ClubMed and Club IO
In the Club Med (competition law), recent legal and policy developments are discussed, including Commission decisions, judgments of the European or US courts, legislative initiatives, and policy guidelines. In the Club Industrial Organization, these same developments are examined through the lens of economic analysis.
Past Club Med
The Hinkley case and its implication for state aid control
24 th March
Digital Markets Act
On 15 December 2020, the European Commission published its legislative proposal for a Digital Markets Act. The Digital Markets Act aims at ensuring contestable and fair markets in the EU digital sector by establishing do’s and don’ts for large online platforms that act as gatekeepers. We will reflect on selected key aspects of the legislative proposal, including the definition of gatekeepers, the list of obligations and prohibitions, the enforcement procedure and the relationship with EU competition law.
Past Club IO
Recent developments in the SEP licensing landscape
In this presentation I review two recently released policy reports on the licensing of Standard Essential Patents (SEPs): (1) the JRC pilot study for essentiality assessment of Standard Essential Patents, available at https://publications.jrc.ec.europa.eu/repository/handle/JRC119894, and (2) the report by the group of Experts on Licensing and Valuation of Standard Essential Patents, available at https://ec.europa.eu/docsroom/documents/45217.
"An economic model of patent exhaustion" by Olena Ivus, Edwin L.‐C. Lai, & Ted Sichelman (2020, Journal of Economics & Management Strategy)
The doctrine of patent exhaustion implies that the authorized sale of patented goods “exhausts” the patent rights in the goods sold and precludes additional license fees from downstream buyers. Courts have considered absolute exhaustion, in which the patent owner forfeits all rights upon an authorized sale, and presumptive exhaustion, in which the patent owner may opt‐out of exhaustion via contract.
This paper offers the first economic model of domestic patent exhaustion that incorporates transaction costs in licensing downstream buyers and considers how the shift from absolute to presumptive exhaustion affects social welfare. We show that when transaction costs are high, the patent owner has no incentive to individually license downstream users, and absolute and presumptive exhaustion regimes are equivalent. But when transaction costs are at the intermediate level, the patent owner engages in mixed licensing, individually licensing high‐valuation buyers and uniformly licensing low‐valuation buyers. Presumptive exhaustion is socially optimal when social benefits from buyer‐specific pricing outweigh social costs from transaction cost frictions in individualized licensing, which requires sufficiently low transaction costs.