2 The Project
2.1 The Market and the Society
Even in a world where the market has obtained the role as the main regulator of economic activities, economic efficiency is not the sole parameter for social regulation, and is not the only yardstick for the balancing of competing interests. Other important interests in relation to production and utilisation of information and knowledge are access to information, freedom of expression, control over resources and power to decide over issues related to production and distribution of information. Such interests are tied to the roles of employees, consumers and citizens, and involve issues of distribution of welfare produced by the exploitation of information gathered from local communities, democratic influence through access to information, and ethical problems created by, for instance, research on human embryos. Reconciling such interests constitutes a major challenge for the design and application of intellectual property rights and competition rules. A major objective of the project is to examine intellectual property rules and competition rules in the light of the different interests that contribute to their development.
In the following we will give examples of the approach we will take in the project to study the legal regime of the Market State. Firstly, we will treat the important role of the contract and contract rules in the commercialisation of knowledge and information (2.2). Secondly, we will turn to more specific legal problems tied to protection of knowledge and information as such (2.3). In this connection, we will examine how competition and economic efficiency can be reconciled with the legal protection of interests in development of knowledge in the interplay between competition law and intellectual property law. Then, we will give examples of questions related to the use and distribution of knowledge and information (2.4).
2.2 Contract law
The market players structure their conduct through contracts. The law on contracts has to adapt to the needs of the market players, and develop in parallel with new ways to organize transactions in the market place. Exchange of information and knowledge as a commercial or industrial activity develops new types of contracts. Further, the internationalisation of markets results in standardisation and model contracts. This in turn leads to increased legislative and private activity to formulate contract law or principles that facilitates the implementation and enforcement of cross-border agreements. An example is the European Commissions proposal for a European contract code. An issue for the project is thus developments in contract law as a result of the commercialisation of knowledge and information in an international market place.
2.3 Rights in knowledge and information
2.3.1 The distinction between protected and non-protected subject matter
In relation to all intellectual property rights, a line has to be drawn between subject matter that may be protected and subject matter that remains unprotected by law. It is in society's interest that private actors have incentives to produce new knowledge and information. If it is left to the market to fund innovative processes it is a prerequisite that innovations can be profitable. The profitability of new ideas, knowledge or information is secured by giving innovators exclusive rights to the commercial use of their innovation. The legal systems conferring intellectual property rights (patents, design rights etc.) and copyrights to private parties are thus a prerequisite for dynamic markets.
The increasing commercial value of knowledge and information leads to a pressure on the traditional requirements as to what constitutes literary and artistic works, inventions etc. Simultaneously, new concepts for protection of knowledge and information evolve within the copyright regime, protecting investments rather than creativity. The database protection is the most prominent example. Both in the EU and on a broader international level exclusive rights to compilations of knowledge and information sui generis are granted to the producers of such compilations (databases).
Against this background, it is obvious that the legal protection of knowledge and information has expanded over the last years, and thus gives a greater incentive for market orientation in the production of new ideas, knowledge and information. An example of this novel orientation may be seen in the fact that employees are given rights to innovations they have contributed to, and this way are entitled to receive part of the economic value created through the exploitation of such innovations. Thus, intellectual property law have influenced the way in which production of knowledge is organised in the society. At the same time, the potential for conflicts between intellectual property protection and access to information is increasing, giving rise to new legal problems, for instance in consumer law, environmental law and general administrative law.
A fundamental question concerns the conditions for protection of knowledge under intellectual property law. In relation to copyright protection (protection for literary and artistic works), the so-called idea/expression dichotomy is fundamental when drawing the line between protected and non-protected subject matter in relation to knowledge and information. It is generally accepted that copyright protection extends only to expressions and not to ideas. The underlying philosophy behind this rule is that the "common goods" of mankind shall not be monopolised or controlled by a handful of private individuals. However, considerable uncertainty prevails as regards the consequences and scope of the rule. Another uncertain aspect is the meaning of the word "idea" itself. Another fundamental rule in national and international copyright, closely related to the idea/expression dichotomy, is that facts and discoveries of natural phenomena do not enjoy copyright protection. This is a consequence of the general requirement that a copyrighted work must constitute the author's own intellectual creation. On the other hand, a description or the further use of facts or discoveries may earn copyright protection (as a literary work) provided that the description or the use itself is the result of the author's intellectual creation. Thus, news articles, biographical works (books or movies), scientific research articles et cetera will normally be subject to copyright even though the facts described or used are not protected. Both the idea/expression dichotomy and the general rule that facts and natural phenomena are not subject to copyright protection, create problems as to what extent knowledge and information can be controlled by reference to copyright.
