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Refusal to License- Intellectual Property Rights as Abuse of Dominance

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Claudia Schmidt

Refusal to license intellectual property rights (IPRs) are an ongoing topic within the enforcement of Article 102 TFEU (ex Article 82 EC). Nevertheless, so far an economic founded instrument to analyse these cases is missing. To close this gap, the Innovation Effects and Appropriability Test will be developed throughout this book. Innovation research has been showing that firms rely on more appropriation mechanisms than only IPRs. The availability of these alternative instruments depends on the involved technologies, the kind of innovation, the concerned industry and so on. Consequently, it is in the centre of the Innovation Effects and Appropriability Test to analyse whether the dominant firm could rely on other appropriation instruments to protect its innovation and to recoup its investments in R&D.

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2 The Situation to Date 5

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2 The Situation to Date Intellectual property rights are generally assigned to promote innovation. Never- theless, in a few cases, dominant companies might use them unlawfully to ex- tend their market power. Throughout this thesis, we will focus on refusal to li- cense intellectual property rights cases. In these cases, dominant firms refuse to license their intellectual property to competitors who consider the refused item to be essential for their own products. Since competition authorities are con- cerned that such refusals to supply are motivated by the desire of the dominant firm to foreclose its market power, in these cases, competition authorities may be forced to interfere in the enforcement of the intellectual property rights to guarantee free competition. These interventions are controversial, to say the least, as they restrict the rights of dominant firms and, so far, there are no dis- tinct criteria by which to analyse those cases. Consequently, it is the goal of this thesis to determine what criteria can be applied in analysing such abuse cases and how we can apply these criteria. After a brief introduction to Article 102 TFEU, this chapter presents an overview of those cases in which dominant firms have abused or were alleged to have abused intellectual property rights. This survey aims at a first detection of criteria that had been applied in previous caselaw and a determination of whether there is consistency in the application of these cases. We then turn to American caselaw in order to analyse whether it...

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