Thibault Schrepel

By Dr. Thibault Schrepel*

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Introduction
I. The Improved Version of the “No Economic Sense” Test 
A. How to Determine Which Test to Apply 
1. Regarding the Goals of Antitrust Law
2. In Terms of its Efficiency 
B. On Why the “No Economic Sense” Test is Suitable 
1. Its Main Characteristics
2. Inoperative Criticisms
C. How to Improve the “No Economic Sense” Test 
D. Modeling of the Proposed Test 
II. Application to Major Predatory Innovation Cases 
A. Berkey Photo v. Eastman Kodak (1979) 
B. Microsoft (2001) 
C. Microsoft (2004) 
D. iPod iTunes (2014) 
Conclusion

Introduction

“To evaluate is to create.

Hear this, you creators!”

– Friedrich Nietzsche

This paper originates from a long-standing anachronism of antitrust law with regard to high-tech markets. Conventional wisdom assumes that antitrust law mechanisms are well suited to the study of practices in technology markets and that only adjustments should be made to these mechanisms, and sparingly at that.[2] This is untrue. Several practices fall outside the scope of antitrust law because the mechanisms for assessing the legality of practices are not adequate. In fact, no one can accurately identify a typical legal approach for non-price strategies, a truth which gives way for a chaotic jurisprudence to emerge from this lack of universal understanding, which we will show.[3]

This article further aims to contribute to the literature by advancing a new test, the “enhanced no economic sense” (“ENES”) test, to be applied to non-price strategies.[4] We show why applying it with consistency will help to simplify the law while avoiding legal errors – two goals that all of the tests aiming to assess the legality of practices under antitrust law should reach.[5] Some of these tests, which are too permissive, generate many type-II errors but are easily understandable, and thus, increase legal certainty. Others, which are better suited and, in theory, allow avoidance of legal errors, are too complex to be applied by the courts and, above all, to be understood by laymen.[6] But one must not give up. Antitrust law is not condemned to remain blind to certain technical problems or, on the contrary, to be incomprehensible to the ordinary man. The “ENES” test brings a solution of reason to this long-standing issue.

We should not adopt a new test without first ensuring that it would allow courts and antitrust authorities to take a position in each individual case and that rulings would benefit consumers as a result.[7] Here again, the “enhanced no economic sense” test meets this double objective. It also helps to understand why several decisions made in the past are, we will argue, legal errors. The Microsoft case[8] is one of them.

In turn, this paper makes a proposal to rethink the way most of the new practices implemented in technology markets are actually evaluated. This study is particularly timely because the development of the issues related to these markets, and the growing interest shown by competition authorities[9] calls for an identified position; one which will not hinder their extraordinary growth.

This paper proceeds in three parts. The first part presents the “enhanced no economic sense” test, ranging from its foundations up to detail of its implementation. The second part probes the test’s empirical efficiency, exploring the most important predatory innovation cases on non-price strategy reassessing them through the prism of the “enhanced no economic sense” test, which helps to establish the test’s effectiveness. The last part expands these empirical findings and presents our conclusions.

I. THE IMPROVED VERSION OF THE “NO ECONOMIC SENSE” TEST

The “no economic sense” test is best suited to assess non-price strategies—in other words, all those which are unrelated to pricing changes. It complies with most of the characteristics that a test should have—its mechanism is easily understood and most of its criticisms fall short. And yet, the test may be improved to create less type-II errors while retaining its best features. This section details, accordingly, how to design a new version of it.

A. How to Determine Which Test to Apply

Determining which test is best-suited to assess non-price strategies implies considering which goals are to be assigned to antitrust law, and, accordingly, which characteristics the ideal test should have.

1. Regarding the Goals of Antitrust Law

The choice of which test is the most suitable for analyzing non-price strategies involves considering several elements. The first element is related to the goals that must be assigned to antitrust law.[10] These objectives may be grouped into three theories:

1. The “efficiency theory”:[11] according to this theory, antitrust law’s primary goal is to increase economic efficiency. Type-I errors[12] are seen as the greatest evil because they deter investments. Under this theory, there is no presumption of anti-competitive practices simply because a company holds a monopoly power.

2. The “consumer protection theory”:[13] this theory is based on the idea that the ultimate objective of antitrust law is to benefit consumers, not necessarily to increase economic efficiency. It contemplates criteria other than pure economic ones, such as preventing big mergers or overprotecting small businesses.[14]

3. The “growth-based theories”:[15] these related theories aim to enhance economic efficiency and prevent unwarranted transfers of consumers’ surplus. As a result, innovation is at the center of the debate, unlike theories which are only centered on economic efficiency and which do not necessarily involve the protection of innovation in and of itself.[16]

Most non-price strategies assume there are technological aspects directly related to innovative fields.[17] Accordingly, while evaluating practices’ efficiencies, courts must take great care not to impair innovation. For that reason, choosing a test included in the growth-based theories is ideal. The “no economic sense” test evaluates the reason a company has implemented practices and also makes it possible to take innovation and technological breakthroughs into account.

2. In Terms of its Efficiency

The second key component to be studied in order to identify the most appropriate test to detect anti-competitive practices is efficiency.[18] It cautions against multiplying the situations in which the courts are unable to judge whether some practices must be condemned.[19] It also means avoiding type-I and II errors.

In its 2005 study entitled “Competition on the Merits,”[20] the Organization for Economic Co-operation and Development (“OECD”) identified six criteria for evaluating various tests’ efficiencies.[21] The first relates to their accuracy: the tests must be based on accepted economic theories and, meanwhile, must avoid type-I and II errors. The second is linked to their administrability, understood as ease of applicability.[22] The third refers to their applicability: the tests should cover all of the issues raised by one type of anti-competitive practice. The fourth relates to their consistency, which should lead to homogeneous solutions.[23] As underlined by one author, the tests applied to predatory innovation are plural.[24] This should be changed. The fifth emphasizes their objectivity. The sixth and final criterion is related to their transparency. The tests must aim at defending the goals that have been identified as being the most crucial to antitrust law, i.e. the growth-based theories. The ENES test will meet these criteria, as explained below.

B. On Why the “No Economic Sense” Test Is Suitable

1. Its Main Characteristics

The “no economic sense” test is based on the simple idea that a practice should be regarded as anti-competitive if it makes sense from an economic point of view only because of its tendency to eliminate or to restrict competition.[25]

While this test is often presented as being close to the “profit sacrifice” test,[26] the fact of the matter is that it differs greatly from it. For instance, when applying the “no economic sense” test, a practice may be sanctioned if it makes no sense—besides creating anti-competitive effects—even though it did not involve any losses for the company.[27] At the same time, a practice that involves losses may still be seen as being pro-competitive if it is justified by potential gains in economic efficiency.[28] To the contrary, the profit sacrifice test condemns all practices that involve significant short-term sacrifices.[29] In short, the “no economic sense” test raises the question of why the defendant agreed to bear losses, which the profit-sacrifice test does not.

Gregory J. Werden, one of the “no economic sense” test’s greatest defenders, also underlined that, according to this test, practices are seen as being anti-competitive when, in addition of having no objectives other than eliminating or restricting competition, they also have the potential effect of restricting competition.[30] Establishing whether the practices have the potential to eliminate the competition is then a prerequisite,[31] and the burden of proof lies on the complainant.[32]

Also, the “no economic sense” test does not imply an ex-post evaluation of a practice’s effects. Rather the court’s duty is to evaluate the practice by taking into account all of the elements available to the dominant firm at the time of its implementation.[33] A practice may have been extremely profitable for reasons that were not anticipated by the company and this should not lead to a finding that the practice is pro-competitive. Also, as Werden notes,[34] a practice may have anti-competitive effects that were unpredictable at the time of its implementation and it should not be used as a means of late condemnation.

In fact, not evaluating the ex-post effects produced by a practice and not focusing on its costs are the reasons why the “no economic sense” test—even though it may be used to address non-price and price strategies[35]—is even more efficient for practices involving low costs, which is an important difference from the profit sacrifice test. It is then particularly suitable for evaluating predatory innovation, which is why it has led many jurisdictions to apply it in related cases.[36]

Another test called the “sham test” could also be suitable because its grounds are similar to the “no economic sense” test.[37] If we consider that innovation is an economic justification in itself, then, applying the “no economic sense” test asks whether the “innovation” is genuine or a “sham.”[38] An “innovation” will be considered a “sham” if it exists only for its negative effects on competition.[39] In other words, the definition of a “sham innovation” is any product modification that does not improve the consumer’s well-being in the short or the long term. The similarity of the two tests is particularly enlightening on the definition to be given for predatory innovation. In assessing whether innovation is real,[40] these two tests stand as opposing the vision of pioneer scholars Janusz Ordover & Robert Willig: that even genuine innovations can be anti-competitive.[41]

In short, unlike several other tests, which lead to a finding of anti-competitiveness in genuine innovations that improve the consumer welfare whenever anti-competitive effects are significant,[42] the “sham” and the “no economic sense” tests do not. The reason why the “no economic sense” test is preferable to the sham test is because it also encompasses non-price strategies that are not directly linked to products’ modifications, like those related to “low-cost exclusion” as a “refusal to deal”.[43] Further, its terminology is self-explanatory to the extent that the terms indicate its analysis mechanism, which can only increase legal certainty.

All of these reasons led to the application of the “no economic sense” test in the US courts[44] in Aspen Skiing,[45] Matsushita Industrial Co., Ltd. v. Zenith Radio Corp. and Brooke Group,[46] and US v. AMR Corp.[47] The Department of Justice and the Federal Trade Commission also argued for applying it in Trinko.[48] Instead, the Court applied the profit sacrifice test, without naming it, by deciding that the dominant company aimed to sacrifice short-term profits in order to compensate for long term ones.[49] Accordingly, criticisms of that decision are irrelevant to the “no economic sense” test.

