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Intellectual property rights and competition policy are intimately related. In this chapter I survey the economic literature analyzing the interaction between intellectual property law and competition law and how the boundary between these two policies is drawn in practice. Recognizing that intellectual property rights and competition law can interact in many different ways, the presentation focuses on several key issues. The economic literature on the interaction between competition law and intellectual property rights shows that these regulatory systems are consistent in terms of basic principles. Significant tensions exist, however, and it is difficult to balance IPR and competition law in practice. The significant differences in approach between the United States and the European Union simply reflect the underlying reality that efforts to achieve a sensible balance do not result in policy harmonization.

This chapter discusses current issues raised by the use of patents in university-industry technology commercialization. After introducing how patent laws operate in the global marketplace, this chapter provides an overview of the U.S. patent system, describing aspects of the process by which patents are obtained and enforced. The focus of the chapter then turns to some of the benefits and costs to academia of the impact of the Bayh-Dole Act, which allows universities to capture returns from federally funded research. The chapter identifies some of the challenges created by the expanding scope of subject matter eligible for patent protection and concludes with a discussion of some of the issues and opportunities associated with the strategic licensing and enforcement of patents that may impact invention and innovation in the academy and beyond.

This chapter provides a selective survey of the theoretical and empirical literature to date on the relationship between intellectual property rights (IPRs) and measures of innovation and international technology transfer. The chapter discusses the empirical implications of theoretical work, assesses the theoretical work based on the evidence available, and identifies some gaps in the existing literature.

Scholars of business, economics, and law have long recognized that rights to intellectual property (IP) intimately shape innovative activity and the pursuit of profits. More than 60 years ago, Michal Polanyi voiced the following concerns about awarding property rights to creations of the “intellect”:The law…aims at a purpose which cannot be rationally achieved. It tries to parcel up a stream of creative thought into a series of distinct claims, each of which is to constitute the basis of a separately owned monopoly. But the growth of human knowledge cannot be divided into such sharply circumscribed phases. Ideas usually develop gradually by shades of emphasis, and even when, from time to time, sparks of discovery flare up and suddenly reveal a new understanding, it usually appears that the new idea has been at least partly foreshadowed in previous speculations. (Polanyi, 1944, pp. 70–71)

This article explores the effect of technological similarity in acquisitions on invention quantity and quality. In doing so, we confirm previous findings in the literature suggesting that technological similarity exhibits an inverted U-shaped relationship with innovative output and a negative relationship with average invention quality. However, we identify the nature of the technology as an important moderating factor for both relationships. We distinguish between two types of technologies, complex and discrete, and suggest that at high levels of technological similarity, invention quantity and average quality increase more in complex technology industries as compared to discrete technology industries. These effects are attributed to innovation cumulativeness and the interdependencies developed between patent rights in complex technology settings. A study of acquisition and patenting activity in two industries over a sixteen-year period provides empirical support to our claims.

Neoliberal political leaders such as Prime Minister Margaret Thatcher (1979–1990) and President Ronald Reagan (1981–1989) heralded entrepreneurs as capitalist heroes, yet for the most part, the policies they enacted did not help real entrepreneurs. Their image of a self-made entrepreneur who thrives in the absence of government action was fundamentally flawed. Their ideology impaired their ability to promote entrepreneurship because they viewed support for entrepreneurs primarily in negative terms as the removal of government tax and regulatory burdens rather than in positive terms as the cultivation of a dynamic market infrastructure. This article presents this argument in four steps, focusing on the US case: (1) how neoliberal reforms embodied internal contradictions; (2) how reforms to market governance undermined entrepreneurship; (3) how other neoliberal policies also failed to support entrepreneurs; and (4) how policies that violated neoliberal principles, such as industry and technology policies, were actually more supportive of entrepreneurs.

Purpose – This chapter examines the licensing behavior of patent pools when they are unconstrained by antitrust rules.

Design/methodology/approach – Patent pools allow competing firms to combine their patents and license them as a package to outside firms. Regulators today favor pools that license their patents freely to outside firms, making it difficult to observe the unconstrained licensing strategies of patent pools. This chapter takes advantage of a unique period of regulatory tolerance during the New Deal to investigate the unconstrained licensing decisions of pools. Archival evidence suggests that – in the absence of regulation – pools may not choose to license their technologies.

Findings/originality/value – Eleven of twenty pools that formed between 1930 and 1938 did not issue any licenses to outside firms. Three pools granted one, two, and three licenses, respectively, to resolve litigation. Six pools issued between 9 and 185 licenses. Archival evidence suggests that the pools studied in this chapter used licensing as a means to limit competition with substitute technologies.

I begin with a dispute over a fox hunt, by which to understand the law of tangible property, then develop that metaphor for the major types of intellectual property. I start with domestic U.S. patent law for the sake of concreteness, and generalize to other jurisdictions and types of intellectual property. In the latter parts of the paper I discuss the international implications of intellectual property, including especially the effects of information spillovers. The last part of the paper describes the hazards in analogizing “trade” in intellectual property rights to trade in goods, and particularly in interpreting international patent data. These hazards motivate the search for a structural model specially adapted to the purpose of valuing international intellectual property rights and rules. The goal is to give economists a simple and integrated framework for analyzing intellectual property across time, jurisdiction and regime type, with an eye towards eventually developing other incentive systems that have the advantages of property (such as decentralized decision-making), but fewer of the disadvantages.

In this chapter, we argue for an essential dualism in the U.S. economy; there are simultaneously institutional sources of dynamism and institutional patterns that portend a process of decay and decline. This dualism corresponds to a growing divide between innovative small- and medium-sized enterprises and big corporations – both financial and nonfinancial – that are increasingly predatory in their business strategies. Surprisingly, firms on both sides of the divide are increasingly dependent on government. The small- and medium-sized firms rely heavily on government science and technology programs to help them innovate. The large firms need government to protect their position. Whether dynamism or decay will prove to be stronger, we think, is contingent on political choices that will be made over the next ten years. This contingency, in turn, makes it easier to understand the highly polarized nature of partisan politics in the United States today.

This chapter introduces the reader to the meaning of competitive advantage and posits that a firm's strategy is defined as the managers’ theory about how to gain and sustain competitive advantage. The author demonstrates how a firm creates its competitive advantage by creating more economic value than its rivals, and explains that profitability depends upon value, price, and costs. The relationship among these factors is explored in the context of high-technology consumer goods-laptop computers and cars. Next, the chapter explains the SWOT [s(trengths) w(eaknesses) o(pportunities) t(hreats)] analysis. Examining the interplay of firm resources, capabilities, and competencies, the chapter emphasizes that both must be present to possess core competencies essential to gaining and sustaining competitive advantage through strategy. Next, the chapter describes the value chain by which a firm transforms inputs into outputs, adding value at each stage through the primary activities of research, development, production, marketing and sales, and customer service, which in turn rely upon essential support activities that add value indirectly. After describing the PEST [p(olitical) e(conomic) s(ocial) t(echnological)] Model for assessing a firm's general external environment, the chapter explains Porter's Five Forces Model. The chapter then describes the strategic group model and illustrates that model by reference to the pharmaceutical industry. The author notes that opportunities and threats to a company differ based upon the strategic group to which that firm belongs within an industry. Finally, the chapter explores the importance of strategy in technology intensive industries and emphasizes that sustained competitive advantage can be accomplished only through continued innovation.