Thursday, February 18, 2021

WIPIP SESSION 6.A. Competition and Antitrust

BJ Ard, University of Wisconsin Law School

Competition With and Without IP in the Video Game Industry

Negative space; a number of lessons. Character protection is meaningful: Pac-Man/combination of elements. Patents can cover some elements/game rules, but most gameplay won’t satisfy novelty. Trademark, right of publicity. Trade secret is also one way of going after clones when the clones are produced by former employees. There aren’t so many other ways to prevent copying; there is only limited protection for games/rules under ©. Thus, a game called Threes was overshone by 2048 which had the same mechanics but a little easier, cleaner interface, marketed better: no litigation b/c Three’s developers could see there was no case. Similarities in golf games came from life, not copying one. Menus, point bars, selection screens are scenes a faire, as is “save the princess” trope.

Hard to copy when a game costs millions to make: graphics, marketing, network effects are hard to copy; feedback loop where the next Call of Duty will sell well.

Independent developers like Three are vulnerable; Zynga became notorious for this kind of copying.

Strategies: (1) Themes that aren’t widely popular—depression, winning by not fighting; horror is a niche. (2) Alternative funding mechanisms like Kickstarter or tip strategies.

Zvi Rosen: DRM seems to keep this from being a negative space. Steam, other platforms use DRM extensively including to sell hardware.

Victoria Schwartz: Some video game copying issues do get resolved before litigation—so there is enforcement that doesn’t show up in public.

Giuseppe Colangelo, University of Basilicata & Stanford Law School

Enforcing Copyright through Antitrust? The Strange Case of News Publishers Against Digital Platforms

Digital platforms seem to expand the market at least as much as they substitute for news. But concern is that Google/Facebook’s bargaining power means they take too much advertising/lack transparency in advertising.

European way: Twisting © through article 15 of the SDM: additional layer of © to encourage cooperation b/t press publishers & online services. From an economic perspective, critics say there’s no empirical evidence in support of free riding narrative and no proof of a causal relationship b/t introduction of neighboring right and increase in revenues for press (German and Spanish experience). Legal perspective: critics say overbroad (any digital use of insubstantial parts that don’t meet the originality requirement) and contentious definitions (“press publication” and “very short extracts”). French competition authority and Google are fighting about title/headlines: do those count as extracts?

French antitrust case: French law required remuneration for reproduction and communication to public of press publications in digital format. Google said it wouldn’t display extracts unless publishers set a zero price. French Competition authority said Google had to negotiate because it has a dominant position in general search. But both the domestic law and EU Directive create a right to prohibit use of protected content, but do not establish a right to obtain remunderation or to require the conclusion of license agreements for use of the protected content. Even antitrust law cannot transform a wish into a duty. Paris Court of Appel nonetheless affirmed the order to negotiate in good faith with press publishers, and Jan. 2021 announced agreement w/French publishers.

Outside the © box: US: hot news doctrine, fair use, antitrust suit against Google for digital advertising. UK: ex ante code of conduct + investigation into G proposals to disable third party cookies. Australia: mandatory bargaining code with binding final offer arbitration process as backstop. In Europe, hyperlinks aren’t covered, but in Australia, even hyperlinks are covered. Canada: rumors of rules to force digital platforms to pay news outlets.

Conclusions: ongoing debate about role of competition policy. EU © approach has limited effectiveness; French approach forces negotiation in shadow of competition law. Regulation as a more coherent way, but potential unintended consequences. Other ways to support journalism might be better, not through IP/competition policy.

RT: Contradiction with monitoring/anti-abuse initiatives: what happens if FB concludes that a publication is an arm of the Russian government? What happens if this turns into ad fraud? Interested that you mentioned the digital advertising antitrust suit b/c that claims that ad prices are too high—press might make less money if it succeeds. Factual questions: If G were broken up, would there be any argument for the publishers under French competition law?  Does Bing or DuckDuckGo have any of these agreements? Or are the French publishers now interested in maintaining G’s monopoly because that’s the only reason agreement is required?

A: Lemley’s recent paper on conflicting goals of regulation says same things. The regulators are pursuing conflicting goals! Google in France will accept the deal forced by the French competition authority; this will create trouble for Facebook. Probably FB’s reaction in Australia is a way to anticipate reaction in Europe, b/c there’s discussion there about a mandatory code of conduct in the digital sector, which would be another proof that the ancillary right itself has no effect. Some Europeans are trying to add the Australian “solution.”

