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Intellectual property and antitrust are especially relevant as we approach the new century because it is more important than ever to encourage innovation and competition, both of which enhance consumer welfare. Innovations are among the most valuable assets of American businesses, and in today's global economy, companies must innovate if they hope to survive and thrive. This is true in industries as diverse as computer hardware and software, biotechnology, aerospace, and pharmaceuticals. Companies generate wealth and employment by generating new ideas and developing them into improved products. Consumers, in turn, benefit enormously from these innovations.

Innovating companies--ranging from modest research boutiques to giant aerospace-defense contractors--all depend vitally on a legal framework that ensures a competitive market while protecting the rights of inventors and allowing innovators to profit from their ideas and inventions. Many attorneys bear responsibility for charting companies' paths through this framework. This responsibility is a real challenge because innovation moves so quickly and change is the norm. It is my hope that this article will make the job a little easier by enhancing knowledge of the antitrust aspects of the legal framework.

Today, it is widely recognized that patent and antitrust drive innovation in different but complementary ways. Both disciplines promote dynamic efficiency: that is, a system of property rights and market rules that create appropriate incentives for invention, innovation, and risk taking—delivering the greatest returns for society not just for today, but tomorrow as well. The patent grant does this by providing incentives for inventors to take risks and make investments in research and development. Patents transform a claimed piece of intellectual progress into a property right, allowing the inventor to exclude others from using that invention during the term of the patent. Our intellectual property framework further advances follow-on innovation through public disclosure of the invention. Antitrust's core mission is to appropriately foster and protect the competitive environment by preventing certain conduct that threatens free markets. This environment is what pushes companies to constantly innovate and allows them to profit when they do. Antitrust recognizes the critical role that intellectual property rights play in driving innovation and so values these rights. Yet antitrust applies the same analytical framework to intellectual property as it does to other forms of property, and imposes some rules about how the patent monopoly can—and cannot—be used. Thus, antitrust and patent law work together to create and preserve the appropriate incentives for technological progress by creating property rights and preserving competition around those rights.

Antitrust is grounded in the principle that competition is good for the consumer, and that anticompetitive behaviors such as unreasonable restraints of trade, monopolistic conduct, price fixing, and price discrimination are suspect. On the surface, intellectual property and antitrust might appear to be inherently incompatible. After all, prevention of monopolistic conduct is an explicit antitrust purpose,62 where stopping such conduct is seen as “protect[ing] the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.”63 On the other hand, copyright is a monopoly legitimized by Congress, and as noted in a later section (see Misuse), courts have no expectations that these monopoly owners foster competition or keep costs down.

However, once one takes a look at the actual descriptions within antitrust, it becomes apparent that the monopolies bestowed by copyright are not the same as the monopolies seen to endanger the economy. An antitrust violation often involves an actor abusing market power, where market power is defined as “the ability profitably to maintain prices above, or output below, competitive levels for a significant period of time.”64 It is unlikely that an individual author will ever hold market power such that she would run afoul of antitrust laws. Corporations who own parts of the rights within copyright, though, may engage in behaviors that would draw antitrust scrutiny. Thus, where Congressional-granted monopolies would not by themselves raise antitrust concerns, how those monopolies are used might.

To make good on its consumer welfare goals, a realignment of antitrust law is needed to promote climate progress in America. In  recently published in the Harvard Business Review, Matteo Gasparini et al. cites a survey finding 60 percent of companies are deterred from climate collaboration due to antitrust concerns. This is problematic because industry-wide collaboration is critical to address climate change. Collaboration helps mitigate the first-mover disadvantage, challenges that come with being the first firm to change their business strategy. In the context of sustainability, actions businesses take to decarbonize can be costly, resulting in higher prices and lower margins in the short run. So those who invest in sustainable transformation may find themselves at a competitive disadvantage. Collective industry action is one way to resolve this, as it ensures that competitors adopt costly practices simultaneously. Without collaboration, firm-level action is far less likely. Thus, when fear of antitrust violations deters collaboration, it deters climate action more broadly.

In  published in the Hastings Law Journal, Amelia Miazad echoes this assessment, and points out an additional flaw of antitrust doctrine: it falsely assumes that collaboration on social and environmental goals is anti-competitive. To illustrate this point, Miazad references when four automakers reached a voluntary agreement with the State of California in 2019 to establish vehicle emissions standards that were stricter than national levels. In response, the Department of Justice launched an  on the basis that this collaboration was anti-competitive by limiting the vehicle types offered to consumers. Ultimately, the probe was . While this probe has been criticized as politically motivated, Miazad argues that it underscores the disconnect between economic and non-economic goals in antitrust law. The automakers’ collaboration reflects a recognition that the auto industry is threatened by climate change with , , and . Addressing this risk is an economic decision that is needed to maintain profitability. Ultimately, Miazad concludes that antitrust law should remain firmly tethered to economic considerations. However, these considerations must also weigh the economic impacts of climate change.

