Intellectual Property, Standard Setting, and the Limits of Antitrust

One of the most significant challenges facing competition policy today is defining the appropriate role of antitrust law within the context of intellectual property right licensing by standard-setting organizations (“SSOs”).  Many commentators believe it is necessary to apply the full force of the antitrust laws, and sometimes special rules that would increase the scope of antitrust, to the standard-setting process in order to adequately oversee what they perceive as a unique opportunity for anticompetitive behavior.  Indeed, antitrust agencies both in the United States and around the world have expressed agreement with the notion that the standard setting process requires strong enforcement of antitrust liability rules in order to ensure efficient outcomes that benefit consumers.  However, this view largely fails to consider the costs of antitrust.  In particular, it fails to recognize the limits of antitrust when the marginal benefit of antitrust enforcement is slight and the potential for erroneous enforcement (“false positives”) and thus, the likelihood that procompetitive behavior will be deterred, is high.  The Supreme Court itself has emphasized repeatedly that the scope of the antitrust laws should be responsive to such a cost-benefit analysis.

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