The Intersection of Patent and Antitrust Law
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Description
Antitrust law’s treatment of potentially anticompetitive business conduct involving patents has oscillated between aggressive intervention and acceptance bordering on complacency. Pre-Chicago antitrust viewed patents as monopolies, and the exercise of patent rights as likely to raise antitrust concerns. This view led antitrust courts to construe the scope of patents narrowly, and to intervene to police licensing terms, price restraints, and other business conduct of patentees that might harm competition. It also led the federal antitrust agencies toward close policing of patent licenses. Following its Chicago reformulation, antitrust has slowly moved away from its former hostility. Some of this movement reflects a reappraisal of the respective roles that antitrust and intellectual property (IP) play in consumer and social welfare. By the advent of the agencies’ 1995 Antitrust Guidelines for the Licensing of Intellectual Property, the prevailing view had shifted markedly away from the presumed antagonism that characterized the patent-antitrust interface pre-Chicago. The IP Guidelines denied, at least implicitly, any foundational incompatibility, stating instead that ‘[t]he intellectual property laws and the antitrust laws share the common purpose of promoting innovation and enhancing consumer welfare’. Based in part on this shift in background presumptions, the IP Guidelines asserted that IP licensing was broadly procompetitive, and that the rule of reason would be applied in the antitrust analysis of licensing restraints. Influenced, undoubtedly, by these deep ideological shifts, the Supreme Court and the federal Circuit Courts are now well forward toward dismantling the structural elements of the earlier hostility. For example, in its 2006 decision in Illinois Tool Works, Inc. v. Independent Ink, Inc., the Supreme Court ruled that in a tying case the existence of a patent on the alleged tying product was insufficient, absent some other evidence that the defendant had power over price, to establish the market power predicate for tying liability. In so ruling the Court overturned its prior rule, in place since the 1947 decision in International Salt Co. v. United States, presuming that a defendant enjoyed market power in a patented tying product. Similarly, the Federal Circuit in CSU v. Xerox ruled that patent owners have a presumptive right to refuse to sell or license products incorporating the patented technology without fear of antitrust liability for unlawful refusal to deal. In so doing, the Xerox court created a special category within the antitrust law wherein refusals to deal in intellectual property are treated more leniently than refusals involving other forms of property. The continuing course of antitrust’s gradual liberalization respecting IP rights raises important questions. Has liberalization gone far enough? Has it gone too far? Unfortunately, we ask these questions against the backdrop of our continuing ignorance regarding the conditions conducive to innovation. Is innovation best encouraged by the spur of competition? Or by the shelter from competition that IP rights sometimes provide? This chapter will examine the most important recent and recurring issues at the intersection of antitrust and patent law, with the goal of assessing whether the development of the law is consistent with underlying economic principles.
Source Publication
Research Handbook on the Economics of Antitrust Law
Source Editors/Authors
Einer Elhauge
Publication Date
2012
Recommended Citation
Sprigman, Christopher J., "The Intersection of Patent and Antitrust Law" (2012). Faculty Chapters. 1742.
https://gretchen.law.nyu.edu/fac-chapt/1742
