Technical Innovation, Market Power and Fairness in Society

Course content

This course will deal with some of the most fascinating but also relevant developments in society. It will study and analyse how certain technologies, and industries having developed these technologies, have been successful in exerting considerable market power in society, most definitely always to their own benefit, but unfortunately not always to the benefit of consumers and society in general.

Many of the so-called disruptive technologies, such as for instance Facebook, Twitter, Google, Uber, Airb&b, etc. have quickly gained a rather dominant position. Whilst this dominant position is at first glance linked to the number of customers they ”serve”, the more educated mind will also realise that these companies have been able to develop such a dominant position not only by virtue of an appealing ”product” they put in the market, but also and especially by obtaining a dominant position in the technology which underlies these ”product” or ”services”, by using their leverage in certain technological areas, and by taking enormous advantage of the huge quantity of datasets they gather daily for their benefit. Indeed, technical innovation is often a function of dominance, and with disruptive technologies, that is not different. Those industries have very specific characteristics, which make them rather different from other industries. Firstly, this is a technological sector which is largely networked, and where innovation does not solely take place in isolation from and in competition with other players (as is the case in many other technologies). Secondly, many of those technologies are offered to consumers free of charge, which presents a wide variety of issues when it comes to the application of competition law. Thirdly, many companies in these industries have been able to develop platform technologies, which provide extensive leverage, as consumers will want to use such platforms, and many other players will want to have access to these platforms (e.g., apps for Facebook). Fourthly, in a growing number of cases, market power is compounded by the huge quantity of data which such industries collect daily, and which give them in turn leverage in other product or service markets. They are the living evidence that one can become dominant even by providing a product or service free of charge, a concept which is difficult to understand for any traditionally minded competition law enforcement agency.

 

Pharma and Biotech is another sector which has largely developed on the train of dominance in certain product markets. Also these industries are defined by a very high degree of technological innovation, and in fact those industries are to a very high degree defined by their technological innovations.

In the pharma and biotech sector, dominance in certain product markets is traditionally shown in very high prices for medicinal products, which puts considerable strain on national health care systems, who are in a growing number of cases forced to make difficult choices between offering life saving medicines available to patients at very high prices (and at the expense of other needs in the health care system) and not making those available, condemning certain patients to an earlier death.

 

In this course, we will study the relationship between technical innovation, dominant market position and fairness in society. We will study in particular whether and how dominance in certain product and/or technology markets can be ”tackled” or limited. In that context competition law (or the American term antitrust law) will play an important role, but this course will not be limited to a study of competition law applied to the aforementioned technological areas, but will also look into other areas of the law, such as fundamental rights, to see whether and how they could be used to reign in the dominant position of certain technological companies.

 

There is a very good reason why these two rather different areas of technology are chosen as the subject matter of this course. IT related technologies (with social media, Google and some other disruptive tech companies), and the more traditional pharma and biotech companies have rather different profiles. Many IT related companies are no longer exclusively based on intellectual property rights (IPRs) protected technologies (whilst they most certainly still use those IPRs), but have been able to develop their dominant position through the principle of networked technologies which have provided them with the required leverage, which has allowed them to gain a dominant positions not solely on the basis of their IPRs portfolio’s, whilst pharma and biotech companies have largely built up their dominant position in certain product markets with the leverage they have been able to exert by virtue of their IPRs and related exclusivities.

 

This course will study how those two different models have developed, and how competition law enforcement authorities struggle with the IT related industries, for a wide variety of reasons, which will be developed and critically analysed in this course. Even though the more traditional pharma and biotech industries are more certain and comfortable entities for competition law enforcement, we will see that it has often proven difficult to use competition law against pharma and biotech companies, largely because these industries have been very successful in using IPRs and related exclusivities (such as data and market exclusivities), which have often led to de facto dominant positions in certain product markets to their benefit, and competition law has struggled and still struggles with the tension that exists between the existence of IPRs and related exclusivities, which provide large discretion to the right holders, and the goal of competition law to ensure that there is sufficient competition and no abuse of dominant position to the benefit of consumers and society at large.

 

The structure of the course is as follows:

 

1. Introduction to the concept of technical innovation; a law and economics analysis

 

2. Introduction into competition law; overview of the basic concepts under EU law

 

3. Introduction into IP law, with special emphasis on those rights relevant to this course, which are largely copyright and in particular also patent law. The aim of this part of the course is to provide a more general overview of some of the concepts, so as to allow students to grasp how IP law plays a role in the context of dominant position and competition law.

