Alex G. Lee's Research Paper

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Dec. 16, 2013
Antitrust Aspects of Trade Secrets in the U.S. and the EU: Balancing Approaches to
Harmonization
Alex G. Lee1
As the importance of intellectual property (IP) has increased in the global knowledge
base economy, the intersection between IP and antitrust law got a great attention among many
legal scholars and practitioners, government policy makers, and business professionals.
Excessive or abusive exercises of IP rights (IPRs) including trade secrets sometimes can block
free flow of new ideas, diffusion of innovation, and competitive market formation. Therefore,
adverse effects of abusive exercises of IPRs can lead to the situation that right holder is subject
to antitrust scrutiny for restricting competition, and thus, harming consumers. Consequently,
trade secrets like other IPRs cannot exploit legal rights without limitation.
The author addresses the antitrust aspects of trade secrets in global context by contrasting
the approaches of the U.S. and the EU antitrust enforcers in applications of antitrust law to trade
secrets. Especially, the author focuses on the cause of differences in antitrust enforcement
between in the U.S. and in the EU on exploitation of trade secrets. The author also provides
implications of differences between the U.S. and the EU approaches in resolving conflicts
between the protection of competition and IPRs’ roles in encouraging innovations, promoting
competitive market and consumer welfares. The author proposes balancing approaches to
harmonization of antitrust enforcement for the upcoming free trade agreement between the U.S.
and the EU.
1
Alex Geunho Lee, Ph.D., earned his J.D. from the Suffolk University Law School. This paper is the term paper for
the “Trade Secrets” course. He thanks to Professor Jerry Cohen for helpful comments.

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Table of Contents
I. Introduction
II. Legal Protection for Trade Secrets
A. Protection of trade secrets in the U.S.
1. What is a trade secret?
2. Tread Secrets v. Other IPRs
B. Protection of trade secrets in the EU
C. Protection of trade secrets in international IP law
III. Antitrust Treatment of Trade Secrets
A.U.S. Antitrust Law
1. Illegal agreements
2. Monopolization
B. EU Antitrust Law
1. Illegal agreements
2. Monopolization
C. Comparison of U.S. and EU Antitrust Treatment of Trade Secrets
1. Antitrust enforcement of illegal agreements
2. Antitrust enforcement of monopolization
IV. Balancing Approaches to Harmonization
A. Causes of Divergence in Enforcement of Antitrust Laws between the U.S. and the EU
B. Implication of Differences in Enforcement of Antitrust Laws for Trade Secrets between the
U.S. and the EU

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C. Harmonization Issues
V. Conclusion
VI. Bibliography
I. Introduction
As the importance of intellectual property (IP)2
has increased in the global knowledge
base economy, the intersection between IP and antitrust law got a great attention among many
legal scholars and practitioners, government policy makers, and business professionals.3
According to the U.S. Commerce Department report,4
IP-intensive industries support at least 40
million jobs and contribute more than $5 trillion dollars to the U.S. economy (34.8 % of U.S.
GDP). The report identified that innovation protected by IP rights (IPRs) was the key to creating
new jobs and driving economic growth. IPRs entitle the holder to have a legally protected right
within limited scope and duration of protection in return for promoting innovation, and thus, for
contributing to the social welfares.
An economic estimation shows that the publicly traded U.S. companies own around $5
trillion worth of trade secrets.5
Thus, providing legal protection of trade secrets is very important
to the U.S. economy. Excessive or abusive exercises of IPRs including trade secrets, however,
2
In this paper, IP means patent, copyright, trademark, and trade secrets.
3
See, e.g., American Bar Association, INTELLECTUAL PROPERTY AND ANTITRUST HANDBOOK (Amer Bar
Assn 2007).
4
U.S. Department of Commerce, Intellectual Property and the U.S. Economy: Industries in Focus, 2012, available
at http://www.esa.doc.gov/sites/default/files/reports/documents/ipandtheuseconomyindustriesinfocus.pdf (last
visited Nov. 1, 2013).
5
Robert J. Shapiro & Kevin A. Hassett, THE ECONOMIC VALUE OF INTELLECTUAL PROPERTY, 2005,
available at http://www.sonecon.com/docs/studies/IntellectualPropertyReport-October2005.pdf ((last visited Dec.
10, 2013).

