The WTO's First Antitrust Case - Mexican Telecom: A Sleeping Victory for Trade and Competition

A World Trade Organization (WTO) dispute panel has decided theWTO’s first antitrust case. It resolved the matter infavour of the United States’ claim that Mexico had anticompetitivelyfacilitated exploitative prices and a cartel that raised theprice of terminating cross-border telephone calls in Mexicoand thereby harmed trade and competition. The case is Mexico– Measures Affecting Telecommunications Services (April2004) (‘the Mexican telecom case’). This essay arguesthat if the WTO’s antitrust clause was in fact triggered(which is a point of contention), Mexico’s conduct violatedits obligations. Furthermore, it argues that the GATS antitrustobligation in the telecommunications sector should be acknowledgedas occupying an important place at the intersection of trade,competition and industrial policies. Antitrust law is the otherside of the coin of liberal trade law. Antitrust law opens marketsby prohibiting private and other commercial restraints, whiletrade law opens markets by prohibiting public restraints. BeforeMexican telecom, no legal discipline was regarded as copiousor flexible enough to address combined public and private restraints.In particular, nations were allowed free rein to privilege nationalchampions that harmed competition in and out of their country,imposing costs on outsiders as well as on their own people.A positive reading of the antitrust clause helps to fill thegap.     

Market Failure and Non-Standard Contracting: How the Ghost of Perfect Competition Still Haunts Antitrust

Modern antitrust policy has a ‘love hate’ relationshipwith non-standard contracts that can overcome market failure.On the one hand, courts have abandoned various per se rulesthat once condemned such agreements outright, concluding thatmany non-standard contracts may produce benefits that are cognizableunder the antitrust laws.¹ The prospect of such benefits, itis said, compels courts to analyze these agreements under theRule of Reason, under which the tribunal determines whethera given restraint enhances or destroys competition.² At thesame time, courts, scholars, and the enforcement agencies haveembraced methods of rule of reason analysis that are undulyhostile to such agreements.³ In particular, courts and othersare too quick to view such agreements and the market outcomesthey produce as manifestations of market power. This articleseeks to explain why these agreements are still the object ofundue hostility.     

搜索引擎与滥用市场支配地位

从反垄断法的角度出发,现有大型搜索引擎运营商们是否实施了违法行为,一直都是各国学者及实务界关注的焦点,其中最主要的争议问题即这些运营商们是否滥用了市场支配地位。根据我国反垄断法相关规定,结合我国学者论述,并参考欧盟相关理论和实践,着眼于我国目前相关诉讼和指责等实际情况,探讨了诸如相关市场界定争议、市场支配地位证明、滥用行为是否可能和在反垄断法意义上是否成立等问题。虽然理论上存在基于滥用行为而限制竞争的可能性,但从中国和欧盟反垄断法的具体规定,尤其是举证责任问题的规定上看,在实践中确实认定搜索引擎运营商滥用市场支配地位仍需时日。     

竞争法对知识产权的保护与限制

知识产权法对知识所建构的权利义务规范以及民法基本原则对知识产权的保护和限制存在着天然的缺陷。知识的私有性与社会性,决定了知识产权与反不正当竞争法和反垄断法的被保护与被规制的关系。反不正当竞争法着眼于侵权人,保护知识产权不受侵犯;反垄断法着眼于权利人,以便防范知识产权的滥用。二者弥补了私法层面对知识产权保护的不足和对滥用知识产权行为制约的局限。     

The interplay between IP rights and competition law in the context of standardization

