Definition of the Institute’s research topics begins with a spatial matrix comprised of three research axes.
- Principles and Functions of Intellectual Property Law and Competition Law
- Configuration of Intellectual Property and Competition Law
- Intellectual Property and Competition Law in Different Economic Areas
These research axes each contain numerous research priorities that can be redefined over time.
Intellectual property law and competition law have the complementary goal to create incentives for investment in research and development. In the continuous evaluation of the available mechanisms, economic parameters play an important role, as do fundamental rights and ethical considerations. The emergence of dysfunctional effects can be prevented primarily through a functioning balance of interests.
As part of a system of comprehensive market regulation, intellectual property law and competition law pursue complementary goals (the so-called complementarity theory). Both are committed to the same objectives of providing incentives for investment in research and development and prohibiting imitations without remuneration, while at the same time maintaining competitive pressure. In prohibiting anticompetitive conduct, competition law provides a framework in which competitive behaviour can develop, while unfair competition law provides rules for fair competition. Through intellectual property law, the legislator intervenes in these competitive processes by recognising the individual rights of market participants.
However, as regards intellectual property rights, one can observe that they are increasingly being used for purposes beyond the goal of promoting innovation, e.g. as a commodity and objects of investment, or merely strategic instruments in competitive struggle. This shift in function poses considerable challenges for research and legal practice, since it is by no means clear how such new functions are to be assessed from the perspective of legal policy, and how legitime and illegitimate use of rights can be distinguished. On the other hand, new innovation models are also being developed, where the use of intellectual property rights is increasingly employed to underpin cooperation rather than (only) exclusivity (e.g. creative commons and open innovation).
Economics, including various parameters such as efficiency and securing economic freedom, plays a decisive role with respect to market regulation law. Intellectual property law and competition law are a part of this with their common goal of promoting innovation. Economics provides decisive insights in the process of a continuous evaluation, further development and adaptation of legal instruments. However, a purely economic, efficiency-oriented approach ultimately falls short. Social needs, the dynamics of market behaviour and values beyond economic welfare must also be incorporated into the concept of comprehensive market regulation law. These aspects can be addressed, for example, through the principles of business ethics and, above all, through an internal balancing of interests within intellectual property law. In both fields of intellectual property and competition law, there is a particular need to create a balance between the economic incentives for individuals and the interests of third parties as well as the general public. For example, copyright sets economic incentives for market participants. At the same time it protects the immaterial interests of creators and is intended to secure cultural diversity – values which cannot be represented in monetary terms alone. One must also take into account the collision between fundamental rights (e.g. protection of property, the right to life, health, freedom of expression, etc.) when designing the scope of protection and the exceptions and limitations.
In the field of competition law, traditionally the the criterion of efficiency, on the one hand, and the securing of economic freedom, on the other, have traditionally stood in collision. But also here, a holistic approach can be pursued. Thus, the protection of open markets can and should be committed to equal opportunities for all economic operators. In the law against unfair competition, the criterion of fairness is of prime importance. Its relevance is particularly apparent in the context of the development of the digital economy where business models build on use of masses of personal data can hardly be evaluated on purely economic terms.
Whether and, if so, to what extent the existing regimes governing intellectual property and competition law fullfil their functions or whether they sometimes provoke dysfunctional effects is a core element and the starting point of basic legal research. How such regimes are to be designed and applied and which criteria play a role in the interaction beyond the efficiency-oriented functional consideration in order to create optimal incentives for innovation in the broadest sense is a question that is in need of constantly being re-examined in different contexts.
“Innovation”, including its emergence, dissemination and protection, is complex, context dependent and culture specific. Innovation also has social, ethical as well as legal policy implications. Innovation can have positive or negative effects on society, social structures, the economy, environment and ethical values, which need to be adequately evaluated and addressed. In this respect, the focus is on the interaction and exchange between innovation and society.
The term “innovation” is complex. It includes, among other things, new developments in products, processes, services and structures that are introduced, accepted and disseminated in the market economy. In this context, innovation not only refers to technological advances – which are often only elements of the more comprehensive innovation process – but also to new behavioural and organisational developments in society. Thus, this encompassing term is not limited to specific products and processes that are commonly used as a yardstick for measuring and quantifying innovation (such as for the purpose of creating innovation rankings); rather, it also includes new developments that are regarded as innovation in different cultures (such as indigenous and local communities).
