Government Policy Towards Innovation in the United States, Canada, and the European Union as Manifested in Patent, Copyright and Competition Laws

Abstract: This paper examines a number of government policies related to competition or intellectual property and affecting innovation for their welfare effects. Its premise is that the enhancement of social welfare is included among the purposes of competition and intellectual-property laws. It also assumes that innovation is a major contribution to long-run welfare. The paper then considers whether the policy initiatives under review furthered that purpose. First it considers U.S. and Canadian legislation designed to promote the entry of generic pharmaceutical products into the market and the response (or lack thereof) of both governments to the issue of regulatory delay eroding some period of patent protection. Second, the paper considers the impact of the principle of free movement of goods within the European Union on the incentive structure of the patent system. It then draws from U.S. experience to consider how the political goal of furthering national autonomy for member states could be pursued without undercutting the effective operation of the patent system. The paper suggests that such a reconciliation might be possible in a way that could be more welfare enhancing than the present regime. Third, the paper considers comparatively the U.S. and European approaches to patent protection in the biotech industry where organic structures on both the dna and protein levels are exceedingly complex. The paper tentatively concludes that the EU may be avoiding the potentially welfare-reducing results of the Federal Circuit’s enhanced description requirement. It notes that the potential remedial role of the doctrine of equivalents in this setting is as yet uncertain. Fourth, the paper examines U.S. patent and copyright approaches to the protection of computer programs, considering especially whether protection is overbroad and thus reduces welfare by impeding innovation. The paper concludes that the structure of those laws and developments under them are likely to minimize this danger. Fifth, the paper examines the U.S. misuse doctrines, with emphasis on the development of the copyright misuse doctrine during the past decade. It also examines related antitrust developments in the U.S. and EU that lie on the edge of the intellectual-property/antitrust interface. The paper concludes that the courts have taken an approach to copyright misuse that is likely to reduce welfare, but that the U.S. courts may be approaching a welfare-enhancing synthesis on their approach to the intellectual-property/antitrust interface. This developing synthesis may well ultimately correct the welfare-reducing aspects of the newly emergent and aggressively applied copyright misuse doctrine. By contrast, the relation between intellectual property and competition law is still being worked out in the EU and it is not yet clear whether the authorities will ultimately formulate a welfare enhancing approach to the resolution of issues arising out of that relationship.

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