The Misuse Doctrine-Law and Policy

• Pages: 239-262

239

CHAPTER VII

THE MISUSE DOCTRINE—LAW AND POLICY

The misuse doctrine protects against conduct that impermissibly

extends intellectual property rights beyond their lawful scope. Such

conduct can create harm in at least two ways. First, it may reduce

competition in a particular market—typically by foreclosing the rights

holder’s rivals from competing. Second, it can undermine the goals of

intellectual property policy by allowing a rights holder to withhold

statutorily intended public benefits from other innovators or the public at

large. Consistent with these concerns, the misuse doctrine has roots in

both intellectual property and antitrust principles. Courts applying the

misuse doctrine, and Congress in defining the scope of the doctrine, have

drawn on both.

However, some courts and commentators have suggested that misuse

should be evaluated under antitrust principles and condemned only in

cases where harm to competition is proved.1 They have argued that to the

extent misuse and antitrust have common goals, it makes sense for courts

to use antitrust principles to screen permissible uses of intellectual

property from impermissible misuse.

Others have suggested that such a screen may be too limiting; barring

an intellectual property rights holder from extending its rights beyond the

granted patent, copyright, or trademark has benefits beyond preserving

competition. Commentators have argued that antitrust standards do not

adequately address the types of harm that misuse is intended to prevent

and misuse should be employed to vindicate intellectual property goals

such as promoting innovation.2 Courts applying the much younger

1. USM Corp. v. SPS Techs., 694 F.2d 505 (7th Cir. 1982); Princo Corp. v.

ITC, 616 F.3d 1318 (Fed. Cir. 2010) (en banc); Mark Lemley, The

Economic Irrationality of the Patent Misuse Doctrine, 78 CAL. L. REV.

1599 (1990). Thomas Cotter, Four Questionable Rationales for the Patent

Misuse Doctrine, 12 MINN. J. L. SCI. & TECH. 457 (2011) goes so far as to

question the need for patent misuse beyond the application of antitrust,

while conceding the need for copyri ght misuse.

2. Robin Feldman, The In sufficiency of Antitrust Analysis for Patent Misuse,

55 HASTINGS L.J. 399 (2003); Christine Bohannon, IP Misuse As

Foreclosure, 96 IOWA L. REV. 476 (2010).

240 Intellectual Property Misuse

doctrine of copyright misuse generally have not required anticompetitive

effects to find challenged conduct to be misuse.

This chapter describes the role the misuse doctrine plays in promoting

intellectual property policy and its goals. It also explores the intersections

between the goals of intellectual property protection and the antitrust

principles that the courts have historically brought to bear on misuse. It

concludes that the modern misuse doctrine continues to be defined by

intellectual property policy principles as well as antitrust law,

notwithstanding the trend in the Federal Circuit of greater use of antitrust

principles in reviewing patent misuse challenges.

A. The Economic Policy Goals of Intellectual Property Protection

The U.S. Constitution authorizes Congress to confer private

intellectual property rights “for limited times” to authors and inventors

“to promote the progress of science and useful arts.”3 Such rights spur

innovation that may not arise from private incentives alone. Innovation is

important because it is the driving force for economic growth.4 The need

for policy to influence incentives for innovation arises because knowledge

is a public (non-rival) good. Once a particular piece of knowledge has

been discovered or created, the information can be used by others without

any reduction in quantity or quality.5

3. U.S. Const. art. I, § 8, cl. 8 (“To promote the progress of science and useful

arts, by securing for li mited times to author s and inventors the excl usive

right to their respective writings and discoveries.”); Eldred v. Ashcroft,

537 U.S. 186, 199 (2003) (construing the “Limited Times” portion of the

clause).

4. Robert Solow, “Technical Change and the Aggregate Production

Function,” The Review of Economics and Statistics, Vol. 39, No. 3 (Aug.

1957), pp. 312-320.

5. As Arnold Plant noted in his classic work:

“It is a peculiarity of property rights in patents (and copyrights) that they

do not arise out of the scarcity of the objects which become

appropriated. They are not a consequence of scarcity. They are the

deliberate creation of statute law; and, whereas in general the institution

of private property makes for the preservation of scarce goods, tending

(as we might somewhat loosely say) to lead us "to make the most of

them," property rights in patents and copyright make p ossible the

creation of a scarcity of the products appropriated which could not

otherwise be maintained. Whereas we might expect that public action

concerning private property would normally be directed at the