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sometimes can block free flow of new ideas, diffusion of innovation, and competitive market
formation. Therefore, adverse effects of abusive exercises of IPRs can lead to the situation that
right holder is subject to antitrust scrutiny for restricting competition, and thus, harming
consumers. Consequently, trade secrets like other IPRs cannot exploit its rights without
limitation.
The main purpose of this paper is to understand the antitrust aspects of trade secrets in
global context by contrasting the approaches of the U.S. and the EU antitrust enforcers in
applications of antitrust law to trade secrets. This paper will focus on the cause of differences in
antitrust enforcement between in the U.S. and in the EU on exploitation of trade secrets.
Especially, this paper will provide implications of differences between the U.S. and the EU
approaches in resolving conflicts between the protection of competition and IPRs to innovations,
competitive market, and consumer welfares. This paper will also propose balancing approaches
to harmonization of antitrust enforcement for the upcoming free trade agreement between the
U.S. and the EU.
This paper is organized as follows. In Section II, I present a review of current status of
legal protection for trade secrets in the U.S. and the EU. I also present a review of trade secrets
in international IP law. Especially, this section includes details about legal definition of trade
secrets, comparison of trade secrets with other forms of IPRs, and contrast of trade secrets
protection in the U.S, the EU, and under TRIPS agreement. Having understood the background
of legal protection for trade secrets in the U.S. and the EU, I introduce antitrust treatment of trade
secrets in the U.S, and the EU in Section III. I contrast antitrust enforcement of trace secrets
regarding restraints of trades and monopolization in the U.S, and the EU. In Section IV, I
present causes and implications of differences between the U.S. and the EU antitrust

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enforcement of trace secrets to innovations, competitive market, and consumer welfares in global
business context. I also propose balancing approaches to harmonization of antitrust enforcement
for the upcoming free trade agreement between the U.S. and the EU. I conclude this paper in
Section V.
II. Legal Protection of Trade Secrets
A. Protection of trade secrets in the U.S.
1. What is a trade secret?
According to the Uniform Trade Secrets Acts (UTSA), a trade secret is defined as
information including formula, process, device or compilation, which is used in one's business
and derive independent economic value by keeping as secret to other persons.6
To be
protected as an intellectual property, it must have been taken reasonable precautions to
preserve the secrecy of the trade secret. In USM Corp. v. Marson Fastener Corp.7
, the court
provided several relevant factors to consider in determining reasonable security precautions:
(1) existence of an express agreement restricting disclosure; (2) extent of security precautions
taken to prevent acquisition of the information by unauthorized third parties; (3) degree to
which the information has been placed in the public domain.
6
Wikipedia, Uniform Trade Secrets Act, http://en.wikipedia.org/wiki/Uniform_Trade_Secrets_Act (last visited Dec.
2, 2013).
7
USM Corp. v. Marson Fastener Corp., 379 Mass. 90 (1979).