Similarly, in patent law, it is fundamental that abstract knowledge (discoveries), abstract mathematical algorithms, methods of doing business, presentation of information etc. may not be protected by patents. On the other hand, useful industrial applications of such abstract creations, are considered patentable subject matter. Hence, while the discovery of a DNA sequence in the human body or of a naturally occurring microorganism may not be patented as such, industrially applicable products and processes based on such discoveries may be protected. An isolated and purified DNA sequence or microorganism may therefore be entitled to patent protection. Similarly, while a business method or a mathematical algorithm constitutes unprotectable subject matter, a computer system incorporating the method or algorithm may be protected by patent. The distinction between protectable and unprotectable subject matter creates difficult problems in several areas, not the least in connection with bio-informatics, where computers are utilised for the identification and construction of genes and proteins. By way of example: are novel computer-constructed genes or new methods of computerised construction of genes, mere abstract creations lacking technical character, or are they industrially applicable inventions?
Further problems arise from the possibility of patenting biotechnological substances, such as industrially applicable genes. A major concern is that broad patent claims may constitute a disincentive for further research and industrial innovation, because a rapidly developing area may be monopolised by a single company. Other potential innovators may thus be deterred from developing, for instance, diagnostics, vaccines etc. utilising the information incorporated in the patented gene. Another concern relates to the fair distribution of revenues from successful biological products between Third World countries, often acting as providers of DNA material, and western enterprises exploiting such material commercially. All these problems have only recently emerged, and much research remains to be done.
2.3.2 Supplementary protection
To the extent knowledge and information is not subject to exclusive rights under the existing intellectual property rights, the question arises whether there are other ways or means to protect the subject matter. One option is to seek protection through special statutory provisions, such as prohibitions against unfair competition and trade practices or provisions sanctioning the disclosure of trade secrets. Protection may also be sought under general legal principles developed by doctrine and case law, such as the principles protecting a person's name, portrait, likeness or reputation, or the performance of athletes and sports teams. Such rights have obviously particular relevance for the media industry. In this context it is also necessary to analyse the relevance and importance of provisions of secrecy in administrative law, and how they interrelate with basic principles of transparency and access to information.
The other option is to seek protection through contractual provisions, e.g. secrecy and non-disclosure clauses obliging receivers of the information not to reveal or disclose it to third parties. In result, it is possible for the parties to create exclusive rights to unprotected knowledge and information by means of contractual obligations. To what extent contractual solutions may give the necessary protection is, however, unclear. It is thus of value to analyse how private actors can use contract law and contractual means to protect ideas, knowledge and information, and how such "contractual" intellectual property rights fit in with "statutory" intellectual property rights.
Contractual restraints on the use of knowledge and information may weaken the competition between the parties. Such agreements can therefore be contrary to prohibitions against anti competitive co-operation in competition law, and the competition rules will influence on the freedom of the parties to enter into such agreements. The contractual restraints put on the disclosure or use of knowledge can also be seen as the result of an abuse by a dominant undertaking when the dominance is caused by the ownership of an existing intellectual property right. Such obligations may thus fall within the scope of prohibitions against abuse of dominant position or monopolisation.
2.3.3 Competition Law and Intellectual Property Law
The ultimate aim of competition law is efficiency. The process of competition is protected because competitive markets are generally assumed to have the best market performance, i e lead to an efficient use of resources both in the short term through optimal allocation of resources (static efficiency) and in the long term through innovations (dynamic efficiency). Competition law shall further both static and dynamic efficiency, as well as an efficient use of resources in the production. It is, however, not obvious that fierce competition will promote both static and dynamic efficiency. This project will primarily focus on how competition law can and should promote dynamic efficiency.
Research and development (R&D) has become increasingly important from a competition law point of view, as technological achievements have become vital elements in the development of markets. Both the increased level of intellectual property right-protection in itself and private arrangements seeking to foreclose third parties' access to knowledge and information represent challenges to competition law.
