Patents, Copyrights, and Trademarks as Sources of Market Power in Antitrust Cases

• Author: Warren G. Lavey
• Date: 01 June 1982
• Published date: 01 June 1982
• DOI: 10.1177/0003603X8202700205
• Subject Matter: Article

The Antitrust Bulletin/Summer 1982

Patents, copyrights, and trademarks

as sources

of

market power in

antitrust cases

BY WARREN G. LAVEY·

433

To

"promote

the progress

of

science

and

the useful arts,"' the

Constitution directs Congress to enact laws granting authors

exclusive rights to their writings,

and

inventors exclusive rights to

their discoveries. This provision responds to the concern

that,

in

the absence

of

legal protection, information can be easily pirated;

unimpeded piracy would cause investments in information devel-

opment

and

the

output

of

new information to be inefficiently low

for the society. A patent gives the inventor

of

a new, nonobvious,

and

useful invention the exclusive right

to

make, use, or sell the

invention for 17 years.' Acopyright gives the author

of

an

original expression the exclusive right to copy it for at least 50

years.' The Supreme

Court

has called each kind

of

exclusive right

a"monopoly":'

•Lawyer/Economist, Lexecon Inc., Chicago, Illinois.

V.S.

CONST. art. I, §8,

d.

8.

235 V.S.C.A. §

101

et seq. (1976).

17 V.S.C.A. §

101

et seq. (1977).

4See, e.g., Graham v.

John

Deere Co., 383

V.S.

1, 19 (1966)

(patent); Fox Film Corporation v. Doyal, 286

V.S.

123, 127 (1932)

(copyright).

©1982by Federal Le8a1Publications, Inc.

434 The antitrust bulletin

Another form

of

intellectual property is a trademark. A

trademark is designed to prevent consumer confusion regarding

the source

of

aproduct, i.e., passing-off

of

one producer's goods

as those

of

another,' The owner

of

atrademark has the exclusive

right to use the mark in connection with its products, thus

possessing a "monopolv.'"

The owner

of

apatent, copyright, or trademark is a "legal"

monopolist over those whose actions would infringe his exclusive

legal rights, just as an owner

of

real property is a "legal"

monopolist in his control over certain uses

of

his land. But an

economic monopoly differs significantly from a legal monopoly.

Intellectual property? may confer exclusive legal rights insuffi-

cient to give the recipient an economic monopoly. To determine

whether an economic monopoly does in fact exist, a court must

look beyond these legal rights; it must define relevant markets

5See, e.g., 3 R.

CALLMAN,

THE

LAW

OF

UNFAIR

COMPETITION,

TRADEMARKS

AND

MONOPOLIES

ch. 17 (1969); Drexel Enterprises, Inc. v.

Richardson, 312 F.2d 525, 527 (10th Cir. 1962); Siegel v. Chicken

Delight, Inc., 448 F.2d 43, 48-49 (9th Cir. 1971), cert. denied, 405 U.S.

955 (1972).

6See, e.g., 1 R. Callman, supra

note

5, at 461; Siegel v. Chicken

Delight, Inc., 448 F.2d

43,50

(9th Cir, 1971), cert. denied, 405

U.S.

955

(1972)

("the

registered trade-mark presents a legal

barrier

against

competition"); Industrial Building Materials, Inc. v. Interchemical

Corp.,

437 F.2d 1336, 1344 (9th Cir. 1970) (A

manufacturer

has a

"natural

monopoly over his

own

products,

especially when

the

products

are

sold under

trademark

....

"); Smirti, Trademarks as Tying Prod-

ucts: The Presumption

of

Economic

Power,

69

TRADEMARK

REV.

I, 3

(1979) (Because

of

perpetual

duration,

a

trademark

"provides

an even

greater monopoly

than

does a

patent

or copyright.").

7Trade secrets also involve legal grants

of

exclusive rights to

information, i.e., intellectual property. Little

antitrust

case law ad-

dresses whether a

trade

secret confers

market

power. See, e.g., In re

Data

General

Corp.

Antitrust Litigation, 490 F.

Supp.

1089, 1113-14

(N.D. Cal. 1980); R.

MILGRIM,

TRADE

SECRETS

§6.05 (1980); Mac-

donald, Know-How Licensing and the Antitrust Laws, 62

MICH.

L.

REV.

351 (1964). A discussion

of

possible developments in this

area

is beyond

the

scope

of

this article.