Keywords: Antitrust Law, Intellectual Property Law, Conflict of Interest, Balance Principle
I. The Microsoft Case
1 、Antitrust Litigation Concerning the Windows System
The Windows operating system developed by the U.S. company, Microsoft Corporation, accounted for more than 90% of the global market. on May 18, 1998, the U.S. Department of Justice (DOJ) and the 20 states and regions of the United States entered into a lawsuit against Microsoft Corporation. The U.S. federal government Department of Justice and the attorneys general of 20 states filed an antitrust lawsuit against Microsoft, accusing Microsoft of abusing its dominant position in the market and preventing other software vendors from competing with it. on April 3, 2000, the District Court for the District of Columbia made a judgment. Microsoft was found to have excluded competitors by imposing Internet Explorer on users through bundled sales and installing source code in the Windows operating system. [1]
2, the first screen provision of the argument
"the first screen provision" (the first screen provision) is Microsoft and computer equipment manufacturers (Original Equipment Manufacturers) in the license contract. The "first screen provision" is a license agreement between Microsoft and Original Equipment Manufacturers (OEMs) that requires users who have installed the Windows operating system to initially start up their computers with a screen that displays the Windows Unified Features (e.g., icons, icon design styles, and sizes, etc.). Plaintiffs claimed that Microsoft abused its exclusive rights to the Windows operating system software through the First Screen Clause to the detriment of device manufacturers, consumers, and other software producers. [2]
In these two separate cases, the plaintiffs, producers and consumers, argued that Microsoft had abused the dominant position of Windows in the market for computer operating systems to the detriment of other competitors and the long-term interests of the market as a whole. Microsoft, on the other hand, insisted that its rights were legally protected by intellectual property rights. This reflects the conflict between the two legal values of antitrust law and intellectual property exclusivity. Is there a better way to balance them, i.e., how can the value of intellectual property protection be reflected in the antitrust vision?
The conflict of interest between antitrust law and intellectual property rights
1, the legislative purpose of intellectual property rights - to give full protection to the right holder
The characteristics of intellectual property rights can be summarized as intangible, proprietary, territorial, practical, reproducible five aspects. From the point of view of this paper, the one that has the most impact on market competition is its proprietary nature. "Exclusivity reveals the monopoly or exclusivity of intellectual property as an absolute and dominant right." [3]
In the case of Microsoft, because of the exclusivity of intellectual property rights, Microsoft, the owner of the copyright, has the exclusive right to use the Windows operating system, which is said to be from the source of the right. In terms of the exercise of rights, since intellectual property rights protect technological achievements that advance society, most rights holders will socialize their achievements through the use of licensing agreements. [Driven by this requirement to maximize the benefits of technology, the law privileges the owner of the right to become the exclusive owner through legal transactions. The prices and contracts obtained for the exercise of such "exclusive rights"
are different from those obtained under competitive market conditions. Once a product of knowledge is protected by the intellectual property system, it excludes others from doing the same. Thus, IPRs are ultimately associated with a status of "non-competitive exclusivity". [5]
So, the exclusive nature of IPRs can be abused by rights holders, thereby undermining the diffusion of technology and innovation.
For example, the use of intellectual property rights to form economic alliances to limit the entry of other competitors; to gain a dominant position in the technology market; or to unreasonably charge a licensee an exorbitant price in a licensing contract, to restrict the use of the technology after the expiration of the contract, or to extend the term of the contract in disguise by asking for a high price ... ...These behaviors have undoubtedly deviated from the intent of intellectual property rights to promote social progress, and because of this, other competitors in the other side of the antitrust law to defend their interests.
2, the legislative purpose of the antitrust law - to protect the stability of the competitive structure of the market
In the market economic system, the most important mechanism is the mechanism of competition, once the competition mechanism is distorted, the market can not play a normal role in the market order and market structure will be destroyed. Monopoly, which originates from free competition, is an important force that distorts the competition mechanism. However, the market mechanism itself does not have the function of safeguarding fair competition, so it is necessary to establish a legal system to protect the competition mechanism. The purpose of enacting anti-monopoly law is to maintain and promote fairness in transactions in order to realize full and effective competition.