When analysing how competition law can contribute to further the aim of dynamic efficiency, the competition rules must be seen in connection with the rules on intellectual property rights. Intellectual property rights give the beneficiary to a right a legal monopoly in the commercialisation of the protected knowledge, and can thus at first glance seem contrary to the rationale behind competition rules. As the goal of dynamic efficiency is common to the two sets of legal rules the borderline between them cannot be drawn based on a conflict scenario, but must be seen as a question of defining the roles of competition law and intellectual property law in furthering dynamic efficiency.
2.3.4 Challenges from intellectual property law to other legal fields
2.3.4.1 Administrative law
Increasing commercial interests in ideas, information and knowledge challenges general administrative law. The administration receives information on private parties in several ways. According to general principles of administration, this information should as far as possible be accessible to the general public. Exemptions from this are provisions on commercial secrets. These provisions in Norwegian administrative law do, however, not give protection to secrets that are not yet commercial, nor to information that is of commercial value but not secret, for instance where copies are subject to licensing. Another general principle requires that the administration base its decisions upon information that is in fact available to it at a given time. The investments that lie behind applications submitted to the administration by one enterprise, may on the other hand warrant that this information is not used in the handling of a later application from a competitor. The administration may also have its own commercial interests in information and knowledge it has produced. Examples are meteorological data and maps produced by the agencies responsible for weather forecasting and surveying of geological data. Existing administrative law needs to be analysed in the light of the pressure such new demands create for new practices.
2.3.4.2 Consumer law
Proprietary rights to information and knowledge contribute to the stock of information at the disposal of consumers. As information society has developed, trade in information in several ways amounts to approximately 1/3 of the consumer market. Commercialisation of information poses legal challenges in, for instance, contract law, connected to the international and intangible nature of the goods and services provided to the consumer. Consumers are also in several ways limited by legal and physical means in their use of information, for instance by expansion of legal protection and development of physical protection against copying and receiving of transmitted signals. It is a task for legal research to investigate new contract provisions and new technical limitations to deliveries in the light of mandatory consumer legislation on a national and European level.
2.4 Use and distribution of knowledge and information
As a result of the legal protection of knowledge and information, various problems arise in connection with the use and distribution of it.
First, although the information in question may be subject to intellectual property or other kinds of legal protection, there are always limitations to the rights to control the use of knowledge and information. One important limitation stems from the principle of freedom of information, either by way of statutory limits inherent in the rights, e.g. the right of quotation of copyrighted works that inter alia follows from the international copyright convention, by application of the general principle in the Convention on Human Rights, rules on access to information as a member of the general public or as employee, and by the application of rules of transparency in public administration occupied in regulating or permitting a given activity. How the line is to be drawn between the conflicting interests of the right holders, information seekers and the general public in this respect is, however, in many ways an unsettled issue.
Competition law will also limit the possibility to control knowledge and information, even though it is accepted that knowledge and information is subject to exclusive rights. Co-operation in R&D may include also co-operation in the marketing of the produced knowledge or products produced on the basis of the new knowledge and lead to reduced competition. On the other hand a joint effort may be necessary to make it possible for the undertakings to produce knowledge that need large investments and research efforts. In these cases the competition rules have to consider to what degree competitors should be allowed to reduce competition between them to produce innovations.
A second set of problems results from the assignment or licensing of rights in knowledge and information. In cases where the information is produced under employment or contract, a controversial issue is whether - and to what extent - the rights are or must be transferred to the employer or buyer of information. Furthermore, in relation to all kinds of licensing or assignment of rights to knowledge and information, it is a question of the legal consequences of the transferral of rights - and the relationship between the "seller" and the "buyer" of the information concerned. New kinds of licensing arrangements evolve, for instance the so-called "open source" licenses in the software industry permitting to some extent the free use of computer programs and insight in the producers' technology, as a reaction to what is considered as the restrictive licensing policy of the "established" industry. Restrictions on the licensee's - or the licensor's - right to use the information are also subject to scrutiny under competition law. Licensing agreements may regulate the competition between the licensor and the licensees, or between the licensees. From a competition law point of view the licensees should be free to take individual commercial decisions regarding the marketing of the product produced on the basis of for instance protected technology.
