Event Report: Institutions And Regulation For The Fourth Industrial Revolution

A few weeks ago this Kat was pleased to participate in the event "Institutions And Regulation For The Fourth Industrial Revolution" jointly organised by the Liège Innovation and Innovation Institute (LCII), Hoover IP2 (Stanford University), and the Center for Intellectual Property of the University of Gothenburg.

The underlining questions of the day were the following: What institutions, policies, and regulations will maximise economic surplus generated in the fourth Industrial Revolution? How can institutions, policies, rules, and regulations be written and developed to provide incentives and encourage trade to the benefit of multiple parties?

The Agenda for the day was packed with four panels addressing these very questions.

Going into the specifics, Panel 1 focussed on Royalty Setting and Patent Policy. It was discussed what is, in case of inter-firm negotiations for the establishment of royalty levels or markets fail, the role played by regulatory agencies and courts. Furthermore, it was addressed what the impact will be of IoT and interconnectivity in this regard, and whether it will it make the process of royalty setting (and in the apportioning of royalties in FRAND-enabled standards) more challenging.

During the panel, the presenters discussed their papers on this subject: A cost‐based approach for calculating royalties for standard‐essential patents (SEPs) by Gunther Friedl and Christoph Ann (Technische Universitat Munchen); and  SEP Royalties: What Theory of Value and Distribution Should Courts Apply? by Alexander Galetovic and Stephen Haber (Standford University and Hoover Institution). The findings of the presenters were discussed by the discussant, Jonathan Barnett (USC Gould School of Law), and the Panel was moderated by Bowman Heiden (CIP and Hoover Institution).

The discussion during Panel 2 concerned "Autonomous Vehicles: Changing Markets, Business Models and Institutions" and had a more practical approach: the panelists, Monica Mangnusson (Ericsson), Yann Ménière (European Patent Office), Ruud Peters (Philips) and Matthias Schneider (Audi), and moderator Keith Bergelt (Open Invention Network) discussed various underlying issues concerning the topic at hand, including the EPO study Patents and self-driving vehicles and the role of patents in autonomous vehicles, SEPs and the combination of technology therein. Questions that were raised included: who will be the beneficiaries, i.e., who will be willing to pay a higher price for autonomous cars? Will autonomous cars create more traffic? What is the value assigned to the patents? Is 5G or WiFi technology more suitable? How do carmakers know what needs to be developed?

After a delicious lunch break, we went on to Panel 3 to discuss: "Digital Platforms: Antitrust and Regulation". Topics included: what is the general role of antitrust agencies regulating platform markets in the digital economy (the so called "FAANG", i.e., Facebook, Amazon, Apple, Netflix and Google)? Will the rise of the Internet of Things pose new antitrust concerns?  What should be the threshold for "large", "big" or "dominant" firms?

During the panel Nicolas Petit (University of Liège) discussed his paper: "Are FAANG Monopolies? A Theory of Disequilibrium Competition with Uncertainty" (currently a working paper; the final version will be available in early 2020) whereby he questions, inter alia, whether FAANG can be considered monopolies or whether their behaviour contradicts the textbook definition, whether they generate positive consumption externalities and whether we should rethink how bad conduct is characterised. The second paper "Digital Conglomerates and EU Competition Policy" by Alexandre de Streel (University of Namur) and Marc Bourreau (Telcom ParisTech) discussed the following points: why do we have digital conglomerates? What are the competitive effects? What do digital conglomerates mean for competition policy? The two papers were then discussed by Luigi Zingales (University of Chicago).

In the fourth and final panel, "Globalisation, Industrial Champions and 21st Century Protectionism?", the panelists, Pascal Belmin (Airbus), Justus Haucap (Duesseldorf Institute for Competition Economics), Can Huang (Zhejiang University), Paul Seabright (Toulouse School of Economics) and Jim Venit (Dentons), and moderator Richard Sousa (Hoover Institution) discussed a number of questions, inter alia: how do societies adopt their laws and industrial market in the 21st century? Is EU antitrust enforcement impeding a growth in size of firms compared to the US and China? Will companies withdraw from China? What should the German export model be? Should "industrial policy" standards be introduced in merger law"?

In sum, the conference "The Institutions And Regulation For The Fourth Industrial Revolution" had a great lineup of speakers including academics, practitioners, representatives from both institutions and companies, who gave an insightful, argumentative and multi-faceted perspectives on the wide range of ip and competition law topics proposed.