Resolving the Patent-Antitrust Paradox Through Tripartite Innovation (original) (raw)

2003, SSRN Electronic Journal

PATENT-ANTITR UST PARADOX benefits. 8 Because, for example, monopolists lack the constraints provided by competitive markets, they often reduce output, raise prices, limit innovation (so as not to introduce products that might dislodge their market position), or fail to allocate resources to the uses most highly valued by consumers. 9 Similarly, agreements between patentees and licensees restrict competition by their very operation. For example, patentees may impose quantity restrictions, royalty payments, grantbacks,10 territorial restrictions, 1 or field-of-use restrictions 1 2 on licensees. Most of these agreements (at a minimum, those with exclusive provisions) limit the amount of competition that would otherwise occur in the market. On a larger scale, several patentees could share their patents in a "patent pool" that excludes competitors or that jointly sets royalties for patents contained in the pool. 13 Patents also could form the basis for a more permanent combination of the participants' market power through joint ventures and mergers. This broad range of activities may make perfect sense from the standpoint of dispersing or exploiting the patented innovation. Patentees may not be the most efficient actors to take advantage of all the potential uses for their invention, or their patents may block the products of other patentees, thus necessitating cross-licenses or patent pools. The danger is that the greater need for cooperation and coordination from the perspective of the patent system often will trigger the heightened suspicion of the antitrust authorities. 14 8.