Legal context: This article attempts to analyse the patent ambush scenarioin the context of both competition law and IP rights under USand EC law. The regulators such as the US FTC and European Commissionattempt to combat the abuses, however the legal tools availablerequire a very difficult balancing act between patent law (whichprotects innovation) and competition law (which attempts tohamper abuse of the free market rules). Key points: The patent ambush scenario employed within a standard-settingorganization poses an important threat of jeopardizing the goalsof achieving a common standard. The response to the problemconcentrates on ensuring that the rules applicable to standard-settingorganizations' members prevent abuse and/or reaching reasonableand non-discriminatory licensing terms to stop deriving unduebenefits from proprietary technologies embedded in the standard. Practical significance: As the information exchange technologies become increasinglypopular, the need to ensure interoperability between productsof different manufacturers employing these technologies becomescrucial for market success. This consequently increases thedanger of malignant abuse of co-operation within the standardsetting-organizations. The law may need to step in to securetechnological progress free of risks such as the patent ambush.     

Claim construction and the extent of patent protection: A comparative analysis of the Phillips en banc Federal Circuit decision

Legal context. The United Kingdom's House of Loads in Kirin-Amgenand the United States Court of Appeals for the Federal Circuitin Phillips addressed similar issues with respect to the methodologyof claim interpretation and the fundamental rules and policiesfor determining the extent of patent protection. This articlewill review Phillips and Kirin-Amgen from the comparative lawperspective. It will compare the UK and US rules and patentpolicies with their German and Japanese counterparts, discussingthe bases for these differences and examining them from theperspective of patent policies, specifically with respect tofair protection and legal certainty. Key points. Despite the use of the same rule and methodology,legal commentators and patent professionals emphasize the differencesin the extent of patent protection in different jurisdictions.Such differences result from the availability of the doctrineof equivalents. For jurisdictions such as the UK, the US andJapan, where courts seldom apply the doctrine of equivalents,the differences result from the way in which the courts conductclaim construction. These courts use the perspective of a hypotheticalperson to support a broad or narrow claim construction, reflectingthe weight given to the competing patent policies. Practical significance. This article cites key cases for claimconstruction and the doctrine of equivalents in four major patentjurisdictions: the UK, the US, Germany and Japan. Knowledgeof the case law trends in these jurisdictions is essential fordrafting patents documents and enforcing patents.     

美国反垄断法豁免中的诺尔——本灵顿原则评析

诺尔——本灵顿原则是由美国联邦最高法院通过几个案例确立的联邦反垄断法中的一个原则,其主要含义是:根据《美国宪法第一修正案》的规定,即使竞争者通过游说政府而改变法律将会削弱竞争,其行为也不违反反垄断法。诺尔——本灵顿原则是协调《谢尔曼法》的重要目标与公民请愿权利和各级政府有效决策之间关系的产物。诺尔——本灵顿原则对中国的反垄断法执法也有一定启发意义,在执法过程应当全面协调经营者的竞争利益与其他经营者的宪法权利、与政府行为的关系。     

The institutional-evolutionary antitrust model

The purpose of this article is to provide an alternative antitrust model to the mainstream model that is used in competition policy. I call it the Institutional-Evolutionary Antitrust Model. In order to construct an antitrust model one needs both empirical knowledge and considerations of how to adequately deal with norms. The analysis of competition as an evolutionary process that unfolds within legal rules provides the empirical foundation for the model. The development of the normative dimension involves the elaboration of a comparative approach. Building on those foundations the main features of the Institutional-Evolutionary Model are sketched out and it is shown that its use leads to systematically different outcomes and conclusions than the dominant antitrust ideals. JEL Classification B52. D83. K21     

Whose trade mark rights? What the Microsoft case means for trade mark owners

Legal context. The article considers the influence of the commissionruling in the Microsoft case, forcing Microsoft to use its WINDOWS-trademark for an ‘unbundled’ version of the program inthe light of the trade mark owner's properties rights. The scopeof these rights is determined by the function of the trade markand the rights that the trade mark laws confer to the ownerin case of infringement. Key points. Trade marks are protected as property rights undercommunity law. They are the embodiment of past investments andtransform the reputation of the owner into a bankable asset.Consumers rely on trade mark owners' control over quality. Thisis mirrored by the rights of the trade mark owner to stop interferencewith quality and image, in particular in the context of resaleof altered products. Any interference that would be considereda trade mark infringement if committed by a private party shouldbe considered an interference with the protected property rightif caused by a government agency. This interference is not justifiedby the public interest because trade mark rights also embodyimportant public interests. Practical significance. If the analysis proposed in the articleis followed, intellectual property rights have to be given greaterweight in shaping antitrust remedies.     