The emergence, dissemination and acceptance of innovation are equally context-dependent. Although individual, personal or entrepreneurial accomplishments can make a significant contribution, these are influenced by societal factors, such as culture, traditions, values and law. This is not only evident in relation to innovation processes based on sustainable collective behaviour (e.g. open innovation, user-generated content, agricultural development), but also with respect to innovations resulting from traditional industrial models of research and development.
Innovation is generally seen as a relevant contributor to economic growth, as well as to cultural and social development. The potential increase in social and economic prosperity through increased production efficiency, improvements in business and production methods, increasing convenience in daily life and creating culturally relevant information is, for example, among its desirable effects. However, this does not mean that innovation has an exclusively positive impact on society. Its development and resulting risks can lead to high social costs, while its social return can be jeopardised by an insufficient dissemination in society. For example, innovation in cases involving the use of human embryos, the genetic modification of humans and animals, unlawful access to genetic resources and traditional knowledge and other acts against public order and common decency, can collide with certain ethical principles and human rights. In addition, innovation can be accompanied by extremely negative consequences, such as environmental hazards, unemployment, economic crises, etc. It is also obvious that the business sector has neglected certain areas where innovation is needed, which should lead to consider a more prominent role of the State to influence the innovation process. Further, the advantages of innovative processes do not always (readily) reach everyone.
With this background in mind, civil society and the scientific community are now paying greater attention to innovations that correspond to certain social values and thus offer increased benefits for society. Innovations are needed that, alongside the goals of economic development, also support goals of ecological and social development (“sustainable” or “social innovation”), that do not stand in conflict with society’s moral values (“ethical innovation”) and whose unknown effects are the subject of an objective risk management in order to identify and protect potential victims.
Within the scope of basic research on the subject of innovation, the aim is to understand the different conditions under which innovation emerges, develops and becomes accepted, or is ignored or rejected by society. In this context, social values and the rule of law must be taken into account in order to determine which innovations are desirable. The resulting findings can be an important source of research for other main areas of research, in particular with regard to the incentive mechanisms offered.
An Examination of the Inventive Step Requirement in AI-related Inventions under the European Patent Convention and in the Practice of the European Patent Office
Anna Chiettini
CRISPR/Cas Technology, Innovation and Regulation
Reto M. Hilty, Pedro Henrique D. Batista, Ezgi Ediboğlu Sakowsky, Tobias Endrich-Laimböck, Elisabeth Hofmeister, Daria Kim, Matthias Lamping, Peter R. Slowinski, Miriam Steinhart
Grand Challenges
Reto M. Hilty, Carolina Banda, Michał Barycki, Pedro Henrique D. Batista, Francisco Beneke, Ezgi Ediboğlu Sakowsky, Tobias Endrich-Laimböck, Rebeca Ferrero Guillén, Begoña González Otero, Jörg Hoffmann, Elisabeth Hofmeister, Daria Kim, Matthias Lamping, Peter R. Slowinski, Miriam Steinhart, Hanns Ullrich, Laura Valtere
Interactions Between Artificial Intelligence and Intellectual Property Law
Prof. Dr. Josef Drexl, Prof. Dr. Dr. h.c. Reto M. Hilty, Yiqiong Chen, Artha Dermawan, Dr. Begoña González Otero, Jörg Hoffmann, Dr. Daria Kim, Shraddha Kulhari, Izv. Prof. Dr. Silke von Lewinski, Kateryna Militsyna, Dr. Valentina Moscon, Dr. Heiko Richter, Peter R. Slowinski, Dr. Klaus Wiedemann
Incentive theory forms the core of the economic justification for the current system of intellectual property rights. It is based upon two hypotheses. First, market failure is destined to occur in innovation-driven markets due to both the public goods attributes of ideas and a lack of inherent market mechanisms to adequately protect the originators of innovative ideas. As a result, imitation ensues at an undesirably higher rate than the creation of new and socially valuable ideas. Second, the allocation of exclusive, fixed-term property right is the best method for remedying the market failure. This foundational theory has been championed and challenged throughout the literature.
Research at the Institute examines the incentive theory by integrating methods and findings from other disciplines in order to determine the potential impact of intellectual property rights in specific markets.
Motivation for innovation or creative behaviour varies in nature. It may be personal (e.g. an artist’s intrinsic need to express creativity), social (e.g. a researcher’s desire for professional recognition) or market-dependent (e.g. a firm’s pursuit of financial gain). From a regulatory perspective, the critical question is whether existing legal mechanisms adequately account for these various motivations in order to support their effects.