European courts have also applied the test on several occasions, although they rarely use the exact terms to describe it. For instance, the Court of Justice implemented it in British Airways[50] and the General Court of the European Union did the same in UFEX[51] and Telefónica, referring to practices as “irrational from an economic point of view.”[52] The test was also applied by national competition authorities in France in British Airways v. Eurostar.[53]

2. Inoperative Criticisms

As we have shown, when dealing with predatory innovation, the “no economic sense” test is the best alternative. For that reason, Herbert Hovenkamp proposes applying it to all cases of this kind.[54] The vast majority of criticisms raised against it fall short.

As for consumer protection. Some have denounced all tests based on analyzing predatory innovation’s effects on the company that implemented it in any given instance.[55] They argue that antitrust law is about addressing the direct effect of practices on consumers[56] and that the “no economic sense” test does not protect consumer welfare.[57] But this criticism is based on false premises. Assessing whether a practice makes economic sense for reasons other than its anti-competitive aspects is the same as protecting consumer welfare because factors favoring consumer welfare align with economically sensible reasons for modifying an existing product. In fact, only two situations exist under the “no economic sense” test:

1. If the practice does not pass the test and thus is deemed to be unlawful, the damage to the consumer is certain since the anti-competitive effects of the practice have driven its implementation;

2. If the practice passes the test and is thus considered to be lawful, it may be:

a. entirely pro-competitive, a situation in which the consumer welfare is necessarily increased;

b. pro and anti-competitive at the same time (the practice is “hybrid”), but the practice is deemed legal as a whole in order not to discourage investments that ultimately benefit the consumer. There is a real danger in micro-analyzing innovation, practice by practice,[58] and applying this test avoids this pitfall to the extent that when practices are considered together a practice may be justified by the presence of another practice that is linked to it.

As for type-II errors.[59] One of the strongest criticisms[60] made to the “no economic sense” test is the courts’ supposed inability to evaluate hybrid practices that produce both positive and negative effects on competition.[61] Situations where a practice is economically justified but also involve anti-competitive features are indeed problematic. Predatory innovation is a good example of this; it would be easy for a company to modify one of its products in a small, pro-competitive way, while also implementing a very effective anti-competitive strategy. In fact, creating an analytical framework for this type of situation is the raison d’être of the “no economic sense” test.[62] This test seeks to avoid balancing the positive and negative effects to the extent that such a process is expensive and uncertain. The ENES test allows for some type-II errors rather than engendering type-I errors that discourage innovation.[63] In short, the “no economic sense” test prefers a result with type-II errors[64] to the possibility of implementing a more intricate test without consistency and accuracy.[65]

As for its simplistic features. Several authors have stressed[66] that some practices could be anti-competitive while being justified from an economic standpoint. This may be the case, for instance, when a company decides not to reveal the existence of several of its patents during a standardization process.[67] In such a case, the firm is implementing an anti-competitive practice although it is economically justified by the fact that it won’t necessitate providing extensive information about its patent—which may be a long and expensive process. In essence, the idea is that the “no economic sense” test is too Manichean,[68] and that a dichotomy between practices that are economically justified and practices that are not is far too removed from economic reality to hold true.[69]

Once again, this criticism seems to disregard the very foundations of the “no economic sense” test. The latter does not advocate for penalizing all practices that do not make economic sense, but only does for those that do not make economic sense without anti-competitive reasons behind them.[70] The example in which a company refuses to provide information to standard organizations is then covered.[71] In fact, let us ask the following question: why condemn the implementation of a practice that a company can justify? Antitrust law is not about imposing on all companies to have an overview of the markets on which they operate. Whenever they can justify a practice, it should be authorized, irrespective of its effects on competition.

As for its manageability. Some have pointed out that the “no economic sense” test was inapplicable when predatory practices involved low costs.[72] This statement is incorrect, however, to the extent that this test condemns practices that exclude competitors, regardless of the costs incurred.[73] Similarly, the criticism related to the inability to implement the test in situations where a company would have mixed intentions must be rejected since this test is indifferent to the subjective intention of the company.[74] One may think, finally, that the test is unsuitable for disruptive innovations in which development makes “no economic sense” because they are, for example, driven by an extravagant philanthropist’s irrational desire. But the “no economic sense” test does not lead to condemning such innovations either if they do not have solely anti-competitive consequences.[75]

As for giving leeway to the judge. The “no economic sense” test is said to create “safe harbors”[76] which would deprive judges of their utility. In this way, the application of the “no economic sense” test could be contravening the spirit of the rule of reason because it would create per se legalities. In reality, applying the “no economic sense” test does not remove the judge from the decision-making process. The judge remains in charge of deciding, according to the law, what constitutes a valid economic justification.[77] Such a role is particularly important as it gives legitimacy to the test as a whole.

As for subjective intent. A distinction should be made between objective and subjective intent. The first—objective intent—is the result of hard evidence, for instance, emails in which the company’s CEO has confirmed his intention to modify a product for the sole purpose of reducing competition.[78] The second one—subjective intent—implies inferring executives’ intentions by analyzing the facts. Some European authors argue for taking subjective intention into account[79] and the Chicago School’s scholars have also done so by stressing that the intention is important[80] when evidence of anti-competitive harm cannot be provided by other means.[81] Courts could adopt three different approaches:[82]

1. not taking subjective intent into account;

2. taking subjective intent into account only when it is proved to be useful and without asking for the anti-competitive intent to be shown in order to condemn a practice;

3. taking subjective intent into account so to establish a violation of antitrust law.

In fact, taking subjective intent into account is championed by Phillip Areeda & Herbert Hovenkamp.[83] Courts have taken subjective intent into account in the C.R. Bard v. M3 Systems[84] case. It was also the position adopted in the Microsoft case.[85] Other cases have followed since then.[86] In fact, several of the tests assessing the legality of unilateral practices take subjective intent into account. The “no economic sense” test does not, which is fortunate for our purposes.[87] In our review, only hard facts and empirical data should be used to establish practices’ illegality. In fact, taking a company’s subjective intent into account is far too unpredictable because it requires frameless control by the judge. Antitrust law is about pursuing economic efficiency. It should lead to imposing penalties only when the evidence of damage is indisputable.[88] Also, because innovation is inherently predatory,[89] taking subjective intention into account makes little sense.

Accordingly, some of the European and North American doctrine on this topic opposes the inclusion of subjective intent.[90] Frank H. Easterbrook, for instance, particularly highlighted the fact that analyzing intention did not allow one to distinguish between true monopolization and attempts to monopolize.[91] He stressed that evaluating a company’s subjective intention was expensive and had the effect of reducing legal certainty.[92] Further, distinguishing anti-competitive intent from pro-competitive intent may be more difficult than it seems. The language used between business executives may wrongly imply an anti-competitive intention. Considering subjective intention could be particularly harmful for small businesses where the language used by the staff may be more explicit than it is in larger corporations where executives are more sensitized to antitrust rules.

As for behavioral economics. Some authors[93] advocate for incorporating “behavioral economics” according to which agents sometimes show a bounded rationality.[94] But the “no economic sense” test wisely rejects any consideration of behavioral economics.[95] No one would argue that agents are rational in every situation, and further, behavioral economics lacks empirical evidence to be integrated into the decision-making process.[96] Studies of behavioral economics fail, to the best of our knowledge, to reveal consistent trends that might be integrated into the rule of law.[97] It must therefore be set aside—as least for ex ante purposes—until it becomes more sophisticated.

As for its long-run effects. Professor Salop highlighted that the “no economic sense” test could lead to legalizing practices that provide an immediate benefit to consumers, such as improving a product, but eliminate competition over the long term, for instance, by removing product compatibility.[98] This would have the effect of increasing prices and thus harming consumers.[99] Such an example, however, assumes that the dominant firm is willing to reduce the usefulness, and therefore the value, of its product by removing its compatibility with other products. This hypothesis also presumes that the company enjoys an absolute monopoly power, because, otherwise, it would be safe to say that competition would actually push it towards compatibility with the aim of creating a network effect.[100] Plus, in the absence of a monopoly power, eliminating compatibility could lead consumers to adopt competing products.[101]

This hypothesis assumes, furthermore, that the dominant firm is present on both the upstream market, concerned by the changes, and a downstream market, where compatible products are. If this is not the case, removing compatibility would be illogical.[102] The example presumes, also, that the market conditions will stay unchanged. It also excludes dynamic efficiency considerations. Indeed, it is required for the dominant firm to know that its market shares will remain at a constant level, otherwise, it may not recoup its losses.[103] With high-tech markets, where market shares are evolving very quickly, it seems unlikely that companies would take such a risk. Disruptive technologies appear abruptly and create new markets, which very often eliminate all possibilities for “locking” the consumer into a market that no longer exists.[104] This example presumes, lastly, that it is better for consumers to have compatible products of lower quality than incompatible products with a higher quality. These different assumptions put together tend to prove the ineffectiveness of this criticism.

As for empirical evidence. Part of the scholarship on this topic notes that the “no economic sense” test excludes empirical evidence on the effects of practices.[105] It seems, conversely, that it allows a fair balance between legal certainty, on the one hand, and the need to consider empirical evidence in order to improve the analysis on the other.[106] If new empirical evidence shows that a practice, previously legal, is in fact having anti-competitive effects, the “no economic sense” test will lead to condemn it. The contrary is true as well. A practice seen as illegal for years may become permissible if new economic evidence is adduced by the company.