Injunctive relief in US patent practice

Legal context. Injunctive relief is available in civil actionsin the United States. Patent litigation is no exception andthe US patent statute explicitly permits it. Because it is aneffective remedy, injunctive relief is commonly sought togetherwith the monetary (legal) remedies which are available to patentowners when enforcing patent rights. Key points. On 15 May 2006 the US Supreme Court in eBay, Incet al v MercExchange, LLC altered the prevailing practice sayingthat ‘the decision whether to grant or deny injunctiverelief rests within the equitable discretion of the districtcourts, and that such discretion must be exercised consistentwith traditional principles of equity, in patent disputes noless than in other cases governed by such standards’. Practical significance. This article will focus on the availabilityof permanent injunctions in patent infringement actions in lightof the Supreme Court's recent ruling in eBay, Inc et al v MercExchange,LLC.     

On terror, drugs and racial profiling

We show that for racial profiling (defined as policy rules that employ statistical discrimination based on racial attributes) to be efficient in fighting ordinary crime, it needs to focus on the racial composition of marginal offenders. Efficiency thus may counter-intuitively call for targeting the group with the lower offending rates. In the context of terror, however, it has to be based primarily on differences in offending rates across racial population groups (group-wise averages). We demonstrate that, assuming correlation between race and crime, racial profiling would nearly always be efficient. Finally, we discuss equity considerations and suggest that if awarding compensation is perceived to be a viable policy option, it should be paid on an ex ante basis.     

PATENT HOLDUP AND OLIGOPSONISTIC COLLUSION IN STANDARD-SETTING ORGANIZATIONS

Current controversies over patent policy place standard-settingorganizations (SSOs) on a collision course with antitrust law.Recent theoretical research conjectures that, in an SSO, patentowners can "hold up" patent users in the sense of demandinghigh royalties for a patented input after the SSO has adoptedthe patented technology as an industry standard and manufacturerswithin the SSO have incurred sunk costs to design end productsthat incorporate that standard. Consistent with this conjecture,actual SSOs have recently sought no-action letters from theAntitrust Division for a variety of amendments to SSO rulesthat would require or request, at the time a standard is underconsideration, the ex ante disclosure by the patent owner ofthe maximum royalty that the patent owner would charge underthe regime of fair, reasonable, and nondiscriminatory licensing.This price information—which is characterized as the "cost"of the patented input—would, under at least one recentSSO rule modification, be a permissible topic for potentialusers of the patent to discuss when deciding whether to selectit in lieu of some alternative standard. This exchange of informationamong horizontal competitors would occur ostensibly becausethe cost of the patented technology had been characterized assimply one more technical attribute of the standard to be set,albeit an important technical attribute. The Antitrust Divisionand the Federal Trade Commission have jointly stated that suchdiscussion, by prospective buyers who are competitors in thedownstream market, of the price of a patented invention thatmight become part of an industry standard should be subjectto antitrust scrutiny under the rule of reason rather than therule of per se illegality. The rationale that the antitrustagencies offer for applying the rule of reason to such conductis that such horizontal collaboration might avert patent holdup.The Antitrust Modernization Commission (AMC) similarly endorsedthe view that rule-of-reason analysis is appropriate for exante discussion of royalty terms by competing buyers of patentedtechnology. This rule-of-reason approach, however, is problematicbecause it conflicts with both the body of economic researchon bidder collusion and with the antitrust jurisprudence oninformation exchange and facilitation of collusion. Put differently,because of their concern over the possibility of patent holdup,the U.S. antitrust agencies and the AMC in effect have indicatedthat they may be willing in at least some circumstances to forgoenforcement actions against practices that facilitate oligopsonisticcollusion by encouraging the ex ante exchange of informationamong competitors concerning the price to be paid for a patentedinput as an implicit condition of those competitors' endorsementof that particular patented technology for adoption in the industrystandard. However, neither the proponents of these SSO policiesnor the antitrust agencies and the AMC have offered any theoreticalor empirical foundation for their implicit assumption that theexpected social cost of patent holdup exceeds the expected socialcost of oligopsonistic collusion. This conclusion does not changeeven if one conjectures that such collusion will benefit consumersby enabling licensees to pass through royalty reductions intheir pricing of the downstream product incorporating the patentedtechnology. Proper economic evaluation of the plausibility ofthe pass-through conjecture will require information about thecalculation of royalty payments; the demand and supply elasticitiesfacing the licensees; and the structure of any industries furtherdownstream between the manufacturer and the final consumer.Consequently, the magnitude of this effect will likely be amatter of empirical dispute in every case. Moreover, such ajustification for tolerating horizontal price fixing finds nosupport in antitrust jurisprudence. Given the analytical andfactual uncertainty over whether patent holdup is a seriousproblem, it is foreseeable that antitrust questions of firstimpression will arise and affect a wide range of high-technologyindustries that rely on SSOs. However, there is no indicationthat scholars and policy makers have seriously considered whetheroligopsonistic collusion in SSOs is a larger problem than patentholdup.     

