Antitrust Laws in the US

When is it okay to be a monopolist?

Acquiring Monopoly Status

Government and court systems recognize firms and individuals who hold patents or copyrights.

PatentsPatents have a life of 20 years from filing

date. Design patents last only 14 years.

Patent system is one of the great miracles of the US. Explicit admission during the republic’s embryonic days that idea is king! (Communal property rights do not provide incentive to innovate.)

PatentsTrade-off is harsh. Patented invention

cannot be used without permission (read: $$) for 20 years.

Legal monopoly power.

After patent expires, the invention can be used without penalty.

CopyrightsProtection of artistic creations.

Copyright lasts 75 years after creator’s death, unless filed before 1978. Then 95 years after creator’s death.

Eldred v. Ashcroft (2003)

Government Granted Exemptions

Utilities (Economies of Scale need to be utilized b/c of HUGE fixed costs associated with producing power.)

Postal Service- only USPS can carry a letter.

America’s Pastime! (Kennesaw Mountain Landis)

Natural Monopolies and Trade Secrets

If you can do it better than anyone else, you’re free to make a go of it in the US.

Coca-Cola guards their trade secret under lock and key. If someone could figure out how to replicate Coca-Cola, then they’re free to sell the product without penalty.

Difference between pharma and many food manufacturers. Trade secrets v. Patents

Antitrust LawSherman Act (1896)

Clayton Act (1914)

Set ground rules for what can and can’t be done in the battlefield of US commerce.

Much gray area for interpretation. Opens up chances for litigation of anti-competitive practices.

Antitrust LawBundling (Microsoft)

Vertical Integration (Standard Oil)

Horizontal Integration (competitors merging and snuffing out competition)

Intimidation (mafia)

Dumping (selling below cost; Intel recently)