Drexl, Josef --- "Intellectual Property in Competition: How to Promote Dynamic Competition as a Goal" [2011] ELECD 753; in Drexl, Josef; Grimes, S. Warren; Jones, A. Clifford; Peritz, J.R. Rudolph; Swaine, T. Edward (eds), "More Common Ground for International Competition Law?" (Edward Elgar Publishing, 2011)

Book Title: More Common Ground for International Competition Law?

Editor(s): Drexl, Josef; Grimes, S. Warren; Jones, A. Clifford; Peritz, J.R. Rudolph; Swaine, T. Edward

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849803946

Section: Chapter 13

Section Title: Intellectual Property in Competition: How to Promote Dynamic Competition as a Goal

Author(s): Drexl, Josef

Number of pages: 20

Extract:

13. Intellectual property in
competition: How to promote
dynamic competition as a goal
Josef Drexl

1 INTRODUCTION: THE `IDEAL WORLD' OF
SCHUMPETEREAN COMPETITION

Ever since Joseph Schumpeter published his theory of `creative
destruction',1 it should have been clear that the protection of innova-
tion by intellectual property rights (IPRs) does not as such contradict the
competition principle. Schumpeter rejected the focus of traditional com-
petition policy on price competition and highlighted the role of dynamic
competition for better products as the driving force of economic growth.
According to his ideas, even if superior technology leads to market
dominance, continuous pressure by other innovators, who may `destroy'
the existing market position of the incumbent at any time, will keep the
market competitive.
In the Schumpeterean worldview, patents ­ as IP rights that are
expected to create incentives for innovation ­ are hence pro-competitive.
Indeed, they exclude only a specific form of competition, namely com-
petition by imitation based on price as the parameter of competition.
Simultaneously, by pushing competitors to bring products to the market
that are technologically superior and serve consumer interests better than
the pre-existing ones, patents ideally promote competition by substitu-
tion. Hence, Schumpeterian `dynamic' competition is based on a trade-off.
Patents have the potential of restricting price competition and thereby
enhance competition based on innovation. In line with these theories,
modern competition policy accepts a theory of `complementarity', accord-
ing to which intellectual property and competition serve the same objec-
tives, or as phrased in ...