Four major agritech corporations now account for 60 percent of the global seed market. It's time to change that.

Earlier this month, PepsiCo stepped down from a controversial league battle with Indian farmers over use of their patented potato seeds.

There is growing consensus in the United States that corporations need to disclose more about their activities and outcomes to include important environmental, social, and governance (ESG) data. The move to require this information is based on a desire to improve the operation of capital markets. Capital markets function effectively—providing accurate market signals about corporate performance and allocating finance efficiently—when participants are well informed about how corporations are currently performing and how they are positioned to respond to changes on the horizon. As conditions in the economy have changed, the set of information needed by capital markets has expanded beyond the calculation of immediate profit and loss. Climate change, which is altering the physical environment and producing a widening range of governmental responses, requires capital market participants to take into account possibly sharp changes in business conditions.1 Increased focus on social equity and economic inequality means that demographic, occupational, and compensation data on a firm’s employees take on new importance for consumer behavior and business operation and success.2

While efforts to expand corporate disclosures along these dimensions are under way at the U.S. Securities and Exchange Commission (SEC), there is good reason why ESG disclosures also ought to include markers that reflect the market power of firms and competitive conditions in the markets in which they operate. Just as the economy relies on capital markets to allocate finance, it also relies on competition in product markets to incentivize adaptation and innovation. When product markets are competitive, higher rates of return are signals that firms are especially productive or that supply is insufficient relative to demand. Directing finance to higher-profit firms under these conditions would help to increase efficiency, which is socially beneficial and something that capital markets ideally would accomplish.

