Legal Protection of Innovative Technologies: Property or Policy?

  • Hanns Ullrich


In the European Community, a new body of intellectual property law has been built up that lends itself rather well for an examination of whether the development of IPR-protection for new technologies follows sound principles. There is, indeed, a number of current legal issues of intellectual property protection which appear to be almost entirely unbeatable, such as defining the proper conditions for access to technological information under copyright law and database protection schemes, the determination of spare-part protection under design law, and the treatment of international exhaustion of intellectual property rights; and there is a widespread unease about the scope of available protection (biotechnology, business methods). These problems do not only result from the difficulties of adapting the IPR-system to new technological realities. Rather they also mirror changes in our perception of what the IPR-system should do and can be expected to do. IPR’s are no longer considered as entitlements granted for merit, but as a means to obtain optimal economic results. The institutional perception of IPR as private property has given way to an instrumental approach using IPR for specific macro- and microeconomic purposes. Where such purposes are in conflict, it is impossible to solve them by systemic value judgements. The task ahead is to return to a systems understanding that allows us to solve such conflicts on the basis of overarching principles. The purpose of the paper is to explain the problems, not to develop the principles that bring the solution to the problems.

The paper starts with some examples of the failure of the IPR-system vis-à-vis conflicts of protection. As most of these conflicts also raise problems of competition law, and as most confidence is placed in competition law as a way to solve the conflicts, a short digression is made into competition law. The purpose of this digression, however, is only to show that competition law does not bring the answers. However, it well explains the relationship between intellectual property protection and competition. It is against this background that the “instrumentalization” of IPR for purposes of economic and commercial policy may best be examined and criticized. In a concluding section, a number of problems will be dealt with that economic IPR-theory poses for the administration and the application of IPR-law within the broader legal system, in particular within European Community law.