C. How to Improve the “No Economic Sense” Test

We have shown that the “no economic sense” test is particularly efficient for analyzing non-price strategies such as predatory innovation. And yet, as explained, applying the test as it was originally designed implies a trade-off: creating some type-II errors in exchange for legal certainty. Although this could be defended, this article intends to demonstrate how this trade-off may be avoided by applying an improved version of the “no economic sense” test, which would maintain legal certainty while avoiding any type of legal errors.

The “no economic sense” test might be improved, but it is important not to create a new version that would have high implementation costs. While keeping this objective in mind, we propose an “enhanced version of the ‘no economic sense’ test,” which answers criticisms related to the underinclusivity of the test and potential difficulties with applying the test when pro and anti-competitive modifications coexist.[107] Two situations may thus be distinguished, one in which product changes are separable from one another and one in which the changes cannot be isolated.

When the changes may be separated from each other. Unlike innovations in the traditional sectors of the economy, innovations developed in high-tech markets often have the advantage of being readable[108] to the extent that it is possible to analyze each line of the source code.[109] Whether innovations introduced in high-tech sectors intend to create a new software structure, to add new features to a product, to facilitate product use, or to increase its security, most of these objectives are achieved by the means of one or more lines of code.[110] The purpose of each of these lines is clearly identifiable.[111]

The software (or product) as a whole is thus distinguished from each of the features that can be adjusted individually.[112] It may also be distinguishable from its updates if the introduction of new software always benefits to the consumer,[113] some of its updates may play against its interest. Accordingly, some authors have raised[114] the point that predatory innovation is more easily identifiable on high-tech markets than others.[115]

Consequently, the “no economic sense” test may be improved by identifying the purpose of every update of a product, and more specifically, each element of the update. Litigious situations where pro and anti-competitive effects are recorded simultaneously tend to disappear to the extent that each of these effects may be separated from the others. As a result, applying the “no economic sense” test is even more relevant. It is not for the judge to interfere with the company’s management and/or express disapproval with the strategic choices so to punish companies for not having implemented “less anti-competitive”[116] practices. Rather, the judge is tasked with punishing actors that implement practices that could have been implemented without harming the consumers’ well-being.

Applying the enhanced version of the “no economic sense” test will have the following structure: in the first instance, the complainant will have to establish the injury he suffered, and in response, the defendant will try to justify each of the changes made to the product. The judge will guarantee the proper conduct of this analysis and will identify all product modifications that have a solely anti-competitive effect. This role is crucial. Consider the situation where a company decides to eliminate its products’ compatibility with those of its competitors. Imagine that the dominant firm is justifying this change by showing that the new version of its product allows geo-location. In this example, the company has an economic justification—adding a new function to its product—but because it is unrelated to the removal of compatibility, doing so is anti-competitive and should be condemned. The judge then has the responsibility to reject all economic justifications made in bad faith. When doing so, he ensures that companies cannot escape liability, as they might under the traditional “no economic sense” test, by presenting “ghost” justifications[117] unrelated to their practices.

Rules for eligibility of evidence in these inquiries can be inspired from the Daubert criteria,[118] which fit in line with the work of Karl Popper.[119] In its famous ruling, the Supreme Court held that pursuant to Rule 702 of the Federal Rules of Evidence governing expert testimony, only those using recognized “scientific method[s]” are to be taken into account. The court admitted the need to “filter” the scientific evidence produced in court. A similar filter should be implemented when applying the “no economic sense” test to invalid economic justifications, evidence or, expert reports that do not have a scientific value but have the sole purpose of obscuring the procedure.

When the changes are indivisible. Although the changes made to a technological product are generally separable from each other, that is not always the case. Let us imagine a situation in which a dominant firm decides to remove the compatibility of its products with the specific aim of increasing their safety. It would be possible to track what changes in the coding led to elimination of product compatibility. However, if the economic justification provided by the company—namely increasing products’ safety—is directly linked to the compatibility removal, the practice will be considered pro-competitive.[120] In this situation, a single line of code is added (or removed) to delete product compatibility, but it produces two consequences that cannot be separated. Imagine an alternative situation in which a company decides to increase the execution speed of its software by using Wi-Fi rather than Bluetooth. In addition, suppose that, for security purposes, all compatible devices use Bluetooth rather than Wi-Fi. Once again, the judge could easily track which lines of code have enabled the addition of new functionality, on the one hand, and the removal of product compatibility with Bluetooth on the other. Yet, the practice must be deemed pro-competitive because increasing the speed of the product is a valid economic justification caused by replacing the Bluetooth functionality. In this case, even though several lines of code are modified, they cannot be analyzed separately.

Accordingly, the judge must (1) ensure that only valid economic justifications are brought by the parties and (2) determine which modifications may be separated from each other.[121] These two steps are the keystones of a decision process free of judicial errors. This reasoning seeks to encourage investments in the short term and allow continued sophistication of antitrust law by better matching business justifications. In order words, it is about creating the smallest safe harbor possible—when practices cannot be separated—so that antitrust law is effective. It allows, at the same time, a drastic increase in the level of legal certainty by providing an understandable legal framework.

D. Modeling of the Proposed Test

The enhanced version of the “no economic sense” test is comprised of four steps. Together, the steps ensure a legal analysis that detects predatory practices as precisely as possible.

Step 1: Does the practice implemented by the dominant company tend to reduce or eliminate competition? If the answer is negative, the practice is deemed to be legal. If the answer is positive, the analysis moves on the second step.

Step 2: Does the practice provide a benefit to the dominant firm solely because of its tendency to reduce or eliminate competition?[122] If the answer is positive, the practice must be condemned. If the answer is negative, the analysis moves on the third step.

Step 3: If the judge suspects that some of the effects created by the practice are pro and anti-competitive, he must determine whether it is possible to distinguish between the modifications made to the product and their economic justifications. If the answer is negative, the practice is deemed to be legal as a whole. If the answer is positive, the analysis moves on the last step.

Step 4: Modifications that make economic sense for reasons that are not anti-competitive must be allowed, while modifications that only tend to reduce or eliminate competition must be condemned. The penalties should be proportional to the intensity/number of anti-competitive practices.

This test, by avoiding judicial errors, ensures short-term efficiency by raising the level of legal certainty for companies while eliminating practices that, without any doubt, are predatory. Moreover, allowing courts to analyze practices related to product modifications will have long-term effect of improving their expertise. Finally, it must be noted that some practices deemed to be legal will be proved to be anti-competitive in a near future. The opposite is true as well.

This graphical representation summarizes the 4 steps detailed beforehand.[123]

Appendix #1 – A reassessment of the major cases related to predatory innovation

A reassessment of the major cases related to predatory innovation
Name & date of the case	IBM (1979)	Berkey Photo v. Eastman Kodak (1979)	CR Bard v. M3 Systems (1998)	United States v. Microsoft Corp US (2001)	European Commission v. Microsoft Corp EU (2004)
Outcome found by the court	No conviction: The product modification is not “unreasonably anti-competitive”	No conviction: Comparing the quality of two devices is not a conclusive evidence	Conviction: the new product is easier to use, but “the real reason” of the modification is anti-competitive	Conviction: Deleting the possibility to remove a software from the operating system (practice n1) and programing the operating system so to bug when certain files related to Internet Explorer are deleted (practice n3) has no pro-competitive justification No conviction: Programing the operating system so to override the consumer choice to use another software than Internet Explorer (practice n2) is technically justified by Microsoft No conviction: Windows’s Java is more efficient than the Sun’s Java	Conviction: The operating system may have properly functioned even in the absence of Windows Media Player
Application of the enhanced version of “no economic sense” test	No conviction: The improvements may not be separated from the anti-competitive effects	Conviction: Removing compatibility is unrelated from improving the camera	No conviction: Improving the needle system may not be done without removing compatibility	Conviction: Practices n1 and n3 made economic sense only because they produced an anti-competitive effect Inability to judge: No information is available on the separability of the improvement with the compatibility removal No conviction: Microsoft’s Java is better and Microsoft’s had no duty whatsoever to ensure the compatibility of new products with those of its competitors	No conviction: The integration of WMP to the operating system is not anti-competitive in itself

Name & date of the case

HDC Medical v. Minntech Corporation (2007)

Intel US (2010)

Allied c. Tyco (2010)

iPod iTunes litigation (2014)

Outcome found by the court

No conviction: Minntech provided an economic justification for its product modification that HDC could not prove to be false

Mutual agreement: Intel has agreed to amend its practices for the future

No conviction: The new design is an improvement establishing the superiority of the new product

No conviction: iTunes 4.7: this version of iTunes is a real innovation in that it increases the security of the software

No conviction: iTunes 7.0: This version of iTunes is also a real innovation in that it increases the security of the software

Application of the enhanced version of “no economic sense” test

No conviction: removing the product compatibility is inseparable from the improvement made to the product

Inability to judge: lack of information on the possibility to distinguish between the improvement and the deleting of compatibility

No conviction: Removing the product compatibility is the reason explaining the improvement

Inability to judge: The documents allowing to analyze whether changes made to iTunes 4.7 were justified for technical reasons are sealed

Inability to judge: The documents allowing to analyze whether changes made to iTunes 7.0 were justified for technical reasons are sealed

* Thibault Schrepel (Ph.D., LL.M.) is a research associate at the Sorbonne-Business & Finance Institute, University of Paris I Pantheon-Sorbonne. He leads the “innovation” team of Rules for Growth and is the Revue Concurrentialiste creator. His personal website is www.thibaultschrepel.com. Your comments on this article are more than welcome (thibaultschrepel@me.com). I would like to thank the editors of the NYU Journal of Intellectual Property & Entertainment Law for their consstructive editing.

