The Review of Austrian Economics, 18:3/4, 343–344, 2005.
2005 Springer Science + Business Media, Inc. Manufactured in The Netherlands.
(2004) The Law and Economics of Antitrust and Intellectual Property: An
Austrian Approach, Northampton: Edward Elgar.
Were it not for the subtitle, and the repeated appeals to the insights of Austrian economics,
this book would be valuable simply as an interesting part-survey-part-analysis of the rela-
tionship between antitrust and intellectual property (IP). The author is, however, claiming
to have done more; speciﬁcally to have produced a new and superior approach to under-
standing this intersecting relationship and implementing policy to deal with it. That this
claim has been fulﬁlled may be seriously doubted.
The relationship between IP and antitrust is fairly easy to understand. A copyright, and
especially a patent, is basically the creation of a legal monopoly to the use of a particular
formula of expression or device. As such it potentially conﬂicts with the stated aims of
antitrust—it is essentially uncompetitive in that it creates a barrier to competition for those
who might compete by using the monopolized patent or copyrighted material. Those wishing
to compete with Microsoft, for example, by producing software applications that use a
Microsoft operating system, are at a disadvantage since Microsoft owns the code. Kallay
provides a detailed analysis of the essentials of antitrust and IP, how they are related, where
they overlap and where they might conﬂict. Sometimes the analysis is a bit tortured, for
example, when she claims that IP and antitrust have in common that both address the question
of property rights failures.
The claimed novelty in her approach is that by reinterpreting the
aims of antitrust (and competition) along Austrian lines, she has removed any real conﬂict.
If competition is understood as a Hayekian discovery process, rather than as a perfectly
competitive situation, and if it is remembered that IP rights may be defended insofar as they
encourage innovation, then IP is not antithetical to antitrust.
The problem is that Kallay’s treatment of the Austrian position is rather spotty. Sometimes
she displays an insightful appreciation, at other times she seems to miss the point. For
example, she seems not to understand that an Austrian treatment of monopoly really has
no place for barriers to entry that are not the result of some sort of legal barrier. She seems
to think that such barriers may be found in the market conditions of particular products
absent any government intervention. So she is led to a rather formulistic, “constructivist”
approach to antitrust policy which involves trying to apply a series of Austrian ingredients
of competition when deciding whether monopoly is present.
She applies this to two interesting cases. The ﬁrst case (the Magill case) involved the “re-
fusal to license” TV listing information to would-be producers of TV-guides. She concludes
that the European court correctly found the owners in violation of antitrust. The other case
(the Dell case) involved Dell Computer Corporation’s claim of a patent violation by mem-
bers of the VESA
of its mechanical slot conﬁguration (used on computer motherboards).
She concludes that the court’s dissenting opinion, afﬁrming Dell’s claim was correct, but for