For the establishment of an effectively competitive market structure, the antitrust law opposes monopolization, restriction of competition, and abuse of a dominant market position, and maintains a competitive market structure. [6] At the legal level, monopoly is the prescriptive nature of behavior and state. Monopoly is first and foremost a behavioral prescriptive, antitrust law is concerned with the behavior of market players, as long as the purpose of the behavior is to restrict competition, will be subject to legal sanctions. Monopoly is also a state of affairs, which is concerned with the concentration of the market, and the state of affairs of monopoly is essentially that the market has reached or exceeded the lower limit of the concentration of enterprises as defined by the law. Therefore, even if there is no obvious monopoly behavior, the relevant government departments can take legal action to change the monopoly behavior into a competitive state, and the monopoly state itself becomes the point of intervention of the state's coercive power.
[7]
Both in developing countries and developed countries, the antitrust law of "social orientation" so that it has become a market economy, "economic constitution", to assume the important task of maintaining the order of the market economy. Although in most cases the antitrust law and its related policies are realized through the national public power, the antitrust law itself takes the best state of free competition as the goal. Therefore, the market economy is inseparable from the antitrust law.
3, antitrust law and intellectual property law conflict of interest
Antitrust law and intellectual property law conflict of interest is mainly focused on the following issues: First, the extent to which the competition policy focuses on the allocation of short-term efficiency or long-term efficiency. If the focus on short-term interests, the behavior of intellectual property rights holders will be more lenient, while if it is focused on long-term development will be more stringent restrictions on the exercise of their rights;
Two, whether the dominant position in the market because of intellectual property rights. If the answer is yes, then intellectual property rights are necessarily regulated by antitrust law; third, the economic characteristics of intellectual property rights themselves (very low marginal cost and easy to be stolen). This point suggests that when analyzing the terms of a licensing agreement in terms of antitrust law, attention should also be paid to the reasonableness of the exercise of the right by the right holder; and, iv. whether a licensing agreement should be recognized as an agreement that restricts competition horizontally or vertically. [
In the two types of Microsoft cases cited in this article, the plaintiffs invariably argued that Microsoft's exclusive right to license the Windows operating system undermined their "right to compete," and that Microsoft's behavior should be sanctioned by antitrust law. The main question is what legal principles should be applied to the most central commercial aspect of intellectual property law, especially copyright law - the licensing of protected works. It is true that nowadays, when technology has become the core factor of market competitiveness, the scope of protection of the exclusive rights of the owners of intellectual products has been increasingly concerned by the antitrust law. If individual intellectual property rights are fully protected under the concept of freedom of contract, more "Microsoft" cases will occur. And if the sharp edge of antitrust cleaves the "exclusivity" of intellectual property rights, for the technology owners, undoubtedly fell into a sense of crisis "can not be relied on", and even lose the enthusiasm of technological innovation, resulting in increased social development costs. In short, one is against exclusivity and the other is for granting exclusivity.[9] For such a problem, it is not easy to find a solution. [9] For such a question, the judicial practice has made a different answer, the theory is not conclusive.
Three, how to realize the coordinated development of antitrust law and intellectual property law
1 、Rational Principles of Antitrust Law
The significance of the antitrust law is to shape a good market structure, so that the competitive entities can engage in a fair competition, thus improving the level of economic development. Out of respect for the public **** interest, it shows flexibility, different times on the same nature of the behavior of different attitudes, which is within a country; and in the highly competitive international market, the protection of intellectual property rights of the country is to protect the country's commercial interests, this time, the antitrust law will support the exclusivity of knowledge products. In short, the standard behind the antitrust law is the economic development needs, from the domestic market, it is the consumer interests and public **** interests, in the world, it is in the peaceful development of the basis to achieve the maximization of national interests. Therefore, in the face of all kinds of competitive behavior, the world's legislation and judicial practice basically established the "principle of reasonableness".[10] According to the competition law, the competition law should be based on the principle of "reasonableness". [According to the principle of reasonableness, the antitrust law does not prohibit all economic unions, but only those mergers that can create or strengthen a dominant market position. Therefore, taking the principle of reasonableness as the basic principle of the antitrust law can make the antitrust law better adapt to the complex economic situation and avoid the negative impact that mechanical enforcement may have on normal economic activities. [11]
In the antitrust regulation of intellectual property rights, the "principle of reasonableness" is also applicable. Thus, there are a few basic principles that should not be overlooked: first, intellectual property rights cannot be considered to cause market dominance; monopolization stems from the competition system, not the intellectual property system. Social progress and innovation were the intent of IPRs, so not every regime of IPRs should be subject to antitrust law. Secondly, competition policy should recognize the rights recognized under the IPR law system; only then could the enthusiasm of technological innovators be protected. Finally, despite the existence of some agreements restricting competition, it can be tolerated if such an agreement promotes competition better than the absence of an agreement; in the absence of a licensing agreement, it is likely that the absence of any regulation will lead to confusion of efficiency, and without licensing agreements as a means of diffusion, the socialization of technological achievements will become empty talk. [12] These three principles indicate that in dealing with such issues, the recognition of the basic adjustment of intellectual property rights is the basis, and then articulated with the antitrust law.