[1] Type-I errors, also called “false positives,” occur when a court—or a competition authority—wrongly condemns a company for having implemented practices which, in fact, are not anti-competitive. On the contrary, type II errors, also known as “false negatives,” occur in the absence of condemnation of a practice that is anti-competitive and should therefore have been condemned.

[2] For an overview, see Michael L. Katz & Howard A. Shelanski, “Schumpeterian” Competition and Antitrust Policy in High-Tech Markets, 14 Cᴏᴍᴘᴇᴛɪᴛɪᴏɴ 47 (2005).

[3] OECD Policy Roundtables, Predatory Foreclosure, DAF/COMP(2005)14, at 48-59.

[4] Predatory innovation, which we previously identified as being one of the key issues in terms of high-tech markets, illustrates our point. See Thibault Schrepel, Predatory Innovation: The Definite Need for Legal Recognition, SMU Sᴄɪ. & Tᴇᴄʜ. L. Rᴇᴠ. (forthcoming 2018); see also, Thibault Schrepel, Predatory innovation: A response to Suzanne Van Arsdale & Cody Venzke, Hᴀʀᴠ. J.L. & Tᴇᴄʜ. Dig. (2017), http://jolt.law.harvard.edu/digest/digest-note-predatory-innovation.

[5] OECD Policy Roundtables, Competition on the Merits, DAF/COMP(2005)27, at 23.

[6] Id.

[7] Id.

[8] Case COMP/C-3/37.792—Sun Microsystems, Inc. v. Microsoft Corp., Comm’n Decision (Apr. 21, 2004), available at http://ec.europa.eu/competition/antitrust/cases/dec_docs/37792/37792_4177_1.pdf [hereinafter “Microsoft Decision”].

[9] The OECD has recently devoted several roundtables to the subject. See OECD Policy Roundtables, Algorithms and Collusion, DAF/COMP(2017)4; see also OECD Policy Roundtables, Big Data: Bringing Competition Policy to The Digital Era, DAF/COMP(2016)14. Most of the world-leading competition authorities have contributed to them too.

[10] See generally Nicholas S. Smith, Innovative Breakthrough or Monopoly Bullying? Determining Antitrust Liability of Dominant Firms in Exclusionary Product Redesign Cases, 84 Tᴇᴍᴘ. L. Rᴇᴠ. 995 (2012) (explaining antitrust law objectives).

[11] Id. at 1016.

[12] As a reminder, type-I errors, also called “false positives,” occur when a court—or a competition authority—wrongly condemns a company for having implemented practices which, in fact, are not anti-competitive.

[13] See Smith, supra note 10, at 1018.

[14] See John B. Kirkwood & Robert H. Lande, The Fundamental Goal of Antitrust: Protecting Consumers, Not Increasing Efficiency, 84 Nᴏᴛʀᴇ Dᴀᴍᴇ L. Rᴇᴠ. 191 (2008); see also Nicolas Petit, European Competition Law, 143 (Montchrestien, 2012) (text in French) (“the European competition law seems to have decided in favor of this theory.”).

[15] We argued that the Neo-Chicago School should seek that goal. See Thibault Schrepel, Applying the Neo-Chicago School’s Framework To High-Tech Markets, Rᴇᴠᴜᴇ Cᴏɴᴄᴜʀʀᴇɴᴛɪᴀʟɪsᴛᴇ (May 6, 2016), https://leconcurrentialiste.com/2016/05/06/neo-chicago-school-high-tech-markets. Two authors further developed the premises of that school of thought. See David S. Evans & A. Jorge Padilla, Designing Antitrust Rules for Assessing Unilateral Practices: A Neo-Chicago Approach, 72 U. Cʜɪ. L. Rᴇᴠ. 27, 33 (2005); see also Thomas A. Lambert & Alden F. Abbott, Recognizing the Limits of Antitrust, 11 J. Cᴏᴍᴘ. L. & Eᴄᴏɴ. 791, 793 (2015) (“Neo-Chicagoans reason that ‘market self-regulation is often superior to government regulation . . .’”).

[16] See Herbert Hovenkamp, Antitrust and Innovation: Where We Are and Where We Should Be Going, 77 Aɴᴛɪᴛʀᴜsᴛ L.J. 749, 751 (2011) (“[T]he gains to be had from innovation are larger than the gains from simple production and trading under constant technology.”).

[17] OECD Policy Roundtables, Two-Sided Markets, DAF/COMP(2009)20, 14 (“Firms sometimes use non-price strategies, such as exclusive contracts and product tying, to limit competition or foreclose the market to rivals. These practices have been at the centre of several important competition cases involving two-sided markets.”).

[18] Mark S. Popofsky, Defining Exclusionary Conduct: Section 2, the Rule of Reason, and the Unifying Principle Underlying Antitrust Rules, 73 Aɴᴛɪᴛʀᴜsᴛ L.J. 435, 477 (2006); see Frank H. Easterbrook, Cyberspace and the Law of the Horse, 1996 U. Cʜɪ. Legal F. 207, 215 (1996) (explaining the necessity to create a straightforward legal standard).

[19] OECD Policy Roundtables, supra note 5 , at 23.

[20] Id. This study of several hundred pages is extremely rich and remains the reference on the law.

[21] Id. at 23.

[22] See John Temple Lang, Comparing Microsoft and Google: The Concept of Exclusionary Abuse, 39 Wᴏʀʟᴅ Cᴏᴍᴘᴇᴛɪᴛɪᴏɴ & Eᴄᴏɴ. Rev. 5, 5 (2016).

[23] In terms of predatory innovation, an author already underlined in 1988 that all decisions dealing with the subject had little coherence, and that remains unchanged to this day. See Ross D. Petty, Antitrust and Innovation: Are Product Modifications Ever Predatory, 22 Sᴜffᴏʟᴋ U. L. Rᴇᴠ. 997, 1028 (1988) (“The decisions to date offer little guidance on how to distinguish a predatory product innovation, if such exists, from a legitimate innovation.”).

[24] See Hillary Greene, Muzzling Antitrust: Information Products, Innovation and Free Speech, 95 B.U. L. Rᴇᴠ. 35, 72 (2015) (“Unfortunately, the courts have failed to carry over important nuances from the articulation of the legal theory of the anticompetitive product design to that theory’s practical application.”).

[25] Jonathan M. Jacobson & Scott A. Sher, “No Economic Sense” Makes No Sense for Exclusive Dealing, 73 Aɴᴛɪᴛʀᴜsᴛ L.J. 779, 782 (2006); see also Herbert Hovenkamp, The Harvard and Chicago Schools and the Dominant Firm, in How the Chicago School Overshot the Mark: The Effect of Conservative Economic Analysis on US Antitrust (Robert Pitofsky ed., Oxford Univ. Press, 2008).

[26] Jonathan B. Baker, Preserving a Political Bargain: The Political Economy of the Non-interventionist Challenge to Monopolization Enforcement, 76 Aɴᴛɪᴛʀᴜsᴛ L.J. 605, 616 (2010).

[27] Gregory J. Werden, The "No Economic Sense" Test for Exclusionary Conduct, 31 J. Corp. L. 293, 301 (2006).

[28] Id.

[29] Id.

[30] OECD Policy Roundtables, supra note 5, at 28; see also Werden, supra note 27, at 301.

[31] Gregory J. Werden, Identifying Exclusionary Conduct Under Section 2: The “No Economic Sense” Test, 73 Aɴᴛɪᴛʀᴜsᴛ L.J. 413, 417 (2006).

[32] Id.

[33] Janusz Ordover & Robert Willig, An Economic Definition of Predation: Pricing and Product Innovation, 91 Yale L.J. 8, 11 (1981).

[34] Werden, supra note27 , at 304.

[35] See Richard J. Gilbert, Holding Innovation to an Antitrust Standard, 3 Cᴏᴍᴘᴇᴛɪᴛɪᴏɴ Pᴏʟ’ʏ Iɴᴛ’ʟ 47, 77 (2007).

[36] Mark S. Popofsky, Defining Exclusionary Conduct: Section 2 The Rule of Reason, and the Unifying Principle Underlying Antitrust Rules, 73 Aɴᴛɪᴛʀᴜsᴛ L.J. 435, 446 (2006); see Transamerica Computer Co. v. International Bus. Machs. Corp., 698 F.2d 1377 (9th Cir. 1983) (in which the judges agreed that “IBM had no further need for the selector[,]” although “the design choice [was] unreasonably restrictive of competition”); see also Computer Prods. v. IBM Corp., 613 F.2d 727 (9th Cir. 1979); In re IBM Peripheral Devices EDP, 481 F. Supp. 965 (N.D. Cal. 1979) (in which the court even specified that a change in the technical aspects “was adopted by IBM because it was a product improvement, and even if its effect was to injure competitors, the antitrust laws do not contemplate relief in such situations.”)

[37] For a definition of the “sham test,” see Gilbert, supra note 35, at 61.

[38] Id. at 62.

[39] Id. An author offered an alternative test in which the court has analyze whether the practice restricted innovation in the concerned industry. See Robert E. Bartkus, Innovation Competition Beyond Telex v. IBM, 28 Stan. L. Rev. 285, 327 (1976).

[40] Thomas J. Campbell, Predation and Competition in Antitrust: The Case of Nonfungible Goods, 87 Colum. L. Rev. 1625, 1626 (1987) (“[P]redatory conduct can be distinguished from economically beneficial conduct such as innovation, so that antitrust law may effectively impose sanctions on such behavior.”).

