1. IP and Antitrust (Competition Law)
Prof. Matthew Sag
Loyola University School of Law

2. IP Rights as a solution to some basic economic problems
Many intellectual goods are expensive to make, but cheap to copy
Ability to copy may lead to an under-production of innovative or creative goods or services

3. The ‘Solution’ of IP rights creates some further problems
Rights not perfectly aligned with economic rationale
Rights confer market power (sometimes)
Fractured entitlements creates transaction costs

4. IP/Antitrust Common Issues
IP ‘off the rails’
‘bad patents’
Copyright over facts
Functional trademarks
Misuse of IP rights
Spurious claims
Anti-competitive settlements to game the regulatory system
Post-term licensing
Middle men with market power
E.g. ASCAP, Patent Pools
Lower transaction costs, but decrease some forms of competition

5. Google | Android
According to the European Commission, Google is hindering the development of innovation, and market access for rival mobile operating systems, applications and services.
Google made about $11 billion last year from advertising sales on Android phones

6. Google | Android | What’s the problem
Android is free an open source, but it cost a lot to develop
Google uses copyright and contract to …
Maintain a cohesive ecosystem?
Anti-Fragmentation Agreement
Agreement to pre-install the whole Google bundle of apps
Exclude rival open source mobile operating systems?
Exclude rival apps?

7. Image © European Union.

8. Google invested in Android to protect Search – Incentive = Exclusion
Other apps and search tools not shut out entirely (but defaults are sticky)
Android is more open that Apple OS
(But Apple is not a search engine)
Concern with fragmentation is more than just a pretext
The bundled products are designed to work together

9. Lessons from Microsoft
Microsoft argued that its license restrictions we legally justified because, in imposing them, Microsoft was simply ‘exercising its rights as the holder of valid copyrights.’
U.S. courts gave some latitude to Microsoft where restrictions applied to look and feel of the desktop.
But taken too far, this argument “… is no more correct than the proposition that use of one's personal property, such as a baseball bat, cannot give rise to tort liability.”

10. For More Information and to Stay in Touch
Professor Matthew Sag Institute for Consumer Antitrust Studies Loyola University Chicago School of Law