Academic journal article Law and Policy in International Business

Refusals to Deal Involving Intellectual Property Rights

Academic journal article Law and Policy in International Business

Refusals to Deal Involving Intellectual Property Rights

Article excerpt

I. INTRODUCTION

The debate about whether refusals to deal or sell can lead to liability under antitrust law (1) has been a heated one, particularly where the refusal is linked to the exclusionary effect of intellectual property (IP) rights, or is somehow coupled with the exercise of those rights.

During the past few years, particularly since the initial decision by the European Commission in Magill TV Guide/ITP, BBC and RTE (2) and the subsequent supporting judgments by the Court of Justice of the European Communities in Radio Telefis Eireann (RTE) & Independent Television Publications Ltd. (ITP) v. Commission (3) (known as Magill), the interaction between competition law and IP rights has become a popular topic in legal literature, conferences, seminars and discussion forums. These decisions represent the first cases in which, under European Union (EU) competition law, a company was found to abuse its dominant position by not supplying copyrighted materials to a competitor, in spite of the exclusionary nature of copyright. (4) The issue of abuse of dominant position involving IP rights has been dealt with in depth by both prominent practitioners and members of academia. (5)

However, there are still a number of fundamental issues that remain open, derived mainly from the Commission's brave position in NDC Health/IMS Health (6) and from the apparent contradiction between the U.S. court decisions in Image Technical Services, Inc. v. Eastman Kodak Co. (7) and In re Independent Service Organizations Antitrust Litigation (8) (known as Xerox after the name of the defendant company). In NDC Health/IMS Health, the Commission compelled an allegedly dominant company to license to a competitor the use of a geographic grid structure for data presentation--a grid structure that was hard to categorize as a separate product--in order to allow the competitor to offer a product similar to that already existing and offered by the dominant company. In Kodak, Eastman Kodak refused to sell certain spare parts to independent repairers seeking to service Kodak micrographics equipment and Kodak copiers. (9) The company argued that it had an absolute right to refuse to sell its patented parts, but the U.S. Court of Appeals for the Ninth Circuit affirmed the lower court's ruling that Kodak's reliance on its patent rights was pretextual, and found that its refusal to sell these parts was an act of monopolization of the service business for Kodak equipment. (10) In Xerox, however, when faced with a similar set of facts, the Court of Appeals for the Federal Circuit explicitly disagreed with the Ninth Circuit's decision in Kodak and granted the patent holders a broad right to refuse to license their patents, regardless of the competitive consequences. (11) The court based its conclusion on earlier decisions holding that the patent holder's subjective intention in refusing to license its patent is irrelevant. (12)

This Article addresses the limits on different types of refusals to deal, such as refusals to sell a product, to provide a service, to provide a license, or generally to grant access to a given asset, totally or partially, conditionally or unconditionally. The Article also compares the application of antitrust law to traditional property rights with the application of antitrust laws to IP rights.

As used in this Article, the term "IP rights" refers to patents, trademarks, industrial designs, geographical indications, and copyright, but nothing should prevent the conclusions reached from extending to any other form of IP rights. The scope of the Article, however, is limited to refusals to deal among competitors in one or more marketplaces and does not discuss refusals to deal involving private companies and governments (such as in compulsory license situations for pharmaceuticals).

II. NO ANTITRUST IMMUNITY FOR IP RIGHTS

Under the relevant case law on both sides of the Atlantic, especially in certain EU Member States where relevant cases have arisen, refusals to deal in products or services involving IP fights are not per se illegal, but may amount to an abuse of a dominant position under certain circumstances. …

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