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As of May 2013, the UTSA has been adopted by all states except New York, North
Carolina and Massachusetts. The UTSA played a vital role in harmonizing the legal protection
of trade secrets across the different U.S. states.8
2. Tread Secrets v. Other IPRs
The owner of a patent is entitled for a limited time exclusive right in return for
disclosure of information. Copyright and trademarks are also required to disclose. The owner
of a trade secret is entitled for an indefinite time right as far as it is a secret. Patents protect
information that are novel, useful, and non-obvious. There are subject matter constraints
imposed on patents. Tread secrets protect any information that has economic value derived
from secrecy of the information. Trade secret protection extends only to confidential
relationships and does not prevent independent development or development through reverse
engineering.9
B. Protection of trade secrets in the EU
There is no EU-wide trade secrets protection. Many EU member states do not recognize
trade secrets as intellectual property. Each EU member state has its own regulation regarding
enforcement of trade secrets, which varies from one state to another. Today, Sweden is the only
member state in which trade secrets are protected by specific trade secrecy law. EU-wide
protection of trade secrets is currently discussed. To consider a minimum level of harmonization
8
Trade secrets are protected by each state law.
9
See, e.g., Katarzyna Czapra, Intellectual Property and the Limits of Antitrust: A Comparative Study of US and EU
Approaches (Edward Elgar Pub 2010).

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of trade secret protection within the EU, the European Commission recently proposed rules to
help protect against the unlawful acquisition, use, and disclosure of undisclosed know-how and
business information (trade secrets).10
The proposal introduced a common definition of trade
secrets. The European Commission, however, considered trade secrets as complementary right
to intellectual property and specifically mentioned that trade secrets are only legally protected in
the events of misappropriation by illegitimate means.
C. Protection of trade secrets in international IP law
The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
introduced provisions on trade secrets and other types of “undisclosed information” in Article
39.2: “Natural and legal persons shall have the possibility of preventing information lawfully
within their control from being disclosed to, acquired by, or used by others without their consent
in a manner contrary to honest commercial practices
-Such protection is required for information which is secret (that is, not generally known among
or readily accessible within the circles that normally deal with such information), which has
commercial value because it is secret, and which has been subject to reasonable steps to keep it
secret.”
The TRIPS Agreement does not require trade secrets to be treated as a form of property.
The TRIPS Agreement, however, requires that a person lawfully in control of such trade secrets
10
European Commission Press Releases, Commission proposes rules to help protect against the theft of confidential
business information, http://europa.eu/rapid/press-release_IP-13-1176_en.htm?locale=en (last visited Dec. 2, 2013).

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must have legal rights for preventing misappropriation if reasonable steps have been taken to
keep the information secret.11
III. Antitrust Treatment of Trade Secrets
A.U.S. Antitrust Law
1. Illegal agreements
Under the section 1 of Sherman Act, every combination between separate entities in
unreasonable restraint of trade is illegal. For over one hundred years, courts have developed two
categories of analysis methods for antitrust illegalities: per se illegal method and rule of reason
method. Per se illegal method applies for collaboration practices whose nature and necessary
effect are so obviously anticompetitive. Once courts categorized the collaboration practices as
per se illegal courts ruled them as illegal for violating antitrust law without further detail
investigation. Category of collaboration practices that courts declared as per se illegal are (1)
minimum and/or maximum price fixing; (2) production/supply/output limits; (3) elimination of
competitive bidding; (4) agreement for dividing territories, customers, and/or products and (5)
concerted refusals to deal or group boycotts.
The rule of reason method applies for collaboration practices whose anticompetitive
effect can only be evaluated by analyzing the facts peculiar to the business. In Chicago Board of
Trade v. United States12
, the court provided several factors to be considered in the rule of reason
11
See, e.g., Rochelle C. Dreyfuss and Katherine J. Strandburg, The law and Theory of Trade Secrecy (Edward Elgar
Pub 2011).
12
Chicago Board of Trade v. United States, 246 U.S. 231 (1918).

