Fostering Innovation and Development
Edited by Christopher Arup and William van Caenegem
Chapter 6: The First Steps in Remedying the Relationship between Patents and Competition
Charles Lawson I. INTRODUCTION Modern statutory competition laws such as the Australian Trade Practices Act 1974 (Cth) (‘Trade Practices Act’) evolved out of the common law, probably because of a failure of the private right of action to sustain the broader public interests in vibrant competition and free trade (see Donald and Haydon 1978, pp. 2–4; Letwin 1954). Together with this evolution has been the development of the idea that markets, and the competitive forces operating independently in those markets, are best placed to make decisions about how societies’ scarce resources might be allocated for the benefit and desires of the majority of consumers (see Hilmer 1993, pp. 1–6). As a cornerstone of modern market economies like Australia, competition laws are now considered necessary to drive innovation delivering better quality products and services to consumers at lower prices by improving productivity and economic efficiency (being technical or productive efficiency, allocative efficiency and dynamic efficiency: see, for example, Hilmer 1993, pp. 3–5). The rationale of government regulation in implementing competition laws is to keep modern market economies open for competition by limiting conduct that is detrimental to competition (Hilmer 1993, pp. 1–16). Importantly though, these regulations should be directed to protecting the competitive process rather than favouring particular sectors of the economy (Hilmer 1993, p. 26). However, a tension remains in some dealings with patents under the Patents Act 1990 (Cth) (‘Patents Act’) where the statutory patent privilege results in monopoly pricing or restricts access to the...
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