Opinions and Editorials

Oct. 21, 2020

RealClearMarkets: Today’s Federal Trade Commission Is Taking One Giant Leap Backwards by Kristen Osenga

At a time when innovative American companies are moving technology forward at often dizzying rates, today’s Federal Trade Commission (FTC) seems to be bent on thwarting that innovation by taking a giant leap backwards by pitting antitrust against patents – a stance that has not been seen decades.

In the 1970s, the relationship between antitrust and patents was viewed as a conflict.  Patents, by their nature, create a limited monopoly.  This limited monopoly, during which the patentee may be able to exclusively sell their product or license their technology to other companies, provides the patentee the potential to recoup the investments made in research and development.  This income, in turn, allows the patentee to take up new avenues of invention and innovation.  Antitrust, on the other hand, is intended to prevent or minimize the impact of monopolies.  The basic idea is that competition amongst companies in any given market produces benefits for consumers.

While at first blush, the conflicted relationship between antitrust and patent makes perfect sense, these two areas of law actually have a common goal – increased innovation.  Patents provide a limited monopoly in exchange for innovation; antitrust incentivizes innovation as one of the axes of competition in which companies can compete for consumers.  Although each of these areas of law may approach the encouragement of innovation in a different way, they are both have innovation as an end goal.

Consumers benefit from innovation, and the state of technology is advanced by innovation.  Importantly, the economy is also driven by innovation.  Yet, for innovation to occur, companies must be motivated to devote extensive amounts of resources, both in terms of money and human capital, into research and development.  This motivation, in part, is provided by the ability of companies to license their patented technology.