|
Archive@NYU >
Stern School of Business >
Economics Working Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26054
|
| Title: | Patents and Antitrust: Application to Adjacent Markets |
| Authors: | Economides, Nicholas
Hebert, William N. |
| Issue Date: | Mar-2008 |
| Series/Report no.: | EC-07-24 |
| Abstract: | We examine the intersection of patents and antitrust where a patent
holder uses the monopoly power it possesses in the market for a patented
product to exclude competitors in an adjacent market and attempt to
monopolize or monopolize the adjacent market. The present scheme for
awarding patents cannot judge when the issuance of a patent will lead to
the appropriate balance between innovation and economic efficiency.
Where a patent holder’s invention uses an interface with adjacent
products, the patent holder may be tempted to extend its patent monopoly
into adjacent markets that depend upon the interface with the patented
invention. Economic theory suggests that it is inappropriate to immunize
a patent holder from antitrust liability when it attempts to extend its
patent monopoly into adjacent markets because it could decrease consumer
surplus. Courts have expressed their reluctance to scrutinize a patent
holder’s innovations and design changes because of the potential
benefits of the innovations and their reluctance to second-guess the
marketplace. However, applying traditional antitrust principles, courts
have found that monopolists could be liable for unlawfully extending
their monopoly positions into adjacent markets in the areas of computer
peripherals and software applications; aftermarkets for replacement
parts, service and maintenance of durable goods; design changes to
medical devices; and changes in drug formulas. While the patent laws
provide a spur to innovation by granting limited monopoly rights, the
antitrust laws curb the excessive reach of these monopoly rights by
acting as a check on excessive expansion of the scope of the patent
grant. Courts are the only participants in the legal process that have
the competence to ensure that patents do not cause economic stagnation
and harm by permitting a patent holder to extend its monopoly into an
adjacent market. Consequently, courts should be willing to apply
antitrust principles to cases involving the monopolization of interfaces
through design changes. |
| URI: | http://hdl.handle.net/2451/26054 |
| Appears in Collections: | Economics Working Papers
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
