Antitrust Analysis of Unilateral Conduct by Intellectual Property Owners

This chapter focuses on scrutiny of unilateral conduct in the
exploitation of intellectual property under Section 2 of the Sherman Act.
In particular, the chapter discusses: (1) the antitrust issues presented by
unilateral refusals to license or sell intellectual property and (2) the
circumstances in which the unilateral enforcement of intellectual
property rights may be subject to antitrust scrutiny.
A. Refusal to License or Sell Intellectual Property
The U.S. Supreme Court has not squarely addressed whether owners
of intellectual property can be subject to potential antitrust liability under
Section 2 of the Sherman Act when they refuse to sell or license their
intellectual property. As discussed below, the lower federal courts have
reached differing conclusions.
1. Antitrust Liability for Refusing to Deal with Competitors: Aspen
Skiing and Trinko
Antitrust cases involving unilateral refusals to sell or license
intellectual property arise in the context of a broader jurisprudence
concerning monopolization and refusals to deal under Section 2 of the
Sherman Act.1
A claim of monopolization under Section 2 of the Sherman Act
requires proof of both monopoly power and predatory or exclusionary
6, 1995) [hereinafter 1995 IP GUIDELINES] (observing that the agencies
“apply the same general antitrust principles to conduct involving
intellectual property that they apply to any other form of property”),
available at
172 Intellectual Property and Antitrust Handbook
acts in the acquisition or maintenance of that power.2 If a defendant lacks
monopoly power, it cannot be liable for monopolization under Section 2.3
A defendant currently without monopoly power may, however, be liable
for attempted monopolization.4 The mere possession of a patent or
copyright does not confer monopoly power.5 While the possession of
2. See United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966) (“The
offense of monopoly under [Section] 2 of the Sherman Act has two
elements: (1) the possession of monopoly power in the relevant market
and (2) the willful acquisition or maintenance of that power as
distinguished from growth or development as a consequence of a superior
product, business acumen, or historic accident.”); see also Verizon
Commc’ns v. Law Office of Curtis V. Trinko, 540 U.S. 398, 407 (2004)
(discussing the fact that it is “settled law” that monopoly power and
predatory conduct must be shown under Section 2 and noting that “[t]he
mere possession of monopoly power, and the concomitant charging of
monopoly prices is not only not unlawful; it is an important element of
the free-market system”).
3. See, e.g., Barry v. Blue Cross of Cal., 805 F.2d 866, 874 (9th Cir. 1986)
(dismissing § 2 claim because the defendant’s alleged market share was
“far below” what the court would require for a showing of monopoly
4. A “dangerous probability” of achieving monopoly power is sufficient to
support an attempt to monopolize claim, so long as the elements of
exclusionary means and specific intent to monopolize are present. See,
e.g., Spectrum Sports v. McQuillan, 506 U.S. 447, 459 (1993); see
DEVELOPMENTS 309-23 (7th ed. 2012) [hereinafter ALD]. Courts
generally assess “dangerous probability” by reference to market shares in
the relevant market, together with other factors such as entry barriers. See
ALD, supra, at 318-20. Where market share is low, courts are unlikely to
find a dangerous probability of monopolization. See id. Generally
speaking, courts rarely find a “dangerous probability” of monopolization
when the defendant’s market share is under 30 percent; they sometimes
do when it is between 30 and 50 percent; and they often do when it
exceeds 50 percent. See id.
5. See, e.g., Illinois Tool Works v. Independent Ink, 547 U.S. 28, 45-46
(2006) (“Congress, the antitrust enforcement agencies, and most
economists have all reached the conclusion that a patent does not
necessarily confer market power upon the patentee. Today, we reach the
same conclusion . . . .”); A.I. Root Co. v. Computer/Dynamics, Inc., 806
F.2d 673, 676 (6th Cir. 1986) (“[W]e reject any absolute presumption of
market power for copyright[ed] or patented product[s] . . . .”). At least
one district court has held that the Illinois Tool holding also applies to
copyrights. See Apple, Inc. v. Psystar Corp., 586 F. Supp. 2d 1190, 1197
Analysis of Unilateral Conduct 173
monopoly power is significant, most of the case law in the context of a
refusal to license or sell intellectual property focuses on whether the
refusal to deal satisfies the exclusionary conduct element.
As to exclusionary conduct, in the context of refusal to deal claims
under Section 2, the Supreme Court has long held that the Sherman Act
“does not restrict the long recognized right of [a] trader or
manufacturer . . . to exercise his own independent discretion as to parties
with whom he will deal.”6 Although courts are “very cautious” in
recognizing exceptions to this rule,7 the right to choose the parties with
whom to deal is not unqualified.8
In Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,9 the defendant
(Ski Company) owned three of the four ski mountains in the Aspen,
Colorado area, and for years had voluntarily cooperated with the owner
of the fourth (Highlands) in issuing a joint, multi-day, all-area ski
ticket.10 After Highlands refused to accept a smaller share of the total
n.3 (N.D. Cal. 2008) (holding that Illinois Tool “rejected . . . the
presumption of market power for copyrighted or patented products”). But
see Research In Motion Ltd. v. Motorola, Inc., 644 F. Supp. 2d 788, 793
(N.D. Tex. 2008) (essential patents may confer market power).
6. United States v. Colgate & Co., 250 U.S. 300, 307 (1919); accord Trinko,
540 U.S. at 408; Pacific Bell Tel. Co. v. Linkline Commc’ns., 555 U.S.
438, 448 (2009) (“As a general rule, businesses are free to choose the
parties with whom they deal, as well as the prices, terms, and conditions
of that dealing.”).
7. See Verizon Communications v. Law Offices of Curtis V. Trinko, LLP,
540 U.S. 398, 408 (2004). The Supreme Court explained in Trinko that
forcing competitors to deal with each other poses several problems:
(1) requiring a competitor who develops an infrastructure making it
uniquely suited to serve its customers to deal with its competitors may
reduce its incentive to invest in its business; (2) courts are ill-equipped to
act as “central planners” to set the terms of forced cooperation; and
(3) compelling cooperation could cause collusion, which is “the supreme
evil of antitrust.” Id. at 407-08. One commentator has criticized the
Court’s “central planner” comment as encouraging courts “to abdicate the
obviously critical role they play in maintaining effective competition.”
Andrew I. Gavil, Exclusionary Distribution Strategies by Dominant
Firms: Striking a Better Balance, 72 ANTITRUST L.J. 3, 50 (2004).
8. See, e.g., Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S.
585, 601 (1985) (“The high value that we have placed on the right to
refuse to deal with other firms does not mean that the right is
9. 472 U.S. 585 (1985).
10. See id. at 587-90.

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