 

4. IT related networked technologies: How do they work and what are their specific features? In this part of the course, we will analyse how those technologies and the related industries are built up, how they use various technologies to carry out their business (with the fact that the product or service they provide is often free of charge, being a very important element indeed as we will see), and how they have been capable of exerting leverage against consumers and society. IPRs are definitely important, but many other factors which are not IP related are equally if not more important to those industries. These industries are more ”hybrid” and probably also more diverse in the way how they exert leverage, with a combination of IPRs and other strategies (some of which are aimed at creating a relationship with or ”dependence” on the side of consumers, other of which are aimed at taking advantage of the huge datasets they collect daily).

 

5. Pharma and biotech related technologies: How do they work and what are their specific features? In this part of the course, we will analyse the business model of pharma and biotech companies, and how they have been able to exert leverage against consumers and societies. Important factors here will be the use of their IPRs portfolio’s and related exclusivities, and the leverage that offers those industries to set the price.

 

6. In a subsequent part of the course, we will discuss whether and how competition law can interact with the aforementioned technologies. As we will see, competition law approaches vis-à-vis IT related industries will often need to be considerably different compared to those used in pharma and biotech industries.

a. For the IT sector and related to IPRs, the role of patents and in particular platform patents, and in that regard so-called Standard Essential Patents (SEP’s) will be further studied.

b. For the IT sector and related to non IPRs, we will study how competition law struggles with technologies which charge no prices, which is in traditional competition law and economics an important parameter for evaluating dominance, and how these technologies have been successful in building up such dominance and what can be done about it.

c. For the pharma and biotech sector, we will study how these industries have optimised the use of the IPRs system, and in particular patents, to exert power in the market, and how competition law enforcement often struggles to apply competition law in heavily IPRs dependent product markets (typical examples of unlawful activities detected are excessive pricing, pay-for-delay agreements, abusive use of IPRs etc).

d. For the pharma and biotech sector, we will also study how other exclusive rights have been successfully used by these industries to exert and prolong market power.

 

7. In a subsequent chapter of the course, we will discuss whether there are other legal frameworks that can be used and invoked to ”tackle” dominance and market power for all of the aforementioned technologies. We will, amongst others, discuss the role of fundamental rights and the extent to which they could be used to ”reign in” those dominant players. The right to privacy, the right to health will play a rather important role here. This part of the course is of a more normative and explorative nature, and it will be expected from students that they do some research into the various possibilities and present alternative solutions.

 

 

This course does not require a prior knowledge of IP or competition law, even though knowledge of both would obviously be an advantage, and it does not require an economic or technical background.

This course will allow MA students to acquire not only knowledge about an area of technology and law which is crucial for their future careers (as indeed the future of the law will be in one way or another be in combination with technology), but also develop analytical skills and competences so as to be capable of analysing critically and resolving legal problems in the abovementioned areas of the law in a real-life setting, whilst at the same time it stimulates critical thinking on the part of students so that whatever is learned during this course can also be applied in a policy making environment.

 

The advantage of taking this course in English is also that, whether one wants it or not, for virtually all future job purposes, a good knowledge and proficiency in English and legal English will be minimum requirements, whether that is as a lawyer in a law firm or in-house counsel. Most clients are international and communication with those will have to be in English. Moreover, in the large majority of cases, there is a multijurisdictional element as well, i.e., it is rare that a case is litigated in only one country, which implies that international coordination will be necessary, which in turn leads to the use of English as the common language to streamline international litigation.

By taking this course as a student, you will, apart from the fascinating contents, also catch two birds with one stone. You will improve your professional and legal English, and by doing so, you will have a competitive advantage over those students who do not take English taught courses.

