Module 7

Module 7: Competition Policy and Intellectual Property Rights (IPRs)

(8 a.h.¹)

Outline of Course Contents

A. The economics of innovation
a. Process and Product Innovation
b. The value of innovation
c. Over and under investment in innovation
d. Promoting innovation: IPRs, rewards, subsidies
e. Sequential Innovation
f. Innovation and market structure
g. Innovation and merger control
h. Recent cases: mergers

B. The economics of patents
a. Patent design
b. Probabilistic patents
c. Patent enforcement: injunctions v damages
d. Valuing patents: methods
e. Over v under compensation
f. Patents and entry deterrence
g. Recent cases: pay for delay

C. Licensing patents I
a. The social welfare implications of patent licensing
b. Royalty and non-royalty dimensions
c. Ad valorem v per unit v fixed royalties
d. Bargaining over royalties
e. Patent hold out and hold up
f. Refusals to license
g. The pros and cons of compulsory licensing
h. Antitrust cases: refusals to license IPRs

D. Licensing Patents II
a. Cross licensing
b. Patent pools
c. Standards and standard essential patents (SEPs)
d. FRAND licensing
e. Portfolio licensing
f. Licensing in multi-layered value chains
g. Injunctions, trolls and privateers
h. Anti-trust cases: SEPs and injunctions

For each topic, we will review the state of the art in economic theory and empirical analysis and criteria that can guide antitrust enforcement will be drawn. Actual cases will be discussed from an economic view point.

Main references

  • Susan Scotchmer, Innovation and Incentives.  MIT Press.  (2004)
  • Nicholas Bloom, Mark Schankerman & John Van Reenen, Identifying Technology Spillovers and Product
  • Market Rivalry, 81 Econometrica 1347 (2013)
  • Marc Bourreau, Bruno Jullien & Yassine Lefouili, “Mergers and Demand-Enhancing Innovation”, TSE Working Paper, n. 18-907, March 2018, (2021)
  • Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089
  • Vincenzo Denicolò, Do patents over-compensate innovators?, 52 Econ. Pol’y. 679 (2007)
  • Joseph Farrell and Carl Shapiro, How Strong Are Weak Patents, 98 Am. Econ. Rev. 1347 (2008)
  • Richard Gilbert & Carl Shapiro, An Economic Analysis of Unilateral Refusals to License Intellectual Property, 93 Proc. Natl. Acad. Sci. U.S.A., 12749 (1996)
  • Steve Haber & Naomi Lamoreaux, The Battle Over Patents: History and Politics of Innovation, Oxford University Press, (2021)
  • Mark Lemley & Carl Shapiro, Patent Hold-Up and Royalty Stacking, 85 Tex. L. Rev. 1991 (2007)
  • Josh Lerner & Jean Tirole, Efficient Patent Pools, 94 Am. Econ. Rev. 691 (2004)
  • Gerard Llobet & Jorge Padilla, The Optimal Scope of the Royalty Base in Patent Licensing, 59 J. of L. & Econ. 45 (2016)
  • Jay Pil Choi & Heiko Gerlach, A Theory of Patent Portfolios, 9 Am. Econ. J.: Micro. 215 (2017)
  • Carl Shapiro, Antitrust Limits to Patent Settlements, 34 RAND J. of Econ. 391 (2003)
  • Daniel G. Swanson & William J. Baumol, Reasonable and Nondiscriminatory (RAND) Royalties, Standards Selection, and Control of Market Power, 73 Antitrust L. J. 1, 57 (2005).

¹ a.h. = academic hour (50 minutes)