Refusals to Deal in Information and Communications Technology IAN EAGLES University of Auckland BILETA 2004 DURHAM

THE PROBLEM Refusals to Deal in ICT The Wider Interface Debate Talking Past Each Other Formalism versus Empiricism Law versus Economics Intent versus Result Action versus Inaction

REFUSALS TO LICENSE Unilateral or Collusive? Explicit or Implied? Absolute or Conditional? Sustained by: - intellectual property - contract with third parties - technological locks

REGULATORY CHOICES Retreat Before the IP Right Presumption of Vice Presumption of Virtue Regulatory Neutrality -between legal rights -between high and low technnology -between market players Case by Case Analysis

THE SOUNDBITE WARS IP and Competition Law Share Same Goal Sacrosanct Property Versus Regulated Monopoly

MORE SOUNDBITES What The Law Creates It Shall Not Destroy - statutory versus non statutory - property versus contract -property versus obligation -expansion of rights Regulation Equals Destruction

MORE SOUNDBITES Rights Define Markets - legal monopoly = market power -IP rights never create market power -right to use implies right to refuse

YET MORE SOUNDBITES Different Markets Need Different Rules -IP is more vulnerable than other rights -time and technology will rescue us -the judge as science fiction writer -fast change is double edged

LEGAL EXITS FROM THE ECONOMIC MAZE? Inside or Outside the Scope of Grant Exclusionary Intent Delegitimises Refusal Cross Market Objectives

SCOPE OF GRANT TESTS Sword or Shield? Absolute or Presumptive? Evidentiary or Substantive? Expressly granted or deduced penumbra? Trans Market Leverage -substitutability versus complementarity -mapping right against market

INTENT BASED TESTS Predatory purpose as an abuse of IP right Presumptive or Absolute? Past Virtue Negates Present Right Achievable Result Versus Wishful Thought Hypothetical Non Monopolist -parsing the statute in Australia and NZ -legitimate business explanation in US -subset of essential facilities, or -independent source of liability

The Search for Unifying Principle in European and UK Law Four illustrative cases -Volvo v Veng -Magill -IMS -Intel Exceptional Circumstances or Essential Facility?

Exceptional Circumstances Prediction or Rule? Parsing Magill Cumulative or Alternative? The Forensic Context -the unlovely defendant -infringement versus enforcement -interlocutory indeterminism

IP as an Essential Facility? American Genesis Antitrust before Economics Four Part Test - control by monopolist -duplication not feasible -access by rival blocked -no harm to facility owner Collective or individual control?

Beating EF Back into its Box Ramping Up the Control Threshold -downstream competition hobbled or eliminated? -permanence of obstacle? Unwillingness to Find Constructive Refusal Actual Access Defeats Claim Courts’ Unwillingness to Act as Quasi Regulator

Essential Facilities in EU Law Refusals to Deal under ART 82 -dominant firm -prior dealing Limited Powers of Direct Regulation Port and Ferry Cases

Essential Facilities in EU Law continued Judicial Correctives -Night Services -Oscar Bronner Use in IP Context -Tierce Ladbroke -IMS

Essential Facilities: A Conceptual and Practical Dead End An Economics Free Zone? Duplication Impossible to Rule Out in Technology Intensive Markets IP Embedded in Industry Standard De Facto Deference to Right Holder Formal Evasion Disguises Substantive Breach

CONCLUSION IP is not special Define markets not rights Measure market power Avoid retreat into formalism Certainty comes at a price Inaction is not better than Action