Dr Philip Marsden
We've made some changes
to The Sunday Times
Today’s judgment, in Microsoft v European Commission, contains valuable lessons for companies that operate in markets where rapid innovation and strong intellectual property (IP) are keys to success.
First, it highlights the fact that divergences remain between Europe and the US when it comes to technology-driven markets. US courts would not accept the theories adopted by the Court of First Instance this morning. This is hardly an ideal regulatory environment for companies in global technology-driven markets. It leads to difficult choices: should dominant companies say yes to a demand for technology from a US rival that has no foundation in US law, but which might be accepted in Europe?
Second, the judgment reminds us that Europe remains more likely to insist that a company hand over its IP to a rival than the US. Today’s decision dilutes the “exceptional circumstances” test that applies to compulsory IP licensing in Europe. The test is no longer whether the IP is indispensable to carry on business. Instead, a leading company must act to maintain sufficient viable competitors on the market. So, the leading companies will need to license their technology to competitors to ensure that there remains an effective competitive structure on the market. Effectively, the Commission is saying that the leading player must handicap itself to enable others to have a chance of winning.
The Commission must now decide whether this is a Microsoft-specific decision or whether it is a precedent of more general application to all dominant companies’ future conduct.
The wider question is whether today’s judgment will lead to more innovation in Europe. It is difficult not to be gloomy about that question when all the companies in the case were from the US. (In addition to Microsoft, the complainants were RealNetworks, Sun, Novell, IBM and Oracle.) It would truly be worrying if Europe is simply a final court of appeal for US-based hi-tech companies – and if there were no European-based companies present at the party.
Dr Philip Marsden is director of The Competition Law Forum and senior research fellow at the British Institute of International and Comparative Law
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Intellectual monopoly is not necessary for innovation and as a practical matter is damaging to growth, prosperity and liberty. More on this look at "Against Intellectual Monopoly" by Michele Boldrin and David K. Levine
Robert Pastierovic, Bratislava, Slovakia
Marsden = anti-antitrust submarine.
sage, sage,
I think the view that this will restrict innovation in Europe is mixing apples with oranges. What we are talking here that one giant in the market did not get away with putting such restrictions in his system that others did not even have an economic base to try to innovate. With so much market power in Microsoft due to the widespread use of its system, any new application which needs to use the system is heavily restricted. That may be the case in regards of Apple as well but Apple does not control more than 80% of the worlds computer systems running.
Ludwig, Irvine, CA, USA
I'd completely disagree with the question about innovation in Europe. If European technologists look towards the Asian software powerhouses using Open Source, they'd soon discover 250,000 projects on the go with Sourceforge and ELance and a community of developers running into the millions - along with much of the web.
The Open Community argument that software is free or low cost, and you charge for the applications or services you enable has resulted in many huge successes, not least is Google and e-commerce. With Microsoft, the word 'Dominant' should be replaced with 'Predatory'. It might be worth checking out some of the Education Authority contracts Microsoft has forces through, particularly in New Zealand and Scandinavia.
Chris Clark, Ruislip Manor, Middlesex
Dr. Marsden own words states the real question. "..to ensure that there remains an effective competitive structure on the market." That is the question, competition drives market economies.
If there is no competition, the surviving company is a monopoly by definition. And monopolies are not good, generally, for the economy. If the company uses "illegal" monopoly power, then it is abusing the market economy.
So the real question is, Dr. Marsden, is there effective competitive structure on the market with Microsoft in this situation?
Andrew DeWitt, Oshkosh, WI, USA
Come on. Just because a U.S. court failed to break up Microsoft, in the same way Ma Bell was broken up, is no reason to condemn the judgement of the European Court. To say that "the leading player must handicap itself to enable others to have a chance of winning" is WAY off base. Microsoft has to stop killing great technologies so that they can prosper. I have no problem with Microsoft being a successful tech company. I have a problem when it intentionally kills Dr. DOS, true Object Oriented Technology, Netscape, BeOS, Linux, etc, etc, etc. I'm tired of MS technology that doesn't work.
If the U.S. courts won't solve the problem, then maybe the European courts can help. Microsoft isn't a Tech Giant... It's a Tech Monopoly focused more on killing competition than on innovation.
Kevin P, Phoenix, Arizona