A. Overview of Intellectual Property and Antitrust Law
The intersection of intellectual property law and antitrust law is
delimited by the nature and purpose of each body of law. In the analysis
of the antitrust treatment of the use of intellectual property, it is therefore
important to start with an outline of each body of law’s main principles.
Difficult questions arise when the nature and purpose of one set of laws
seem to conflict with those of the other.
1. Nature of the Intellectual Property Laws
Intellectual property is the collective term for a group of intangible
property rights, primarily patents, copyrights, trademarks, and trade
secrets, that give their owners a legal stake in the fruits of their creativity
and reputation. Broadly speaking, patents cover inventions; copyrights
cover expressive works of authorship; trademarks cover words and
designs that indicate source, sponsorship, or quality, and trade secrets
cover confidential business information.1 Each right protects a different
aspect of intangible property and is an independent right; none of these
rights is a subset of the others.2 Intellectual property aims to reward
creative effort with the promise of exclusive or near-exclusive rights—
whether to profits, recognition, or both—to encourage innovation, which
ultimately benefits consumers and society at large.3
Intellectual property is similar to other types of property in that each
right gives its owner the ability to exclude others, and each right can be
transferred via license (leased) or assignment (sold) for the owner’s
profit.4 However, intellectual property differs from tangible property in
that multiple users, whether ten, a thousand, or a million, can use a given
PROPERTY HANDBOOK: POLICY, LAW & USE, §§ 2.1, 2.162, 2.319-20,
2.833-34 (WIPO 2008) [hereinafter WIPO HANDBOOK].
2. See Medtronic, Inc. v. Catalyst, 518 F. Supp. 946, 955 (D. Minn. 1981),
aff'd, 664 F.2d 660 (8th Cir. 1981).
3. See Mazer v. Stein, 347 U.S. 201, 219 (1954).
2 Intellectual Property and Antitrust Handbook
item of intellectual property at the same time.5 Also, while it may be
expensive to create the first product unit of an intellectual asset, the
intellectual property portion of that product (as distinguished from any
tangible embodiment, such as the binding of a copyrighted book or the
metal in a patented machine) can be reproduced indefinitely at essentially
zero cost.6
Free riding—when a subsequent user benefits from the innovation of
an intellectual property creator without compensating that creator or
otherwise permitting the creator to recoup its investment—is a particular
hazard with intellectual property because of its low marginal cost of
reproduction.7 Intellectual property law, at its simplest, prevents free
riding, or at least limits it to levels that are less likely to discourage
innovation.8 The intellectual property laws may be thought of as ways to
devise artificial, legal barriers against this form of theft, and by doing so,
to preserve incentives to innovate.
The constitutional mandate for the protection of intellectual property9
strikes a balance between intellectual property owners and the general
public by encouraging and rewarding a creator’s innovation, but also
ensuring varying degrees of rights of use for the public. Intellectual
output not covered by the intellectual property laws, or creations to the
5. See id. at 20.
6. See William M. Landes & Richard A. Posner, An Economic Analysis of
Copyright Law, 18 J. LEG. STUD. 325, 326 (1989).
7. See id.; Hanns Ullrich, The Importance of Industrial Property Law and
Other Legal Measures in the Promotion of Technological Innovation, 28
INDUST. PROP. 102-03 (1989).
8. See Mark A. Lemley, Ex Ante Versus Ex Post Justifications for
Intellectual Property, 71 U. CHI. L. REV. 129, 138 (2004) (stressing the
need “to give creators of patented and copyrighted works power over
price because the act of creation imposes a cost that imitators do not
9. The public policy basis of the intellectual property laws finds its primary
source in the U.S. Constitution, which empowers Congress “[t]o 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.” U.S. CONST. art. 1, § 8, cl. 8. This clause casts private
rights in light of a public goal—“progress”—and tempers those rights by
recognizing them only for “limited times.” The terms “writings” and
“discoveries” are generally interpreted as corresponding to modern-day
copyrights and patents, respectively. See generally Eldred v. Ashcroft,
537 U.S. 186, 192-93 (2003) (referring to U.S. CONST. art. 1, 8, cl. 8 as
the “Copyright and Patent Clause”).
Introduction 3
extent they consist of expired rights, become part of the “public domain,”
a catch-all term for anything that the public may use without needing an
intellectual property owner’s permission.10 The interplay of intellectual
property rights and the public domain is the central tension of intellectual
property law and is the subject of frequent debate, and occasional action,
by Congress.11
There are four main types of intellectual property: patents,
copyrights, trademarks, and trade secrets. Since patents and copyrights
are the types that most frequently intersect with antitrust law, this chapter
discusses only these in detail below.
a. Patents
A patent is a government-created right to an invention.12 The owner
of a patent has the exclusive right to “practice” the patent—make, use,
offer to sell, sell, or import a product or service embodying the
invention—within the United States.13 There are three types of patents:
utility patents, plant patents, and design patents.14 Utility patents—by far
the most common type—may be obtained for any new and useful
process, machine, composition of matter, or useful improvement
thereof.15 Plant patents may be obtained for certain new varieties of
plants that the applicant has discovered and asexually reproduced.16
Utility and plant patents are awarded for a term of twenty years measured
10. See Feist Publ’ns v. Rural Tel. Serv., 499 U.S. 340, 350-51 (1991)
(describing how facts are in the public domain and ineligible for
copyright protection); Baker v. Selden, 101 U.S. 99, 103 (1880) (holding
that, because “the very object of publishing a book on science or the
useful arts is to communicate to the world the useful knowledge which it
contains,” such facts and knowledge become part of the public domain
upon publication).
11. For example, in 1998, Congress extended the term of copyright
protection—not merely for future works, but for existing ones as well—in
the Copyright Term Extension Act, Pub. L. 105-298, §§ 102(b) and (d),
112 Stat. 2827, 2827-28 (amending 17 U.S.C. §§ 302, 304). The Supreme
Court concluded that in doing so, Congress acted within its powers under
the Copyright and Patent Clause. Eldred, 537 U.S. at 194.

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