Competition policy and antitrust law are experiencing a global renaissance. New market realities such as digital market gatekeepers, the financialization of firms, highly concentrated markets, a rising labor movement, industrial policy, and trade wars, among others, are radically reshaping how this policy area is understood and applied. Sustainability concerns have also been a driving force for reconstituting antitrust to meet twenty-first century challenges. It is now widely accepted that competition policy – both its aims and its enforcement – has wider societal impacts beyond competition, including effects on democracy, economic inequality, growth and innovation, racial and gender imbalances, privacy, geopolitical implications and more. Its effects on the environment can also no longer be ignored. Increasingly, private-sector firms say that antitrust is chilling the mobilization of non-state actors to address climate change and other sustainability challenges. Activities such as joint standard-setting, industry-wide competitor collaborations, and information sharing have raised new questions and controversies. Coordinated engagement by investors and financial institutions has become a particular target of politicized attack in the United States, further muddying the waters. These trends have generated confusion among private actors regarding permissible behavior, which has prompted many international competition agencies to issue updated guidelines. Although a common narrative emphasizes that antitrust law is getting in the way of coordination, antitrust law is, fundamentally, an allocator of coordination rights.3 It defines what kind of market coordination is pro-social or benign, and where private actor coordination becomes anti-social (for example, cartel behavior). Competition agencies, since their inception, have wrestled with how to define what constitutes pro-social coordination, and how to measure any anti-competitive harms against other social and economic benefits. For these reasons, competition policy is a profound shaper of markets. Competition enforcers and regulators must grapple with the role that it can play in advancing or hindering sustainability objectives. Various competition agencies define the scope of sustainability considerations differently, but broadly they can include: mitigating environmental impacts, accelerating the energy transition to clean energy, protecting human rights, and advancing worker rights and prosperity. Vigorous debates about the normative goal of competition policy have renewed urgency. For every position on what antitrust law should accomplish, differences in methodology and technical implementation follow. Biden administration antitrust enforcers are experimenting with a wholesale revival of the antimonopoly origins of antitrust and are exercising long-dormant enforcement authorities, focusing on addressing concentrations of power and protecting the competitive process. Due to both the increasingly politicized nature of the debate in the US, and the Neo-Brandesian belief that ancillary benefits like environmental or social benefits follow from increased market competition, US agencies largely remain silent on sustainability issues. Instead, the US is debating and experimenting with what new goal should replace the longstanding “consumer welfare standard” that has guided antitrust application for more than four decades. The US federated system – whereby states enforce their own antitrust laws parallel to federal law enforcement – creates additional complexity. In contrast, Europe is still largely operating under the consumer welfare standard, expanding who is considered a ‘consumer’ (“in market” or “out of market”) while moving to new semantic versions like the ‘citizen welfare standard,’ which allow for a wider set of welfare considerations beyond price or efficiency gains. Compared to the US, the EU, UK, and Dutch agency approaches to sustainability collaborations are more permissive, more experimental, and more oriented around exceptions and safe harbors. European agencies are now directly incorporating environmental and other sustainability concerns into their mandates and updated guidelines. Using the long-standing “balance of harms” approach for sustainability collaborations raises new and substantial challenges of measurement and enforcement. The anti-ESG (“Environmental, Social, Governance”) narrative battles have also heightened focus on financial institution coalitions such as the Global Financial Alliance for Net Zero (GFANZ), Climate Action 100+, Ceres, and others. In the US, Republican Attorneys General and Congressional representatives have launched investigations for alleged antitrust violations. The claim that coordinated behavior among financial institutions such as banks, asset managers, or insurers is a violation of antitrust, and a “collective boycott” in particular, has dominated headlines, although no lawsuits have been brought to date. As the political pushback has intensified, some major asset managers and insurers have withdrawn from their respective climate alliances. The rising anti-ESG movement overlaps and intertwines with antitrust concerns but must be parsed closely to differentiate narrative fiction from legal reality. In the US, state-level anti-ESG bills employ “boycott” language but are more concerned with questions of fiduciary duty than antitrust violations. Nevertheless, the coordinated statelevel activity means that firm risk from purported antitrust violation investigations is difficult to mitigate, even if federal agencies offered updated guidelines or safe harbors (as other international competition agencies are doing). For this reason, it is nearly impossible to provide a unified US approach to these questions, in contrast to international jurisdictions. Other industries – like fashion and agriculture – claim that a “first mover disadvantage” afflicts companies pursuing sustainability goals which may entail higher costs. For this reason, they assert that collective action amongst competitors – such as standard-setting and industry association activities, collective purchasing requirements or mandatory standards, information sharing, and others – is an important way to institute needed reforms, and they perceive antitrust as standing in the way of these collaborations. Most competition agencies have long-standing competitor collaboration guidelines to inform businesses about what kinds of collaborations are permissible under the law; there is also existing case law which has provided clarity on various kinds of collaborations. But some collaborations and activities with sustainability objectives continue to raise challenging questions. Some contend that antitrust’s focus on reducing prices or maximizing output is fundamentally in tension with sustainability goals. Competition agencies now wrestle with what amount of a reduction of competition among firms – if any – should be permissible to obtain certain sustainability benefits. How should agencies assess the benefits and harms of restrictions of competition against consumer or citizen benefits? And does this require legislative change, or simply updated guidelines? Discussions about how sustainability benefits should be quantified, to whom, and over what time horizon are ongoing. These technical questions absorb much of the European dialogue on “green antitrust.” However, it is worth noting that competition agencies have wrestled with technical questions relating to competitor collaborations for decades. Historically, competitor collaborations have been assessed using the lens of maximizing efficiency, rather than sustainability benefits. So, while the weighing of benefits and harms of these collaborations is not new to competition policy, ‘sustainability gains’ are becoming the new ‘efficiency gains’ that companies propose as deserving of new regulatory or legislative carve outs. To provide increased clarity on these issues in the US, financial institution coalitions and other non-financial industry collaborations can seek advisory opinions or business reviews from the Department of Justice (DOJ) and the Federal Trade Commission (FTC). They can also request that the FTC use its power to compel information (known as 6(b) authority, from section 6 of the FTC Act) to conduct market studies on critical industries relevant to energy transition or sustainability, which may raise new questions about permissible collaborations. This can help the agency investigate the unique competitive dynamics of a relevant industry, and perhaps yield specific case studies for updated competitor collaboration guidelines which would take sustainability oriented collaborations into consideration. Concurrently, the whole-of-government approach to competition policy – instituted under President Biden’s Executive Order on Promoting Competition in the American Economy in July 2021 – provides an opportunity to infuse sustainability considerations through existing interagency collaborations. While the FTC and DOJ are primarily responsible for enforcing the federal antitrust laws, other agencies such as the Department of Transportation, US Department of Agriculture, National Labor Relations Board, and many others also have antitrust authority. And increasingly, the FTC and DOJ have memorandums of understanding (MOUs) with other federal agencies, and often comment on rulemakings, as they intersect with competition concerns. At a time where the antitrust agencies are politically constrained from engaging questions of sustainability directly, they can support other agencies which may consider sustainability considerations in their rulemaking and other regulatory actions. Ultimately, competition policy and its enforcement agencies are one component of a broad policy framework that shapes private sector activities and their alignment with, or contributions to, climate or other policy objectives. Incentivizing private actors to align their practices with sustainability and climate goals will require policies and regulations throughout the economy. Antitrust policies and agencies should be a coherent part of this robust policy framework.