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analysis: (1) structure of industry; (2) facts peculiar to the firm’s operation in the industry; (3)
history and duration of restraint; (4) reasons why the restraint was adopted (purpose); (5) effects
on the competitive market; (6) other ways to get the same pro-competitive results without the
restraint. In Broadcast Music, Inc. v. CBS, Inc.13
, the court provided a standard of review to
determine illegality of the defendant’s activity after considering the above mentioned factors: (1)
whether the challenged conduct is reasonably necessary to achieve the cost-reducing efficiencies;
(2) whether the restraint that follows is actually necessary to the main purpose of the conduct and
(3) whether the efficiency achieved by the conduct outweighs the adverse effect of the restraint.
2. Monopolization
Under the section 2 of Sherman Act, monopolization or attempt to monopolize or
conspire to monopolize of trade is illegal. In Grinnell Corp. v. United States14
, the court
provided two elements to test illegal monopolization: (1) possession of monopoly power in a
relevant market and (2) willful acquisition or maintenance of monopoly power, as distinguished
from growth or development as a consequence of a superior product, business acumen, or
historic accident. Here, monopoly can be demonstrated by an ability to raise prices beyond
competitive levels. The relevant market includes product and geographic market. The conduct
of willful acquisition or maintenance of monopoly power includes (1) exclusionary conduct
impairing competition or expansion of unnecessary productivity;15
(2) exclude competitors
13
Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1 (1979).
14
Grinnell Corp. v. United States, 384 U.S. 563 (1966).
15
Alcoa United States, 148 F.2d 416 (2d Cir. 1945).

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without being of great benefit to its customers;16
(3) unnecessarily restrictive way by the refusal
to deal;17
and (4) charging a price below an appropriate measure of cost (predatory pricing). 18
B. EU Antitrust Law
1. Illegal agreements
EU competition law is stricter and rigid in its applications than American counterpart.
Article 101 of the TFEU (Treaty of Functioning of EU) prohibits agreements which prevent,
restrict or distort competition among EU member states. Article 101(3) specifies prohibited
agreements: (1) fix purchase or selling prices or any other trading conditions; (2) limit or control
production, markets, technical development, or investment; (3) share markets or sources of
supply; (4) apply dissimilar conditions to equivalent transactions and (5) make contracts subject
to acceptance of supplementary obligations which have no connection with the subject of such
contracts. Exemption, however, is granted under Article 101(3) for agreements that contribute to
improving the production or distribution of goods or to promoting technical or economic
progress.
2. Monopolization
Article 102 of the TFEU prohibits the abuses of a dominant market position. The abuses
include (1) imposing unfair or discriminatory terms; (2) limiting production, markets or technical
development; (3) applying dissimilar conditions to equivalent transactions and (4) make
16
United Shoe Machinery Corp. v. United States, 391 U.S. 244 (1968).
17
Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).
18
Matsushita v. Zenith Ratio Corp., 475 U.S. 574 (1986).

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contracts subject to acceptance of supplementary obligations which have no connection with the
subject of such contracts. Generally, a market share in excess of 40% can be considered as
indicate dominant market position.
C. Comparison of U.S. and EU Antitrust Treatment of Trade Secrets
1. Antitrust enforcement of illegal agreements
In the U.S., trade secrets were essentially treated as other forms of IPRs for the purpose
of applying § 1 of the Sherman Act.19
Basically, rule of reason method applies for antitrust
scrutiny of agreements involving trade secrets.20
Restrictions preventing a licensee from disclosing improvements base of licensed trade
secrets to third parties if disclosure of the licensor‘s secrets might occur are considered to be not
unreasonable restraint of trade under the antitrust laws.21
A territorial restriction in the license of
a secret process is considered to be not a per se violation of the antitrust laws.22
The courts
found an antitrust violation, however, if the purpose of the agreement is for a territorial division
markets among competitors, rather than to license trade secrets.23
A field of use restriction in a
trade secret license is considered to be not a violation of the antitrust laws if the licensing term is
19
U.S. Department of Justice and FTC, Antitrust Guidelines for the Licensing of Intellectual Property, 1995,
available at http://www.justice.gov/atr/public/guidelines/0558.pdf (last visited Nov. 1, 2013).
20
See, e.g., U.S. Department of Justice and FTC, Antitrust Enforcement and Intellectual Property Rights &
Promoting Innovation and Competition, 2007, available at http://www.justice.gov/atr/public/hearings/ip/222655.pdf
(last visited Dec. 1, 2013): Agencies “will continue to apply the flexible rule of reason analysis of the Antitrust-IP
Guidelines to assess intellectual property licensing agreements, including non-assertion clauses, grant backs, and
reach-through royalty agreements.”
21
United States v. Imperial Chem. Indus., 254 F. Supp. 685 (S.D.N.Y. 1966).
22
Newburgh Moire Co. v. Superior Moire Co., 237 F. 2d 283 (3d Cir. 1956).
23
Key Pharms., Inc. v. Lowey, 373 F. Supp. 1190 (S.D.N.Y. 1974).