[41] Steven C. Salop, Strategy, Predation and Antitrust Analysis, Bureau of Economics & Bureau of Competition Joint Report, 302 (Sept. 1981) (“We find that antitrust scrutiny of product innovations is not a priori unwarranted. Surprisingly, we find that even genuine innovations (that is, new products that in some regards are superior to existing ones in the eyes of both engineers and consumers) can in fact be anticompetitive.”). This position differs from the one held by the Supreme Court. United States v. Grinnell Corp., 384 US 563 (1966). (The Supreme Court held that having a dominant position because of a superior product is not to be condemned: “the offense of monopoly under § 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.”); see Mark Furse, United States v. Microsoft Technology Antitrust, 13 Int’l Rev. L. Computers & Tech. 237, 241 (1999).

[42] Daniel A. Crane, Legal Rules for Predatory Innovation, 2013 Concurrences 4, 5 (2013).

[43] Gregory J. Werden, The “No Economic Sense” Test for Exclusionary Conduct, 31 J. Corp. L. 293, 305 (2006).

[44] This test had been applied more regularly in the United States than in Europe.

[45] Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).

[46] Matsushita Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574 (1986); see also Brief of the United States and the Appellees States Plaintiffs at 48, United States v. Microsoft Corp., 253 F.3d 34 (DC Cir. 2001) (Nos. 00-5212, 00-5213); Brief for the United States at 33-34, United States v. Dentsply International, Inc., 399 F.3d 181 (3d. Cir. 2005) (No. 03-4097); see also R. Hewitt Pate, Assistant Att’y Gen, The Common Law Approach and Improving Standards for Analyzing Single Firm Conduct, Speech at the 30th Annual Conference on International Antitrust Law and Policy (Oct. 23, 2003) (available at https://www.justice.gov/atr/speech/common-law-approach-and-improving-standards-analyzing-single-firm-conduct).

[47] See US v. AMR Corp., 335 F.3d 1109 (10th Cir. 2003).

[48] See Brief for the United States Federal Trade Commission and Amici Supporting Petitioner, Verizon Communications, Inc. v. Trinko, 540 U.S. 398 (2004) (No. 02-682). That probably explains why some authors have argued that the Supreme Court actually implemented the test in Trinko. But see U.S. Dep’t Of Justice, Competition And Monopoly. Single-Firm Conduct Under Section 2 Of The Sherman Act 40 (2008) (“Similarly, the Trinko Court, while not expressly adopting the no economic-sense test, identified the Aspen Skiing defendant’s ‘willingness to forsake short-term profits to achieve an anticompetitive end’ as a key element of the liability finding.”).

[49] See Trinko, 540 U.S. at 409-416.

[50] Case C-95/04P, British Airways plc v. Comm’n, 2007 E.C.R 1-2331, para. 126.

[51] Case T-60/05, Union Fraçaise de l’Express (Ufex) v. Comm’n, 2007 E.C.R. 3397.

[52] Case T-336/07, Telefonica and Telefonica de España v. Comm’n, not yet reported, para. 139.

[53] Conseil de la concurrence, Eurostar, Decision 07-D-39 (23 November 2007).

[54] See Herbert Hovenkamp, Post-Chicago Antitrust: A Review and Critique, 2001 Colum. Bus. L. Rev. 257, 332 (2001).

[55] Steven C. Salop, Exclusionary Conduct, Effect on Consumers, and the Flawed Profit-Sacrifice Standard, 73 Antitrust L.J. 311, 331 (2006); see Alan J, Meese, Debunking the Purchaser Welfare Account of Section 2 of the Sherman Act: How Harvard Brought Us a Total Welfare Standard and Why We Should Keep It, 85 N.Y.U. L. Rev. 659, 736 (2010).

[56] Alan J. Meese, Section 2 Enforcement and the Great Recession: Why Less (Enforcement) Might Mean More (GDP), 80 Fordham L. Rev. 1633, 1641 (2012).

[57] Jonathan Jacobson, Scott Sher & Edward Holman, Predatory Innovation: An Analysis of Allied Orthopedic v. Tyco in the Context of Section 2 Jurisprudence, 23 Loy. Consumer L. Rev. 1, 2-4 (2010).

[58] Professor Crane underlines that, in some situations, a case-by-case analysis may be insufficient, see Daniel A. Crane Does Monopoly Broth Soup Make Bad?, 76 Antitrust L.J. 663, 663 (2010) (“[D]etermining legality on a contract-by-contract or practice-by-practice basis would systematically lead to false negatives”).

[59] Type-II errors, also called “false negatives,” occur whenever the court—or a competition authority—rules not to convict a company that has implemented anti-competitive practices.

[60] Other critiques are negligible. See OECD Policy Roundtables, supra note 5, at 29: (“Finally, the NES test would seemingly require a dominant firm that owns a valuable property right to sell or license its property to any rival who needs it to survive and offers a profitable fee for it – even if the dominant firm has never sold or licensed it to anyone. That could damage the incentives to develop or acquire the property right in the first place.”).

[61] Id. at 28; see U.S. Dep’t of Justice, supra note 48, at 43; see also, Bonny E. Sweeney, An Overview of Section 2 Enforcement and Developments, 2008 Wisc. L. Rev. 231, 238 (2008).

[62] See generally Werden, supra note 31.

[63] Type-II errors created by the application of this test will be uncovered after several years, when the strength of the anti-competitive effects will be revealed. See U.S. Dept. of Justice, supra note 48, at 43. On the link between type-I errors and the willingness to invest, see Nicolas Petit, From Formalism to Effects? The Commission’s Communication on Enforcement Priorities in Applying Article 82 EC, 32 World Competition & Econ. Rev. 486, 486 (2009).

[64] Jacobson, Sher & Holman,supra note 57, at 30; contra Popofsky, supra note 18, at 443 (2006).

[65] U.S. Dept. of Justice, supra note 48, at 40. On the applicability of the test by jurors, see Bartkus, supra note 39, at 329.

[66] See Hovenkamp, supra note 25 at 115.

[67] Id.

[68] See Jacobson, Sher & Holman, supra note 57, at 7.

[69] Hovenkamp, supra note 25, at 115.

[70] See generally Werden, supra note 27.

[71] See Hovenkamp, supra note 25, at 115.

[72] Jacobson, Sher & Holman, supra note 57; see also, Jonathan B. Baker, Has Preserving Political Bargain: The Political Economy of the Non-Interventionist Challenge to Monopolization Enforcement, 76 Antitrust L.J. 605, 613 (2010). Applying the “no economic sense” test implies determining what is meant by the notion of “cost.” See Michael A. Salinger, The Legacy of Matsushita: The Role of Economics in antitrust Litigation, 38 Loy. U. Chi. L.J. 475, 486 (2007). But the notion of “cost” also is integrated into all other tests. Therefore, it is not specific to the “no economic sense” test.

[73] Werden, supra note 31.

[74] Id. at 426.

[75] Werden, supra note 31.

[76] Gilbert, supra note 35, at 61; see also, Hovenkamp, supra note 54, at 329.

[77] John M. Newman, Procompetitive Justifications in Antitrust Law, 48 Ind. L.J. (forthcoming 2018).

[78] Pinar Akman, The Role of Intent in the EU Case Law on Abuse of Dominance, 39 Eur. L. Rev. 316, 318 (2014).

[79] Id. at 317; see also Tetra Pak II, Mar. 19, 1991, 1991 O.J. L 72.

[80] The authors advocating for giving a role to subjective intent underline that economic instruments do not cover the issue of innovation. They do not explain, however, how intention does. See Marina Lao, Reclaiming a Role for Intent Evidence in Monopolization Analysis, 54 Am. U. Rev. 151, 181 (2004) (“[E]conomic tools cannot predict effects on innovation.”).

[81] Id. Addressing the Chicago school learnings in generic terms is somewhat misleading insofar as it was crossed by different sensibilities. The first Chicago School was more interventionist than its second version.

[82] Smith, supra note 10, at 1022.

[83] See Salop, supra note 55, at 355.

[84] C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340 (Fed. Cir. 1998).

[85] Id., at 1372.

[86] Lao, supra note 80, at 153-54.

[87] This test takes objective intent—not subjective—into consideration. On the distinction between the two, see Ronald A. Cass & Keith N. Hylton, Antitrust Intent, 74 S. Cal. L. Rev. 657 (2001). See also Akman, supra note 78, at 317.

[88] This is one of Joshua D. Wright’s main contributions to the Federal Trade Commission. See Thom Lambert, Josh Wright and the Limits of Antitrust, Truth On The Market (August 26, 2015), https://truthonthemarket.com/2015/08/26/josh-wright-and-the-limits-of-antitrust [https://perma.cc/QL7B-V4NG].

[89] According to Frank H. Easterbrook, “Firms want (intend) to grow; they love to crush their rivals; indeed, these desires are the wellsprings of rivalry and the source of enormous benefit for consumers . . . the same elements of greed appear whether the entrepreneur wants to please customers or stifle rivals.” Frank H. Easterbrook, Monopolization: Past, Present, Future, 61 Antitrust L.J. 99, 102-03 (1992).

[90] See Akman, supra note 78, at 317.

[91] See A.A. Poultry Farms, Inc. v. Rose-Acre Farm, Inc., 881 F.2d 1396, 1402 (7th Cir. 1989).

[92] Lao, supra note 80, at 170.

[93] On behavioral economics growing popularity, see Thibault Schrepel, “Behavioral Economics” in US (Antitrust) Scholarly Papers, Concurrentialiste (April 23, 2014), https://leconcurrentialiste.com/2014/04/23/behavioral-economics-in-u-s-antitrust-scholarly-papers. Also, for a comparative study of how to incorporate behavioral economics, see Philipp Hacker, More Behavioral vs. More Economic Approach: Explaining the Behavioral Divide Between the United States and the European Union, 39 Hastings Int’l & Comp. L. Rev. 355, 355 (2016).

[94] Michal S. Gal & Spencer Weber Waller, Antitrust in High-Technology Industries: A Symposium Introduction, 8 J. Comp. L. & Econ. 449, 456 (2012).

[95] For a definition, see Joshua D. Wright & Judd E. Stone II, Misbehavioral Economics: The Case Against Behavioral Antitrust, 33 Cardozo L. Rev. 1517, 1530 (2012) (“[A]ttempts to address irrational human behavior in light of limited cognitive capacity and inherent cognitive failings.”); see also, Allan L. Shampine, The Role of Behavioral Economics in Antitrust Analysis, 27 Antitrust 65, 65 (2013).

[96] When answering the question “Are you pro or against the use of behavioral economics?”, 84.13% say to be in favor. See Schrepel, supra note 93.

[97] Doctrinal principles often are the excuse to justify applying a certain policy. For instance, the “error-cost” analysis justifies creating type-II errors so as to avoid type-I errors. Behavioral studies pursue a political objective as well as more interventionist theories. Wright & Stone, supra note 95; see also Alan Devlin & Michael Jacobs, The Empty Promise of Behavioral Antitrust, 37 Harv. J.L. & Pub. Pol’y 1009, 1057 (2014).

[98] Salop, supra note 55, at 322.

[99] Werden, supra note 31, at 427.

[100] Daniel F. Spulber, Unlocking Technology: Antitrust and Innovation, 4 J. Comp. L. & Econ. 915, 948 (2008).

[101] Michael L. Katz & Carl Shapiro, Antitrust in Software Markets, in Competition, Innovation And The Microsoft Monopoly: Antitrust In The Digital Marketplace 29, 66 (Jeffrey A. Eisenach & Thomas M. Lenard eds., 1999).

[102] Christopher S. Yoo & Daniel F. Spulber, Antitrust, the Internet, and the Economics of Networks, in The Oxford Handbook of International Antitrust Economics, Volume 1 380, 390 (Roger D. Blair & D. Daniel Sokol eds., 2014).

[103] Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 589–90 (1986).

[104] Gönenç Gürkaynak et al., Antitrust on the Internet: A Comparative Assessment of Competition Law Enforcement in the Internet Realm, 14 Bus. L. Int’l 51, 78 (2013).

[105] William J. Kolasky, Jr., Reinvigorating Antitrust Enforcement in the United States: A Proposal, 22 Antitrust 85, 89 (2008).

[106] Jacobson & Sher, supra note 25, at 785.

[107] The test may be used to protect consumers while protecting competition through innovation. This is the objective assigned by John McGaraghan to antitrust law: “By changing the focus, the courts can provide more meaningful protection for consumers by protecting competition through innovation.” See John McGaraghan, A Modern Analytical Framework for Monopolization in Innovative Markets for Products with Network Effects, 30 Hastings Comm. & Ent. L.J. 179, 200-01 (2007).

[108] Michael J. Madison, Law as Design: Objects Concepts and Digital Things, 56 Case W. Res. L. Rev. 381, 396 (2005). One author notes the differences between the “source code” and “object code,” the first being set by humans while the second refers to the processing of data by the computer. See John M. Newman, Anticompetitive Product Design in the New Economy, 39 Fla. St. U. L. Rev. 681, 695 (2012); see also Greene, supra note 24, at 85 (2015) (“If one can establish that the conduct at issue can be isolated to a portion of the redesign that is functionally separable from other segments of the redesign, a court may narrow its focus accordingly. In so doing, an innovation-based defense would then require the defendant to demonstrate the existence and size of the innovation associated with the component, rather than rely on innovation that characterizes the redesign as a whole.”).

[109] “In computing, source code is any collection of computer instructions, possibly with comments, written using a human-readable programming language, usually as plain text. The source code of a program is specially designed to facilitate the work of computer programmers, who specify the actions to be performed by a computer mostly by writing source code. The source code is often transformed by an assembler or compiler into binary machine code understood by the computer. The machine code might then be stored for execution at a later time. Alternatively, source code may be interpreted and thus immediately executed.” See Wikipedia, Source code, https://en.wikipedia.org/wiki/Source_code.

[110] According to Wikibooks, coding is “the process of designing, writing, testing, debugging / troubleshooting, and maintaining the source code of computer programs.” See Wikibooks, Introduction to Software Engineering/Implementation, https://en.wikibooks.org/wiki/Introduction_to_Software_Engineering/Implementation.

[111] As it was underlined by Greene, supra note 24, at 85 (“In some cases a question arises as to the scope of the redesign at issue. More specifically, is the redesign more appropriately analyzed as a bundle of relatively unrelated innovations, or should it be analyzed as an integrated whole?”); see also Newman, supra note 108, at 712-714 (“Since the elements and functionality of a software update are relatively easily conceived of as separate from the elements of the base software program affected by the update, courts are more competent to address their effects on competition than the same courts would be in the stereotypical product-design case . . . [A]lleged innovative justifications are much more capable of judicial scrutiny in code-based product markets than in traditional, physical product markets.”).

[112] Newman, supra note 108, at 712 (“And as a result, even if a software update contains multiple design changes, the lines of code that dictate functions within the update are separable, allowing direct analysis of what those respective functions are.”).

[113] On the per se legality when introducing a new product, see Werden, supra note 31, at 414 (noting that conduct such as introducing a new product should not be subjected to any test for legality for such conduct can derive significant consumer benefits).

[114] Newman, supra note 108, at 711 (“[S]ections of code perform specific functions and are separable from surrounding sections, again facilitating the ability of courts to discern between exclusionary and innovative design elements.”).

[115] See Jay Dratler, Microsoft as an Antitrust Target: IBM in Software?, 25 Sw. U. L. Rev. 671, 698 (1996) (underlining the difficulty of analyzing the practices other than those whose sole effect is reducing competition).

[116] See Communication from the Commission – Guidance on the Commission’s Enforcement Priorities in Applying Article 82 of the EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings, COM (2009) 45 final (Feb. 24, 2009) (showing that the European Commission uses the term “less anti-competitive”).

[117] Werden, supra note 27, at 305.

[118] Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993).

[119] Karl R. Popper, Conjectures and Refutations: The Growth of Scientific Knowledge (1962).

[120] If this was not the case, this would entrust the judge to interfere with companies’ decision-making, which we have previously rejected.

[121] David A. Heiner, Assessing Tying Claims in the Context of Software Integration: A Suggested Framework for Applying the Rule of Reason Analysis, 72 U. Chi. L. Rev. 123, 144 (2005); see also United States v. Microsoft Corp., 253 F.3d 34, 87 (D.C. Cir. 2001) (the court admits that “bundling can also capitalize on certain economies of scope. A possible example is the ‘shared’ library files that perform OS and browser functions with the very same lines of code and thus may save drive space from the clutter of redundant routines and memory when consumers use both the OS and browser simultaneously”).

[122] It should be noted that several decisions dealing with predatory innovation have insisted on the fact that the dominant firm had maintained the old version of the product on the market, alongside with the new one. They have concluded, accordingly, that related practices were not to be condemned. The enhanced version of the “no economic sense” test does not take direct account of the existence of these two offers but it should be emphasized that the maintenance on the market of the product version as it existed before the various changes tends to show that the company intended to improve its product. Companies are hoping for consumers to buy the newest version because it is better, but they remain free not to do so. In short, the presence of the old and the new version does not constitute a proof in itself of the pro-competitive nature of the modifications made to the product, but it presumes a good-will that the courts will have to investigate before ruling. In addition, it should be noted that the “no economic sense” test takes place in two steps, the first being the demonstration of the anti-competitive nature of the practice which will be complicated to show if the old version of the product still is on the market.

[123] Available in a wide format at the following address: https://perma.cc/97A2-4Q2L.

[124] See European Commission Press Release IP/10/1006, Antitrust: Commission Initiates Formal Investigation against IBM in Two Cases of Suspected Abuse of Dominant Market Position (Jul. 26, 2010).

[125] This is the first step of the reasoning. See the graphical representation above for further information. We presume, for each of these cases, that the practices had an actual tendency to eliminate or reduce competition.

[126] Berkey Photo v. Eastman Kodak, 603 F.2d 263 (2d Cir. 1979).

[127] Id. at 302.

[128] Id. at 284.

[129] Id. at 278.

[130] Id.

[131] Id. at 289.

[132] Id. at 285.

[133] See Daniel J. Gifford, The Damaging Impact of the Eastman Kodak Precedent Upon Product Competition: Antitrust Law in Need of Correction, 72 Wash. U. L. Rev. 1507, 1535 (1994) (the author contends that the ruling did not provide enough legal certainty).

[134] See Eastman Kodak, 603 F.2d at 286.

[135] Id. at 294.

[136] Id. at 286.

[137] United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001).

[138] Daniel J. Gifford, The European Union, the United States, and Microsoft: A Comparative Review of Antitrust, CLEA 2009 Annual Meeting Paper (2009).

[139] George L. Priest, Rethinking Antitrust Law in an Age of Network Industries, Ctr. for Studies in L., Econ. & Pub. Pol., n. 352 (2007); see also Toshiaki Takigawa, A Comparative Analysis of US, EU, and Japanese Microsoft Cases: How to Regulate Exclusionary Conduct by Dominant Firm in a Network Industry, 50 Antitrust Bull. 237 (2005).

