PTC FORUM : PUBLICATIONS

USA / INTELLECTUAL PROPERTY / ANTI-TRUST

LICENSING JOURNAL, VOL 22 NO 1. JAN 2002

Anti-trust Treatment of Refusals to License Intellectual Property

James A Kobak, Jr

This article is a further contribution to the increasingly important debate on the relationship between the exclusivity conferred by intellectual property rights and the attempts under anti-trust law to end the unacceptable conduct of monopolies, particularly in terms of their refusal to license. The author reviews the three principal tests traditionally used to determine whether a monopolist has unlawfully refused to deal. One is the "unjustified change in the pattern of dealing". Another is the "essential facilities" doctrine. A third is "monopoly leveraging" in one market to obtain unfair competitive advantage in another. However, as the author points out, intellectual property owners have no general duty to license their intellectual property to anyone. At the same time, there appear to be inroads on intellectual property rights both from Europe and from Canada - the European cases of McGill and IMC and the Canadian Competition Act, section 32, are mentioned briefly - and in the USA itself. The article examines the implications of Data General v Grumman Systems, ITS v Eastman Kodak and Re ISOs (Xerox), and draws a distinction between the ways in which copyrights and patents respectively may be treated. It also examines the position of the Federal Trade Commission, referring to the observations of Robert Pitoksky [20050] and the Intergraph case. The author draws attention to the potential for Copyright misuse claims, particularly by reference to the decision in Alcatel USA v DGI, but also to a little noticed footnote to the Napster case, in which the Court observed that "a unilateral refusal to license a copyright may constitute wrongful exclusionary conduct giving rise to a claim of misuse". He adds, in a discussion of the Dell Computer case that "lack of access to the interface means that fewer complementary products will be developed by competitors… [this] is the core of the thinking behind the Microsoft and Intel cases". But Microsoft was not primarily about intellectual property rights; and Intel was settled without a decision on its merits. "When a patent or copyright becomes the basis for exclusion, the same principles of broad intellectual property protection that encourage innovation leading to the initial product may actually discourage innovation at a later stage. This is a fundamental paradox of intellectual property rights, which anti-trust and intellectual property law are only beginning to confront." In a final caveat, the author draws attention to the possibility of litigation in the future, where refusals to deal are backed by a deliberate accumulation of intellectual property. [20058]