2, the balance of interests in intellectual property law
From the above discussion can be seen, because of intellectual property rights of the exclusivity of the problem has increasingly attracted the attention of the legal profession. In practice, especially after China's accession to the WTO, litigation around intellectual property rights has been increasing. In the integration of global trade, intellectual property rights and domestic and international economic development are issues that cannot be avoided in legal research. Especially in technology licensing, with the increase in the number of patent applications and the expansion of the scope of protection, many enterprises and research institutes are in an awkward situation, where the technology that can be used freely falls into the scope of patent protection of others, and becomes an obstacle to further development, research and production. Even the patent system to encourage innovation has become a tool for some people to maliciously set "litigation traps", hindering the further development of the economy. For example, a DVD, from components to parts, its effective patents as many as 1500. China's manufacturers want to successfully enter the international market, first of all to obtain the license of foreign patentees, and to pay a considerable amount of money.
In the face of such a situation, countries around the world are gradually recognizing the need to make specific institutional arrangements based on the principle of both stimulating the creation of knowledge products and facilitating their accessibility to, and use by, the public. Balancing the private interests of intellectual property rights and public **** interests is the cornerstone of the legal system of intellectual property rights. [13] Therefore, in the system of intellectual property itself, there are many targeted provisions to harmonize public **** interests. For example, fair use in copyright law and compulsory licensing in patent rights. Most importantly, intellectual property is protected for a limited period of time, and once it expires and the product enters the public domain, it becomes the ****same wealth of all mankind. So, fundamentally, both intellectual property and antitrust law are focused on the long-term development of society.
3, the principle of balance - the basic principle of coordination of intellectual property and antitrust law
While it seems from our country at present, the field of intellectual property rights into the antitrust case is not much, and the relevant judicial practice has not been unified standards, but in fact the conflict between the two are mainly concentrated in two aspects. First of all, the excessive protection of intellectual property rights will cause the imbalance of competition and thus be prohibited by the anti-monopoly law, and secondly, the anti-monopoly law before and after the review of everything will destroy the autonomy of the subject of competition and the enthusiasm of innovation. Therefore, to find an appropriate standard, it is to maximize the interests of competition for case analysis, and to find a balance between the interests of both parties to the contract and the public interest of the society. The author believes that this standard can not be established through the law clear and specific provisions, but basically rely on the self-evaluation of market players and the judge's case determination.
First, it is first clear that the management of knowledge products needs to be regulated more by contract law and intellectual property law to ensure individual will and social innovation. "Licensing should benefit the copyright owner: this is partly why copyright and contract law were designed. Success in the marketplace does not deprive a company of the benefits through copyright and contract law." [14] Thus, antitrust is not against big business. Monopolies created by large corporations as a result of innovation and technological advances are not true monopolies, and monopoly profits included in entrepreneurial profits can be viewed as bonuses for those who succeed.
This kind of enterprise with "monopoly in the technical sense" is actually still in competition, because on the one hand, it has to compete with the enterprises of the original technology and products, and on the other hand, it is threatened by the potential competition.[15]
This kind of enterprise with "monopoly in the technical sense" is still in competition. [15]
This passage shows that the formation of a monopoly does not necessarily mean the elimination of competition, and that in order to maintain its position, the monopolist has to work harder to improve its technology and reduce its costs. If this is the case, then consumers will ultimately benefit. This is evidenced by the development of the IT industry.
Also, from the perspective of contract law, antitrust law is a correction of the parties' meaning.