A primer on US antitrust claims against patentees under Walker Process

Legal context: In the wake of two recent cases from the Federal Circuit onthe subject, this article provides an introduction to the WalkerProcess doctrine under US law. Under the doctrine, a patenteewho knowingly enforces a patent procured by intentional fraudon the patent office may lose its immunity to antitrust claims,should it act to enforce its patent. Key points: Walker Process fraud refers to a knowing and deliberate fraudperpetrated on the patent office as opposed to mere acts ofinequitable conduct. Proving that a patent applicant engagedin Walker Process fraud does not by itself prove liability foran antitrust violation. The accused infringer must still provethe individual elements of an antitrust claim. Antitrust claimsbased on Walker Process fraud require significant time and resourcesto litigate. Practical significance: With the allure of mandatory treble damages and attorney's fees,antitrust claims based on Walker Process fraud can serve asa potent counterclaim for an accused infringer's arsenal. Butthe legal requirements and resources needed to successfullylitigate these claims to a conclusion may temper their effectivenessfor the typical patent-infringement suit.     

Profit Neutrality in Licensing: The Boundary Between Antitrust Law and Patent Law

We address the patent/antitrust conflict in licensing and developthree guiding principles for deciding acceptable terms of license.Profit neutrality holds that patent rewards should not dependon the rightholder’s ability to work the patent himself.Derived reward holds that the patentholder’s profits shouldbe earned, if at all, from the social value created by the invention.Minimalism holds that licenses should not be more restrictivethan necessary to achieve neutrality. We argue that these principlesare economically sound and rationalize some key decisions ofthe twentieth century such as General Electric and Line Material.     

Taming digital gatekeepers: the ‘more regulatory approach’ to antitrust law

Antitrust enforcement and competition policy in the digital economy is high on the agenda of authorities and policymakers. The distinctive features of digital markets and the strategic role played by large platforms apparently require a rethinking of the antitrust regime. Several reform proposals point to the need to integrate the antitrust toolkit with ex ante measures since there is a risk that ex post enforcement would be too slow to successfully keep markets competitive and contestable. The aim of this paper is to investigate whether the invoked regulatory approach reflects the distinctive structural features of digital markets or whether it is just an enforcement short-cut.     

