Law Commons^™

Intellectual Property Misuse, Herbert J. Hovenkamp

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This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters …

Innovation And Competition Policy, Chapter 6 (2d Ed): Restraints On Innovation, Herbert J. Hovenkamp

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This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters …

Competition Policy And The Scope Of Intellectual Property Protection, Herbert J. Hovenkamp

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This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters …

Competition And Innovation In Copyright And The Dmca, Herbert J. Hovenkamp

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This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters …

Competition In Information Technologies: Standards-Essential Patents, Non-Practicing Entities And Frand Bidding, Herbert J. Hovenkamp

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Standard Setting is omnipresent in networked information technologies. Virtually every cellular phone, computer, digital camera or similar device contains technologies governed by a collaboratively developed standard. If these technologies are to perform competitively, the processes by which standards are developed and implemented must be competitive. In this case attaining competitive results requires a mixture of antitrust and non-antitrust legal tools.

FRAND refers to a firm’s ex ante commitment to make its technology available at a “fair, reasonable and nondiscriminatory royalty.” The FRAND commitment results from bidding to have one’s own technology selected as a standard. Typically the FRAND commitment is …

Innovation And Competition Policy: Statutory Supplement And Other Materials, Herbert J. Hovenkamp

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This Supplement to Cases and Materials on Innovation and Competition Policy includes the following: (1) a statutory supplement containing relevant provisions of the antitrust laws, the Patent Act, the Copyright Act, and the DMCA: (2) an annotated table of contents. Other supplemental materials, including discussion of recent decisions or other developments, will be added from time to time.

This book will be supplemented frequently as important new decisions or other developments occur. However, the author will attempt not to revise individual chapters during the course of the academic semester in order to avoid confusion in pagination or printing. Instead, supplemental …

Antitrust And The Movement Of Technology, Herbert J. Hovenkamp

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Patents create strong incentives for collaborative development. For many technologies fixed costs are extremely high in relation to variable costs. A second feature of technology that encourages collaborative development is the need for interoperability or common standards. Third, in contrast to traditional commons, intellectual property commons are almost always nonrivalrous on the supply side. If ten producers all own the rights to make a product covered by a patent, each one can make as many units as it pleases without limiting the number that others can make. That might seem to be a good thing, but considered ex ante it …

Markets In Ip And Antitrust, Herbert J. Hovenkamp

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The purpose of market definition in antitrust law is to identify a grouping of sales such that a single firm who controlled them could maintain prices for a significant time at above the competitive level. The conceptions and procedures that go into “market definition” in antitrust can be quite different from those that go into market definition in IP law. When the issue of market definition appears in IP cases, it is mainly as a query about the range over which rivalry occurs. This rivalry may or may not have much to do with a firm’s ability to charge a …

Mergers, Market Dominance And The Lundbeck Case, Herbert J. Hovenkamp

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In Lundbeck the Eighth Circuit affirmed a district court’s judgment that a merger involving the only two drugs approved for treating a serious heart condition in infants was lawful. Although the drugs treated the same condition they were not bioequivalents. The Eighth Circuit approved the district court’s conclusion that they had not been shown to be in the same relevant market.

Most mergers that are subject to challenge under the antitrust laws occur in markets that exhibit some degree of product differentiation. The Lundbeck case illustrates some of the problems that can arise when courts apply ideas derived from models …

Antitrust And Patent Law Analysis Of Pharmaceutical Reverse Payment Settlements, Herbert J. Hovenkamp

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Patent settlements in which the patentee pays the alleged infringer to stay out of the market are largely a consequence of the Hatch-Waxman Act, which was designed to facilitate the entry of generic drugs by providing the first generic producer to challenge a pioneer drug patent with a 180 day period of exclusivity. This period can be extended by a settlement even if the generic is not producing, and in any event all subsequent generic firms are denied the 180 day exclusivity period, significantly reducing their incentive to enter.

The Circuit Courts of Appeal are split three ways over such …

Antitrust And Innovation: Where We Are And Where We Should Be Going, Herbert J. Hovenkamp

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For large parts of their history intellectual property law and antitrust law have worked so as to undermine innovation competition by protecting too much. Antitrust policy often reflected exaggerated fears of competitive harm, and responded by developing overly protective rules that shielded inefficient businesses from competition at the expense of consumers. By the same token, the IP laws have often undermined rather than promoted innovation by granting IP holders rights far beyond what is necessary to create appropriate incentives to innovate.

