Jose Cortina of Daniels Daniels & Verdonik writes today, July 26, 2006, in the Local Tech Wire about the intersection of patent and antitrust law.
A grant of a patent in the United States is often discussed as being a grant of a monopoly power. This is a misstatement because a patent only grants the owner of the patent the right to exclude others from making, using, selling, offering for sale and importing the invention defined in the claims of the patent.
A patent owner does not obtain an absolute right to practice his/her invention because, for example, there may exist patents owned by others that would be infringed by the “practice” of the invention claimed in the owner’s patent.
In contrast, the term “monopoly” is one more appropriate to the realm of antitrust law where certain conduct, when a party has sufficient market power or a “monopoly”, is considered illegal. However, it is clear that ownership of a patent sometimes will permit certain kinds of conduct that would otherwise be considered an antitrust violation.
The difficulty in understanding the interplay between patents and antitrust law is that some antitrust cases in the past have assumed that every patent holder has a dominant market position even if there are other patented technologies that compete effectively. In short, this assumption in the past was wrong and a patent owner defendant in an antitrust case should not have to bear the burden of being presumed to have an economic monopoly simply because he/she owns a patent.
The Supreme Court has held that certain practices are per se patent misuse. For example, requiring payment of royalties after a patent has expired constitutes misuse. On the other hand, many acts are considered reasonable within the patent grant. Such acts include notification of patent infringement, threats of suit, calculation of royalties based in part on revenue derived from unpatented components, etc.
A tying arrangement where the purchase of unpatented components is tied to the purchase of a patented product is an example of conduct that in the past was often found to constitute a misuse. However, even this area is in flux as evidenced by the recent U.S. Supreme Court decision in Illinois Tool Works, Inc. v. Independent Ink, Inc.
In short, conduct outside the four corners of the right granted in a patent may not always constitute an antitrust violation. However, the greater the market power of the patent owner, the more likely that conduct outside the rights granted by the patent, and utilizing the patent to support that conduct, will be found to be an antitrust violation. In order to avoid the antitrust trap, patent owners, to the extent possible, should limit their actions to those rights granted by the patent. If conduct is to fall outside the grant of the patent, then closer legal scrutiny is required to ensure the conduct is legal. Otherwise one risks loss of the right to enforce the patent.
Read the full article here.