An Industry-contextual Approach to Predatory Innovation

Authors

Douglas, Erika M.

Abstract

“Predatory innovation” claims allege that a monopolist has redesigned its product to exclude competition, in violation of antitrust law. This Article examines the messy jurisprudence on predatory innovation. It finds analytical paradigms that are almost as numerous as the decisions themselves, and persistent Circuit splits. While some courts worry that judicial scrutiny of product redesigns will chill future innovation, others are willing to examine the competitive effects of exclusionary redesigns.

The Article proposes a new, industry-contextual approach to untangle this predatory innovation jurisprudence. In existing law, antitrust courts often treat innovation as monolithic across industries. The Article draws on cross-disciplinary insights from patent and economic literature to show that, in fact, the characteristics of innovation are variable and deeply industry-specific. For example, patent literature observes a paradigmatic contrast between pharmaceutical innovation (which tends to be episodic, expensive and patent-driven) and software innovation (which tends to be cumulative, collaborative and less dependent on patent exclusivity). Since the processes and character of innovation vary widely by industry, the Article argues that antitrust analysis of innovation should vary as well. Courts should tailor their treatment of predatory innovation claims to account for the distinct processes and characteristics of innovation in the industry at stake.

The Article then applies this proposed industry-contextual approach to recent “product hopping” cases, which allege the predatory redesign of pharmaceutical drugs. It argues that industry context usefully informs two Circuit-splitting controversies: the appropriate level of judicial deference to product redesigns, and the use of consumerpreference or choice to judge whether a redesign is innovative.

Recommended Citation

Douglas, Erika M., An Industry-contextual Approach to Predatory Innovation, 62 Santa Clara L. Rev. 317 (2022).
Available at: https://digitalcommons.law.scu.edu/lawreview/vol62/iss2/3