The Interaction between European Community Competition Law and Intellectual Property Rights - Tying and Bundling in the Light of the Microsoft Case

European Community (EC) Competition Law and Intellectual Property Right (IPR) share the same basic objective of promoting consumer welfare and allocation of resources. However, potential conflicts arise owing to the means used by each system to promote their respective goals. Tying and bundling is one of these means, which IPR owners use as one way to exploit Intellectual Property (IP). Competition law, on the other hand, looks at tying and bundling with suspicious eyes. This conflict between competition law and tying and bundling was evident in a recent set of cases, namely those brought against Microsoft in both the United States and the EU. In the light of these cases, the question of where to draw the line between anti-competitive and pro-competitive tying and bundling and the question of proper remedy against anti-competitive tying and bundling was examined. Microsoft represents an important industry in our society today, namely the Information Technology (IT) or, more specifically, the software industry. This is a new kind of industry with features different from traditional industry. Due to this fact, one might think that we would see a new approach and new criteria of where to draw the line between anti-competitive and pro-competitive tying and bundling. Instead, an analysis of doctrines and case law on the area shows that the Microsoft judgement in Europe can be said to be consistent in being in line with the established case law in the field, Hilti AG v. Commission and Tetra Pak International SA v. Commission. However, these cases refer to tying and bundling within traditional industry and, as pointed before, the situation in Microsoft is dealing with software products and the software market. Tying software is part of the development of products within this line of business. The approach against Microsoft in EU as portrayed by the high evidentiary requirements on Microsoft and the fact that the approach is consistent with established case law reflect a continued suspicious attitude towards tying and bundling. The U.S. Court of Appeal, District Court of Columbia, however, shows a change in attitude towards tying and bundling as portrayed in Microsoft and its tying and bundling of Internet Explorer (IE) with Windows. However, a conclusive answer cannot be drawn from this case because the Supreme Court never ruled on the case. Until that happens, a per se rule applies to tying and bundling. With regard to the question of proper remedy, a remedy that is not a disincentive to further innovation, there is no general correct answer, thus a case-by-case basis is necessary. One can say that we are moving in the right direction, where there is a clear-cut line between anti-competitive and pro-competitive tying and bundling and where tying and bundling is seen with positive eyes. In other words, a rule of reason approach rather than a per se rule approach towards tying and bundling. Competition law must learn to cope with a new sort of economy where tying and bundling is a common feature