Ask voters about American politics, and they typically respond that it is ever more polarized, fragmented, divisive, and hyperpartisan. A recent report indicated that 78 percent of voters are unhappy with increasing partisan divisions. Beyond the issue of polarization, there is also a problem of performance. Satisfaction with American political institutions is decreasing. The dominant popular feeling toward the federal government is frustration—a sentiment now shared by 57 percent of Americans according to a March 2019 Pew survey. Surveys of public trust in the government tell a similar story, continuing the decades-long decline from the height of public trust in the early 1960s. Yet, at the same time, sizable majorities support increased federal spending on education, infrastructure, Medicare, and scientific research; thus the sentiment of frustration seems clearly tied to the government’s ineffectiveness in these areas, not simply ideological opposition to government in general.

Political fragmentation and distrust, whatever the cause, are often interpreted as signs of a decaying democratic system. But the usual response to this situation—another round of hand-wringing about civility—inevitably accomplishes nothing. Today’s combination of dissatisfaction and fragmentation should instead point to a different diagnosis. It is evident that there is no institution within which the country’s disparate interests can negotiate their differences with real consequences for political decision-making. For now, the United States still enjoys a tacit agreement on core issues such as pursuing economic prosperity, social mobility, and the sense of national and social integrity. But few would point to Congress as a place where important interest groups, like business and labor, hash out and negotiate their interests with reference to the common good. Instead, since lobbying occurs behind the scenes, representatives have little incentive to negotiate among competing interests in public. For the long-term health of the American regime, this lack of a trusted deliberative body is very disturbing.

Of course, pharmaceutical companies operate in the private sector and have the right to pursue mergers and takeovers as a means of securing future growth for their shareholders. Nevertheless, critics argue that an over-reliance on M&A in the pharma industry is ultimately unsustainable because of the damaging effect it has on the industry’s R&D capacity. Business goals must be met, but when it’s at the cost of R&D in a research-intensive industry like pharma, there’s a risk that companies are fuelling growth through the synergies and efficiencies that come with mergers, while reducing what should be their raison d’être – the development of new drugs.

John LaMattina, a former president of global research and development at serial M&A player Pfizer, has been particularly prominent in his criticism of mergers and their affect on pharma research. “A consequence of any merger is the inevitable consolidation of the two companies,” he wrote in a June 2014 editorial for Forbes.

The government doesn’t necessarily need to win cases for lawsuits to have an impact. For starters, big cases against big companies send a message designed to discourage future dealmaking. This is particularly true for today’s most successful technology companies, which have long expanded into emerging markets by gobbling up promising startups already on the field. As ex-Biden competition advisor Tim Wu recently noted, it can make a huge difference to an industry if the major players know they’re “under heavy surveillance from the government.”

Even if deals eventually close, regulators see value in everyone understanding that all transactions will be more closely scrutinized. From the outset, companies will find themselves encouraged to make voluntary concessions. In the Activision deal, for example, Microsoft preemptively offered substantial limits on how it will treat Activision’s products post-merger. Flagship titles including Call of Duty, notably, will not be pulled from other platforms, and offered instead as Xbox exclusives.

There is growing concern that dominant companies use patents strategically to keep competitors from entering their market. This column uses the landmark 1956 Consent Decree against Bell Labs to explore whether antitrust enforcement is an effective remedy to the problem. Results show that patents can indeed be used as an entry barrier for start-up firms, and that the compulsory licensing of patents can foster market entry and innovation. However, compulsory licensing is found to be ineffective in markets where dominant firms have other means of market foreclosure.

Innovation is a key driver of economic growth, and the patent system is one of the main instruments governments use to foster innovation. However, there is growing concern that dominant companies might use patents strategically to deny potential entrants – often small, technology-oriented start-ups – access to key technologies in an attempt to keep out competitors.1 As start-ups are thought to generate more radical innovations than established firms, this practice may harm technological progress and economic growth.

But the effects of such action are highly uncertain. Will a less concentrated tech sector comprised of slightly smaller firms fuel innovation and create openings for a new generation of tech companies? Or will reductions to scale significantly hurt leading tech firms’ ability to leverage the traditional building blocks of AI innovation—like computing power and data—into breakthroughs? The answers to these questions aren’t clear cut but offer a way to begin thinking about how antitrust enforcement could impact artificial intelligence innovation and national security more broadly.

Unlike some earlier national-security technologies, the commercial sector plays an outsize role in AI development. As a result, government access to both AI products and innovation hinges, in large part, on industry. While academia, private research labs, and AI start-ups offer important contributions to AI development, major American technology companies have traditionally led the field. Last year, Microsoft, Facebook, Amazon, Google, and Apple ranked among the ten largest recipients of U.S. artificial intelligence and machine learning (ML) patents.