Incentives for dynamic and innovative behaviour on the part of market participants are primarily based on competitive pressure. In this context, competition law plays an important role. Its function is to protect the competitive process against restrictions which result from the conduct of individual market participants. Competition law must be applied in such a way as to create optimal conditions for innovation. On its own, however, competition law is unable to generate incentives. Specific interventions in free competition may be necessary. In particular by vesting, under certain conditions, a privileged position in individual competitors, those incentives resulting from competition may be maintained or even strengthened. The current system of intellectual property rights is largely based on this economic justification.
This underlying incentive theory is based on a two-part hypothesis. The first presumption is that market failure, brought about largely by the public goods attributes of ideas, is destined to occur due to a lack of inherent market mechanisms which adequately protect such ideas from duplication (so-called free-riding). As a result, imitation ensues at an undesirably higher rate than the creation of new and socially valuable ideas. The second essential premise of the incentive theory is that a system based on an exclusive right provides an effective means of preventing such undesireable market behaviour.
Historically, other theories – such as labour theory or natural rights theory – have been put forth to justify the current system of intellectual property. Indeed, such theories are still put forth today. However, the incentive theory indisputably occupies the most prominent position among them. In particular, it is central to the question whether existing legal regimes are capable of adequately fulfilling their function, or to what extent modifications are necessary.
It is important, however, to take note of criticisms of the incentive theory. For instance, it has been argued that other external incentive mechanisms – e.g. price regulation or grants – may be equally and in certain environments even better suited to stimulating innovation. Intellectual property rights (IPRs) can also produce various adverse effects (e.g., the so-called tragedy of anti-commons) – a point which has been much discussed in economics-oriented literature. Criticism of the incentive theory has also come from the fields of cognitive and behavioural psychology. Social science research has called the market failure premise into question by theorising that external rewards are, in many instances, unnecessary to induce artistic and technological innovation. IPRs based on abstract economic logic may even lead to dysfunctional effects in certain constellations, hindering rather than enhancing innovation and creativity.
Against this background, legal research in the area of intellectual property law must understand and take into account both theoretical as well as empirical findings from various other disciplines in order to determine the potential impact of IPRs in specific markets.
We often observe a dissonance between the intended (ideal-typical) function of an intellectual property right and the use to which a given right is put under the influence of economic and technological factors. As regards the legal implications, such functional change often finds expression in extended legal protection that goes beyond the intended function of the intellectual property right. In this context a main area of research with three characteristics emerges which firstly examines the causes and consequence of various strategies of protection and competition. Secondly, the tensions between the goals of intellectual property protection and the modalities of that protection ought to be examined. Finally, the changing and emerging functions of intellectual property protection need to be contextualized in light of their implications for the scope of protection afforded by the law.
The notion of the “function” has an ambivalent status in intellectual property law. On the one hand, it is the key to understanding the substance and effect of rights. On the other hand, however, the complexity of the issues arising in that context bears a considerable risk of misunderstanding. A distinction has to be made between an “ideal-typical” or “essential” function as the very reason of the protection of a given intellectual property right, on the one hand, and the “legally protected” functions thereof, on the other. The ideal-typical function consists above all in the prohibition of any imitation by unauthorised third parties, and, with increasing importance, in the use of intellectual property rights as business assets. The “legally protected” functions can be distilled from the modalities of the protection afforded by the law. For example, while the ideal-typical function of trade marks consists in the identification of the corporate origin of a given product, the protection afforded by the law, such as in relation to marks with a reputation, may go further. In this sense, other functions of the trade mark are also “legally protected”.
In addition, intellectual property rights may also have economic or factual functions in connection with certain forms of (strategic) use or economic consequences, irrespective of whether or not it may be desirable to protect such forms of use. While ideal-typical functions are essentially a given, economic functions remain highly dynamic. That dynamic influences the legislature and judiciary, and thus concomitantly the nature and extent of legally protected functions. Such legal developments are in part reactions to economic and technological change, and in part economic and technological developments as such influence the behaviour of intellectual property rightholders (as in the context of digitalisation and cooperative or otherwise “open” forms of innovation).
Functional change typically leads to an extension of the subject-matter of protection (such as patents for computer programs or biotechnological innovation; trade mark protection for all sorts of shapes; copyright or data-base protection in the software sector), and of the scope of exclusivity (such as all types of use in trade mark law, and the making available right in copyright law), as well as the independence of the object of protection (such as the free transferability of trade marks, even only for selected classes of goods). The expansionist tendency of such functional change also favours tendencies towards overlaps between different intellectual property rights.