[140] Microsoft remains the most important US decision—outside of the Supreme Court’s decisions—in terms of antitrust law. In addition, over 200 private actions followed. See Gavil & Harry First, The Microsoft Antitrust Cases: Competition Policy for the Twenty-first Century 133 (2014) (“In the wake of the governments’ cases against Microsoft, the firm faced more than 200 civil actions by private parties alleging they were injured by its conduct”); see also Keith N. Hylton, Microsoft’s Antirust Travails, The Antitrust Source 3 (2014) (reviewing Gavil & Harry First, The Microsoft Antitrust Cases: Competition Policy for the Twenty-first Century (2014)); see also Keith N. Hylton, Microsoft’s Antitrust Travails, The Antitrust Source 3 (2014).

[141] It was alleged that Windows was trying to eliminate competition through contractual and technical means. The former falls outside predatory innovation contrary to the latter, which is part of it.

[142] See William H. Page & John E. Lopatka, The Microsoft Case: Antitrust, High Technology, and Consumer Welfare (2007) (suggesting that the challenge was to develop a browser that allows to run applications and software regardless of the operating system).

[143] See Wikipedia, Java (programming language), https://en.wikipedia.org/wiki/Java_(programming_language) (“Java is a general-purpose computer-programming language that is concurrent, class-based, object oriented, and specifically designed to have as few implementation dependence as possible . . . compiled Java code can run on all platforms that support Java without the need for recompilation . . . Java was originally developed by James Gosling at Sun Microsystems . . . and released in 1995 as a core component of Sun Microsystem’s Java platform”); see also United States v. Microsoft Corp., 253 F.3d 34, 137 (DC Cir. 2001).

[144] Heiner, supra note 121, at 123 (“In the United States, the D.C. Circuit has held that the rule of reason governs the legality of alleged tying arrangements involving platform software.”).

[145] Microsoft, 253 F.3d at 65.

[146] Id.

[147] Id.; see also Alan Devlin & Michael Jacobs, Anticompetitive Innovation and the Quality of Invention, 27 Berkeley Tech. L. J. 1, 15 (2012) (“Beyond putting the initial burden of proof on the plaintiff – an allocation common to all civil cases – the D.C. Circuit’s test created an analytic framework equally conducive to findings of legality and illegality”).

[148] Microsoft, 253 F.3d at 65.

[149] See Renata B. Hesse, Section 2 Remedies and US v. Microsoft: What is to be Learned?, 75 Antitrust L. J. 847, 868 (2009) (noting that the original proposal to split Microsoft into two companies has created high expectations in terms of sanctions).

[150] Microsoft, 253 F.3d at 67.

[151] Id.

[152] Id. at Section II.B.

[153] See Hovenkamp, supra note 16.

[154] See Devlin & Jacobs, supra note 147, at 14; see also Gavil & First, supra note 140, at 184 (stressing that “[i]n the end, it is difficult to assess the costs and benefits of these cases, both for the parties and, more broadly, for the institutions charged with deciding them—the federal and state courts.”).

[155] See Alan Devlin & Michael Jacobs, The Empty Promise of Behavioral Antitrust, 37 Harv. J. L. & Pub. Pol’y 1009 (2014) (pointing out that balancing properly between the pro and anti-competitive effects would have anyway been impossible).

[156] Microsoft, 253 F.3d at 34, 74-75.

[157] Id. at 76.

[158] Id. at 75.

[159] Id.

[160] Thomas A. Piraino, Jr., A Proposed Approach to Antitrust High Technology Competition, 44 WM. & Mary L. Rev. 65, 104 (2002).

[161] Id. at 113.

[162] Microsoft, 253 F.3d at 67.

[163] Id.

[164] Id. at 75.

[165] See generally Microsoft Decision, supra note 8; see also Kudrle, The Atlantic Divide In Antitrust: An Examination Of US And EU Competition Policy 15 (2015) (explaining that the Microsoft case is the perfect illustration of the differences in antitrust law on the two sides of the Atlantic).

[166] See European Commission Press Release IP/17/784, Antitrust: Commission fines Google €2.42 Billion for Abusing Dominance as Search Engine by Giving Illegal Advantage to own Comparison Shopping Service (June 27, 2017).

[167] See Lopatka, supra note 142 (emphasizing that the Microsoft case is the epitome of the Post-Chicago school).

[168] Microsoft, 253 F.3d at 65.

[169] Microsoft Decision, supra note 8, para. 5, at 5.

[170] Id. para. 3, at 5.

[171] Id.

[172] Id.

[173] Id. para. 10, at 7.

[174] Id. para. 470, at 129; see also New Economy, Investopedia, http://www.investopedia.com/terms/n/neweconomy.asp (“New economy is a buzzword describing new, high growth industries that are on the cutting edge of technology”).

[175] Microsoft Decision, supra note 8, para. 5, at 5.

[176] One author underlined that the test applied by European judges in the Microsoft case is directly deducted from the Jefferson Parish test. See Daniel J. Gifford, The European Union, the United States, and Microsoft: A Comparative Review of Antitrust, CLEA 2009 Annual Meeting Paper, 29 (2009).

[177] The term “proportionality” is absent from the European Commission’s decision.

[178] See Thibault Schrepel, The Microsoft Case By The Numbers: Comparison Between US and EU, Concurrentialste (February 10, 2014), https://leconcurrentialiste.com/2014/02/10/the-microsoft-case-by-the-numbers-comparison-between-u-s-and-e-u (providing a statistical study on the subject).

[179] Microsoft Decision, supra note 8, para. 693, at 186.

[180] See, e.g., id. para. 422, at 117; id. para. 622, at 167; id. para. 946, at 260.

[181] See, e.g., id. paras. 30-32, at 11; id. paras. 32-34, at 12; id. para. 1064, 294.

[182] United States v. Microsoft Corp., 253 F.3d 34, 68 (D.C. Cir. 2001).

[183] Id. at 89.

[184] In terms of philosophy, the European decision is closer to the consumer protection theories while the North American decision is related to growth-based theories. See generally Microsoft Decision, supra note 8; see also United States v. Microsoft Corp., 253 F.3d.

[185] Microsoft Decision, supra note 8, paras. 792-799, at 209-211.

[186] See generally Legal Recognition, supra note 4, at 40 (describing the similarity in function and aim of rules directed at tying and rules directed at predatory innovation).

[187] Id. at 40-43 (emphasizing that tying is inadequate framework to address software-related issues in antitrust).

[188] Microsoft Decision, supra note 8, para. 970, at 269.

[189] Id.

[190] Case T-201/04, Microsoft Corp. v. Comm’n, 2007 E.C.R. II-3601.

[191] Microsoft Decision, supra note 8, para. 829, at 219.

[192] Id. para. 1027, at 284.

[193] Id. para. 829, at 219.

[194] See, e.g., Case T-201/04, Microsoft Corp. v. Comm’n, 2007 E.C.R. II-3601, para. 1149.

[195] Some authors noted that “very early in the case Microsoft built upon that commentary to argue that its “integration” strategy shouldn’t even be analyzed as tying[.]” See Gavil & First, supra note 140, at 316.

[196] The European ruling in the Microsoft case is opposed to the more-economic based approach to antitrust law. See Christian Ahlborn & David S. Evans, The Microsoft Judgment and Its Implications for Competition Policy Towards Dominant Firms in Europe, 75 Antitrust L.J. 887, 889 (2009).

[197] Microsoft Decision, supra note 8, para. 963, at 267.

[198] Id.

[199] Id. para. 1028, at 284-285.

[200] Id.

[201] Id. para. 1033, at 287.

[202] Id.

[203] It being specified that the penalty was decreased by 50% to reflect the duration of the infringement. Id. para. 1078, at 297 (the Commission noted that duration and gravity of Microsoft’s antitrust infringement led to a 50% increase in the standard fine, resulting in the reported number).

[204] Dep’t of Justice, Assistant Attorney General for Antitrust, R. Hewitt Pate, Issues Statement on The EC’s Decision In Its Microsoft Investigation, at 2 (March 24, 2004), https://www.justice.gov/archive/atr/public/press_releases/2004/202976.htm.

[205] For a critical view on the sanction, see Keith N. Hylton, Remedies, Antitrust Law and Microsoft: Comment on Shapiro, 75 Antitrust L.J. 773, 786 (2009). Only a single manufacturer has chosen to offer for sale the version that excluded Windows Media Player, and had no success doing so. This shows, in this regard, the failure of the sanction imposed by the judges. See William H. Page, Mandatory Contracting Remedies in the American and European Microsoft Cases, 75 Antitrust L.J. 787, 799 (2009); see also Ahlborn & Evans, supra note 196, at 922.

[206] Microsoft Decision, supra note 8, para. 999, at 277.

[207] See generally Legal Recognition, supra note 8 (describing the difficulties European and United States courts have especially had with separating anti and pro-competitive effects of software innovation).

[208] For an in-depth background on the effects and developments immediately following the Microsoft cases, see Marina Lao, Reclaiming a Role for Intent Evidence in Monopolization Analysis, 54 Am. U. L. Rev. 151 (2004).

[209] Apple Presents iPod, Ultra-Portable MP3 Music Player Puts 1,000 Songs in Your Pocket, Apple (Oct 23, 2001), https://www.apple.com/newsroom/2001/10/23Apple-Presents-iPod [https://perma.cc/B7ER-2USA]; Apple’s iPod Available in Stores Tomorrow, Apple (Nov. 9, 2001), https://www.apple.com/newsroom/2001/11/09Apple-s-iPod-Available-in-Stores-Tomorrow/.

