The Treatment of Specific Licensing Issues

• Pages: 73-129

73

CHAPTER V

THE TREATMENT OF SPECIFIC LICENSING

ISSUES

A. Duty to License Third Parties

The Patent Act and Copyright Act afford intellectual property

owners the basic right to exclude others from their inventions and

works.

1

The Guidelines, however, are less than definitive on one of the

most fundamental questions relating to the application of the antitrust

laws to intellectual property: under what circumstances a unilateral

refusal to license some or all of an intellectual property owner’s rights

can violate the antitrust laws.

The Guidelines state that even where intellectual property confers

market power , s uch market power does not “impose on the intellectual

1. With regard to patents, see generally Dawson Chem. Co. v. Rohm &

Haas Co., 448 U.S. 176, 215 (1980) (the “essence” of the p atent grant is

the “right to exclude others from profiting by the pate nted invention”);

Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 100, 135 (1969) (the

“heart of [the patentee’s] legal monopoly is the right to in voke the State’s

power to prevent others from utilizing his discovery without his

consent”); Hartford-Empire Co. v. United States, 323 U.S. 386, 432

(1945) (“A patent owner is not in the position of a qua si-trustee for the

public or under any obligation to see that the public acq uires the free right

to use the invention. He has no obligation either to use it or to grant its

use to others.”), clarified, 324 U.S. 570 (1945); E thyl Gasoline Corp. v.

United States, 309 U.S. 436, 457 (1940) (hold ing that a patent owner has

a legal “right to refuse to sell . . . [its] patented p roducts”); Continental

Paper Bag Co. v. Eastern Paper Bag Co., 210 U .S. 405, 429 (1908)

(holding that exclusion of competitors is “the ver y essence of the right

conferred by the patent”). With regard to cop yrights, see generally

Stewart v. Abend, 495 U.S. 207, 228-29 (1990) (noting that “nothing in

the copyright statutes would prevent an author fro m hoarding all of his

works during the term of the copyright” and that “a cop yright owner has

the capacity arbitrarily to refuse to license one who see ks to exploit the

work”); Fox Film Corp. v. Doyal, 286 U.S. 123, 12 7 (1932) (“The owner

of the copyright, if he pleases, may refrain fro m vending or licensing and

content himself with simply exercising the right to e xclude others from

using his property.”).

74 Intellectual Property Guidelines Origins and Ap plications

property owner an obligation to license the use of that property to

others.”

2

The Guidelines add, however, that: “As in other antitrust

contexts, . . . market power could be illegally acquired or maintained, or,

even if lawfully acquired and maintained, would be relevant to the ability

of an intellectual property owner to harm competition through

unreasonable conduct in connection with such property.”

3

This

reservation, together with General Principle 1, which provides that “for

the purpose of antitrust analysis, the Agencies regard intellectual

property as being essentially comparable to any ot her form of property,”

4

leave open the possibility that, under certain limited circumstances, the

enforcement agencies will treat a unilateral refusal to deal i n intellectual

property as a violation of the antitrust laws.

5

1.

The Agencies’ Approach to Unilateral Refusals to License

The Antitrust Division of the U.S. Department of Justice (DOJ or the

Division) enforcement activities since the Guidelines were issued do not

indicate with any precision the circumstances under which it views

unilateral license refusals as unlawful. When the DOJ sued General

Electric Company (GE), challenging GE’s policies for the licensing of

diagnostic software for its medical imaging equipment, it did not claim

that GE was obligated to license its software to its competitors—a claim

that, as discussed below, has formed the basis for numerous private

antitrust actions.

6

More recently, the DOJ suggested in a brief filed in

2. U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrus t Guidelines for the

Licensing of Intellectual Property § 2.2 (1995) [hereinafter

INTELLECTUAL PROPERTY GUIDELINES or GUIDELINES], reprinted in 4

Trade Reg. Rep. (CCH) ¶ 13,132 and Appendix A to thi s book.

3. Id.

4. Id. § 2.0.

5. See, e.g., Aspen Skiing Co. v. Aspen Highlands Skiin g Corp., 472 U. S.

585 (1985) (ski operator’s discontinuation of jo int marketing arrangement

with a smaller competitor constituted monopolization); Lorain Journal

Co. v. United States, 342 U.S. 143 (1951) (newspap er’s refusal to deal

with competitor’s customers constituted monopo lization); but cf.

STATEMENT OF COMMISSIONERS HARBOUR, LEIBOWITZ AND ROSCH ON

THE ISSUANCE OF THE SECTION 2 REPORT BY THE DEPARTMENT OF

JUSTICE at 8-9 (suggesting possible liability for a mere refusal to license).

6. See United States v. General Elec. Co., 63 Fed . Reg. 40,737, 40,740 (DO J

1998) (Proposed Final Judgment and Competitive I mpact Statement:

“The Complaint did not allege that GE’s refusal to lice nse its intellectual

Special Issues Associated With Standard-Setting Organizations 75

United States v. Microsoft Corp.

7

that unilateral refusals to license are

not always lawful,

8

and made the same point in its brief urging the U.S.

Supreme Court to deny the petition for certiorari in In re Independent

Service Organizations Antitrust Litigation.

9

The position of the Federal T rade Commission (FTC or the

Commission), similarly, has not been set forth precisely. In a decision

issued before the release of the Guidelines, the FTC rejected the

argument that a monopolist has a general duty to license patents because

“imposition of a duty to lice nse might serve to chill the very kind of

innovative process that led to [the respondent’s] cost advantage.”

10

Subsequently, in In the Matter of Intel Corp.,

11

the FTC challenged Intel

Corporation’s (Intel’s) refusal to provide advance technical information

about future microprocessors t o three customers that had asserted patent

claims against Intel, allegedly in order to extract an intellectual property

license. Although a decision in private litigation addressing the same

conduct characterized Intel’s conduct as a refusal to license intellectual

property,

12

the FTC did not characterize the withheld information as

patented or copyrighted, and stated that the decree “does not impose any

property to any or all persons who might seek such lice nses violated the

antitrust laws, and the Final Judgment is silent as to that c onduct.”).

7. United States v. Microsoft Corp., 87 F. Supp. 2d 30 (D.D.C. 2000), aff’d

in part and rev’d in part, 253 F.3d 34 (D.C. Cir. 2 001), cert. denied, 122

S. Ct. 350 (2001).

8. See Plaintiffs’ Joint Reply to Microsoft’s Propo sed Conclusions of Law,

United States v. Microsoft, No. 98-1232, at 27-28 (D.D.C. filed Jan. 25,

2000) (“Even in the context of refusals to license, let alo ne in the less

difficult context of anticompetitive license restrictions (li ke those at issue

here), intellectual property defenses to conduct that violate s the antitrust

laws have been rejected.”), available at

http://www.usdoj.gov/atr/cases/f4000/4087. htm.

9. See Brief for the United States as Amicus Curiae, CSU, L.L.C. v. Xerox

Corp., No. 00-62 (filed January 2001) (“we do not b elieve the Federal

Circuit’s decision must be read as holding that no Section 2 claim may

ever be based on the unilateral refusal to sell or license such intellectual

property”), available at http://www.usdoj.gov/osg/briefs/2 000/2pet/

6invit/2000-0062.pet.ami.inv.htm.

10. E.I. duPont de Nemours & Co., 96 F.T.C. 653, 74 8 (1980).

11. No. 9288 (FTC June 8, 1998) (complaint).

12. See Intergraph Corp. v. Intel Corp., 195 F.3d 1 346, 1362-63 (Fed. Cir.

1999).