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ancillary to a commercially viable licensing arrangement.24
Voluntary package licensing
including tying arrangement is considered to be not a violation of the antitrust laws if the
licensing agreement promotes market efficiencies.25
In the EU, trade secrets were not treated as other forms of IPRs for the purpose of
applying the TFEU. Traditionally, trade secrets were considered to be overridden by the antitrust
laws. The EU antitrust agencies and courts willingly constrained national trade secrets law. The
European Commission found that trade secrets licensing agreement that the obligate the licensee
to keep the licensed know-how secret and not to grant sublicenses was illegal against Article 101
of the TFEU.26
The European Commission also found that trade secrets licensing agreement
including a nonexclusive grant-back clause was illegal.27
EU Transfer of Technology Block Exemption Regulation (TTBER) of 2004, however,
considers IP licensing including trade secrets as generally pro-competitive. The TTBER treats
know-how as a form of IP; anticompetitive restraints in patent and know-how licenses are
assessed in the same manner. The TTBER allows exemption for territorial restrictions in know-
how licenses until the licensed know-how is no longer secret.
2. Antitrust enforcement of monopolization
Generally, in the U.S., it is not presumed that holding a patent means its owners have
market power in the context of antitrust violation analysis.28
Thus, considering the
24
A. & E. Plastik Pak Co. v. Monsanto Co., 396 F.2d 710 (9th Cir. 1968).
25
U.S. v. Westinghouse Elec. Corp., 471 F. Supp. 532 (N.D. Cal. 1978).
26
Rich Products/Jus-rol, Commission Decision 88/143/EEC, 1988 O.J. (L 69) 21.
27
Id.
28
Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006).

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characteristics of trade secrets such as weaker exclusive IPRs and permission of lawful discovery
through reverse engineering or independent efforts, one can infer that holding a trade secret does
not presume that its owners have market power. Trade secrets were essentially treated as other
forms of IPRs for the purpose of applying § 2 of the Sherman Act.
In general, conducts protecting trade secrets cannot be a violation of antitrust laws.
However, the threat of trade secret litigation made in bad faith with the knowledge that a trade
secret does not exist or that the rights have not been violated in order to obtain a licensing
agreement may constitute an antitrust violation.29
Leveraging monopoly power to gain
advantage in a neighboring market is illegal. However, a monopolist does not have a duty to
pre-disclose trade secrets relating to new products to competitor simply because the monopolist
is present also in a neighboring market and has capability to set de facto industry standards.30
Antitrust enforcement agencies and courts in the EU tend to infer antitrust liabilities from
the nature of accused activities rather than their effects. In order to protect competition, antitrust
agencies and courts in the EU seek to prevent an interference with the freedom to compete. Thus,
a strict per se rule approach is applied for a market reader’s abusing of the dominant power.
Antitrust enforcement of Microsoft’s Window’s operating system licensing practice is the
best example to show the divergence in antitrust enforcement regarding trade secrets between in
the U.S. and the EU. Contrary to the U.S. court’s judgment, the European Commission found
that Microsoft had abused its dominant position in PC operating systems in violation of Article
102 of TFEU by refusing to provide interoperability information for server operating systems to
29
CVD, Inc. v. Raytheon Co., 769 F.2d 842 (1st Cir.1985).
30
Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979).