Nikolas Guggenberger, Yale Information Society Project, Yale University

Essential Platforms

For transportation, we have regulated modes that are the only way to reach customers (bridges, railroads). The app store is the new version of that. Certain digital platforms have become gatekeepers for commerce, and this strangles innovation. They extract monopoly rents and destroy competitors. They can behave in that manner b/c network effects shield them from effective competition.

Learn from the past: essential facilities doctrine, establishing access rights for competitors.

First, we should revive this doctrine as applied to platforms, granting downstream competitors access where the market doesn’t have reasonable alternatives; bar discrimination and self-preferencing; guaranteeing horizontal interoperability. Second, expand the doctrine and upend the platform monopolies entirely by ensuring horizontal interoperability—competing platforms can reach customers on Amazon, competing app stores can reach customers on Apple or Google Play, competing social media can reach customers on FB. Like the telephone network works today, where AT&T customers can reach T-Mobile customers. Analogy to optimal design of IP rights: we create monopolies to incentivize innovation, but those exclusive rights are limited in time and scope. This allows follow-on innovation which is existential for economic progress.

RT: still have questions for abuse; isn’t this pro-counterfeiting, especially when many market participants are overseas and not otherwise subject to regulation—we want the sites to screen those out. You want bridges with guards.

A: Wouldn’t require platforms to sell whatever they’re offered. Business justifications for denying dealing would still exist. Safety concerns or other legal violations would be relevant. But you can’t discriminate to safeguard monopoly profits/position.

RT: But does essential facilities doctrine really teach us anything about how to resolve conflicts about who should get to sell?

A: would not be that interested in federal rules of platform procedure, but the decision Amazon makes should be reviewed judicially. Whether it allowed due process wouldn’t necessarily help. [One of things Amazon gets criticized for is giving its partners more deference in defining/policing unauthorized uses, so I don’t think we can completely separate “anticompetitive behavior” from “kicking people off for bad content”—indeed that’s the issue with the recent 9th Circuit case saying 230 doesn’t apply to allegations of anticompetitive conduct. And the massive House report complains that Amazon fails to police against counterfeits, and immediately thereafter complains that Amazon kicks too many small sellers off for selling unauthorized products.  It’s possible that both are true, but solving both problems is harder than solving one of them.  It may well be that the sorting costs are worth it, but I think more needs to be said about how that would work.]

BJ Ard: How do you make it more concrete? Delisting apps due to conflict between Apple and Epic is easy. But FB interoperability sounds hard. [Do you really want it interoperating with Parler?]

A: various possibilities do exist for transferable information, e.g. services building on existence of bank account without coordination w/bank.

One of the challenges is that a small company might not be able to do anything with the raw data—this is why they need access to Amazon’s tools.

[In chat I asked about whether we want FB to interoperate w/Parler; his answer was yes, but FB can apply its own content moderation standards exactly as they apply to content originating with FB.]

Liza Vertinsky, Emory University School of Law

Artificial Intelligence, Patents and Competition

Thesis: ML along with control over large data sets will end up increasing concentration of and control over innovation processes in ways our current regulatory system is not equipped to deal with. (Sorry, not good with patents.) To those who have, more will be granted—the predictions will get better with more data, increasing the advantage of business.

Joy Xiang, Peking University, School of Transnational Law

IP Licensing, Antitrust Law, and Access to Essential Technologies

What are essential technologies? Pharma tech (Doha Declaration), cleantech, digital platform technologies. Global South is a net importer of such tech and this allegedly contributes to exploitation. Available mechanisms in antitrust and IP: abuse of dominant position (refusal to license, essential facilities doctrine, excessive/abusive pricing); IP misuse doctrine; int’l or regional exhaustion/parallel imports.

Refusal to license: US makes actionable under exceptional circumstances; usually no obligation to license from IP owner. EU is similar. China says there’s no obligation to license, with valid justifications. Essential facilities: US hasn’t recognized IP as essential facilities, but EU and China are open to using the doctrine and to considering IP as essential facility. South can learn from EU/China on abuse of dominant position.

Christine Haight Farley: this requires a very well functioning administrative state to provide access.

No comments: