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IP Foreclosure & Antitrust Foreclosure

 |  February 22, 2013

Posted by D. Daniel Sokol

Steven Semeraro, Thomas Jefferson School of Law battles over IP Foreclosure & Antitrust Foreclosure.

ABSTRACT: Professor Christina Bohannan’s IP Misuse as Foreclosure enlightens the debate over the patent misuse doctrine’s role in regulating intellectual property owners’ ever-expanding claims. Presently, courts scrutinize licensing restrictions under the antitrust laws only after determining that the IP holder has exceeded what the Federal Circuit has called the “exclusionary zone” of the IP right. Professor Bohannan wisely rejects this question-begging inquiry, explaining that “[e]very licensing agreement contains terms that are not express in the [IP] grant, and the beyond-the-scope test does not provide a meaningful way to determine which of these terms lies ‘within the scope’” To bring coherence to this area, Professor Bohannan would eschew the existing two-step test in favor of an exclusive focus on “the core IP values of promoting innovation and protecting access to the public domain.”

Commenting on her piece, Professor Thomas Cotter points out that antitrust law and IP policy cannot be distinguished so easily. IP holders simultaneously possess both (1) a property right to foreclose competition; and (2) a privilege to compete in an open market. As Professor Cotter recognizes, antitrust law, no less than IP policy, seeks to mediate these rights and privileges. He suggests broadening antitrust doctrine, if necessary, rather than using IP policy to condemn licensing restrictions as misuse that antitrust doctrine would otherwise permit.

The misuse problem, however, is more fundamental than either Professors Bohannan or Cotter suggest. IP policy and antitrust law seek precisely the same objectives — an optimal melding of a property-rights regime that insulates owners from competition, and a competitive regime in which everything that might constitute property is up for grabs. A coherent solution will not come from tweaking either IP or antitrust. Both already serve as syntheses of society’s dual commitment to property rights and competitive markets. Instead, the law must step back and focus directly on how one structures a legal regime that commits itself to these conflicting goals.

Part I summarizes existing law and Professor Bohannan’s proposal. Part II explains that since IP policy and antitrust doctrine share common goals, her approach essentially replicates what modern courts do in misuse cases. Part III suggests a potentially more fruitful path.