“If generic drugs don’t compete with their branded counterparts, then it makes little sense to award damages in patent cases on the assumption that sales of the infringing product cause the patentee to lose sales”.
Perhaps the problem is the lack of clear standards for market definition in IP cases. If we had clear rules for defining markets, parties couldn’t take inconsistent positions when it suited them to do so. We would either define markets narrowly, treating IP rights as conferring substantial power and lacking substitutes, or we would treat them as just another property right, unlikely to cause much harm but also unlikely to confer much unique value.
IP rights can create their own antitrust market in any product in which consumer loyalty to the brand is strong enough, or in which IP rights make the products different enough
Concluding that many IP rights define markets turns a wide array of companies into monopolists, and so in many ways it would dramatically expand the role of antitrust law. But in other respects it would shrink it. Suppose Pepsi and Coke were to enter into a horizontal market division agreement, in which Pepsi agreed to sell only north of the Mason–Dixon Line, and Coke agreed to sell only south of that line. If Pepsi and Coke compete in the same product market, that agreement would be illegal per se, just as it would be if they both agreed on the price they would charge.But if they aren’t competitors, traditional antitrust analysis doesn’t have much to say about agreements they enter into, any more than it would object to Coke’s agreeing with the two of us on the price it might charge.
“The current approach to market definition draws an arbitrary line when what we need is a continuum that reflects the partial differentiation of products and differences in the cost and convenience of those products. That is especially true in IP markets, where the existence of the IP right all but guarantees some amount of product differentiation, making the yes–no framework (¿el producto X pertenece al mismo mercado que el producto Y? ¿la tienda situada a 12 km forma parte del mismo mercado que la primera? ¿y la que está a 15 km?) of classical market definition particularly problematic”.