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its competitors on a nondiscriminatory basis.31
The European Commission ordered Microsoft to
disclose complete and accurate interoperability information including the certain proprietary
communication protocols so that its competitors’ servers could achieve full interoperability with
Windows PCs and servers. The disclosure requirement was at the level of compulsory licensing
with the licensing terms and conditions similar to FRAND commitments for standard essential
patents (SEPs).32
The European Commission concluded that Microsoft's refusal to supply the
interoperability information was abusive because the interoperability information was an
essential facility that can result in complete blocking of the entry of competitors in to the market.
The European Commission’s reasoning that the interoperability information was an
essential facility is also a good example to show the divergence in antitrust enforcement between
in the U.S. and the EU. The U.S. Supreme Court has never endorsed the essential facility
doctrine33
although some lower circuit court of appeals applied the essential facility doctrine.34
On the other hand, the essential facility doctrine was adopted and explicitly applied in the EU to
impose antitrust liability for denial of access.35
The essential facilities doctrine requires four
elements to establish antitrust liability: (1) the monopolist controls an essential facility; (2) a
31
Microsoft Corp., Commission Decision COMP/C-3/37.792, 2004 O.J. (L 32) 23.
32
Standards are often developed and set-up through the standardization process by the standard setting organizations
(SSOs). If the adopted standards are covered by some patents owned by the members that proposed the adopted
standards, the members become the patentees of SEPs. The patentee of SEPs may have market power in the
relevant technology market because the industry may be locked-in to using the standard and the value of SEPs
becomes significantly enhanced. To avoid abusing dominant market power of SEP, a majority of the SSOs require
that the members participating in the standardization process to agree ex ante to license their SEPs under fair,
reasonable, and nondiscriminatory (FRAND) terms ex post to any implementers of the standard.
33
Verizon Communications v. Law Offices of Curtis V. Trinko, 540 U.S. 398 (2004).
34
See, e.g., MCI Communications Corp. v. AT&T Co., 708 F.2d 1081, 1132-33 (7th Cir. 1981).
35
See, Case IV/34.174, B&I Line PLC v. Sealink Harbours Ltd. & Sealink Stena Ltd., 5 C.M.L.R. 255 (1992);
Commission Decision (EC) No. 94/19, Sea Containers v. Stena Sealink, 1994 O.J. (L 15) 8; Commission Decision
(EC) No. 94/119, Port of Rodby, 1994 O.J. (L 55) 52; Commission Decision (EC) No. 354/66, Eurotunnel, 1994 O.J
(L 354) 66.

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competitor does not have the ability to practically or reasonably duplicate that essential facility;
(3) the denial of the use of the facility to a competitor; and (4) the feasibility of providing the
facility.
The European Commission never decided whether Microsoft’s proprietary
interoperability information qualified as protected trade secrets. The commission raised the
possibility that trade secrets can be treated differently (and less favorably) from other IPRs in the
event that trade secrets do not embody enough innovative information.36
Thus, standard of
antitrust intervention in cases involving trade secrets embodying less innovative information
could be lower as compared cases involving other IPRs.
On the other hand, the U.S. court’s judgment did not deal with antitrust liability of a
refusal to license trade secrets.37
On remand, the court ordered similar to but lesser extend in
scope of disclosure compare to38
the remedy adopted in the European Commission’s Microsoft
decision.
IV. Balancing Approaches to Harmonization
A. Causes of Divergence in Enforcement of Antitrust Laws between the U.S. and the EU
The fundamental objective of antitrust enforcement in the U.S. and EU is the same: it is
for protecting consumer welfare. In practice, however, both side show several divergences
36
In the U.S., information protected as trade secrets are available for both information related to technical
innovations and information that does not relate to technical innovations.
37
United States v. Microsoft Corp., 231 F.Supp.2d 144, 202 (D.D.C. 2002).
38
The European Commission required the disclosure of certain server-to-server protocols not covered by the U.S.
case.

