Antitrust Mercantilism: The Strategic Devaluation of Intellectual Property Rights in Wireless Markets
Abstract
Policy approaches to the enforcement and licensing of standard-essential patents (SEPs) in wireless communications markets reflect the competing interests of entities that specialize in the innovation or implementation segments of the technology supply chain. This same principle can anticipate the policy preferences of national jurisdictions that specialize in the chip-design or device-production segments of the global technology supply chain. Consistent with this principle, the legal treatment of SEP licensing and enforcement by regulators and courts in the People’s Republic of China reflects a strategic effort to deploy competition and patent law to reduce input costs for domestic device producers that rely on wireless communications technology held by foreign chip suppliers. This mercantilist use of antitrust law has derived its intellectual foundation from patent holdup and royalty stacking models of market failure developed principally by U.S. scholars and has borrowed excessive pricing, essential facility, and other doctrines from E.U. competition and U.S. antitrust law, which have then been applied expansively by Chinese regulators and courts in service of geopolitical objectives. While this strategy promotes the short-term interests of a national economy that specializes in the implementation segments of the technology supply chain, it is unlikely to promote the global economy’s longer-term interest in preserving the funding and transactional structures that have supported innovation and commercialization in the wireless technology ecosystem.