Intellectual Property and Transactional Choice: Rethinking the IP/Antitrust Dichotomy

It is common to characterize patents as monopolies.  This assumption, which underlies the standard dichotomy between intellectual property and antitrust law, is challenged by evidence that large companies in technology markets (outside biopharmaceuticals) tend to advocate for weaker patent protection or, in some cases, no patent protection at all.  This revealed preference for weaker patent protection reflects the fact that large integrated firms can often capture returns on innovation through economies of scale and scope and other non-patent-dependent capacities that few other firms can match.  Relatedly, a weak-patent environment can confer a competitive advantage on integrated firms against smaller and more innovative firms that rely on patents to capture value on innovation through licensing and other contract-based monetization strategies.

By Jonathan M. Barnett^[1]

I. INTRODUCTION

In antitrust jurisprudence and scholarship, it is common to characterize intellectual property (“IP”) rights in general, and patents in particular, as a type of “monopoly.”^[2] Economists widely construe IP rights as sources of monopoly power that distort competitive markets.^[3] A search of the Google Scholar federal case law database as of May 2022 finds 2,430 decisions that use the phrase, “patent monopoly.” The “patent-as-monopoly” assumption has important implications for antitrust jurisprudence and scholarship, which often characterize patents as