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Although competition and patent regimes share the same goals of
innovation and related economic and consumer benefits, tensions at
the interface between these areas of law are reaching unprecedented
levels. The challenge is to permit the legitimate exercise of
patent rights while continuing to enforce competition laws where
anti-competitive practices involve patent rights. But what happens
where both regimes are implicated and yet neither
effectively controls conduct that harms innovation and imposes
economic costs? How do we compare the cost/benefit trade-off of
addressing the problem via the competition system, patent system or
both? When intellectual property laws are being used to impede
innovation should competition law intervene?
This article considers a gap between patent law and competition
law that is being exploited by "patent trolls", firms
whose business is the acquisition and assertion of patents against
parties who are already using the patented technology. First, we
frame the discussion by considering the interaction of competition
law and patent law and how the interaction can, in theory, impact
innovation. Then we look at the example of patent trolls and how
they are taking advantage of an absence of competition and patent
law enforcement: what they are, the reasons for their recent
emergence and the main arguments in defence of patent trolling.
Next we examine the economic cost and harm to innovation caused by
patent trolls in the context of wider issues in competition and
patent law and policy, including asymmetry of litigation risk, the
hold-up problem and the growing valuation of patents based on the
right to exclude rather than the economic value of the underlying
invention. Finally, we survey the efforts to stem patent abuse,
including patent trolling, through market, judicial, legislative
and regulatory means. Regardless of the source of the solution, be
it patent or competition law or policy, patent trolling highlights
a clear need for reform to achieve the innovation goals of both the
competition and patent regimes. Law makers, enforcement agencies,
regulators and the courts need to bridge the ever-widening gap.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should be
sought about your specific circumstances.
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