William & Mary’s Alan Meese has posted a terrific tribute to Robert Bork, who passed away this week.  Most of the major obituaries, Alan observes, have largely ignored the key role
Bork played in rationalizing antitrust, a body of law that veered sharply off course in the middle of the last century.  Indeed, Bork began his 1978 book, The Antitrust Paradox, by comparing the then-prevailing antitrust regime to the sheriff of a frontier town:  “He did not sift the evidence, distinguish between suspects, and solve crimes, but merely walked the main street and every so often pistol-whipped a few people.”  Bork went on to explain how antitrust, if focused on consumer welfare (which equated with allocative efficiency), could be reconceived in a coherent fashion.

It is difficult to overstate the significance of Bork’s book and his earlier writings on which it was based.  Chastened by Bork’s observations, the Supreme Court began correcting its antitrust mistakes in the mid-1970s.  The trend began with the 1977 Sylvania decision, which overruled a precedent making it per se illegal for manufacturers to restrict the territories in which their dealers could operate.  (Manufacturers seeking to enhance sales of their brand may wish to give dealers exclusive sales territories to protect them against “free-riding” on their demand-enhancing customer services; pre-Sylvania precedent made it hard for manufacturers to do this.)  Sylvania was followed by:

• Professional Engineers (1978), which helpfully clarified that antitrust’s theretofore unwieldy “Rule of Reason” must be focused exclusively on competition;
• Broadcast Music, Inc. (1979), which held that competitors’ price-tampering arrangements that reduce costs and enhance output may be legal;
• NCAA (1984), which recognized that trade restraints among competitors may be necessary to create new products and services and thereby made it easier for competitors to enter into output-enhancing joint ventures;
• Khan (1997), which abolished the ludicrous per se rule against maximum resale price maintenance;
• Trinko (2004), which recognized that some monopoly pricing may aid consumers in the long run (by enhancing the incentive to innovate) and narrowly circumscribed the situations in which a firm has a duty to assist its rivals; and
• Leegin (2007), which overruled a 96 year-old precedent declaring minimum resale price maintenance–a practice with numerous potential procompetitive benefits–to be per se illegal.

Bork’s fingerprints are all over these decisions.  Alan’s terrific post discusses several of them and provides further detail on Bork’s influence.

And while you’re checking out Alan’s Bork tribute, take a look at his recent post discussing my musings on the AALS hiring cartel.  Alan observes that AALS’s collusive tendencies reach beyond the lateral hiring context.  Who’d have guessed?

Filed under: antitrust, cartels, law and economics, legal scholarship, markets, monopolization, regulation, resale price maintenance, Supreme Court

As Democrats insist that income taxes on the 1% must go up in the name of fairness, one Democratic Senator wants to make sure that the 1% of heaviest Internet users pay the same price as the rest of us. It’s ironic how confused social justice gets when the Internet’s involved.

Read the full piece here.

A debate is brewing in Congress over whether to allow the Federal Trade Commission to sidestep decades of antitrust case law and economic theory to define, on its own, when competition becomes “unfair.” Unless Congress cancels the FTC’s blank check, uncertainty about the breadth of the agency’s power will chill innovation, especially in the tech sector. And sadly, there’s no reason to believe that such expansive power will serve consumers.

Read the full piece here.

A heavily revised and expanded verison of one of my earlier blog postings was just posted as an op-ed on Forbes.com.  This op-ed addresses how the FTC and DOJ have let themselves become swept up in anti-patent rhetoric, as evidenced by the FTC-DOJ workshop on December 10 that I participated in. Here’s a small taste of the op-ed:

Although the public hears the mantra almost daily that “the patent system is broken,” what we really need is a thorough evaluation of the historic impact the patent system has had on innovation without the negative hype and misinformation that is perpetuated in news headlines or blogs. On December 10, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) held the first of a series of workshops on the patent system and innovation. This first workshop dived into the workings of what some people call “patent assertion entities” (PAE), which are firms that acquire and license patents. The FTC and DOJ, as well as most of the invited participants at the workshop, adopted the “PAE” label as the subject of their critical scrutiny.

 Of course, identifying these firms by their business model of patent licensing denies the patent system naysayers the pejorative rhetorical force of their “PAE” label.  In fact, patent licensing firms have come under attack in newspaper reports, in blogs, and in academic commentary, prompting the FTC and DOJ to consider whether to sanction patent licensing firms for allegedly undermining the innovation made possible by the patent system through some nebulous notion that patent licensing is somehow “anti-competitive.” If anything, this reveals the power of rhetoric.

The truth is that these patent licensing firms maximize value in patented innovation, proving once again Adam Smith’s classic economic insight that specialization and division of labor is key to the success of a commercial economy. There has always existed since the early nineteenth century a secondary market in the sale and purchase of patents, but these firms make use of modern developments in corporate law, finance, and technology to reap new value for inventors or other firms who lack either the knowledge or resources to monetize their innovation assets. In short, patent licensing firms reflect the exact same value-maximizing aggregation and specialization that other firms have long employed in our successful invention economy, such as when 3M or Thomas Edison’s Menlo Park Laboratory aggregated inventors for research and development itself. Patent licensing firms, by better enabling inventors to sell and exchange their ideas, bring the same efficiencies to our invention economy as did the invention of R&D departments over one hundred years ago.

