Antitrust law and patent law are legal tectonic plates –
always in motion, occasionally converging, occasionally diverging,
and occasionally moving in parallel relation. As patent suits
have recently multiplied, the antitrust enforcement policies have
again responded – for example, imposing pro-competition rules
on patent case settlements, on abuses in standard setting
situations, and on practices used to obtain patents in the first
instance.
When the two disciplines' plates converge, we see the direct
clash of the constitutional grant of a patent monopoly confronting
the statutory edict against monopoly. When the plates
diverge, we see that antitrust law has no bearing on many of the
important patent doctrines of obviousness, anticipation, best mode,
claims construction and the like. And when the doctrines
transform – moving sideways in relation to each other –
we see often compatible principles in royalty calculation,
innovation promotion, and licensing practices.
The Supreme Court could say in 1902 that the "general
rule" was the "absolute freedom in the use or sale of
rights under the patent laws... The very object of these laws
is monopoly." E. Bennett & Sons v. National Harrow Co.,
186 U.S. 70 (1902). But 60 years later, antitrust law treated
intellectual property rights more skeptically, leading to perhaps
the zenith of antitrust's dominance in 1970.
We will use that latter era as our discussion jump-off point,
referencing a set of doctrines issued at the time when the
antitrust tectonic plate was dominant, when patents and patent
licensing practices – mostly of a vertical nature –
were viewed with anti-competitive suspicion. It was the era
of the "Nine No-Nos," articulated by the Antitrust
Division in 1970. Over time, these per se illegal
prohibitions succumbed to the free market thinking of antitrust
enforcers in the Reagan and Bush administrations. Yet just
when patent law appeared to be on a long run of domination, we are
now again witnessing a renewed pushback against patents – a
pushback led by the Supreme Court rulings, by defendants in suits
brought by non-practicing entities, and by the Federal Trade
Commission. Could a Reagan era antitrust enforcer ever have
imagined that today's FTC would hold hearings on whether the
assertion of weak patents in infringement litigation brought by
"Non-Practicing Entities" (aka "trolls") could
constitute unfair competition?
The two regimes are ever moving, often in conflict, and always
creating new challenges for intellectual property and antitrust
lawyers. What we shall observe is that the Nine No-Nos of the
1970's were a collective condemnation of larger, vertical
patent licensing practices as per se illegal. That per se
prohibition is absent in contemporary antitrust law. Today,
vertical restraints – whether involved in a patent license or
not – are never per se illegal. However, we do see in
the Nine No-Nos some foreshadowing of practices that the modern
antitrust enforcer may challenge – practices that use patent
powers to extend market power. The Nine No-Nos asked the
right question – how does a patent holder unlawfully extend
the patent grant – but may not have provided the right
answers. Today, an antitrust analysis requires more than a
rote incantation of a patent to prove market power. A patent
is important to consider, but is not determinative.
Let us proceed, then, to discuss some current antitrust issues
looking through the lens of the Nine No-Nos. The Nine No-Nos
were:
- Tying of purchase of unpatented materials as a condition of a patent license;
- Requiring the licensee to assign back or grant an exclusive grant-back license of subsequent patents obtained by the licensee;
- Restricting the right of the purchaser of the product in the resale of the product;
- Restricting the licensee's ability to deal in products outside the scope of the patent;
- Promising a licensee that the licensor would not grant further licenses;
- Mandating that the licensee take a "package license";
- Imposing royalty provisions not reasonably related to the licensee's sales;
- Restricting a licensee's use of a product made by a patented process; and
- Requiring a minimum resale price for the licensed products.
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