Maurice- Leaving aside the predatory pricing issue for a moment, you are absolutely correct that the absense of competition in the disfavored product market is the primary linchpin in my analysis that no competitive harm can occur since there are no competing sellers of a product for which one seller has by patent been granted a lawful monopoly. If I understand your argument, it is that the patents in question include ones for functionality that can be purchased elsewhere by the use of products which (i)do not offend the disfavored patent in question, and (ii) the economics are such that its industry practice to actually sell that part as an individual item, as opposed to a component of an assembled item.
But I still see this one distinction between product and the IP behind it that I think is substantive. Let me try to flesh it out.
Every product in the world has,or at one point had, either legally cognizable IP behind it, or failing that, some form of an idea, no matter how crude and simple the idea might be. The difference between bundling IP as opposed to the product itself is that the purchaser of the IP still has the expense of purchasing or producing the actual thing that can be made with the idea.
Thus there is a very real sense in which the transfer of IP (even IP used to make something according to a method for which there are other methodologies available) differs considerably from the transfer of the product itself.
To illustrate the difference, lets look back at the MSFT case. If MSFT had bundled the OS with the IP behind the browser, but not the browser itself, all MFST has succeeded in doing is putting the competitive dynamics where they would be when the IP rights had expired. The transferee of the IP still either has to make the browser itself, or buy one from someone else. This creates a much different competitive environment in the browser product market than simply installing the browser itself. So, I don't think its right to say that "MSFT has IP, being the software..." They are two distinct thinggs. the one being the idea ,and the other being the assemblage of physical matter which interacts with the computer to afford it a browser function. I can see how the distinction is more sublime in this context than it would be in the comparison of the schematic model of a locomotive engine and the locomotive engine itself, but its no less valid, and will continue to be valid until someone comes up with an idea which can, with no physical application of it, self-effectuate the thing its is designed to do.
Now ,an interesting twist on the idea is if one could conceive of a purely IP "product market". Where five different methodolgies to accomplish the same thing were seperately patented. There is no physical product involved. And one of the patent holders has a patent so valuable and for which there is no alternative methodology. We must further assume that the companies involved are exclusively IP Houses (like QCOM would have been had SPINCO gone through. Is giving away the former when one sells the latter a competitive problem. Again, getting back to the maxim that the harm must be to competition, and not merely competitors, how has the consumer been harmed if someone wants to give him something for free? Secondly, is there any market of the sort I've described in wireless IP consisting purely of licensors of ideas but not makers or resellers of products? Because if somebody comes up with a different idea and also builds and sells the product behind the idea,QCOM creates no disincentive to buy that product simply by giving away the idea behind a different way to make it.
A final thought on predatory preicing, with respect to which your point was:
<<Similarly on the predatory pricing aspect. Customers are obviously harmed by QUALCOMM's pricing as competitors can't enter the market solely on some equivalent technology which QUALCOMM might invent this week, because that technology will be given away, obviously below cost, along with the rest of the technology portfolio which has already been enjoyed. A competitor would have to charge something for their equivalent, which they might also develop this week. So they couldn't enter the market>>
Customers aren't harmed by competitors being blocked out of the market because QCOM is giving something away for free. It is axiomatic that the reason competitors can't enter the market is because the customer would prefer to get it from QCOM for free. So saith Brooke Group, which holds that the customer benefits from the predatory price, suffers from the supracompetitive price, and the practice is only actionable in a setting where the latter can outweigh the former. That QCOM would continue the "predatory price" in perpetuity doesn't change the analysis, but would suggest an economic motive behind the practice incompatible with the well understood motive of the predatory pricer which is to jack up the prices as soon as everyone else has left the field.
Now, its true that there has been a great deal of academic debate about the merits of the Brooke Group analysis. I haven't had occasion to consult the caselaw on the point for several years, but I'm not aware of predatory pricing being revived by any of the subsequesnt cases. I can update this fairly easy and will do so.
Lets test this idea of mine whether the idea will always be seperable from the product. It seems to work, but maybe I'm wrong, and if I am, you are right that the competitve analysis would change as well.
A final disclaimer. The antitrust work I've done has not been in the field of IP. I am inferring generally applied principles which may well be modified in the cases by the particularities of that setting. As time permits, I'll do a bit of kicking around.
I absolutely agree that antitrust vigilance in the analysis of QCOM's admittedly unusual business model is a wise thing. |
