Basics of Intellectual Property Laws for the Antitrust Practitioner

Issues of antitrust liability arise in patent cases most commonly,
though not exclusively, when the alleged infringer claims that the patent
asserted was procured by fraud,1 or the party knowingly asserts baseless
claims of patent infringement.2 Antitrust issues also may arise in
connection with other activities such as licensing pools and tying
arrangements involving patents or other types of intellectual property
such as copyright, trademark and trade secrets.
In order to understand the contexts in which these antitrust issues
may arise, this chapter provides antitrust practitioners with some
background on various forms of intellectual property, focusing primarily
on utility patent laws and procedures. It seeks to acquaint the reader with
matters relevant to antitrust claims, such as those bearing on the validity,
enforceability, interpretation and scope, infringement, implied license,
exhaustion, waiver, and estoppel.
A. Overview of the United States Patent Laws
1. The Constitutional Foundations of Patent Protection
The United States Constitution provides, “Congress shall have power
. . . to promote the progress of science and useful arts by securing for
limited times to authors and inventors the exclusive right to their
respective writings and discoveries.”3
Congress passed the first United States Patent Act in 1790 (“An act
to promote the Progress of Useful Arts”), then replaced it with the Patent
1. Walker Process Equip. v. Food Mach. & Chem. Corp., 382 U.S. 172,
176–77 (1965) (holding that enforcement of a patent obtained through
fraud on the Patent Office may be the basis of an action under § 2 of the
Sherman Act); Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d
1059 (Fed. Cir. 1998); Atari Games Corp. v. Nintendo of Am., Inc., 897
F.2d 1572, 1576 (Fed. Cir. 1990).
2. Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1305 (Fed. Cir.
2004); Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282 (9th Cir. 1984);
Handgards, Inc. v. Ethicon, Inc., 601 F.2d 986 (9th Cir. 1979).
3. U.S. Const. art. 1, § 8, cl. 8.
2 Antitrust Counterattack in Intellectual Property Litigation Handbook
Act of 1793, largely shaped by then-Secretary of State Thomas
Jefferson.4 The Act’s definition of patentable subject matter has been
unchanged since it was enacted: “any new and useful art, machine,
manufacture or composition of matter, and any new and useful
improvement on any art, machine, manufacture or composition of
matter.”5 As of December 31, 2009, 7,640,591 patents had been issued.6
2. Policies behind Patent Laws
The patent laws seek to foster invention, including investment and
risk taking, and promote innovation.7 By granting inventors the right to
exclude others from making, using, or selling a patented invention for a
limited period of time, patent law encourages innovation and its
byproducts, such as new jobs, new industries, new consumer goods, and
trade benefits.8 A corollary benefit arises out of the incentive to design
around a competitor’s patent, thus providing a continual flow of
innovation into the marketplace.9 Patent law also encourages the public
disclosure of knowledge through publication of patents upon issuance.10
4. Act of April 10, 1790, c.7, 1 Stat. 109; Act of Feb. 21, 1793, § 1, 1 Stat.
5. Act of Feb. 21, 1793, § 1, 1 Stat. 319; accord 35 U.S.C. § 101 (“Whoever
invents or discovers any new and useful process, machine, manufacture,
or composition or matter, or any new and useful improvement thereof,
may obtain a patent therefore, subject to the conditions and requirements
of this title.”).
6. Patent number 7,640,591 “Image display device” was issued December
29, 2009. See U.S. Patent and Trademark Office,
7. Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480 (1974); Brenner v.
Manson, 383 U.S. 519, 534 (1966) (“The basic quid pro quo
contemplated by the Constitution and the Congress for granting a patent
monopoly is the benefit derived by the public from an invention with
substantial utility.”); Paulik v. Rizkalla, 760 F.2d 1270, 1276 (Fed. Cir.
8. Diamond v. Chakrabarty, 447 U.S. 303, 307 (1980); Kewanee Oil,
416 U.S. at 484; Paulik, 760 F.2d at 1276.
9. State Indus. v. A.O. Smith Corp., 751 F.2d 1226, 1235–36 (Fed. Cir.
10. 35 U.S.C. § 10; Brenner v. Manson, 383 U.S. 519, 533 (1966).
Basics of Intellectual Property Laws for the Antitrust Practitioner 3
3. Statutory Scheme of United States Patent Laws
Title 35 of the United States Code contains the statutes governing
most aspects of patent practice, including the establishment of the United
States Patent and Trademark Office (PTO), the types of patents available,
patentable subject matter, the requirements for a patent, the application
and examination process, the rights that accompany a patent, and the
remedies available to one whose patent has been infringed.11
Implementing federal regulations are located in Title 37 of the Code of
Federal Regulation.12 A brief overview of the key requirements for
obtaining a patent, along with a description of the rights associated
therewith, follows.
a. Requirements for Obtaining a Patent
In the United States, an invention may be patented only if it satisfies
certain conditions. Specifically, an invention may be patented if the
subject matter of the invention is deemed to be (1) patentable subject
matter, and the invention is (2) useful (there is a practical use for the
invention), (3) novel (the exact combination of elements of the invention
are not found in prior art), and (4) nonobvious.13
Patentable subject matter includes processes, machines, articles of
manufacture, and compositions of matter. Naturally occurring products
are not patentable, nor are abstract principles, pure mathematical
formulae or principles of nature such as the law of gravity.14
Prior art, which is the focus of much attention in patent prosecution
and litigation, is knowledge that exists in other patents or patent
applications or is otherwise publicly available. A patent may be invalid
if it is found in the prior art or if the prior art makes it obvious at the time
11. See 35 U.S.C. §§ 1–376.
12. 37 C.F.R. Ch. 1.
14. J.E.M. Ag Supply v. Pioneer Hi-Bred Int’l, 534 U.S. 124, 130 (2001);
Diamond v. Diehr, 450 U.S. 175, 185 (1981); Diamond v. Chakrabarty,
447 U.S. 303, 309 (1980); Funk Bros. Seed Co. v. Kalo Inoculant Co.,
333 U.S. 127, 130 (1948). In In re Bilski, 545 F.3d 943, 965–66 (Fed.
Cir. 2008) (en banc), cert. granted sub nom. Bilski v. Doll, 2009 U.S.
LEXIS 4103 (June 1, 2009), the Federal Circuit rejected processes as
unpatentable under § 101 unless (1) they are tied to a particular machine
or apparatus (except an ordinary computer), or (2) they transform a
particular article into a different state or thing.

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