As I explain in The Market Power of Technology, the central challenge for antitrust is that firms with advanced technology build legal market power to extract monopoly profits. While market entry is free (for example, anyone can sell smartphones), an entrant cannot use existing proprietary technology (such as the Apple iPhone). To compete in that market (top-quality smartphones), it must invent new technology and produce a superior product. But that is very difficult, and any attempt will elicit an aggressive response from the incumbent (Apple, Inc.). Consequently, competitive challenges are rare, and market power becomes entrenched.

Antitrust laws and Supreme Court decisions have declared profits from an innovation “innocent” because they result spontaneously, not as a result of intentional action to restrain trade. Not only is the accumulating market power of technology legal and unregulated; it is also supported by patent law, which is thus in conflict with the original aim of antitrust law. The implication is that the FTC can bring suits only against how firms conduct their business, not against their actual monopoly power.

Tech giants have been on an artificial intelligence spending spree, doling out billions of dollars to invest in, poach from, and gobble up smaller companies developing the world’s AI technology.

Amazon has poured $4 billion into AI startup Anthropic to use its tech. Apple purchased Canadian startup DarwinAI earlier this year, adding to a long list of the company’s quiet AI acquisitions. Microsoft made a strange deal to “acqui-hire” the startup Inflection, paying a $650 million “licensing fee” to hire its chief executive Mustafa Suleyman and hire most of its staff.

Nonetheless, breakups are critical on at least two grounds. In testimony before the House of Representatives last year, Judge Diane Wood stated that “without competitors, there will be no competition.” Even if Congress and agencies prohibit certain forms of unfair competition, they cannot conjure up beneficial forms of competition in monopolistic markets, especially markets in which incumbents enjoy the protection of large network effects. Without a serious search rival, how much motivation does Google have to improve its search results and interface? In the absence of effective competitors, the quality of Google search appears to have steadily declined, including through the proliferation of often unwanted ads. So long as Amazon dominates e-commerce, will it feel much pressure to reduce commissions and improve other terms for its millions of sellers? Paired with rules on unfair competition, breakups of dominant tech corporations can ensure business rivalry that confers benefits on consumers, workers, and suppliers. Great size also means great power: Amazon exercises power up its supply chain to the detriment of manufacturers and their workers, while Facebook and Google wield outsized clout over advertisers. Further, a corporation that owns dozens of plants and facilities across the United States is well positioned to thwart labor organizing. Large corporations today, in the words of labor lawyer Brandon Magner, “disperse their production without dispersing their power.” Under current American labor law, unions can only be formed at the establishment level. For example, Amazon warehouse workers would have to organize the company one warehouse at a time. With its concentration of power but decentralization of operations, a firm like Amazon can reallocate work away from warehouses with unions or even nascent signs of union activity and toward warehouses with more quiescent workforces. This is not a new fear. In 1920 the Interchurch World Movement attributed the failure of workers to organize U.S. Steel to the corporation’s enormous size: The first cause of failure was the size of the Steel Corporation. . . . It had too large a cash surplus, too many allies among other businesses, too much support from government officers, local and national, too strong influence with social institutions such as the press and the pulpit, it spread over too much of the earth—still retaining absolutely centralized control—to be defeated by widely scattered workers of many minds, many fears, varying states of pocketbook and under a comparatively improvised leadership. Giant corporations—specifically their controlling shareholders and top executives—wield extraordinary power in society. They can use their command of economic resources to shape the course of political campaigns, fund favorable media coverage, sponsor sympathetic scholarship, and decide which cities and regions thrive. The utility holding companies did this in the 1920s and ’30s and Big Tech companies do this today. Lord John Browne, the former CEO of BP, candidly told the Wall Street Journal in 2003: “We do get the seat at the table because of our scope and scale. Whether we are the second or the third largest (oil) company is of very little import, but we’re certainly up there and we operate in places which are important to the United States government, and the United States government is important to us.” Jeff Bezos exercised the power that comes with scope and scale in a particularly brazen fashion in 2017 when he invited states and cities to compete to host Amazon’s second headquarters. Municipal and state governments offered Amazon lavish incentives with the aim of attracting “HQ2” and the associated jobs and tax revenues. This frenzy to entice one of the world’s richest men took a particularly embarrassing turn when New York Governor Andrew Cuomo jokingly offered to rename himself Amazon Cuomo if Bezos selected New York for the second headquarters. With elected officials supplicating before Bezos, democracy certainly seemed subordinate to great wealth.