In principle, these phenomena are not new. What is new, however, is the level of refinement of market participants’ prosecution and exploitation strategies, and the vigour with which they are pursued. This can lead to a differentiation of the economic functions and potentially their solidification as legally protected functions.
A main area of research assessing on these developments has three characteristics:
First, the causes and consequences of differentiated strategies of protection and competition must be identified. In the area of patent law, this concerns, for example, the exploitation of inventions through R&D companies or non-practicing entities as a distinct business modell or the patenting behaviour of certain industries (e.g., in the ICT and pahrma sector), where the function of patents to protect innovation against imitation is superseded by strategic objectives. In the area of trade mark protection, a similar situation emerges concerning the new brand strategies of large companies or franchising practices.
Second, tensions between the goals of intellectual property protection, namely, the promotion of innovation, creativity and competition, and the means of realising these objectives, that is to say the grant of exclusive exploitation rights, must be resolved. Construing the scope for action and rights of exclusion afforded by intellectual property law in accordance with the objectives of that protection requires a normative trade-off. The modalities of this trade off will be identified and examined in the main areas of research mentioned under I.1 and 2.
Third, functional change impacts all system levels of intellectual property law, including the conditions and scope of protection, exceptions and limitations thereto, as well as remedies (e.g. injunctive relief or damages). Functional change also affects the law against unfair competition, the flexible sanctioning mechanisms of which often complement protection arising under intellectual property law. In general, we can say that this area is a moving target. The differentiation, and often the rebalancing of the functions of intellectual property protection, is a continuing process, influenced internally by legislative and judicial developments, and externally through economic and technological change. Given that the process involves innovation and creativity, it proceeds at a fast pace. Existing functions are typically not replaced by new ones but rather develop continuously.
Art Investments – The Applicability of Investor Protection and Transparency Regulations to the Art Market
Antonia von Appen
Die Konkurrenz von Urheberrecht und Lauterkeitsrecht im Binnenmarkt
Timmy Pielmeier
How does the Exhaustion of Rigths Adapt to the Blockchain Era?
Zhenni Chen
There is a consensus that the competitive actions of market players should adhere to certain rules of commercial fairness. Most legal systems (at the national, European or international levels) therefore provide for some level of regulation. The principle of fairness also plays a role in the shaping and interpretation of IP legislation (for instance in trade mark law with the criterion of “honest practice”). In addition, it has influenced the European Directive on trade secrets protection. In view of this, an investigation into the fundamental tenets of this principle is necessary to develop a uniform system of judgement.
In a market economy, the participants’ actions aim at improving their position in the market. That a competitor’s position may at the same time weaken does not justify any legal intervention. On the contrary, this is a structurally inherent aspect of competition, and intense competition is usually in the interest of consumers. There is, however, a consensus that the actions of market players in gaining a competitive advantage should adhere to certain rules of commercial fairness. Most legal systems thus regulate commercial activities under the aspect of fairness (in Germany, e.g., pursuant to the Act against Unfair Competition). These rules, at least indirectly, also influence the shaping of intellectual property rights.
In international law, the basic consensus on fair competition is expressed in the concept of “honest practices in industrial or commercial matters” (Art. 10bis Paris Convention). In addition, European primary law has established the principle of undistorted competition, which consists not only in the legal principle of freedom of competition but also in the requirement of ethical behaviour in relation to competition. On this basis, at least in European law, the legal principle of fairness is achieved through a complementary system of unfair competition law (unfair trading rules) and intellectual property rights. This can best be seen in trade mark law, where the concept of “honest practices“ is an element to establish the limitations of an absolute right. The principle of fairness is, however, also reflected in the considerations underlying the protection of well-known marks and the CJEU jurisprudence on the functions of trade marks. It has furthermore influenced Directive 2016/943 on the protection of trade secrets. The recognition of commercial fairness as an autonomous legal concept could, at least indirectly, also have an impact on those areas which are not yet harmonised and where fair trading rules thus fulfil a genuine task of protection. This all the more so since the concept of fairness plays a role in assessing national laws restricting trade on the basis of EU primary law (Article 34 TFEU).
