Expansion of the Compulsory Licensing Doctrine? Image Technical Services, Inc. V. Eastman Kodak Co

By Trumm, Tonya | Journal of Corporation Law, Fall 1998 | Go to article overview

Expansion of the Compulsory Licensing Doctrine? Image Technical Services, Inc. V. Eastman Kodak Co


Trumm, Tonya, Journal of Corporation Law


I. INTRODUCTION TO IMAGE TECHNICAL SERVICES, INC. V. EASTMAN KODAK CO.

Generally, patent holders have the right to refuse to license their patents to others. l However, this right no longer seems to be inherent.2 Compulsory licensing requirements, through both legislation and the courts, have lessened the guarantee that a patent holder may unilaterally refuse to grant the license to another individual or corporation.3 Nonetheless, despite its availability, compulsory licensing is rarely used.4 The right to exclude is essential to the grant of a patent;5 therefore, courts do not often require compulsory licensing.

Before Image Technical Services, Inc. v. Eastman Kodak Co.,6 no court had ever compelled a patentee to license a valid patent.7 In Image Technical, the Ninth Circuit considered the existing state of the law regarding refusals to license. Under prior law, licensing had only been judicially compelled in cases of unlawfully acquired patents or patent misuse.8 Despite the status of the law, however, the Ninth Circuit compelled Kodak to license its valid patents on service parts.9 The Image Technical Court's imposition of a duty to license on Kodak has created instability for patent holders in the Ninth Circuit. Furthermore, if future courts follow the Ninth Circuit and impose a duty to license, it will have widespread impact on the patent system as it now exists, the purposes behind the patent laws,10 and the overall value of intellectual property rights. l l

This Comment addresses whether compulsory licensing should have been imposed in Image Technical. First, this Comment discusses the purposes of both the patent and antitrust laws and how these laws impact one another.12 Second, it examines the state of the law regarding patents and the right to exclude or refuse to license prior to Image Technical.13 Third, this Comment presents the Image Technical decision. It presents the facts, the holding, and the court's analysis in reaching its decision.14 This Comment next critiques the court's analysis and its holding.15 It concludes that although the court attempted to harmonize patent and antitrust laws, it developed a subjective intent standard which conflicts with the objectively-based standard adopted by the Supreme Court in Professional Real Estate Investors, Inc. v. Columbia Pictures Industrial, Inc.16 This result, especially in cases involving valid patents and fifty percent market control,17 could have serious ramifications upon both the court system and patent holders. By requiring proof of the patentee's subjective intent, anyone can sue a patent holder who refuses to license. Under the Ninth Circuit's subjective intent analysis, whether licensing should or should not be compelled will not be determined until at least the discovery stage of a lawsuit.18 Finally, this Comment considers whether compulsory licensing is ever appropriate and suggests some possible remedies to the problems created by Image Technical.19

II. BACKGROUND

A. The Intersection of Patent and Antitrust Laws

Both antitrust and patent laws stress benefiting the public as their end goal,20 and they attempt to encourage invention and innovation.21 However, the methods through which each strives to accomplish these goals differ. Antitrust laws attempt to promote and protect competitive markets by prohibiting monopolies and restraints on trade.22 Patent laws, on the other hand, attempt to create incentives to invent23 by protecting and introducing inventions in the public market.24 Perhaps most importantly, patent laws attempt to encourage investment for innovation, which can be quite costly, through the limited exclusionary grant25 contained within patent laws.26

Because patent law attempts to protect monopoly power and antitrust law attempts to prevent it,27 these two areas often overlap and sometimes conflict.28 For example, a patentee might want to implement a certain strategy through the use of his patent. …

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Expansion of the Compulsory Licensing Doctrine? Image Technical Services, Inc. V. Eastman Kodak Co
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