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Chapter 3: The Contestability of IP-Protected Markets
Andreas Heinemann 1 Introduction IP protection and contestability? At first sight, this subject seems to be paradoxical: the very sense of an IPR is excluding others from the use of the protected knowledge. IPRs are granted in order to protect their owners from contestability. On the other hand, every IPR has a well-defined scope. It does not in itself confer market power or even dominance, but only gives exclusiveness over certain knowledge. Others keep the right to develop substitutes, to ‘invent around’ or to be active in neighbouring markets not covered by the exclusive right in question. Typically, it is in the interest of the IPR owner to make the most of her privilege. The fundamental problem consists in telling the difference between what is allowed and what is prohibited in this respect. Or to put it another way: how far does the scope of reward for an IPR go? This chapter will show that – under certain conditions – the owner of an IPR cannot make use of the whole spectrum of rights granted to her under IP legislation. The chapter will analyse which limits should be set to the freedom of an IPR holder. Even IP-protected markets have to stay open to a certain extent, not only in the long run, but also in the face of abusive short-term strategies. Restrictions on the freedom of the IPR holder are not only compatible with the model of dynamic competition and the promotion of innovation, but they are even required by these...
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