A third major problem worth mentioning is the use of technology to prevent or restrict the distribution of knowledge and information. On the one hand, technology may secure the lawful use of information. On the other hand, the development of Internet and other digital networks for the distribution of information represents a serious challenge to the right holders interests in controlling the use of the protected information, including the possibilities to receive compensation for the use. Industry's response to this challenge is the development of technical devices that shall prevent the unlawful use of information. Such technical devices are in turn subject to legal protection. Legal protection of technical devices enables, however, not only the right holders' efforts to prevent or restrict unlawful exploitation, but even lawful use of knowledge and information. This causes obviously further problems, not the least in relation to the general principles of freedom of information. Technological barriers to use are also of relevance to competition law. The producer of an operating system for personal computers, that also operates in the market for software applications, may for instance attempt to block competitors from the software market by making their programmes incompatible with the operating system.
2.5 Shaping and structuring of markets
Competition rules on merger control are used as a mean to control market structure. Mergers that create market structures leading to reduced competition and efficiency losses should be forbidden, but mergers that promote market structures leading to increasing dynamic efficiency should on the other hand be allowed. Further, intellectual property rights may be decisive for market structure, for instance where an undertaking patent a revolutionary product that forces the undertakings competitors out of the market. The sale and purchase of intellectual property rights that have impact on the market structure may be scrutinized under merger control rules.
3 Importance of the project
3.1 Academic relevance and benefits
Several of the research problems that are described, have been the object of studies in international legal literature. Not much research, however, has been undertaken from the perspective of Norwegian law. Our project is also to our knowledge, among the international forerunners in combining intellectual property law, competition law, contract law, mandatory civil law and administrative law in the study of commercialisation of information and knowledge.
Research on problems of production, marketing and market structure of knowledge and information will contribute directly to development of theory within the legal fields of intellectual property law, contract law, competition law and private international law. Research on competition law has to a great extent been focused on perfect competition and static efficiency. The question on how competition law can promote dynamic efficiency has not been given the same attention. Research on how competition law may promote innovations has become very important, and the project aims to contribute to the development of this important field of legal research. But, competition law must be viewed as a whole, and the project will thus contribute also to the development of general competition law. In relation to intellectual property rights a main task will be to examine the changing roles and scope of the intellectual property rights as a result of the commercialisation of knowledge and information.
Studied in the context of the market as the emerging arena for balancing of different public interests and the pursuit of general public objectives, the project will also contribute to fields such as consumer law, labour law and international contractual law and to the legal requirements and restraints on the political use of legal instruments in general. In this way, the project will contribute to the development both of important aspects of civil law and public administrative law.
The way the project is designed, it will have a potential for academic recruitment. Emphasis is placed on research undertaken by research fellows and graduate students in close co-operation with senior researchers doing research under the same project. By providing a possibility for young researchers to work closely with experienced researchers and to take part in the international network of the project, we hope to attract well qualified candidates to academic work. We are already engaged in talks with several outstanding candidates suited for research fellowships under the project.
For the Department of private law it is of great value to develop and host the project. Academically it will contribute to the development of several of the disciplines under the department and institutionally it will contribute to solving the problems the department is experiencing in recruiting new staff members.
3.2 Relevance and benefits to society
The relations between the public sector and the market are going through far-reaching transformations as a result of international and national technological and political developments. Competition law and intellectual property law are both important fields in this development, and their meeting-points the melting-pot of legal transformation.
Much of what previously was regulated by public law is now left to the market or subject to constraints of competition law. Contracts and property rights have gained new importance as ways of organising both private and public activities. The scope and means of legal protection of knowledge and information is a field where these developments are fully emphasised.
Research on the topics of the project will thus be of high relevance to commercial actors seeking to plan for protection of their investments, for trade unions in securing ways for employees to influence factors determining the shaping of their future working conditions and securing their rights and for public agencies in redesigning and developing new policy instruments.
Results from the project will also shed light on more general questions of the scope of law and legal intervention in the new Market State. Since markets and market behaviour are substituting many of the previous public law regimes, private law and competition law has become much more important to both the political system and the economy.
4 Method
The project is interdisciplinary within the field of law, encompassing disciplines such as competition law, intellectual property law, contract law, private international law and administrative law. These are fields where national law is highly influenced by global developments and by European Union law.