Exclusion payments in patent settlements: a legal and economic perspective

Legal context. The application of antitrust law to assess settlementsof patent litigation raises difficult issues concerning theappropriate balance of patent law and competition policy. Recentprivate and public invocations of US antitrust law to challengesettlement agreements covering pharmaceutical patents have broughtthese issues to the forefront. The agreements share the commonfeature of an ‘exclusion payment’ from a brand-namedrug manufacturer (the patentee) to a generic drug manufacturer(the accused infringer) in exchange for a promise by the genericcompany to refrain from marketing its product for some time.US federal courts that have examined these agreements have variedin their approach and conclusions regarding the appropriateantitrust analysis to be applied to these settlements. Key points. This article argues that informed antitrust analysisof such agreements must take due note of the ‘probabilistic’nature of patent property rights. Practical significance. The article concludes that exclusionpayments fall outside the scope of a patent's exclusionary scopeand thus are subject to antitrust scrutiny. It demonstratesthat barring anticompetitive exclusion payments in settlementnegotiation prevents collusive bargains that harm consumer welfarewithout discouraging efficient settlements.     

COMPETITION POLICY IN CHINA AND ITS RELEVANCE TO SMES

Competition policy has great relevance to all the firms in any economy. Even though it is unlikely that small and medium-sized enterprises (SMEs) have enough market power to constrain competition through a misuse of such power, they may still face prosecution if they are involved in a boycott of competitors or suppliers, price-fixing, output-restriction and other monopoly agreements. This article discusses antitrust issues pertaining to SMEs with a focus on China’s Anti-Monopoly Law (AML) and its implementation rules. Contrary to the popular view that SMEs benefit from competition laws, evidence shows that they are reluctant to get involved in antitrust litigation against large firms partly because of the high legal costs involved. There is an urgent need to promote an awareness of antitrust compliance in China and to educate SMEs about the need to avoid breaching the new antitrust law and its associated regulations. In the meantime, SMEs should take full advantage of the antitrust laws to fight against the abuse of market dominance directed at them, and to gain equal opportunities to market access.     

WTO for Trade and Development Post-Doha

The WTO Members’ negotiations under the Doha mandate onspecial and differential treatment (‘SDT’) and developmentissues have made little progress. The gap between developedcountries and developing countries in this regard seems toowide to be bridged. This gap originates from a fundamental differencein their basic stances on cross-cutting issues. In principle,without prejudice to currently available SDT under individualWTO Agreements, developing countries should be given flexibilitiesin implementing WTO rules, which may result in the rebalancingof rights and obligations of WTO Members but only when policymeasures at issue can contribute to particular developing countries’development needs and no alternative less-trade restrictivemeasures are reasonably available. After reviewing WTO Members’discussions since the adoption of the Doha Ministerial Declaration,this article suggests a ‘measure-specific ex ante approach’for a workable solution to bridging the gap between developedcountries and developing countries on SDT and development issues.     

Three Principles of Transnational Corporate Bankruptcy Law: A Review

Abstract: After having discussed the weaknesses of the universalist and territorialist approaches to transnational corporate bankruptcy law, this article argues that a free‐choice régime could combine the advantage of ex post value maximisation of the firm's assets with a comparatively higher degree of ex ante predictability to investors. In addition, it could lead to a better alignment between corporate ownership structures and corporate bankruptcy régimes. Moreover, a free‐choice régime could potentially open the door for regulatory competition in corporate bankruptcy law. However, EC Regulation 1346/00 on insolvency proceedings implements a system of modified universalism, which allows for strategic ex post forum shopping by debtors while keeping the national legislatures’ monopoly in the field of corporate bankruptcy in place. It is suggested that even though it cannot be predicted that a free‐choice régime will pressure state lawmakers to improve their corporate bankruptcy laws, a system of free choice could redirect the law‐making agenda in the EU by focusing the coordination efforts of lawmakers on those issues—such as security interests in property and statutory priority rights—which could negatively affect the proper functioning of the Internal Market, while enabling Member States to customise corporate bankruptcy laws to local preferences and needs.