Title
The Black Market and Intellectual Property: A Potential Sherman Act Section Two Antitrust Defense?
Abstract
The author begins by exploring the relationship between antitrust and intellectual property and poses the question of where do black markets, illegal economic competition to legitimate IP rights holders and producers, fit when determining relevant market and market power analyses. The author then examines the presence of black markets, their impact upon IP rights holders and society, and proves the motivation that a Sherman Act Section Two defendant will have to argue that black markets should be included in the antitrust analysis.
The author analyzes both the supply and demand sides of relevant market and market power analyses. Based upon the economic reality and the increasing threat black markets have to legitimate IP rights holders, the author determines that, technically, black market products and producers should be incorporated into a relevant product market and market power analyses. The inclusion of these products and producers will depend on the consumers using those products and whether they can move back and forth between legitimate and black markets freely.
The author concludes, however, that though the black market products and producers should be included in the antitrust analysis that courts should not permit this argument at this time. Evidentiary reliability issues exist with our current understanding of black markets. Courts must consider the effect on IP law if a court recognizes a black market producer as “legitimate” competition for antitrust purposes. There are also paradoxical results in government acknowledgement of competition and simultaneous duty to suppress illegal competitors. Finally, IP rights holder could manipulate the size and even existence of the black markets, thereby creating their own scapegoat.
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