The main field of study is within legal doctrine to investigate the structure and content of legal rules covering the field and legal policy to discuss appropriate legal responses to the economic, political and ethical questions that arise. A main research assumption is that national law within this field cannot be studied in isolation, but must be studied in the broader contexts of EU law, international trade and treaty law and international private law. We will also draw upon theory and research within other relevant disciplines, such as market and competition theory within the fields of economics and institutional political science.
5 Organisation
The project is organised as an autonomous research project within Department of Private Law, Faculty of Law, University of Oslo. It is led by one of the faculty members of the Department of private law, Professor Hans Petter Graver. His main research fields are European law, administrative law and legal theory. In the autumn of 2002 and spring 2003 professor Graver is relieved from other duties and will participate in the project full time.
Together with Graver, four of the department's senior researchers, associate professor dr. juris Olav Kolstad, associate professor dr juris Giuditta Cordero Moss, associate professor dr. juris Ole Andreas Rognstad and associate professor dr. juris Are Stenvik will participate in the project within the scope of their research time. In addition to conducting own research within the project, Graver, Kolstad, Moss, Rognstad and Stenvik will supervise post-graduate and graduate students and maintain and develop the international network of the project.
Given the international nature of the topic of the project, the project will co-operate with researchers of high international standing abroad. The doctoral students under the project will be encouraged to spend at least one term of their scholarship period abroad. We will use our international contacts to find suitable institutions to host them for these periods. We aim to invite international guest lecturers at least twice a university term to present a paper to our regular research seminar.
We are in the process of establishing mutual agreemets of cooperation with research projects abroad. These agreements will include the establishing of a network, and prospects of co-operation on conferences, receiving visiting scholars and lecturers and joint research projects. Presently talks have been initiated with professor Niklas Bruun, Svenska Handelshögskolan Helsinki and Annette Kur, Max Planck Institute, Munich.
To ensure relevance of the project to government and business, and to give co-determination to private sponsors, an advisory board will be established. Members of the board will be recruited among highly established experts within the field of competition law and policy and intellectual property rights, representing government, private enterprises and academia.
The function of the board will primarily be advisory and will be focussed on giving input on the formulation of research problems, the main strategy, budget and more specific research plans. In this way, the board will ensure the quality and relevance of the research to the needs of business and government.
6 Planned results
The main object of the project is to establish a highly competent research team on market and competition law with international recognition at the University of Oslo. For this reason English will be an important working language, in addition to Norwegian necessary to service the demands of the national legal community. Through research seminars with 2-3 invited international scholars per university term and through our international partners, we aim to have established a working international network during the first four years of the project covered by this application. Emphasis will be put on international publications, and we aim to publish contributions from the project in international journals.
By the end of the four-year period covered by this application, we aim to submit 3-4 Ph.D. theses and the total of 8-12 student theses (20 vekttall). The best of these theses will be published either as articles or in edited volumes from the project.
We will organise a research seminar with four meetings pr. university term where international colleagues, members of the research staff and practitioners will have the possibility to present problems and finding to an invited group of scholars and practitioners. With funding from the Ruhrgas scholarship program, this seminar series will start with invited participants from Germany already the fall of 2002.
7 Funding
The project will be funded through three main sources: contribution by Department of Private Law, contribution by private sponsors and contribution by Research Council.
The contribution from the Department of private law consists of salaries and allocation of senior research personnel to the project. Currently five senior researchers are allocated to the project, one full-time, one part time, and three within the normal scope of their faculty obligations. In addition 1-2 faculty research fellows (doktorgradsstipendiater) will be associated with the project. The department provides office space.
Private funding will contribute to finance more specific research projects to be undertaken by graduate students as part of their 20 vekttall thesis. Currently a program financing 5 such theses has been established with the law firm BAHR (attachment 2). The law firm Lindh Stabell Horten finances 1 thesis per year through a scholarship.
The basic funding of the project is sought from the research council. We apply for funding of three doctoral students. The exact topic of the two theses will be determined in discussions with interested applicants, based on the problems described above in section 2.
Since the project is designed as a research- and development project with external contributions, emphasis on close contact with private enterprises and government agencies and development of an international network, it is necessary to strengthen the administrative capacity of the department. We also seek funding for general project costs (travel costs, technical equipment, conferences and seminars, literature and dissemination).