Source: https://www.robinskaplan.com/resources/articles/a-lawful-monopoly-the-intersection-between-antitrust-and-intellectual-property-law
Timestamp: 2019-04-23 00:59:50+00:00

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Over the past five years, much has been written and discussed about the importance of a business incorporating its intellectual property portfolio into its strategic marketing plan. While the owner of patent rights holds many natural advantages in today's commercial and legal landscape, that patent holder must be sensitive to the limits that antitrust law places upon the wielding of those rights in the marketplace.
There was a time when the only type of acceptable monopoly were the hotels that you could place on Boardwalk and Park Place in the Parker Brothers board game. As many commentators have noted, however, especially with the maturation of the Federal Circuit, the legal community has embraced a policy of encouraging innovation by way of the statutory patent monopoly over a policy of promoting competition by way of antitrust and trade regulation laws. As with all paradigmatic shifts in the law, this leaves those caught on the outside -- in this case the putative infringers -- searching for new or creative ways to breathe life into older doctrines and shift the balance of power back in their favor. As a result, it is likely that holders of patent rights will increasingly face challenges that the patent holder has acted in an anti-competitive fashion.
The conflict between the antitrust and patent laws arises in the methods they embrace that were designed to achieve reciprocal goals. While the antitrust laws proscribe unreasonable restraints of competition, the patent laws reward the inventor with a temporary monopoly that insulates him from competitive exploitation of his patented art. . . .
When the patented product is so successful that it evolves into its own economic market . . . or succeeds in engulfing a large section of a preexisting product market, the patent and antitrust laws necessarily clash. In such cases the primary purpose of the antitrust laws -- to preserve competition -- can be frustrated, albeit temporarily, by a holder's exercise of the patent's inherent exclusionary power during its term.
At the heart of this tension is the fact that antitrust law is premised upon economics, while patent law is based upon technology. These two disciplines are themselves separate and distinct, drawing upon different analytic frameworks. Accordingly, judges, faced with the difficult task of determining which substantive area of the law should be entitled to primacy, reach inconsistent and ad hoc decisions from which few general rules can be drawn.
As with most legal issues, merely placing bounds upon inquiry provides at least a useful starting point for the analysis. Fortunately, two more or less clear principles have emerged regarding the interplay between these areas of the law.
First, as a general rule, patent holders may unilaterally refuse to license their patent technology to third parties without fear of violating the antitrust laws. Data General Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1187 (1st Cir. 1994); 35 U.S.C. § 271(d).
The Court has held many times that power gained through some natural and legal advantage such as a patent, copyright, or business acumen can give rise to liability if a seller exploits his dominant position in one market to expand his empire into the next.
Kodak I, 504 U.S. at 480, n. 29.
Tying arrangements - where the patentee is willing to sell or license a patented product only on the condition that the purchaser/licensee also purchase, or agree not to purchase, another article of commerce - are not within the scope of the patent monopoly. E.g., Senza Gel Corp. v. Seiffhart, 803 F. 2d 661. 664-5 (Fed. Cir. 1986).
Post-expiration royalties or restraints (e.g., regulations contractually requiring a licensee to continue to pay royalties, or limit its use of the patented technology, after the patent expires) are illegal. Brulotte v. Thys Co. 379 U.S. 29 (1964).
Resale price restrictions on the patented article are improper. Ethyl Gasoline Corp. v. U.S., 309 U.S. 436 (1940).
Agreements among competitors or licensees setting the price of patented articles, or agreements not to license third parties, can be treated as illegal conspiracies. See Mannington Mills, Inc. v. Congoleum Industries, Inc., 610 F.2d 1059, 1073 (3rd Cir. 1979).
Generally, field of use and territorial limitations are acceptable. Continental T.V. Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977); Mallinckrodt, Inc. v. Medipart, Inc. 976 F.2d 700 (Fed. Cir. 1992) (upholding single use restrictions).
Finally, while there is a presumption that a patentee may unilaterally refuse to license its patent, that presumption may be rebutted if the patentee engages in a scheme to foreclose competition or has no "legitimate competitive reasons for the refusal." Kodak I, 504 U.S. 451, 483 n.32 (1992); see also, Kodak II (holding that Kodak's refusal to sell replacement parts to Independent Service Organizations on the grounds that some of the parts were patented was pretextual and thus violated the antitrust laws).
In Kodak I, the Supreme Court explicitly recognized that, in appropriate circumstances, it was acceptable to define a relevant market in terms of a single brand of product, if there was evidence that customers had been "locked into" continued use of or reliance upon that brand because of technological or informational barriers. Although it is now commonplace to state that market power does not flow automatically from intellectual property,(1) Kodak's recognition of single brand relevant markets renders it much easier to define the relevant market as consisting solely of a patented item. Variations on this "lock in" theory have already been used by the government in its cases against both Intel and Microsoft. The FTC is accusing Intel of refusing to sell patented chip technology to companies who rely on that technology to build Intel based systems, unless the companies agree to license some of their own technology back to Intel. The case is set to begin on March 9. In the Microsoft case, the government is employing a tying theory, among others, to argue that Microsoft is abusing the economic power associated with its patents and copyrights in operating systems now that industries and the public have standardized on those systems. This case is entering its final stages.
Ultimately, if an antitrust plaintiff succeeds in defining the relevant market consonant with patented technology, the patent holder may face serious consequences. See Grid Systems Grp. v. Texas Instruments, 771 F. Supp. 1033, 1037 (N.D. Cal. 1991) (presumption of market power arising from patent rights survived the "safe harbor" amendments to § 271(d)). Although for the moment, the trend definitely appears to be in favor of defining the scope of a patent monopoly broadly, thereby preempting any claims that the patentee is unfairly wielding market power in a relevant market, a clear doctrinal basis exists for reversing that trend should litigants and courts wish to seize upon it.
<1.>E.g., 35 U.S.C. § 271(d) (patentee cannot be guilty of misuse without proof of market power); Antitrust Guidelines for the Licensing of Intellectual Property (intellectual property, by itself, does not create market power).

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