Does a ‘Rule of Reason’ Analysis Emerge out of Interoperability-Centric Concerns under EC Law?: A Critical Analysis in light of EU Microsoft Case

The Europe-wide debate on to what extent antitrust scrutiny must be applied to exploitation of intellectual property rights has started with Magill and come to a juncture point with Microsoft. EU Authorities now have to decide either to render the test of exceptional circumstances that warrant compulsory licensing into comparably well-formulated ‘modified per se legality’ test of Magill-IMS Health or to refashion it along with a new ‘rule of reason’ analysis which is seen capable to optimise the rules that relate to interoperability between operating system vendors as well as incentives to innovate across the industry. Endorsing the latter, open-ended approach in Microsoft comes at some cost, which is hardly justifiable with peculiarities of network effects and/or possible prejudices to consumers. Primarily, if future incentives to innovate are over-highlighted by overlooking the ECJ’s ‘new product test’, possible harmful consequences, i.e. uncertainty concerning the conditions that apply to antitrust liability, emergence of a fragmented market and regulatory structure would be enabled to become stronger and unmitigated. Second, new ‘incentives balancing test’ requiring an unnecessarily comprehensive trade-off analysis makes Microsoft type ‘rule of reason’ analysis less applicable and more complicated. Third, such sorted rules thwart a thorough ‘refusal to license’ analysis under clear-cut rules, and would cause potential R&D and innovations to be deterred because of the hazy conditions in legal environment. Last but not least, Commission’s barely confined approach in Microsoft yields a new interoperability policy design which far more exceeds that of the Software Directive; and this approach would bring in future encroachments on internal check-balances of IPR system as well as possible distortions in sector-specific rules. At this juncture, EU Authorities stand in a critical position as to clarify the decisive factors in ‘refusal to license’ analysis under Article 82, considering the conclusive impacts of Microsoft puzzle. This paper stands in contrast to Microsoft type ‘rule of reason’ analysis and draws attention to its far-reaching implications, contending that Magill-IMS Health criteria would be the ideal base for conducting a ‘refusal to license’ analysis under Article 82.