Social Justice, Innovation and Antitrust Law

INTELLECTUAL PROPERTY LAW, ECONOMIC AND SOCIAL JUSTICE PERSPECTIVE, Anne Flanagan, Maria Lillà Montagnani, eds., Edward Elgar, 2010

Posted: 11 Sep 2010

See all articles by Mariateresa Maggiolino

Mariateresa Maggiolino

Bocconi University - Department of Legal Studies; Ask Research Center

Abstract

Pursuing “Social Justice” may mean supporting a non-discriminatory distribution of resources and opportunities among people, in order to assign to each individual and group a fair treatment, a just share of collective wealth, and the right to affect social and economic developments. Accordingly, endorsing a social justice approach towards proprietary innovations, such as patented inventions and copyrighted creations, could mean discussing whether the existing IPRs allow, on the one hand, inventors and authors to receive a fair and just consideration for their efforts; and, on the other hand, the whole society to benefit from innovation, as such, and from the spread of knowledge that each innovation entails and triggers.

But what should mean supporting a social justice perspective towards antitrust rules regarding dominant firms’ conduct and, in particular, towards those monopolistic practices involving dominant firms’ proprietary innovations?

Though in different years, in the United Stated and in the European Union Section 2 of the Sherman Act and Article 102 of the EC Treaty have been enforced in order to: (i) protect democracy, individual freedom, and citizens’ self-independence by sheltering economic pluralism; (ii) preventing big companies from undertaking unfair and exploitative behaviors in detriment of their rivals, customers and consumers; and (iii) guaranteeing a just wealth redistribution towards consumers. Hence, it could be argued that pursuing a social justice approach to antitrust rules that deal with dominant firms’ conduct means, inter alia, preventing dominant firms from impairing their rivals and, in case, prohibiting dominant firms from using their proprietary innovations to reduce their rivals’ profit opportunities. Actually, this conception of antitrust law is outdated: mere harm to competitors is not a basis for antitrust liability in both the United Stated and European Union. Rather, these key antitrust jurisdictions finally concur in considering that antitrust law must concern behaviors that harm consumer welfare and innovation. Thus, the condicio sine qua non for having the current antitrust authorities to scrutinize a dominant firm’s proprietary innovation can no longer be – and, actually, it has never really been – that such innovation gives to the dominant firm a competitive advantage in detriment of its rivals. Rather, the antitrust assessment of dominant firms’ innovation should follow a three-step analysis. First, given that good or true innovation, i.e. innovation that does not consist in mere tinkering with products and processes, does represent a key driver of economic progress and, as such, a crucial source of wealth and consumer welfare, antitrust authorities should distinguish such a good innovation from sham innovation by evaluating the inherent quality of the regarded patented invention or copyrighted creations. Second, they should use economics so to establish whether the conditions under which dominant firms can employ innovations to harm allocative and dynamic efficiency hold. Third, perhaps by using an effective burden of proof rule, US courts as well as EU antitrust institutions should confront the scenarios in which dominant firms' innovations produce benefits against the scenarios in which they cause competitive harm.

Accordingly, whereas Section 3 of this chapter will look at the economic theory to briefly address each of these steps in turn, Section 4 will consider if and how US courts and EU antitrust authorities apply the above three-step analysis. Finally, Section 5 will wonder whether the current US and the EU jurisdictions grant any further space for a social justice approach to dominant firms’ proprietary innovations and conclude that if playing dynamic efficiency arguments have been enough to prevent the block of rivals’ innovation, changing the antitrust law’s aims so to encompass a social justice’s issue, such as the spread of innovation, could be a useless choice.

Keywords: Social Justice, Innovation, Competition, Antitrust, IPRs, Tying, Bundling, Incompatibility

JEL Classification: K21

Suggested Citation

Maggiolino, Mariateresa, Social Justice, Innovation and Antitrust Law. INTELLECTUAL PROPERTY LAW, ECONOMIC AND SOCIAL JUSTICE PERSPECTIVE, Anne Flanagan, Maria Lillà Montagnani, eds., Edward Elgar, 2010, Available at SSRN: https://ssrn.com/abstract=1674883

Mariateresa Maggiolino (Contact Author)

Bocconi University - Department of Legal Studies ( email )

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Milan, Milan 20136
Italy

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