A Note on Antitrust Issues in the Licensing of Intellectual Property

Louis Kaplow, Harvard Law School and National Bureau of Economic Research

8/08/2008
(Original Publish Date: 9/1/1997)

Intellectual property licensing is becoming an increasingly important economic activity, and licensing practices pose ever more complex antitrust issues. This note discusses Richard Gilbert and Carl Shapiro’s paper on the subject. First, I consider which aspects of contractual penalty clauses -- the subject of much of their paper -- are most likely to cause welfare losses. Second, I explain why certain anticompetitive practices that, as they indicate, cause static inefficiency are also likely to be undesirable after taking into account that such practices may increase the ex ante rewards to innovators. Third, I comment on how problems posed by standard-setting might be addressed.