Compulsory Licensing: An Underrated Antitrust Remedy

By Richard Gilbert

Compulsory licensing of intellectual property is a common remedy for harms to competition from mergers, but antitrust enforcers generally shun compulsory licensing as a remedy for monopolization because they are concerned that actual or threatened compulsory licensing deters innovation. However, neither anecdotal nor empirical evidence supports a conclusion that infrequent instances of compulsory licensing have deterred innovation by firms that were compelled to license their intellectual property and there is considerable evidence that compulsory licensing promotes competition and follow-on innovation by allowing innovators to build on the licensed technologies. Compulsory licensing should be used sparingly because it is difficult to administer and can harm competition in some situations, but antitrust enforcers should keep compulsory licensing in their tool box to address abuse of market dominance as well as to remedy competition concerns for mergers.