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when actually enforcing the antitrust laws as we see in the previous discussion. Most of all,
antitrust agencies and courts in the U.S. willingly consider the pro-competitive effects of
seemingly antitrust activities in appearance. Especially, long term consumer benefits from
dynamic efficiencies embedded in innovation are considered to be more important than short
term harms to consumers by deterring static efficiencies.39
By contrast, antitrust agencies and courts in the EU willingly apply per se rule approach
to the case that a party tries to abuse its dominant position against its smaller competitors. Thus,
the outcomes of antitrust resolutions in the EU are sometimes blamed to be protecting
competitors rather than preserving competitions.
Consequently, in the U.S., one can say that antitrust policy generally favors preservation
of incentives to innovation and benefits of dynamic efficiency to consumer welfares over the
long term regarding new products/services and innovative markets. On the other hand, in the EU,
one can say that antitrust policy generally reluctant to adopt the forward looking attitude and
willingly interrupt to monopolists’ conducts to correct market for more competitive environment.
B. Implication of Differences in Enforcement of Antitrust Laws for Trade Secrets between the
U.S. and the EU
Different standard for application of antitrust laws to trade secrets may discourage
transatlantic licensing of trade secrets. Companies may only invest in those member states
39
See, e.g., Federal Trade Commission, Promoting Innovation: Just How “Dynamic” Should Antitrust Law Be?,
2010, available at http://www.ftc.gov/speeches/rosch/100323uscremarks.pdf (last visited Nov. 15, 2013).

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which have legislation in place concerning trade secrets.40
Especially, insufficient protection of
trade secrets and strong enforcement of antitrust law for the business practices involving trade
secrets such as licensing/technology transfer, joint ventures, M&A and FDI may hinder
innovation and limit the diffusion of new technology. On the other hand, excessive protection of
trade secrets and week enforcement of antitrust law can be used to establish territorial protection.
At the individual company level, as we have seen in the Microsoft’s case for PC OS, it is
very important to develop careful business practices so that do not afoul antitrust law in the EU.
For example, recently, the EU Commission started preliminary investigations on Google’s
Android licensing practices.41
Google’s competitors alleged that Google’s pre-installation of
various Google’s services that are related to internet advertising such as YouTube can be
considered as illegal bundling to monopolize mobile advertising market. Base on the previous
analysis of enforcement of antitrust law involving trade secrets in the EU, we can predict the
outcome of the antitrust investigations of licensing practice of Android OS as follows.
Google will argue that Google’s pre-installation of various Google’s services that are
related to internet advertising as YouTube is a innovative way to deliver high quality services to
consumers because the built-in services on top of the Android OS can perform more reliable and
higher quality applications. Google will also argue that, because Google allows third-party
applications run on the Android OS, consumers can choose any applications that they want.
Therefore, Google will argue that it did not abuse its dominant position in mobile OS market and
40
See, e.g., Christopher Heath and Anselm K. Sanders, Intellectual Property & Free Trade Agreements (Hart
Publishing 2007).
41
Financial Times, Google faces Brussels probe over Android licensing, http://www.ft.com/cms/s/0/b3da6604-
d42b-11e2-8639-00144feab7de.html#axzz2hsTvBooP (last visited Oct. 15, 2013).

