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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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4 The Appropriation of Innovation: How Can We Assess the Necessityof Intellectual Property Rights? 71

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4 The Appropriation of Innovation: How Can We Assess the Necessity of Intellectual Property Rights? Having outlined a framework for the Incentives Balance Test, in this chapter we will review economic theories in the hopes of finding theories and criteria that can be applied to assess how much intellectual property protection is necessary for providing sufficient incentives for innovation. In detail, we will now analyse what criteria economic theories can offer to conduct the Incentives Balance Test. The chapter starts with a review of the law and economics theories of intel- lectual property rights that discuss the optimal degree of protection. The purpose of proceeding as such is twofold: first, to analyse whether a standardized as- signment like we have in most countries might lead to an inefficient result; and second, to analyse whether we can use these theories to derive criteria for our test. Thus, the first purpose aims at a confirmation that it is possible that intellec- tual property rights are not always optimally designed and that competition pol- icy can therefore intervene. The second purpose aims at the development of cri- teria for an assessment from competition policy in refusal to license intellectual property rights cases. In the second part of this chapter, I employ insights from innovation eco- nomics, starting with an analysis of preconditions for innovation and imitation and exploring appropriability instruments beside intellectual property rights. This is in order to examine whether these results can be used to complement the theories and criteria of...

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