Abstract
The results of certain practices in patent matters which, while they do not follow from the obligations under the Paris Convention, are greatly facilitated by its existence, are called “indirect effects” The most important source of such effects is the cartel agreement that relies on the enforcement of patent rights for its basic “legal” structure.
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References
Although the effects of national cartels may resemble those of international cartels, their total effects in the present context are likely to be much smaller.
R. Whittlesey, National Interest and International Cartels (New York: MacMillan, 1946), p. 1.
A large number of cartel agreements between French and German firms in particular were officially sponsored in the 1920’s.
League of Nations: International Cartels (United Nations Archives, 1948, II, D. 2).
R. Opie, “A Critical Appraisal of the International Cartel”, International Cartels and Private Trade Agreements, America’s Place in the World Economy [eds. A. J. Zürcher, R. Page] (New York: New York University, Institute on Postwar Reconstruction, Conferences, Fourth Series, 1945) p. 128.
F. Machlup, “The Nature of the International Cartel Problem”, A Cartel Policy for the United Nations [ed. C. D. Edwards,] (New York: Columbia University Press, 1945) pp. 10–11.
Ibid. p. 11. See also, R. Terrill, “The American Trade Proposals: Restrictive Business Practices”, The Department of State Bulletin, March 24, 1946, p. 455.
See, for instance, C. D. Edwards, Maintaining Competition; Requisites of a Governmental Policy (New York: McGraw Hill, 1949).
C. D. Edwards, “America’s Postwar Policy toward International Cartels”, International Cartels and Private Trade Agreements, America’s Place in the World Economy [eds. A. J. Zürcher, R. Page] (New York: New York University, Institute on Postwar Reconstruction, Conferences, Fourth Series, 1945) p. 101.
These principles were incorporated into the Atlantic Charter, where the United Nations endeavored “to further the enjoyment by all states, great or small … of access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity.” Ibid., pp. 103-04.
Ibid., p. 106.
The critérium for opposing new ventures was that such investments were considered “unwise” when they would have a negative effect on the values and properties of previous investments. Cf. Edwards, “American Postwar Policy …”, pp. 107-09.
Ibid., p. 109.
See Opie, op. cit., pp. 127-31; for a refutation, see Machlup, op. cit., p. 21.
Edwards, op. cit., p. no; see also Whittlesey, op. cit., p. 29.
Machlup, op. cit., p. 17.
Edwards, op. cit., pp. 112-13.
Ibid., p. 114.
Although the exchange of technological information including patents was not unknown earlier, it is generally assumed that only in the 1920’s did such exchange begin to provide both the legal basis for cartel agreements and sometimes its principal raison d’ëtre. Cf. E. Hexner, International Cartels (Chapel Hill: University of North Carolina Press, 1946) p. 71 ff.; the first major analysis on the subject of cartels and patent rights appears to have been H. Isay, Die Patentgemeinschaft im Dienst des Kartellgedankens (Leipzig: J. Bensheimer, 1923).
R. Terrill, “Cartels and the International Exchange of Technology”, A.E.R., 36: 750, May, 1946.
Ibid. p. 746; see also M. E. Massel, “Evolving Needs for the Protection of Industrial and Intellectual Property: An Economist’s View”, IDEA, 9: 37, Conference No., 1965.
Cf. Machlup, op. cit., p. 8; Whittlesey, op. cit., p. 80. A reason for basing cartel agreements on patent rights is also that other agreements have often been challenged by antitrust legislation. Several authors have suggested that ninety percent of all cartel agreements between the United States firms and foreigners are in the form of patent cartels. See, for instance, Mason, op. cit., p. 49.
For various types of “patent cartels” see Isay, op. cit., p. 12 ff and F. Neumeyer, “Die Rolle von Patenten in internationalen Kartellen”, Wirtschaft und Recht, 4: 222–27, No. 3, 1953.
E. T. Penrose, The Economics of the International Patent System (Baltimore: Johns Hopkins, 1951), p. 193.
Opie, op. cit., p. 131.
In support of this thesis, cf. Hexner, op. cit., p. 171.
ECOSOC Res. 375 (XIII) of September 13, 1951.
Documents E/2379 and E/2380 of March 30, 1953.
Document E/2443 of May 26, 1953.
Infra, pp. 192-93, 195-96.
Terrill, “Cartels …”, p. 746.
Cf. Supra, n. 12.
W. Friedmann and P. Verloren van Themaat, “International Cartels and Combines”, Anti-trust Laws, A Comparative Symposium [ed. W. Friedmann,] (Toronto: Carswell, 1956), p. 471.
Neumeyer, op. cit., p. 227.
Kronstein, “A Re-evaluation of the International Patent Convention”, Law and Economic Power, Selected Essays (Karlsruhe: C. F. Müller, 1962), p. 358. Cf. supra, p. 150.
Penrose, op. cit., pp. 210-n.
Ibid., p. 211.
A possible exception would be the reservation of home markets which in the present context is of no interest.
Mason, op. cit., pp. 89-90.
Another clause designed to limit the importance of technology outside the “domain” of the cartel is the one that prohibits members of the cartel from acquiring licenses from third parties, in order to avoid that any cartel member becomes dependent on “outside” technology.
See Whittlesey, op. cit., pp. 81-82.
See Document E/2379, paragraph 15 (supra, n. 28); Terrill, “Cartels …”, p. 747.
“The main basis for assuming that the suppression of technology does take place in the international sphere are the large number of national statutes providing for remedial action if a local patent is not exploited.” Doc. E/2379, paragraph 37 (supra, n. 28). As the various quotas (sales, market, etc.) of each cartel member are fixed on the actual size of operations, cartels are likely to support high-cost, inefficient producers. There may therefore be reason to believe that the introduction of certain technology may be withheld or delayed. Cf. Whittlesey, op. cit., pp. 25-26.
Cf. Supra, pp. 49-50.
Terrill, “Cartels …”, p. 747. “Among those agreements” the author continuous, “that provide the principal technical ‘linkages’ between the national economies of the world it is probable that all include this particular feature.” Ibid., pp. 747-48.
An American author, who has made several studies of American industries, has made the following conclusion on cross-licensing of future patents: “I believe … not only that it is important for small and medium-sized firms to be encouraged to develop research but that competition among the large patent-holders in an industry should be fostered. Hence I doubt that cross-licensing of future patents should ever be permitted.” W. R. Maclaurin, “Patents and Technical Progress—A Study of Television”, The Journal of Political Economy, 58: 157, Nr. 2, 1950. Isay, op. cit., pp. 15-16, though very favorable to patent cartels in general, recognizes that in this respect, they may turn the objective of patent legislation of promoting inventiveness into the contrary.
F. Neumeyer, Patent, reflexioner kring patent-institutionens uppkomst, utveckling och ställningi vâr tid. [Studier och Debatt, Vol. IV 1958] (Stockholm: Studieförbundet Näringsliv och Samhälle, 1958) p. 82. [translated from Swedish].
Friedmann, Verloren van Themaat, op. cit., p. 507.
See Mason, op. cit., p. 53; Hexner, op. cit., p. 175; Terrill, “Cartels …”, p. 754.
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© 1971 Martinus Nijhoff, The Hague, Netherlands
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Anderfelt, U. (1971). Indirect Effects of the International Patent System. In: International Patent-Legislation and Developing Countries. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-9218-7_6
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