Microsoft and the Evolution of the Intellectual Property Concept

Abstract

In the “old economy” of railroads and electric power companies, the “public utility concept” was frequently employed to justify monopoly as “natural,” to turn state granted privileges into property rights, and to immunize business practices from antitrust enforcement. In the “new economy” of information industries, a similar concept is now evolving, one which we can call the “intellectual property concept.” Built vaguely around intellectual property law, the new intellectual property concept turns out to be remarkably similar in its rhetoric and economics to the old public utility concept. And, like the public utility concept, the desired effect of the intellectual property concept is to provide an immunity from antitrust law.\nThis article explores the evolution of this new intellectual property concept, describing the concept through the lens of two antitrust prosecutions brought against the Microsoft Corporation—perhaps the paradigm new economy firm—and showing how the intellectual property concept might properly be used in cases raising a conflict between intellectual property rights and antitrust. The article begins by examining the role that intellectual property issues played in the liability and remedy phases of the monopolization case that the Department of Justice and the states brought against Microsoft. The second part of the article discusses the more central role that intellectual property issues are playing in the proceeding that the European Commission brought under Article 82 of the EC Treaty. The third part of the article, drawing on the experience in these two cases as well as on our past experience with applying antitrust to regulated industries, suggests five specific principles for applying an “evolved” intellectual property concept to antitrust cases and shows how those principles could have been applied in several recent court of appeals’ decisions.

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