In response to these arguments, opponents assert that antitrust enforcement impedes innovation in the pharmaceutical industry.147 The idea of chilling innovation and deterring the development of new, potentially life-saving drugs is certainly concerning. However, this argument is less concerning than it sounds. When submitting its Amicus Brief in support of Plaintiff-Appellee State of New York in the Second Circuit Actavis case, the AAI addressed this argument. First, the AAI asserted that no empirical evidence existed showing that antitrust scrutiny of product hopping deters innovation.148 Moreover, the AAI further asserted that antitrust scrutiny of product hopping actually increases innovation.149 Without antitrust scrutiny of product hopping, brand- name companies will invest in making minor alterations to products to extend the patent, rather than investing in research for new, innovative drugs.150 Indeed, one study found that “[b]rand-name firms have sought increasing recourse to ancillary patents on chemical variants, alternative formulations, methods of use, and relatively minor aspects of the drug.”151 Essentially, immunizing brand-name pharmaceutical companies from antitrust liability encourages them to spend time and resources in order to find ways to make insignificant changes to current drugs in order to preserve the patent, instead of using time and resources to develop the next innovative drug. In its Brief as Amicus Curiae filed with the district court in Mylan, the FTC bolstered this argument by asserting: “The threat posed to existing brand drugs by generic competition can incentivize the brand company facing dramatic loss of sales to develop new and innovative drugs that benefit consumers.”152 Notably, the FTC recently filed a Brief for Amicus Curiae in support of Mylan in its appeal to the Third Circuit.153 In sum, there is no evidence that antitrust regulation of product hopping slows down innovation by brand-name pharmaceutical companies. Rather, regulation actually encourages innovation, as the competition from generics causes brand-name manufactures to innovate new products and prevents them from spending resources on insignificant changes to extend patents.