As the blogging master (Instapundit) likes to say: Read the whole thing!

Filed under: antitrust, doj, federal trade commission, intellectual property, licensing, patent

I will be participating in a wide-ranging discussion of Google and antitrust issues at the upcoming AALS meeting in New Orleans in January. The Antitrust and Economic Regulation Section of the AALS is hosting the roundtable, organized by Mike Carrier. Mike and I will be joined by Marina Lao, Frank Pasquale, Pam Samuelson, and Mark Patterson, and the discussion will cover Google Book Search as well as the FTC investigations/possible cases against Google based on search and SEPs.

The session will be on Saturday, January 5, from 10:30 to 12:15 in the Hilton New Orleans Riverside (Newberry, Third Floor).

 Google and Antitrust

(Papers to be published in Harvard Journal of Law & Technology Digest)

Moderator:

Michael A. Carrier, Rutgers School of Law – Camden

Speakers:

Marina L. Lao, Seton Hall University School of Law

Geoffrey A. Manne, Lewis & Clark Law School

Frank A. Pasquale, Seton Hall University School of Law

Mark R. Patterson, Fordham University School of Law

Pamela Samuelson, University of California, Berkeley, School of Law

How should the antitrust laws apply to Google? Though the question is simple, the answer implicates an array of far-reaching issues related to how we access information and how we interact with others. This program will feature a distinguished panel engaging in a fastpaced discussion (no PowerPoints!) about these topics.

The panel will explore the Federal Trade Commission’s potential case against Google. It will discuss Google’s position in the search market and potential effects of its conduct on rivals. The panel also will explore the nuances of the Google Book Search settlement. What would – and should – antitrust law do about the project? How should the procompetitive justifications of the increased availability of books be weighed against the effects of the project on rivals?

Antitrust’s role in a 21st-century economy is frequently debated. Google provides a fruitful setting in which to discuss these important issues.

Filed under: announcements, antitrust, google Tagged: AALS, antitrust, Association of American Law Schools, Federal Trade Commission, ftc, google

Today, thirty-one prominent deans, professors, and former government officials who specialize in law and economics and antitrust submitted a letter to the Senate Commerce Committee supporting Josh Wright‘s nomination to be a Commissioner at the Federal Trade Commission.

The letter, which is addressed to Chairman John D. Rockefeller IV and Ranking Member Kay Bailey Hutchison of the United States Senate Committee on Commerce, Science and Transportation, strongly urges confirmation of Josh, praising him for his knoweldge and his many accomplishments.  Here’s just a small snippet:

As a young professor, Josh has a well-deserved reputation for producing rigorous, high-quality scholarship that explores important issues in competition and consumer protection policy.  His scholarly work reflects that rare professor who possesses impeccable academic and intellectual integrity in combination with thoroughgoing knowledge in economic theory, econometric and empirical skill, and knowledge of relevant legal institutions. The rigor of his scholarly work is second to none, because it is truly bottom-up, data-driven in its conclusions. As a result, his scholarly output at this early stage in his academic career, in terms of its quantity, quality, and impact, is unsurpassed within his field.

. . . .

As a result of his rigorous and scrupulous analysis of data according to well-established empirical and economic methodologies, Professor Wright is widely regarded as a top antitrust law scholar of his generation, and his scholarly efforts have had a significant impact in the academic and public policy debates.  Top antitrust and law and economics scholars, moreover, consistently cite his scholarship, and Professor Herbert Hovenkamp, the author of the leading antitrust treatise, has described Josh as a “top scholar of competition policy and intellectual property.”

I can attest that this is all well-deserved praise, as I have learned much from Josh in the years that we have been colleagues at George Mason.  I will be very sorry to lose him as a colleague, but I can think of no other better person for this position.  I wish him all the luck in his confirmation hearing tomorrow, but he doesn’t need it, because as the letter rightly concludes, his is “an easy case for the Senate’s approval of his nomination.”

Read the whole letter here.

Filed under: federal trade commission, george mason university school of law

Last week, I participated in a panel discussion on standard essential patents and antitrust at the Washington Legal Foundation.  The panel was entitled, “Standard Essential Patents: Where do IP Protections End and Antitrust Concerns Begin?”  It was a great panel, and I think everyone did a really good job at avoiding any unnecessary technical jargon in discussing what is a very complex issue.

You can read about the panel in this blog posting by WLF’s Chief Counsel of its Legal Studies Division, Glenn Lammi (who also moderated the panel discussion).

Even better, you can watch the video of the panel here.

Filed under: antitrust, federal trade commission, intellectual property, patent, truth on the market

As the Google antitrust discussion heats up on its way toward some culmination at the FTC, I thought it would be helpful to address some of the major issues raised in the case by taking a look at what’s going on in the market(s) in which Google operates. To this end, I have penned a lengthy document — The Market Realities that Undermine the Antitrust Case Against Google — highlighting some of the most salient aspects of current market conditions and explaining how they fit into the putative antitrust case against Google.

Read the full piece here.