Chopping at old antitrust trees
The Supreme Court has put to rest a lingering remnant of an age of hostility to IP - the fiction that a patent or copyright gives market power sufficient to support an antitrust tying claim when a license is conditioned on the licensee taking other property or rights.
Even the briefest review of patent or copyright office records would quickly show that most patents and copyrights have no market value, let alone market power. Can anyone seriously believe that the copyright on "Harry and the Hendersons", a never popular television show, gives its copyright owner any market power? I don't think so.
The Court's decision in Independent Ink permanently (I hope) set aside the fiction that rights under IP law equate to market power. Virtually all neutral observers have urged burial of that concept, as have virtually all lower courts. The only people supporting the fiction were plaintiffs seeking antitrust damages and a coterie of people and organizations that believe commercialization of IP should be tightly constrained. That's where the fiction began - in a desire years ago to constrain those rights, a hostility to them, and a fear of misuse. To me, those attitudes seem today arcane and extravagantly misguided.
It took the Supreme Court years to eliminate this one artifact of an old world view not because the issue was in doubt, but because the Court can only rule on cases presented to it. I suspect that Congress thought that it had eliminated the fiction in 1988 when it legislated that no person could be held to have misused a patent by requiring another license or purchase as a condition for the license, unless the patent gave it market power in the antitrust sense. But that statute only referred to misuse, not antitrust, and did not refer to copyright or trademark cases. Under any fair reading of the Independent Ink decision, however, there is no basis in misuse or antitrust law for continuation of a market power assumption.
Other artifacts of that old world-view linger in modern law because the Supreme Court has not revisited them. The signal from the modern Court is quite clear. Courts should also discard these other remnants. Among the top on my list to be discarded are:
*The idea that patent or copyright misuse can occur without circumstances that support an antitrust claim.
*The idea that agreeing to pay royalties after a patent expires is misuse.
*The idea that an agreement to not contest the validity of a licensed right is unenforceable.
*The idea that licensing copyrighted works or patents only on the condition that a whole package of numerous works or patents be taken is suspect or perhaps per se invalid.
*The idea that requiring a licensee to compute royalties on a base that is broader than the licensed patent is an expansion of the patent, rather than simply a means of pricing the contract.
This is not to say that any of these practices might not be objectionable in some contexts, but that they all should be evaluated under competition law standards and a rule of reason, rather than the remnant of old hostility to IP and IP owners. As Judge Posner commented: "If misuse [and other] claims are not tested by conventional antitrust principles, by what principles shall they be tested? Our law is not rich in alternative concepts of monopolistic abuse; and it is rather late in the day to try to develop one without in the process subjecting the rights of patent holders to debilitating uncertainty."