Refusals to Deal with Competitors by Owners of Patents and Copyrights: Reflections on the Image Technical and Xerox Decisions

Abstract

Under the patent and copyright laws, the owner of a patent for an invention or of a copyright for a work has the right to sell, license or transfer it, to exploit it individually and exclusively, or even to decide to withhold it from the public. By contrast, under the antitrust laws, a unilateral refusal to deal may constitute an element of a violation of Section 2 of the Sherman Act, and the courts may then impose a duty on the violator to deal with others, including possibly with its actual or would-be competitors. The central question addressed by this Article arises from an attempt to harmonize these potentially conflicting principles: What is the extent to which the antitrust laws may impose a duty to deal on the owner of intellectual property? Two recent court of appeals decisions have taken notably different approaches to this question. In Image Technical Services v. Eastman Kodak, the Ninth Circuit held that, in the absence of legitimate business justifications, the defendant, the owner of copyright and patent rights, violated the Sherman Act by its refusal to sell or license the products subject to intellectual property protection to its competitors. In In re Independent Service Organizations Antitrust Litigation (Xerox), the Court of Appeals for the Federal Circuit expressly disagreed with the Ninth Circuit and rejected the proposition that even in the absence of those justifications, the antitrust laws might impose a duty on the owner of patents or copyrights to deal with competitors. On several occasions, albeit not in the context of intellectual property, the Supreme Court has recognized that the antitrust laws may impose a duty on a firm with market power to deal with its competitors. However, last Term, in Trinko, the Supreme Court limited the reach of some of those prior decisions. This Article explores this apparent - but in fact exaggerated - tension between the intellectual property regime and the antitrust laws. What are the policy justifications for imposing, or refusing to impose, a duty on the owner of intellectual property to deal with competitors? Was Image Technical correctly decided? To what extent does Image Technical survive after Xerox, Trinko, and other recent cases?