This kind of correction should happen in the case of obvious unfairness, for example, one party takes advantage of its dominant position to impose unreasonable obligations or prices on the other party, resulting in "the strong getting stronger and the weak getting weaker", which exceeds the acceptable limit of normal competition, and this is the space for the antitrust law to play its role. In the "first screen" clause between Microsoft and computer equipment manufacturers, Microsoft did not impose excessive and unreasonable constraints on the setting and display of the "first screen", nor did it restrict manufacturers and consumers from redesigning the screen after the "first screen". Nor does it restrict manufacturers or consumers from redesigning the screen after the "first screen. As the author of COPYRIGHT, LICENSING, AND THE "FIRST SCREEN" points out, under the principle of contractual autonomy, it is impossible for a license agreement to protect the interests of the licensor alone. On the whole, a licensing contract is a game, because the balance of interests between the two parties is inevitably reflected in the price of the contract. The more rights acquired, the higher the price paid. Walter Eugen of Germany said: "Freedom of contract". Eugen says that freedom of contract "is indispensable, and without free contracting by individuals from the economic programs of households and enterprises, there can be no regulation of everyday economic processes through perfect competition." [16] Moreover, this "first screen" clause can be used to reduce training costs, quality control, clear trademarks and other aspects of the role of consumers to get stable, inexpensive services, and ultimately through the reduction of transaction costs to achieve the increase in the interests of society. On the basis of the "principle of reasonableness", it can be argued that the "first screen" clause is not the result of a complete abuse of rights. If antitrust scrutiny must be introduced into this clause, it will jeopardize the consent of the contract and the free choice of the market players in the competitive environment, and then it will pay the price of jeopardizing the technological progress of the society, which is a problem that the antitrust law has to think about. Therefore, using economics to specifically analyze the contract terms, weighing the interests of many parties, in order to find the role of antitrust law space.
Secondly, the antitrust law can not completely withdraw from the field of intellectual property protection, as long as this kind of "protection" has become an umbrella for the destruction of competition, the antitrust law should be obliged to regulate this, in order to ensure the healthy development of the competitive structure.
Facts show that freedom of contract sometimes fails to protect competition between supply and demand in the market, and can even be used to eliminate competition, as exemplified by the establishment of cartels and other monopolistic organizations. Firms use freedom of contract to create monopolistic organizations, which in turn use freedom of contract to lead to coercive contracts. "Freedom of contract" often serves as an excuse for monopolies to prove that they are protected by the law and that they enjoy the corresponding rights.[17] It is precisely because of this that cartels and other monopolistic organizations have been established to eliminate competition. [It is precisely because traditional intellectual property and contract law overly promotes autonomy that abuses of rights may be legalized. In intellectual property law, the law gives the right to the privilege of the right holder, to the benefit of knowledge products delimit a closed space, can only be enjoyed by the right holder, naturally triggered and other social interests of the main body of the contradiction.
As in the first case at the beginning of this article, the courts in the United States and Europe, in response to the antitrust litigation, respectively found that Microsoft's behavior violated the antitrust law and made a judgment against Microsoft. From such facts, it can be seen that the antitrust law is fully justified to intervene and regulate in the face of the phenomenon of exclusivity in the field of intellectual property. This is due to the nature of antitrust. Therefore, despite the barrier of "exclusivity" of "private rights", and the freedom of contract, but from the perspective of the long-term interests of society, should recognize the rationality of the intervention of antitrust law.
Thirdly, the conclusion of this paper is that the relationship between intellectual property rights and antitrust law is no longer purely as a monopoly exemption, but in the protection of intellectual property rights and the prevention of abuse of rights to seek a balance; for the intellectual property rights related to the restriction of competition should also be included in the scope of antitrust regulation. The consideration in antitrusting a company is no longer just about its size, but also about whether it utilizes its size to restrict competition and harm consumers. [18]
As the U.S. Supreme Court expressed its view in the Dell case, "Objective format standards, recognized through a fair process, have a 'substantially pro-competitive virtue.' By setting standards, the applicability of products can be improved, thereby increasing consumer choice, and production costs can be reduced through standardization of inputs and economic indicators. Enabling new entrants to produce products according to current standards reduces barriers to market entry ...... "In general, it seems that both IPRs and competition policy are concerned with technological progress and the ultimate benefit to consumers. Firms want to make technological changes but at least prevent free-rider behavior, so IPR protection is essential. Market players have sufficient incentive to transform only in the face of competition, so the creation of an environment of healthy competition is the basis for economic development. So it is necessary to balance the interests between the ever-increasing competition and further technological transformation. In the face of the complexity of economic life, the problem of intersection between different areas of law is becoming more and more common, and it is then necessary to correctly grasp the deeper meaning of the legislation of different sectoral laws to promote the development of the overall interests of society.