Learning outcome

Knowledge:

1. Demonstrate knowledge and understanding of the basic rules relating to competition law, intellectual property rights (IPRs), and other exclusivities (such as e.g., data and market exclusivities);

2. Demonstrate detailed knowledge of the role of competition law in the limitation of market power, including also FRAND licensing and other forms of agreements between parties;

3. Demonstrate detailed knowledge as to how IPRs can be used to exert market power, and how they can subsequently or alternatively also compound market power;

4. Demonstrate knowledge and understanding of the law and economics of innovation;

5. Demonstrate good knowledge and understanding of the IT related industries, including disruptive technologies, and how these industries work and exert their market power;

6. Demonstrate good knowledge and understanding of the pharma and biotch industries, and how these industries work and exert their market power;

7. Demonstrate detailed knowledge of and the ability to critically evaluate the law regarding the above mentioned rights and issues;

8. Appreciate the social context and underlying policy issues in this area of law and the influences they exert;

9. Show a good awareness of the practical implications for individuals and corporations of the operation of the abovementioned rights;

10. Be able to critically evaluate the difficulties and challenges which each of the aforemenioned rights present, how their effective enforcement can be hampered, and what alternatives can be found;

11. Demonstrate detailed knowledge of and the ability to critically evaluate the role of fundamental rights in the context of the course;

12. Research the relevant laws, electronically and on paper and present an effective argument, soundly based in critical analysis of the law in its social and policy context both orally and in writing;

13. Be able to complete specified tasks and case studies with minimal direction or input through formal instruction prior to preparing such tasks.

 

General skills and competences learned in this course:

1. Problem Solving

2. Written communication

3. Conduct independent research

4. Communicate in legal terminology with care and accuracy

5. Critical analysis

6. Reflective learning

7. Communicate orally findings in solving case studies (problem questions)

 

Specific skills and competences for this course:

 

Skills: The student should be able:

1. to identify the relevant legislative framework in the areas of competition law, IPRs and fundamental rights;

2. to differentiate between the various goals to be achieved by each of those aforementioned legal norms and rights;

3. to understand the role of economic analysis in the context of innovation and market power;

4. to analyse and evaluate how those different legal regimes can interact with each other, the extent to which that is done, and the hierarchical relationship between these various legal regimes;

5. to identify specific issues in the context of IT industries in application of competition law, IPRs and fundamental rights;

6. to identify specific issues in the context of pharma and biotech industries in application of competition law, IPRs an fundamental rights;

7. to identify and critically evaluate the role of FRAND licensing and other forms of agreements between (more or less) dominant market players;

8. to identify facts of legal relevance; to apply legal norm(s) to the factual situations.

 

Competences: The student should be capable of

1. providing professional advice in situations involving subject-matter which can become subject to scrutiny by competition law enforcement agencies;

2. providing professional advice in situations involving subject matter which can be subject to IPR protection;

3. providing professional advice as to the role and effect of IT technologies on the structure and functioning of the various IPRs and competition law;

4. providing professional advice as to the role and effect of pharma and biotech technologies on the structure and functioning of the various IPRs and competition law;

5. providing policy advice as to the tension between IPRs and competition law in the aforementioned industries;

6. providing professional advice as to the role of fundamental rights in limiting market power by IT and pharma and biotech industries, even in the presence of valid and enforcable IPRs;

7. providing policy advice as to the effective role which fundamental rights can play in shaping and reigning in market power by IT and pharma and biotech industries;

This course will also apply the active learning philosophy and method as stimulated within the Law Faculty. To that effect, it is envisaged that students will be divided into an even number of groups, and will have to present a specific position (this can be a moot court style of case, with or without the assistance of a reputable law firm or industry, depending on availability, defending a position as a lobbyist before national or EU institutions, etc). Each time, two groups will have to present adversorial positions, and will have an opportunity for a rebuttal. This will not only train intellectual insight in and critical analysis of the studied materials, but it will also train skills such as oral presentations, and group work, but also competences such as analysing cases, make complex decisions, and conceptualise the learned materials in a practical context. The subjects on which these activities will take place will be decided each semester during the course. It speaks for itself that this active learning method will also have a beneficial effect on preparation for the exam. Students will also be asked to submit a type of ”skeleton argument” for the position they have been allocated.

TBA

 

 

 

 

No specific academic skills above and beyond other courses are requested in this course. A good mix of analytical and critical skills, willingness to do independent research and presentation skills for the active learning element and the oral exam are expected for this course.

Written
Oral
Individual
Collective
Continuous feedback during the course of the semester
Feedback by final exam (In addition to the grade)
ECTS
15 ECTS
Type of assessment
Oral examination, 20 min.
Oral exam based on synopsis, 20 minutes
Marking scale
7-point grading scale
Censorship form
External censorship

Single subject courses (day)

  • Category
  • Hours
  • Seminar
  • 56
  • Preparation
  • 356,5
  • English
  • 412,5