Competition Policy and Intellectual Property Rights

Long-run benefits from innovation justify granting intellectual property rights (IPRs), even though free copying would yield short-run benefits because products incorporating the intellectual property could be priced close to marginal cost. On the other hand, IPRs can unduly restrict “secondary” innovation or reduce incentives for further innovation. Competition agencies are generally reluctant to second-guess the appropriate breadth of IPRs, and they have not usually interfered with unilateral decisions by IPR holders about their pricing and licensing policies. Competition agencies are more likely to intervene when IPR holders that are actual or potential competitors cross license one another, or when IPR holders adopt licence terms having the effect of increasing the scope or duration of their statutory protection. Licenses may nonetheless be accepted if competition will be greater with the licence, despite its restrictions, than with no licence at all. This document comprises proceedings in the original languages of a Roundtable on competition issues relating to intellectual property rights which was held by the Committee on Competition Law and Policy in October 1997. This compilation which is one of several published in a series named “Competition Policy Roundtables” is issued to bring information on this topic to the attention of a wider audience.