Symposium: Intellectual Property Rights and Federal Antitrust Policy: Introduction
Hovenkamp, Herbert, Journal of Corporation Law
In the last few years antitrust has confronted intellectual property issues with a frequency and level of complexity seldom seen before. To be sure, judges deciding antitrust cases have dealt with antitrust issues since early in the century.1 The result has been a sizeable body of law relating to such things as tying arrangements involving patent licenses,2 price-fixing and territorial division in licensing agreements,3 or various misuses of patents by dominant firms, such as the filing of unwarranted infringement complaints.4
The new generation of intellectual property/antitrust cases is hardly the first time antitrust judges have had to confront the law and policy of intellectual property rights. But the decisions have faced a number of novel issues, dealt with increasingly complex markets, and attempted to fashion unique and sometimes unprecedented remedies. They have also exhibited some significant failures-ranging from the inability to measure market power in technologically complex markets5 to understandable befuddlement over whether two pieces of software bundled into a single package (Microsoft Windows 95 and Microsoft Internet Explorer) should be regarded as a "single product" or "separate products" for the law of tying arrangements.6 They have also expanded antitrust liability considerably-and in the process reduced the amount of protection historically given to intellectual property rights. The prominent examples include the Ninth Circuit's Kodak decision,7 creating a compulsory licensing duty for a simple refusal to deal when accompanied by anticompetitive intent, in apparent disregard of a provision to the contrary in the Patent Act8 as well as Supreme Court precedent.9 Another example is the Federal Circuit's C.R. Bard10 decision, approving a jury verdict that innovation itself can be an antitrust violation when it creates less compatibility with the unpatented complementary products provided by rivals.
The authors in this symposium address these problems as well as several others. First, Professor David McGowan looks at the problem of refusal to deal in intellectual property rights, particularly in networks. 11 McGowan surveys the wide variety of judicial and scholarly opinion on the refusal to deal problem. He finds the potential for anticompetitive effects to be somewhat greater in industries displaying substantial network effects; nevertheless, he concludes that "antitrust should not, under any market conditions, declare that the use of intellectual property rights in acts of. . . `pure exclusion' violate the antitrust laws."12 He then defines pure exclusion as situations "in which the owner of a valid intellectual property right, validly obtained, unilaterally refuses to sell or license the technology covered by the right to a party wishing to obtain the technology."13 McGowan finds this right to be so well established in the patent and copyright regimes that it must be regarded as beyond dispute.14 He would continue to recognize some basis for antitrust liability in cases that involve more traditional claims of anticompetitive intellectual property "misuse," such as tying arrangements, reciprocity, and the like.15 Nevertheless, he argues that these can be dealt with under well established antitrust principles.16 For example, McGowan finds grounds for antitrust concern in the "coercive reciprocity" claim raised in the Intel litigation,17 namely, that Intel withheld its intellectual property from certain firms unless they agreed to give it intellectual property licenses in return.18 He also faults the Ninth Circuit's decision in the Kodak litigation for making the duty to license intellectual property depend on the defendant's subjective intent.19 Most significantly, Professor McGowan concludes that even in network industries use of the antitrust laws to condemn unconditional refusals to deal would severely limit the protection offered by the intellectual property statutes, while providing benefits to competition that are ambiguous at best. …