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the integration of various Google’s services into the Android OS is not anti-competitive and
provide the long term consumer benefits.
The European Commission, however, will assert that Google violate Article 102 of the
TFEU by the bundling of services that are related to internet advertising including YouTube
and Android OS because Google abused its dominance in the mobile OS market to strengthen
the position of its market for services that are related to internet advertising. The European
Commission will argue that Google could foreclose competition because it can manipulate its
own services over third parties’ services to make outperform the competition. The European
Commission will weighed more on anticompetitive effects/loss of consumer choices than
efficiencies/consumer benefits.
Furthermore, the European Commission will contest Google’s imposition of Android OS
licensing integrated with of services that are related to internet advertising is an unlawful
exclusive dealing agreement because Google restricted freedom to choose third party application
services. It is also possible that the European Commission will may order Google to open its
application interface of Android OS to the third party application service providers so that they
can compete with Google’s own services under the same conditions, although Google will argue
that the application interface information is the proprietary secret information protected under
trade secrets.
C. Harmonization Issues
Balance between the over-protection of trade secrets and under-intervention by antitrust
enforcements in the U.S. and the under-protection of trade secrets and over-intervention by

19. 19
antitrust enforcements in the EU will be important to increase U.S.-EU trade and investment to
support mutually beneficial job creation, economic growth, and international competitiveness.
Key considerations for providing balancing approach to trade secrets protections and antitrust
interventions are as follows: (1) trade secret protection was rather the preservation of
confidential relationships by protecting the secret from being misappropriated by others than
incentives for innovation because trade secrets information are not necessarily innovative; (2)
less market power of trade secrets compare to other IPRs and venerable to misappropriation; and
(3) licensing practices exploiting trade secrets can restrict trades and can be used to increase
monopoly by extending the patent’s fixed term.
A possible balancing approach to harmonize the antitrust enforcement between the U.S.
and EU is to classify trade secrets as embody enough innovative information and not embody
innovative information at all. Then, one treat trade secrets classified as not embody innovative
information at all differently and less favorably from other IPRs in enforcing antitrust liabilities.
Thus, standard of antitrust intervention in cases involving trade secrets embodying less
innovative information could be lower as compared cases involving other IPRs.
This balancing approach is similar to two tier copyright protection in the EU. In the EU,
contrary to the U.S., nonoriginal and noncreative databases are protected as the sui generis right.
In Feist Publications, Inc., v. Rural Telephone Service Co.,42
the U.S. Supreme Court held that
information alone without a minimum of original creativity cannot be protected by copyright.
The Feist court rejected the “sweat of the brow” doctrine. On the other hand, in the EU,
database is protected for 15 years as the sui generis right independent of copyright.43
42
Feist Publications, Inc., v. Rural Telephone Service Co., 499 U.S. 340 (1991).
43
EU Directive No. 96/9/EC.

20. 20
The major advantage of the proposed balancing approach to harmonize the antitrust
enforcement based on the innovative nature of trade secrets is such that it can compromise the
main purposes of adopting policy of providing IPRs for trade secrets to promote innovations and
enforcing antitrust law to protect consumer welfares.
V. Conclusion
In this paper, I presented the antitrust aspects of trade secrets in global context by
contrasting the approaches of the U.S. and the EU enforcers in applications of antitrust rules to
trade secrets. The fundamental objective of antitrust enforcement in the U.S. and EU is the same:
it is for protecting consumer welfare. In practice, however, both side show several divergences
when actually enforcing the antitrust rules. I reviewed legal protection for trade secrets in the
U.S. and the EU, protection of trade secrets in international IP law, U.S. antitrust law, EU
antitrust law, and U.S. and EU antitrust treatment of trade secrets and implication of differences
in enforcement of antitrust laws for trade secrets between the U.S. and the EU.
Considering the increasing the importance of trade secrets in global business, different
standard for application of antitrust laws to trade secrets may discourage transatlantic licensing
of trade secrets. Especially, insufficient protection of trade secrets and strong enforcement of
antitrust law for the business practices involving trade secrets such as licensing/technology
transfer, joint ventures, M&A and FDI may hinder innovation and limit the diffusion of new
technology. To resolve the above mentioned issues, I have tried to provide a little contribution to
the efforts of providing a possible balancing approach to harmonize the antitrust enforcement
between the U.S. and EU.

21. 21
VI. Bibliography
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22. 22
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23. 23
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