The Antitrust Duty to Deal and Intellectual Property Rights
Burling, James C., Lee, William F., Krug, Antia K., Journal of Corporation Law
Although the goal of promoting competition has been a foremost public policy concern for decades, the means through which that goal is best achieved has continued to remain elusive. Certainly the explicit objective of the antitrust laws is to thwart the efforts of those who would stifle competition through actions directed at eliminating business rivals. And though less explicit, promoting competition is also the goal of the intellectual property laws and the purpose behind patent monopolies. Because both the antitrust and the intellectual property law1 aim in their own ways to preserve a competitive economic environment, the course to steer when the two doctrines come into conflict logically presents a challenge for the courts. Notably, patent law has lost out in several recent cases, perhaps because the pro-competitive effect of patent laws is less direct and thus easily overshadowed by the immediate mission of the antitrust laws to foster competition. This Article discusses how courts have addressed so-called "duty-to-deal" antitrust claims involving intellectual property, and what they should do in those circumstances to ensure appropriate deference to the competition goals of intellectual property doctrine.
Part II discusses duty-to-deal principles in the general case, where intellectual property rights are not at issue, noting that hard and fast rules have yet to emerge.2 Part III discusses the approaches courts have taken in the intellectual property context and contends that, although many courts have conducted their analyses with a view to the objectives of patent law, at least two have not, with potentially detrimental consequences for the preservation of patent rights.3 Part IV discusses two recent cases involving significant antitrust and intellectual property issues-In re Intel Corp.4 and United States v. Microsoft.5 Each of the cases highlights a different facet that courts must consider as they confront an increasing number of cases with intellectual property and antitrust implications. The Article concludes by suggesting that any doctrine endeavoring to navigate the waters of intellectual property/antitrust cases must devote considerable attention to patent law and its objectives.6 When that attention is given, there are only a few circumstances (involving intellectual property rights) in which a duty to deal should be imposed.
II. REFUSALS TO DEAL
When determining how to treat unilateral refusals to deal in licensing intellectual property, a central issue is whether "a unilateral refusal to license a patent should be treated like any other refusal to deal by a monopolist, where the patent has afforded its holder monopoly power over an economic market."7 This query rests on the presupposition that there are some clear principles guiding courts as they analyze "any other refusal to deal." As the following discussion demonstrates, that presupposition is dubious.
As a general proposition, Section 2 of the Sherman Act permits one firm unilaterally to refuse to conduct business with another firm, even if such a refusal perpetuates monopoly power for the refusing firm.8 In United States v. Colgate,9 the Supreme Court declined to endorse the creation of a duty to deal merely to thwart possession of monopoly power, reasoning that the Act did not modify the firm's right "freely to exercise [its] own independent discretion as to parties with whom [it] will deal."10 The Court also observed, however, that a refusal to deal would run afoul of Section 2 when a monopolist had exhibited an intent to establish or to maintain a monopoly.11
The Supreme Court's post-Colgate decisions applying refusal-to-deal analysis provide the point of departure for the development of modern duty-to-deal exceptions.12 Seventy-two years ago, in Eastman Kodak Co. v. Southern Photo Materials Co.,13 the Court affirmed the jury's verdict of monopolization in a case in which Kodak refused to sell wholesale products to a retailer, whose business Kodak had unsuccessfully sought to acquire. …