An Unconventional View of Intellectual Property and Antitrust Policy
Abstract
The conventional view of the IP system assumes an inherent tension between innovation policy, which values IP rights as a mechanism to incentivize R&D investment by deterring imitation, and antitrust policy, which tends to treat IP rights as a monopoly entitlement that raises entry costs and increases deadweight losses by driving a wedge between price and marginal cost. This view overlooks the transactional functions played by IP rights in enabling and structuring value-enhancing relationships among the holders of complementary intellectual, financial, and physical assets that are necessary to execute the innovation and commercialization process. As illustrated by examples drawn from U.S. patent and technology history, and the biotechnology and semiconductor markets in particular, robust IP rights promote the public interest in both innovation investment and competitive markets by providing a property-rights foundation for the formation of markets in financing and developing innovation assets.