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Abstract

When government recognizes intellectual property (IP) rights, it is often viewed as sanctioning the existence of private "monopolies," in contrast to the general antimonopoly thrust of the antitrust laws. And yet, on occasion IP law itself condemns conduct on the part of IP owners-or excuses otherwise infringing activity on the part of IP defendants-expressly for the purpose of promoting competition. It does so even though antitrust law -if one were to apply it at all under analogous circumstances-would not find anticompetitive harm without conducting a more thorough analysis of whether the antitrust defendant possesses power over a well-defined market. Salient examples include the misuse doctrines in patent and copyright law; some applications of merger and fair use in copyright; and trademark law's functionality doctrine. In this Article, Professor Cotter develops a theoretical explanation for that divergence between antitrust and IP. Specifically, he argues that in some limited contexts the expected social costs, including error costs, of ruling for IP defendants may be low in comparison with the expected anticompetitive harm from ruling for IP plaintiffs. As a result, IP courts sometimes may enhance welfare if they are less concerned than antitrust courts about the expected costs of "false positives," that is, cases wrongly decided against the party defending the allegedly anticompetitive conduct. Put another way, it sometimes may be appropriate for courts to excuse IP defendants from liability, in order to avert relatively speculative threats of anticompetitive harm. Professor Cotter further contends that such cases probably are more common in the copyright than in the patent law context, and that even in copyright contexts courts should be cautious about casually inferring anticompetitive harm; but that his analysis provides a rationale for a relatively expansive definition of trademark functionality.

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