could occur when lack of interoperability is used to foreclose the means of access. They consider this may have

352 Alan Devlin, Michael Jacobs and Bruno Peixoto, ‘Success, Dominance and Interoperability’ (2009) 84 (4) Indiana Law Journal Article 4

123 occurred in United States v Microsoft³⁵³ where Microsoft blocked Netscape Navigator’s and Sun Microsystems’ bids to gain market access thus threatening Microsoft’s position in the operating systems market. Even in that case they point out that Microsoft did “not violate the antitrust laws simply by developing a product that is incompatible with those of its rivals”.³⁵⁴ The difference is between “interoperability as a remedy to antitrust violation and exclusivity as an antitrust offence in itself.”³⁵⁵ Devlin et al say that Europe should take note of this. However Microsoft’s practice of using interoperability information to gain market share and then to withhold it from competitors has similarities with both the US Microsoft case and also with Aspen where the unilateral termination of a voluntary course of dealings suggested a willingness to forsake short-term gains to achieve an anticompetitive end.³⁵⁶

There are some commentators, who while recognising the need to incentivise innovation, do not yet accept that the case is closed.³⁵⁷ Simon Genevez argues that IPRs as property rights should not be treated differently to other property and criticises giving

quasi-immunity to IPRs in exclusion cases advocating that it is not justified by dynamic efficiency arguments.³⁵⁸ He cites Ayers and Klemperer’s research that restrictions on patentees’

market power are efficient as the loss of incentives is negligible relative to the increase in social welfare. This is however industry dependant and is also dependent on the degree of

353 United States v Microsoft., 253 F.3d 34, 53 (D.C. Cir. 2001).

354 Ibid para 75

355 Alan Devlin, Michael Jacobs and Bruno Peixoto, ‘Success, Dominance and Interoperability’ (2009) 84 (4) Indiana Law Journal Article 4, 1200

356 Aspen Skiing Co v Aspen Highlands Skiing Corp, 472 U.S. 585 (1985)

357 Kathryn McMahon, ‘Interoperability: Indispensability and Special Responsibility in High Technology Markets’ (2007) 9 Tul J Tech & Intell Prop 123

358 Simon Genevaz ‘Against Immunity For Unilateral Refusals To Deal In Intellectual Property: Why Antitrust Law Should Not Distinguish Between Up And Other Property Rights’ (2004) 19 Berkeley Technology Law Journal 741

124 price elasticity.³⁵⁹ Genevez refers to a study conducted by Scherer at Harvard in 1977 which showed that compulsory licensing did not discourage innovation.³⁶⁰ However explanations again were industry specific and industries with an innate high level of R&D or where substitutes were the norm were not deterred from innovating by compulsory licencing.

Genevez argues that while the judgement in Trinko did not confirm the essential facility doctrine, it did not rule out judicial control where IPRs protection was abused.³⁶¹ Provided the door is left open Genevez considers the rule of reason can be used to prevent actions taken solely to foreclose markets while preserving the incentive to innovate.

In this complex landscape the Commission and the European Courts, and their counterparts in the USA, had to develop an approach to ex post regulation of interface information.

Review by competition law on an ex post basis should have the advantage that it can give consideration on a more flexible case-by-case basis. Theoretically this review should be better placed to determine the correct balance between openness or control of interface specifications and which is more likely to advance innovation. An ex post review in this manner can however result in uncertainty which in itself is damaging to investment and innovation. The uncertainty can be ameliorated by the Courts adopting a predictable, but possibly rigid analytical framework but at the expense of flexibility. This is contrasted with the ex ante regulation of intellectual property law which grants exclusivity with exceptions and is more rigid. There is the danger of striking a suboptimal balance between control and openness and static and dynamic efficiency.³⁶²

One analysis of the tension between competition law and IPRs has proposed that the balance of regulation by ex ante legislation or ex post competition law intervention is

359 Ian Ayres and Paul Klemperer, ‘Limiting Patentees' Market Power Without Reducing Innovation Incentives:

The Perverse Benefits of Uncertainty and Non-Injunctive Remedies’ (1999) 97 Michigan Law Review 985

360 Frederic M Scherer, The Economic Effects of Compulsory Patent Licensing ( New York University 1977)

361 Verizon Communications Inc v Trinko LLP 124 S.Ct. 872

362 Ashwin van Rooijen, The Software Interface between Copyright and Competition Law (Kluwer Law International 2010) 197

125 determined by a parameter of structural foreseeability.³⁶³ Circumstances that are

considered structural and foreseeable are best addressed by ex ante legislation, for example by IPRs or exceptions. It is only where for some reason circumstances that might have been foreseeable were not anticipated on a particular occasion that competition law should step in on a one off basis. The legislation should be amended as similar cases should now be foreseeable. Only unforeseeable or non structural circumstances are best dealt with by competition intervention, and this should be in exceptional circumstances where the balance of static and dynamic efficiency is less than optimal and is not structural and cannot be foreseen.³⁶⁴ Arguably the use of competition law to intervene in the disclosure of interface information is a case which has been foreseen by the reverse engineering provisions of the Software Directive. Applying these parameters it could be said that the Microsoft case, where intervention corrected IPRs that were considered too broad, would signal either that intervention should not have happened or that the consequences were not fully foreseen and anticipated. The courts must assess not only whether the suboptimal balance was anticipated by the relevant IPR but also what the ex post optimal balance should be. It is said that the courts often neglected the first element and the second is an economic evaluation.³⁶⁵ The Federal Circuit of the United States favours the per se rule where IPRs are nearly always lawful which means the second part of the analysis is

overlooked. The test of the European Courts is the exceptional circumstances test, which will be looked at in detail in the following section, incorporates a new product test which stands as a poor proxy for both parts of the analysis.³⁶⁶ IPRs protect certain aspects of

363 Josef Drexl, ‘Abuse of Dominace in Licensing and Refusals to License A “More Economic Approach” to Competition by Imitation and to Competition by Substitution’, in: Claus Dieter Ehlermann & Isabela Atanasiu, European Competition Law Annual 2005: The Interaction between Competition Law and IP Law, Oxford: Hart Publishing 2006, pp 647-664

364 Ibid

365 Ashwin van Rooijen, The Software Interface between Copyright and Competition Law (Kluwer Law International 2010), 111

366 Ibid

126 technology or expression and new product development can be foreseeable and

anticipated.

The application of the exceptional circumstances test to the refusal to supply IPRs is more concerned with structural ownership issues resulting from the ex ante allocation of rights rather than from behaviour which is patently abusive. The structural and foreseeable nature of the problem indicates that an ex ante solution in the IPR regime is better than ex post competition law. There have however been aggravating circumstances in some of the cases, including in Microsoft where interface information was originally disclosed before withdrawing it when the benefits of network effects had been achieved and were available to exploit on a more exclusive basis.