Intellectual Property Competition Policy Patent Protection Patent System Intellectual Property Protection 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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    This profound change results from the combined effects of the Commission’s new approach both to vertical restraints of Competition (see Commission, Notice on the application of the EC competition rules to vertical restraints, COM (1998) 544 final; Commission Reg. 2790/99 on the application of Art. 85 (3) of the Treaty to certain categories of vertical restraints, OJEC 1999 L 336, 21; Commission, “Guidelines on Vertical Restraints”, OJEC 2000 C 291, 1; see R. Whish, “Regulation 2790/99: The Commission’s ‘New Style’ Block Exemption for Vertical Restraints”, 37 C.M.L. Rev. 887 (2000)), and to horizontal restraints of competition (Commission, Regulation of November 23, 2000 on the application of Art. 81 (3) EC Treaty to Categories of agreements on research and development, OJEC 2000 L 304, 7, and to specialisation agreements, OJEC 2000 L 304, 3; Guidelines on the application of Art. 81 EC Treaty to agreements on horizontal cooperation, OJEC 2001 C3, 2)) as well as from the Commission’s reform proposals regarding the enforcement system; see Commission, “White Book on the Modernization of the rules on application of Art. 85 and 86 of the Treaty”, OJEC 1999 C 132, 1; Commission, “Proposal for a Regulation on the Implementation of the Competition Rules laid down in Art. 81 and 82 of the Treaty”, COM (2000) 582 final. These changes cannot be analyzed here; see only G. D. Ehlermann, “The modernization of EC antitrust policy: A legal and cultural revolution”, 37 C.M.L. Rev. 537 (2000);Google Scholar
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    W. Möschel, “Guest Editorial: Change of Policy in European Competition Law?” 37 C.M.L. Rev. 495 (2000); see also supra n. 48.Google Scholar
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    See e.g. as to the breakdown of the spare parts-regulation supra n. 11; other examples are the protracted lobby battles over the decompilation issues in software protection and their doubtful results (see H. Ullrich in H. Ullrich, E. Körner (eds.), Der internationale Softwarevertrag, Heidelberg 1995, 74 et seq.) or the long-lasting stalemate regarding EC legislation on artists’ resale right, which is due to industry’s capture of parts of the legislative bodies (see supra n. 95, and Commission, Reply to a Written Question of the Parliament, as reported in GRUR Int. 2000, 182; Commission, “Statement for the Protocol of the Council on the Directive on Artists’ Resale Right”, OJEC 2001 C 208, 2.Google Scholar
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    Unless, of course, the exception serves the interests of a powerful lobby; see e.g. the farmers’ privilege in Art. 11 Biotechnology Directive, supra n. 88.Google Scholar
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    See Fitzpatrick, loc. cit. Eur. Int. Prop. Rev. 2000, 214, and, taking abroad view, W. Kingston, “A Spectre is Haunting the World — The Spectre of Global Capitalism”, 10 J. Evolutionary Ec. 83 (2000).CrossRefGoogle Scholar
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    See P. Drahos, A Philosophy of Intellectual Property, Dartmouth 1996, 199 et seq., 213 et seq., 220 et seq., contrasting a “proprietary” understanding of intellectual property protection with an “instrumentalist” one, meaning that the definition, interpretation and enforcement of intellectual property must remain tied to the socio-economic objectives (in a broad, moral sense) underlying the legislative grant of protection. Instrumentalist in this sense is more akin to a functionalist or to a teleological conception and application of the law than to the “instrumentalist” approach criticized in the text, which uses a proprietarian approach to achieve interventionist goals of economic policy. It is precisely the separation of the exercise of protection as a right of “property” from the interventionist policy goals pursued by the legislator which constitutes the camouflage of the intervention, and which produces social risks due to the absolute or abstract character of the exercise of the right.Google Scholar
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    An all too obvious case for analysis is the cumulative use of intellectual property protection and R&D subsidies, possibly even combined with the promotion of R&D-cooperation (see the critique by Ullrich, Kooperative Forschung, loc. cit. at 166 et seq.; Monopolkommission, Hauptgutachten 1988/1989 Baden-Baden 1999, at No. 1082). Another example might be the combination of the IPR-exclusivity with standardization in view of the public good-nature of standards as infrastructure and of the network effects to which they give rise; see for a discussion J. Liotard, “Normalisation, Droits de propriété intellectuelle et concurrence: L’exemple des télécommunications”, Rev. int. dr. écon. 2000, 279.Google Scholar
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    The Commission itself notes and favours the high degree of inter-enterprise cooperation and strategic alliances in innovation markets (see Commission, “White Book: Growth, Competitiveness, Employment”, Bull. EC Supp 6/93 at 2.3 (p. 67 et seq. id., “Communication on Competitiveness of European Enterprises in the face of Globalisation”, COM (1999) 718 final, sub II.5, II 6). In fact, the cooperative networks in industry have grown still further, so that the IPR-paradigm has to be readjusted: not only do we have the team invention rather than the individual inventor, not only are inventions a result of investment rather than of genius, and not only do patents not cover products (except in some instances of pharmaceuticals), but entire technologies by virtue of patent packages. Rather, the R&D process itself is no longer a matter of individual business activity, but of a group effort. Nowhere in the patent system is there any trace of these changes. Does the traditional model of the property approach really fit so well the interests of all industry, and does it fit the public interest in free competition? The question is the more intriguing as even economists generally do analyze the patent system on such idealistic assumptions, and then look at strategic R&D alliances as an alternative rather than as a synergistic combination of the patent system and cooperative competition. For a brief summary of the state of analyses and further references see H. Klodt, Grundlagen der Forschungs- und Technologiepolitik, Munich 1995, 44 et seq.Google Scholar
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    See Fitzpatrick, loc. cit., Eur. Int. Prop. Rev. 2000, 214; UNCTAD, The TRIP s Agreement and Developing Countries, Geneva 1996, 14, 21 et seq. et passim.Google Scholar
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  146. 125.
    See Art. 2 (3) Computer Programme Directive (supra n. 5), Art. 3 (4) Database Directive (supra n. 5), and compare the preliminary hearing on reforming the law of employee inventors in Germany, GRUR 2000, 1000. The question is one of which paradigm to follow (see supra n. 122), and of our concepts of industrial organization in general. However, the primary concern must be how to conceptualize the relationship between information and the person or organisation who created it and/or specified its utility and use. The economic nature of information as a public good should not make us forget that it is a product of the mind.Google Scholar
  147. 126.
    In fact, we have generally not very well understood, at least as lawyers, the implications which the multifunctional and multi-use properties of information may or should have for the definition of property in such information. Probably, due to increased dependencies, the new approach of the revised European Patent Convention (Art 54 (4) (5)) to patent protection for successively discovered medicinal uses of pharmaceutical compounds will result in so much transaction cost that, instead of no less costly institutional arrangements (see supra n. 33), new concepts of property in information may need to be developed, which bring the respective profit potentials more directly to bear. Technological information, which is split up in pieces of separate property according to its multifunctionality, should produce rules of “good neighbourhood”, which, though certainly different, would be analogous, in purpose to those known and developed over centuries in the field of property in land; i.e. there may be some wisdom in accommodating the use of one property with the use others are entitled to make of their property, rather than to insist on the exclusivity. In fact, the idea that there is some relativity in the absolute exclusivity of property is not yet very much developed in the area of intellectual property. Compulsory licences are a very crude remedy, and not of much help in the long run, as ever more property titles to information of all kinds are likely to arise, either under existing or under new laws, to satisfy the needs of an ever-expanding information economy. As a consequence, there will be an increasing need not only to accommodate intellectual property with the public domain, but also to limit its exercise so as to avoid conflicts with “overlapping”, “interrelated” or “concurring” rights to “exclusive” protection.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2003

Authors and Affiliations

  • Hanns Ullrich
    • 1
    • 2
  1. 1.Faculty of Economic and Organisational SciencesBundeswehr University MunichNeubibergGermany
  2. 2.College of EuropeBruggeBelgium

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