Therefore, the guiding principles for a coherent system of judgement (including aspects of business ethics) have to be developed on the basis of primary and secondary European law as well as, where appropriate, through a comparison of national principles and traditions. This system should overarch existing legal systems and allow, if necessary, for the adaptation of their scope. Such a system could serve as a basis for the interpretation of criteria open to discussion within the already harmonised areas of intellectual property law (like trade mark law). It could be of particular importance where the legally defined categories of existing IP rights do not provide clear answers as to their application in new technological and economic constellations.
Competition Law Control of Excessive and Unfair Prices of Pharmaceuticals: An EU and South African Perspective
Isaac Kundakogo Kunko
Fairness als Rechtsprinzip – Die anständigen Marktgepflogenheiten der Digitalwirtschaft
Stefan Scheuerer
Methodological questions constitute a central element of the legal order. In its classical function, legal methodology aims at ensuring the consistent application and interpretation of existing legal norms. The need for taking recourse to the findings of other disciplines also arises in this context, for example, when indeterminate legal terms require definition or when a statutory provision needs to be interpreted in order to achieve the objectives of the field of law. The question of how insights from other disciplines can be incorporated into legal reasoning arises even more so when it comes to the evaluation of legal norms, the problem of an optimal design of regulations or concerning the definition of the objectives of a particular field of law. This is particularly true in the areas of intellectual property law, unfair competition law and the law against restraints of competition.
Methodological questions arise in all fields of law. The classical function of legal methodology is to ensure a consistent interpretation and application of existing legal norms. In this regard, there is a need to draw on the methodical and substantive knowledge of other disciplines, for example, when indeterminate legal concepts need to be defined or when the interpretation of the law requires a consideration of legislative objectives.
The need for interdisciplinary approaches is all the more necessary, not only when a mere interpretation of existing law is at issue, but also concerning the evaluation or the optimal design of legal norms. Here, the particular methodological challenge consists in making theories and methodological findings of other disciplines usable for the legislative process – e.g. economics, behavioural sciences, innovation, technology and creativity research. This challenge includes the identification and selection of relevant findings, their integration into the application and design of the law, and finally the further development and refinement of the legal instruments themselves.
This mechanism is of particular importance for the evolution of legal methodology with regard to competition law and intellectual property law in addition to the purely intradisciplinary development of, for example, comparative law. These areas of law are characterised by the co-existence of different regulatory layers (national, European and international) and by a plurality of legal methods. This results in inconsistencies, which can be mitigated by means of a further development and refinement of legal methods. In addition, the constant change in technologies and market conditions requires flexibility in the regulatory concepts of these fields of law. Therefore, in these fields of law the legislator, in attempting to achieve legal certainty, has often resorted to indeterminate and open legal terms.
Considering its economics-based concepts, competition law can hardly be interpreted and applied solely by resorting to the doctrine of classical methodology. The need for a consistent methodology increases even more where competition economics runs up against its own theoretical limits with regard to the objective of promoting innovation. The neo-classical instruments of competition economics have proved to beone-sidedly oriented towards static (price) competition. Thus, neoclassical economic thinking appears to be less suitable for securing dynamic competition. Therefore, a paramount methodological challenge exists in developing tools for detecting restraints on innovation competition.
Also in the field of unfair competition law, fundamental methodological questions arise. Here, the fundamental premises and objectives of this legal area – for example, with regard to consumer protection – are not clearly defined and doubts also arise with regard to the legal methodology. In particular, the interpretation of indeterminate legal terms as well as the interplay of purely national and European norms need to be clarified. Above all, it is necessary here to interpret and apply indeterminate and open legal concepts with regard to the permissibility of new business models. Finally, the question arises whether and how insights from behavioural economics can be drawn on.
With regard to intellectual property law, methodological challenges are particularly evident where the need for and the legitimacy of creating new intellectual property rights is being discussed. In addition, it must be ensured that the application of generally applicable intellectual property rights also leads to convincing solutions if these rights might have dysfunctional effects in a specific market context or if rights holders use intellectual property rights in a dysfunctional way. For the identification of - desired and undesirable - effects of existing intellectual property rights, the availability and informative value of empirical findings must also be examined. Finally, fundamental methodological questions arise in cross-border contexts, whether it is the development of the European intellectual property rights systems in the multi-level system or the coordination of conflicting international agreements.
Aktionärsstruktur und Wettbewerb: Gefährden horizontal-diversifizierte Großaktionäre durch ihr Netzwerk aus Minderheitsbeteiligungen den Wettbewerb?
Jonas Weller
