Soft-Wars: The Role of the Essential Facilities Doctrine as Jus in Bello

A. Bouchagiar

Competition and Regulation in Network Industries, 2007, vol. 8, issue 3, 337-379

Abstract: The question addressed is whether the Essential Facilities Doctrine can be applied in cases of software interoperability. The Microsoft case is used as a platform for the exploration of an evolved version of the Doctrine, tailored especially for cases of compatibility in the high-technology industry. The focus is on four issues: First, the notion of indispensability is approached with respect to particularities of the software industry. As in cases of physical infrastructure, the criteria which have to be fulfilled for interoperability information to be indispensable are: necessity as input for competing, non-interchangeability, non-duplicability, and sustainability. Second, when the competitors are already in the market, "softening" the requirement for "elimination of all competition" to "risk of elimination of competition" is the only means to provide an effective remedy. Therefore, an ex ante assessment becomes necessary. Third, the requirement for a new product to be introduced to the reserved market is an additional condition that renders the Essential Facilities Doctrine more protective for cases where intellectual property rights constitute essential facilities. The aim is to avoid duplication. However, in industries where the rate of innovation is enormous, such as the software industry, it is neither possible nor appropriate to focus on a specific product. An "aggregate approach" is needed to assess in general whether new products will emerge, so that derivative innovation, and not duplication, will be fostered. Otherwise, a separate procedure would be required for each update and the remedy would become ineffective. Fourth, the "new product requirement" is incomplete without the addition of the "balance of incentives to innovate" test. The latter protects the incentives of the IPR holder to invest. Besides, without the innovation of the IPR holder the competitors might not have been able to develop new derivative products. It is admitted that the cases where it will be possible to apply with certainty such a test are extremely few. However, with the burden of proof on the Commission or the plaintiff, the IPR holder is never harmed by uncertainty. Indeed, the IPR grants a rebuttable presumption of dynamic efficiency.

Date: 2007
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