Notes:
[1] In June 2000 Microsoft filed an appeal, and the Court of Appeals issued a decision that essentially affirmed Microsoft's use of anticompetitive tactics to maintain its monopoly on computer operating system software, but rejected the trial court's decision that attempted to extend the monopoly to the field of browser software. on November 6, Microsoft settled the case with the Department of Justice and the nine states that were plaintiffs. Since it is not very relevant to the discussion in this paper, it will not be described in detail. Xu Jie and Shi Jianzhong, editors, Case Study on Economic Law, p. 204, Intellectual Property Publishing House, September 2004 edition. See Ronald A. Cass: COPYRIGHT, LICENSING, AND THE "FIRST SCREEN", Source:
American Social Science Research Web site www.ssrn.com
[2] Liu Ping Zhou detailed "Comparative Study of Intellectual Property Rights and Property Rights", in Comparative Study of Intellectual Property and Property Rights" in Intellectual Property, No. 4, 2003
[3] "In keeping with the basic approach of the copyright law , copyright owners are given great In keeping with the basic approach of the copyright law, copyright owners are given great freedom in deciding the terms on which to license their products. After all, the value of the copyright is the ability of the right owner to set terms expected to maximize the return from licensing. After all, the value of the copyright is the ability of the right owner to set terms expected to maximize the return from licensing."
See Ronald A. Cass: COPYRIGHT, LICENSING, AND THE "FIRST SCREEN". ".
[4] The author does not deny that the "exclusivity" of intellectual property rights is limited in duration and subject to fair use.
Therefore, the discussion of exclusivity is relative and not overly radical. This article is based on the existing system of intellectual property rights, and does not question the intellectual property rights themselves, but mainly from the antitrust point of view and the perspective of the overall social development of some thinking. At the same time, I do not deny that intellectual property rights obtained initially, but also in the market fair competition in the case of the right to the results of creative labor.
[5] "Effective competition" is a goal model in the economic sense, in which competition is regarded as a means of realizing the overall economic and social public interest, and which is proposed in order to establish a market structure conducive to economic development. As a legally operational target model, the key is how to establish a criterion for evaluating competition in the market as effective competition. According to the experience of other countries, the target model for establishing effective competition mainly starts from regulating the competitive market structure. According to the theory of Germany's Konsenbach, an optimized market structure has multiple competitors in the market with moderate differentiation of their goods and a high degree of market transparency. Wang Xiaoye: "Competition Law Research" Publishing House 99th edition page 73-90
[6] Liu Ningyuan Si Pingping Lin Yanping: "International Antimonopoly Law" Shanghai People's Publishing House September 2002 edition page 7 -9
[7] "To the extent there has been a perceived conflict, however, it seems to stem from four principal areas of uncertainty: (a) the extent to which competitio policy is about short-run allocative efficiency or long-run dynamic efficiency, (b) whether market power should be inferred from the existence of an IPR, (c) certain distinctive economic characteristics of IPRs, (d) the extent to which the competitio (b) whether market power should be inferred from the existence of an IPR, (c) certain distinctive economic characteristics of IPRs, and (d) whether a particular contract, license, or merger should be regarded as horizontal or vertical. See "Competition policy and intellectual property rights", OECD, committee on competition law and policy, DAFFE/DDGM. pro"
and anticompetitive tying in cases where the requisite market power is conferred through IPR. " See "competition policy and intellectual property rights", OECD , committee on competition law and policy, DAFFE/DLP (98) 18
[12]Feng Xiaoqing, "Balance of Interests Theory: The Theoretical Basis of Intellectual Property Law" in Intellectual Property Rights
[14]Liu Bingyong, "Trying to Discuss the Theoretical Basis of Anti-Monopoly" in Jiangsu Social Science, No. 5, 2002
[15]Liu Bingyong, "Trying to Discuss the Theoretical Basis of Anti-Monopoly" in Jiangsu Social Science, No. 5, 2002
[16]Liu Bingyong, "The Theoretical Basis of Anti-Monopoly" in Jiangsu Social Science, No.5, 2002
[17]Ma Hongyu, "The Development Trend of Anti-Monopoly Laws from the "Microsoft" Case - Some Implications for China's Anti-Monopoly Legislations" in Lanzhou Business School, No.4, 2001
[18]The "Microsoft" Case, No.4, 2001
[19]The "Microsoft" Case, No.4, 2001
[20]The Anti-Monopoly Laws in China Issue 4, 2001