[210] See In re Apple iPod iTunes Antitrust Litigation, 796 F. Supp. 2d 1137, 1139-40 (N.D. Cal. 2011); Apple Launches the iTunes Music Store, Apple (April 28, 2003), https://www.apple.com/newsroom/2003/04/28Apple-Launches-the-iTunes-Music-Store/.

[211] Newman, supra note 108, at 699.

[212] Apple iPod iTunes Antitrust, 796 F. Supp. 2d at 1140; see generally Amended Complaint – Second Amended Class Action Complaint at 2, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Aug. 28, 2006).

[213] Apple iPod iTunes Antitrust, 796 F. Supp. 2d at 1140.

[214] Id.

[215] See id.

[216] See Amended Complaint – Second Amended Class Action Complaint at 2-3, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Aug. 28, 2006).

[217] See Memorandum in Opposition to Defendant’s Motion to Dismiss Class Action at 3-5, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Feb. 28, 2005).

[218] See Apple iPod iTunes Antitrust, 796 F. Supp. 2d at 1141; see also Memorandum of Points and Authorities in Support of Plaintiffs’ Opposition to Defendant’s Motion to Dismiss Counts IV and VII of The Second Amended Complaint at 12, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Oct. 30, 2006). (Apple summarized the arguments from the complaint as: “[t]hey allege that Apple changed the ACC format to the AAC Protected format not for any technological benefit, but to exclude competing portable hard-drive digital music player from playing iTMS songs. They also allege that Apple again changed its format once RealNetworks began selling iTMS compatible files for play on the iPod so that RealNetworks would be locked out”).

[219] See Response in Support of Its Motion to Dismiss Class Action Complaint filed by Apple Computer, Inc. at 1, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Mar. 7, 2005).

[220] Apple used this argument from the beginning of the proceedings. See, e.g., NOTICE by Mariana Rosen re 965 Administrative Motion to File Under Seal Notice of Filing Public Documents Regarding Plaintiffs Opposition to Apple Inc.’s Motion, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Dec. 7, 2014).

[221] See Apple iPod iTunes Antitrust, 796 F. Supp. 2d at 1141.

[222] Id. at 1140. Part of the North American doctrine particularly underlined that the high-tech markets for new technologies allowed the dominant undertaking to compensate for losses arousing from the implementation of an anti-competitive practice expensive faster than in other markets. See Newman, supra note 108, at 703-4.

[223] Allied Orthopedic Appliances, Inc. v. Tyco Health Care Grp., 592 F.3d 991 (9th Cir. 2010).

[224] Id.

[225] Id.; see also In re Apple iPod iTunes Antitrust Litigation, 796 F. Supp. 2d 1137.

[226] Id.

[227] Id.

[228] Id.

[229] Id.

[230] Id.

[231] Id.

[232] Id.

[233] Id.

[234] Id.

[235] See, e.g., Order on Administrative Motion to File Under Seal Declaration of David F. Martin in Support of Plaintiff’s Opposition to Apple’s Motion for Summary Judgment, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Mar. 17, 2011); Order on Administrative Motion to File Under Seal Declaration of Augustin Farrugia in Support of Defendant’s Renewed Motion for Summary Judgment, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Mar. 17, 2011); Administrative Motion to File Under Seal portions of Apple’s Renewed Motion for Summary Judgment, and the Declarations of Jeffery Robbin, Augustin Farrugia, John Kelly, and certain exhibits to the Declaration of David Kiernan in support thereof, in accordance with General Order 62, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Jan. 18, 2011).

[236] See In re Apple iPod iTunes Antitrust Litigation, No. 05-CV-0037 YGR, 2014 U.S. Dist. LEXIS 165254 (N.D. Cal. Nov. 25, 2014).

[237] Proposed Jury Instructions, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Nov. 19, 2014) (“(i) the issue to be tried is whether the issuance and activation of the software and firmware changes in iTunes 7.0 and 7.4 were genuine product improvements and (ii) Apple’s conduct with respect to the development of the iPod and its integration with iTunes and the iTunes Store prior to these particular changes is not at issue in this trial and has been held to be legal.”).

[238] Id.

[239] Letter from William A. Isaacson regarding the appropriate preliminary instruction on the issue of whether the conduct at issue in this case involved a genuine product improvement, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Nov. 22, 2014); see also Joint Proposed Jury Instructions by Apple, Inc. and Plaintiffs, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Oct. 22, 2014).

[240] Letter from Bonny E. Sweeney in response to Apple Inc.’s November 22, 2014 Letter to the Court (ECF 919) regarding preliminary instructions on genuine product improvement, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Nov. 23, 2014).

[241] Letter from Bonny E. Sweeney, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Dec. 7, 2014) (“Apple must defend the claim as asserted and not as reconfigured by Apple into something more easily defended.”).

[242] Id. (“Instruction on genuine product improvements does not properly reflect the narrow factual issue to be decided by the jury.”).

[243] Id.; see also Letter from Bonny E. Sweeney, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Dec. 11, 2014).

[244] Letter from Bonny E. Sweeney, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Dec. 11, 2014).

[245] Letter from Karen L. Dunn, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Dec. 8, 2014).

[246] Id.; see also Joint Proposed Jury Instructions by Apple, Inc. and Plaintiffs, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Oct. 22, 2014).

[247] Transcript of Proceedings held on December 1, 2014, before Judge Yvonne Gonzalez Rogers, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Dec. 8, 2014).

[248] Id.

[249] Id.

[250] Joint Proposed Jury Instructions by Apple, Inc. and Plaintiffs, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Oct. 22, 2014).

[251] Proposed Jury Instructions. Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Nov. 19, 2014); see also Letter from Bonny E. Sweeney in response to Apple Inc.’s November 22, 2014 Letter to the Court (ECF 919) regarding preliminary instructions on genuine product improvement, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Nov. 23, 2014) (The complainant raised that, “[i]n short, there is ample legal authority and evidentiary predicate for the Court to instruct the jury that it ‘must decide whether the software and firmware changes in iTunes 7.0 and 7.4 were genuine product improvements or not genuine product improvements but evidence of a pretext,’ as it indicated it would do at the hearing on November 19, 2014.”).

[252] Letter from Bonny E. Sweeney Regarding Proposed Jury Instructions, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Dec. 10, 2014).

[253] Joint Proposed Jury Instructions by Apple, Inc. and Plaintiffs, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Oct. 22, 2014); see Letter from William A. Isaacson regarding the appropriate preliminary statement on the issue of whether the conduct at issue in this case has involved genuine product improvement, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Nov. 22, 2014).

[254] Revised Proposed Jury Instructions by Apple, Inc. Nos. 17 and 31, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Nov. 18, 2014).

[255] Jury Verdict, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Dec. 16, 2014); see also Final Jury Instructions, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Dec. 15, 2014).

[256] For one of the only comments of the decision, see Laurence Popofsky, Product Redesign and the Abuse of Dominance: The Apple iPod iTunes Antitrust Litigation, speech given at the Center for Competition Law & Policy Lecture Series at Pembroke College (May 7, 2015).

[257] Joint Pretrial Conference Statement by Apple Inc. and Plaintiffs, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Oct. 14, 2014).

[258] Letter from Karen L. Dunn, Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Dec. 8, 2014).

[259] It should be noted, on this point, that Steve Jobs would have fallen in all likelihood. The introduction of DRM does not prevent the music from being pirated, proving the weakness of one of Apple’s justifications. See Mike Musgrove, Jobs Calls for Open Music Sales, Wash. Post (Feb. 7, 2007), http://www.washingtonpost.com/wp-dyn/content/article/2007/02/06/AR2007020601764.html. The testimony of Steve Jobs, however, was excluded from the procedure.

[260] See, e.g., Order on Administrative Motion to File Under Seal Declaration of Augustin Farrugia in Support of Defendant’s Renewed Motion for Summary Judgment by Apple Inc., Apple iPod iTunes Antitrust Litigation, No. C05-00037 (N.D. Cal. Mar. 17, 2011) (“This document is currently Under Seal and not available to the general public.”). More than 50 documents of the proceedings are sealed.

About Thibault Schrepel

Posts by Thibault Schrepel:

The ‘Enhanced No Economic Sense’ Test: Experimenting with Predatory Innovation

Introduction

I. THE IMPROVED VERSION OF THE “NO ECONOMIC SENSE” TEST

A. How to Determine Which Test to Apply

1. Regarding the Goals of Antitrust Law

2. In Terms of its Efficiency

B. On Why the “No Economic Sense” Test Is Suitable

1. Its Main Characteristics

2. Inoperative Criticisms

C. How to Improve the “No Economic Sense” Test

D. Modeling of the Proposed Test

II. APPLICATION TO MAJOR PREDATORY INNOVATION CASES

A. The Berkey Photo v. Eastman Kodak case (1979)[126]

B. The North American Microsoft case (2001)[137]

C. The European Microsoft Case (2004)[165]

D. The iPod iTunes Litigation

CONCLUSION

January 2019

JIPEL Vol. 7, No. 2 – Spring 2017

A Judicial ‘Supplement’ to Advertising Law: The Fourth Circuit’s GNC Decision and Policy Implications for the Dietary Supplement Industry

Think Big! The Need for Patent Rights in the Era of Big Data and Machine Learning

The ‘Enhanced No Economic Sense’ Test: Experimenting with Predatory Innovation

The Hybrid Trademark and Free Speech Right Forged From Matal v. Tam

JIPEL Vol. 7, No. 1 – Fall 2017

From Mailroom to Courtroom: The Legality of Unpaid Internships In Entertainment After Glatt v. Fox Searchlight Inc.

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