Antitrust has always played a fundamental role in guiding the innovation process. The AT&T antitrust consent decree of 1956 led to the creation of Unix, the first and most important universal computer operating system and the underlying language of the Internet. The Internet is probably the main technological innovation that has affected markets in the last thirty years taking us in the Internet Era and massively generating digital online markets. Based on Pen Internet surveys, in mid-2011, seventy-eight percent of the American people interviewed were Internet users. Hi-tech companies built on the Internet platform, such as Google and Amazon, exponentially increased in size in a few years. In 1998, Google counted six million of Web pages; in two years Google ran a billion of pages. The blockchain has the potential to be the next cutting edge technology which will change markets paradigm again bringing us to a new era—the Blockchain era. Similar to Java technologies developed in the late 20th, blockchain represents a world of new opportunities for some companies. Alternatively there is a looming threat for others who hold market power in present centralized networks as such platforms may become unnecessary. At the end of the 1990s Microsoft, which held over ninety percent of the world’s personal computer (PC) market, had to confront the threat of Java. Microsoft v. Java is an interesting case and useful to the blockchain discussion, because Java technology was the first open technology to enable software developers to write programs that could run on any operating system or microprocessor, bypassing Microsoft. Present large players, including Google and Amazon, may be tempted to engage in anticompetitive conduct to slow down the success of the blockchain technology or to misuse this technology to increase their market power or to collude with others. Blockchain technology is in its infancy and far from being perfect. Private/closed blockchains can, for example, create the perfect conditions for companies to collude and smart contracts automatically punish deviations by participants from cartel agreements. In private/closed blockchains exclusionary conduct might also occur, as the participation to those networks is by invitation only. Antitrust enforcers have the responsibility to investigate similar risks and be proactive. On the other hand, a public and open blockchain devises an open democratic platform that preserves economic democracy and open markets. Since Standard Oil, the creation and preservation of open and free markets is the primary antitrust goal; the same goal should be encouraged for blockchain technology today. Standard Oil, AT&T and more recently U.S. and EU Microsoft cases have shown that the temptation for companies that have the most to lose in a totally open market to engage in illegal anticompetitive behavior is often too compelling. Antitrust enforcers are markets’ irreplaceable gatekeepers and need to be aware and prepared for such a risk without compromising companies’ incentives to innovate as it is explained in the following section—Microsoft v. Java. A. Microsoft v. Java (1995) In 1995, Sun Microsystem (Sun) released the Java platform, which included a set of computer software and specifications; the DOJ saw in Sun and its development of Java technologies a potential alternative to Microsoft’s quasi-monopoly in operating systems. At the time that Sun developed Java technologies, which included both Java programming language, Java class libraries, and Java Virtual Machine (JVM), Microsoft held about 95 percent of the “licensing of all Intel-compatible PC operating systems worldwide.” Java technologies enabled software developers to write computer programs that could run on any operating system through a JVM, a virtual translator that enabled software written in Java or other computer languages to be executed in different operating systems or directly on microprocessors like Intel. Before Java was released, all computer programs were written to and run only on a specific operating system or microprocessor. Microsoft Windows or Apple IOS needed specific compilers (called platforms-dependent) to execute computer programs because each operating system reads/understands a specific machine language. Conversely, the JVM is a virtual machine (not a compiler designed for a single operating system) that enables operating systems to run any computer programs, significantly lowering the barriers of the operating systems market. By doing so, the JVM could have become the common platform used to perform computer programs on any machines. Sun, in addition to collaborating with Netscape, started collaborating with Intel, the market leader of computer microprocessors (Intel x86 CPU). Sun and Intel aimed at optimizing the translation of the computer program codes directly to Intel microprocessors, bypassing the Microsoft operating system (Windows). In 1996, as Java was increasing in size and threatened to overshadow Windows’ quasimonopoly, Microsoft created a fork of Java technologies. In particular, the Microsoft fork included the Microsoft version of the JVM that was intentionally incompatible with any Sun products. Although the DOJ considered that Microsoft’s fork of Java aimed at weakening the JVM competitive position, the district court did not embrace the DOJ’s complaint. As the Microsoft JVM ran faster than “ones calling upon Windows APIs with Sun’s method,” the district court recognized Microsoft’s conduct as lawful. In other words, Microsoft invested in developing a JVM for Microsoft that ran faster and was incompatible with Sun products, to prevent the JVM, and more generally Java’s technologies from jeopardizing Microsoft’s dominance. Although de facto Microsoft’s conduct was directly focused on limiting Sun’s success through the standardization process of its technologies, Microsoft developed a higher quality product for its operating systems than Sun. Considering the fact that antitrust law encourages competition among companies and competitors, no antitrust intervention was taken with respect to the Microsoft/JVM fragmentation issue. Antitrust enforcers thought that no matter what the underlying intent of Microsoft conduct was or whether its conduct damaged competitors, in the end, Microsoft created a better version of this operating system which increased consumer welfare. Although I am still not convinced that the decision of the district court was the best antitrust solution—it makes legal sense. There is much to learn from Microsoft v. Java case that can be useful as it relates to the development of blockchain and the preservation of a truly open market. Antitrust enforcers will be faced with a similar situation when confronting the potential of blockchain as it relates to the players that have the most to lose in a totally open market. Antitrust law protects consumers and markets’ efficiency—not competitors. Antitrust analysis should evaluate the overall results in the behavior of companies in the light of innovation technology and consumer welfare. The innovation process inevitably increases consumer welfare providing a wider variety of technological products and services at increasingly lower prices. The main focus of antitrust law should be to achieve this competitive outcome. B. Antitrust and Innovation “Without change there is no innovation, creativity, or incentive for improvement.” (William Pollard) If we look back historically, antitrust law has made clear the importance of the innovation process in preserving market efficiency and consumer welfare, often leading the path to innovation and the development of new markets. The AT&T antitrust consent decree of 1956, for example, led to the creation of Unix, the first and most important universal computer operating system. Although AT&T developed the Unix operating system for private use in 1969, AT&T could not sell Unix because the terms of the consent decree of 1956 prevented AT&T from selling software, such as Unix. AT&T decided to freely license the Unix operating system to universities and Unix soon became the most important universal operating system due to its network effects 100 and the underlying language of the Internet. In 1980, Berkeley University, which had created complementary software for Unix, collaborated with the Defense Advanced Research Projects Agency to adapt Unix for the creation of the precursor to the Internet—the ARPANET project. Unix has been developed in many different versions, such as GNU/Linux, Sun Solaris and MacOS X. Linux is the open source operating system that powers Google, Facebook, Twitter and Amazon. In the discussion on antitrust and innovation, the IBM antitrust case and the creation of the market of operating systems represents another interesting story. In 1960s, IBM was the leading computer manufacturer, which produced from the hardware to the operating system and most of software installed in IBM computers. In 1968, the DOJ required IBM to implement a software unbundling policy, which prevented IBM from installing its own operating system. The IBM unbundling decision opened the market of operating systems to competition. In 1980s, Microsoft started developing the operating system for IBM’s personal computers (IBM PC) —the rest of the story is well known. The 1956 antitrust intervention at AT&T set the tone for the creation of the Internet. In 2018 blockchain potentially could be the next technology that would lead the innovation process. Blockchain may change market paradigm again and markets shift from digital to blockchain platforms. Innovation means “the discovery, development, and commercialization of new and improved products and processes,” according to Professor Michael Carrier, hence new markets. Professor William Baumol, Robert Litan and Carl J. Schmman provided a broader definition, defining innovation as “the marriage of new knowledge, embodied in an invention.” Blockchain technology falls perfectly into both of these definitions. Antitrust and innovation (such as the blockchain) are not separate issues. Antitrust and the innovation process pursue the same goals: increasing market efficiency and consumer welfare. Antitrust and innovation need each other to achieve such goals. Similar to the Internet, blockchain can change markets again bringing us to a new economic era—the blockchain era— where ‘blind alleys’ are the standard and where antitrust needs to serve as first market guidance enforcing antitrust rules and principles. Antitrust enforcers must endorse and oversee this new economic era maintaining the delicate balance between over controlling the actions of large high technology companies and keeping incentives for them to lead in the creation of new technologies.

