Tailoring the Essential Facilities Doctrine to the IT Sector: Compulsory Licensing of Intellectual Property Rights after Microsoft

Abstract

Under the essential facilities doctrine, intellectual property right holders are forced to license their exclusive right to competitors when certain conditions established by the European Court of Justice are met. In the Microsoft case, the Court of First Instance applied the doctrine, but it lowered the standards for the imposition of a compulsory license considerably. In this article, it will be argued that the Court did this because of the exceptional market situation in the case. Looking at the economics of IT and the innovation process in this industry, it will be shown that compulsory licenses should be imposed on the basis of more lenient conditions in order to protect in­novation and competition in the IT market. The market situation grown around the intellectual property right could indicate how strictly the conditions of the essential facilities should be applied in future intellectual property licensing cases. The stricter conditions established in earlier judgments like Magill and IMS Health may therefore still be valid in cases where no substantial entry barriers to the market are present.

Keywords: Essential facilities doctrine, compulsory licensing, intellectual property rights, competition law, information technology

JEL Classification: K21