Application of Predatory Innovation Theory to Idemitsu Kosan’s Invalid Patents

This paper is the research on the new attempt of application of US Antitrust Law to the anticompetitive conduct of predatory innovation found in OLED display industry and reinforcement of antitrust regulatory influence on the patent system. Multinational material firms having original material patents in the display market have tried to build patent portfolios using chemical combination inventions as one of the patent strategies to extend their monopolization with their market power. Recently, as domestic material firms cannot enter into the display market because of such chemical combination patents, the validity of the patents has been issued, so, accordingly, competitor have brought patent invalidation lawsuits against the invalid patents in Korea, Europe and Japan. Recently, three Idemitsu Kosan’s combination patents have been finally invalidated in Korea. These strategic patenting, however, may block competitors’ exploitation of its own invention, and thus may inhibit competitors’ entry into the market since competitors try to avoid infringing such patents, which results in the suppression of competition. As a result, such conduct adversely affects consumer’s welfare to enjoy high quality and cheap products by preventing free competition with material competitors and panel manufactures in OLED industry. Virtually, the dominant firms’ such conduct has triggered patent misuse concerns and antitrust scrutiny over predatory innovation. If the predatory innovation such as combination patents of Idemitsu Kosan restricts the competition or actually monopolizes the relevant market, such conduct shall be subject to Section 2 of the Sherman Act as monopolization or attempted monopolization by considering two prongs of the dominant firms’ blocking intent and the patent’s validity. In addition, hypothetically, if the predatory innovation is exercised with any enforcement of patent rights like threats or warning of infringement litigation by the dominant firms with intent to unfairly control the relevant market, that conduct shall constitute patent misuse. Ultimate goal of Antitrust Law and Patent Law is to improve true innovation and to maximize consumer welfare by encouraging firms’ competition. To achieve this goal, it shall be the best solution: to reinforce antitrust regulatory influence on the patent system; to harmonize Patent System and Antitrust Law by introduction of US Antitrust Law to IP Guidelines under MRFTA of KFTC to regulate anticompetitive conduct including predatory innovation; and establishment of an organization for communication and cooperation between Antitrust agents and Patent Offices.