The patent misuse doctrine alone is an inadequate response to anticompetitive tying arrangements. Patent misuse is only a defense, not a cause of action, and the targets and victims of such misuse do not have any affirmative claim for damages under patent law.161 Consequently, patent misuse can neither disgorge ill-gotten gains (and thus deter misuse by making it unprofitable), nor provide compensation to those who suffered from the anticompetitive effect created outside the scope of the patent. Furthermore, the patent misuse doctrine allows a patentee to retain and enforce its patent so long as the anticompetitive conduct is stopped. While courts have not spoken with a single voice on the matter, some have held that ―if the unlawful practice has been abandoned and the consequences of the improper exploitation have been dissipated, the misuse is considered ‗purged,‘ and the owner‘s right to enforce the patent revives.‖162 This imposes a temporary cost, because the patentee cannot recover against infringers during the period in which the misuse occurred. It remains possible that, depending on the amount of infringement damages sacrificed, the amount of money gained by tying may outweigh the expected losses. If so, patent misuse doctrine may insufficiently deter anticompetitive moves that may hurt innovation.

Antitrust takes a different approach in dealing with tying arrangements. Instead of providing a defense and simply removing the patentee‘s ability to collect damages, antitrust allows the targets and victims of tying arrangements to collect damages from the patentee. In this way, consumers and competitors who suffer antitrust injury as a result of the tie-in are compensated. Furthermore, because damages are trebled, the antitrust approach is more likely to disgorge any ill-gotten gains earned through the tie-in. Finally, the successful plaintiff in an antitrust suit will receive its attorneys‘ fees and reasonable costs.163 Even if the infringement defendant prevails on its patent misuse defense, it will ordinarily be responsible for its own litigation costs. Thus, even if the defendant wins on a patent claim, it is worse off than if the misuse had never occurred. On some level, the relationship between patent misuse and antitrust law remains unclear. Some courts describe the patent misuse doctrine as ―a method of limiting abuse of patent rights separate from the antitrust laws.‖164 Others describe them as coextensive.165

Indeed, my core belief is that the U.S. economy today is the most dynamic, creates the most jobs, and produces the highest level of innovation precisely because we as a nation committed long ago to a policy of vigorous but sound antitrust enforcement. My thesis before you today, then, is that antitrust enforcement is as essential to innovation and economic growth in the 21st Century as it has been in the 20th -- and that vigorous but reasonable antitrust enforcement is a crucial component of the fight to keep America competitive in international and high-tech markets.

Before I explain these views, however, it is imperative that you have a clear understanding of how modern antitrust law is applied. I need not go back to the legislative histories of the Sherman and Clayton Acts to ascertain whether those laws originally reflected an animus against large corporations. If they did, that is simply no longer the case. Congress drafted the antitrust laws in sufficiently general terms to delegate to the courts the task of developing an antitrust jurisprudence that is consistent with contemporary concepts of economic efficiency and consumer welfare. And the courts and federal antitrust enforcement agencies have accepted that responsibility.

Presently large digital companies, known as Big Tech, are in the crosshairs of regulators and Congress for alleged monopolistic conduct. Antitrust lawsuits, and government and legislative interventions worldwide against Big Tech, are hard to count. Keeping track of their developments has become challenging. A recent study published in this journal identified “100-plus antitrust cases” only considering Google in 23 jurisdictions.

The U.S. has often been criticized for being lax compared to EU antitrust enforcers in dealing with Big Tech’s power. But innovation does not seem to be a hallmark of EU companies. In the U.S., Alexander Bell invented and patented the telephone before founding what was later called AT&T. It was at AT&T that other game-changer technologies, such as the transistor and Unix operating system, were also invented. IBM, Microsoft, Google are only three other examples of U.S. tech companies which changed the computer industry forever by setting the tone for the present digital economy. This raises the question of whether U.S. antitrust enforcement action played a prominent role in the innovation process which led to breakthrough technologies flourishing especially in the computer industry. It also begs the question “why do we see less innovation on the other side of the Atlantic?”