Perhaps the biggest intellectual change in recent decades is that we have come to see patents less as a …

Are Those Who Ignore History Doomed To Repeat It?, Peter Decherney, Nathan Ensmenger, Christopher S. Yoo

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In The Master Switch, Tim Wu argues that four leading communications industries have historically followed a single pattern that he calls “the Cycle.” Because Wu’s argument is almost entirely historical, the cogency of its claims and the force of its policy recommendations depends entirely on the accuracy and completeness of its treatment of the historical record. Specifically, he believes that industries begin as open, only to be transformed into closed systems by a great corporate mogul until some new form of ingenuity restarts the Cycle anew. Interestingly, even taken at face value, many of the episodes described in the …

Post-Sale Restraints And Competitive Harm: The First Sale Doctrine In Perspective, Herbert J. Hovenkamp

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A post-sale restraint is a condition or contract provision that operates after a good has been sold. In antitrust law these restraints are roughly divided into two classes, “intrabrand” and “interbrand.” An intrabrand restraint limits the way a firm can distribute the restricted property. For example, resale price maintenance controls the price at which goods can be resold. Intrabrand nonprice restraints place other types of limits, such as the places from which goods can be sold, the uses for which they can be sold, and the identity of buyers. By contrast, an interbrand restraint limits a purchaser’s right to deal …

Concerted Refusals To License Intellectual Property Rights, Christina Bohannan, Herbert J. Hovenkamp

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Unilateral refusals to license intellectual property rights are almost never antitrust violations, as is true of most unilateral refusals to deal. Concerted refusals to deal are treated more harshly under the antitrust laws because they can facilitate collusion or, in the case of technology, keep superior products or processes off the market.

In its en banc Princo decision a divided Federal Circuit debated whether Congress had protected concerted refusals to license from claims of patent misuse. The majority rejected the dissent’s argument that Congress had no such intent and then went on to hold that an alleged concerted refusal to …

Introduction To Creation Without Restraint: Promoting Liberty And Rivalry In Innovation, Christina Bohannan, Herbert J. Hovenkamp

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This document contains the table of contents, introduction, and a brief description of Christina Bohannan & Herbert Hovenkamp, Creation without Restraint: Promoting Liberty and Rivalry in Innovation (Oxford 2011).

Promoting rivalry in innovation requires a fusion of legal policies drawn from patent, copyright, and antitrust law, as well as economics and other disciplines. Creation Without Restraint looks first at the relationship between markets and innovation, noting that innovation occurs most in moderately competitive markets and that small actors are more likely to be truly creative innovators. Then we examine the problem of connected and complementary relationships, a dominant feature of …

Resale Price Maintenance: Consignment Agreements, Copyrighted Or Patented Products And The First Sale Doctrine, Herbert J. Hovenkamp

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The rule of reason adopted for resale price maintenance in the Supreme Court’s Leegin decision, which upset the century old Dr. Miles rule of per se illegality, requires some reconsideration of a number of issues about antitrust treatment of RPM. Under the old per se rule, bona fide “consignment” agreements were not covered by Section 1 of the Sherman Act at all because there was said to be no qualifying “agreement” between the supplier and the dealer. Rather the dealer was simply said to be acting as an agent of the seller. However, insofar as RPM produces competitive dangers, such …

American Needle And The Boundaries Of The Firm In Antitrust Law, Herbert J. Hovenkamp

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In American Needle the Supreme Court unanimously held that for the practice at issue the NFL should be treated as a “combination” of its teams rather than a single entity. However, the arrangement must be assessed under the rule of reason. The opinion, written by Justice Stevens, was almost certainly his last opinion for the Court in an antitrust case; Justice Stevens had been a dissenter in the Supreme Court’s Copperweld decision 25 years earlier, which held that a parent corporation and its wholly owned subsidiary constituted a single “firm” for antitrust purposes. The Sherman Act speaks to this issue …

American Needle: The Sherman Act, Conspiracy, And Exclusion, Herbert J. Hovenkamp

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This essay, part of a colloquium in the CPI Antitrust Journal, explores the meaning and significance of the Supreme Court’s decision in American Needle v. NFL. The Supreme Court held that for purposes of the dispute at hand the NFL should be treated as a collaboration of its member teams rather than a single entity. The factors that the Supreme Court considered most important were, first, that the NFL’s member teams are individually owned profit making entities who compete with each other in at least some economic markets, such as that for the sale of apparel bearing NFL symbols. …

Intra-Enterprise Activity, Joint Ventures And Sports Leagues: Identifying Unilateral Conduct Under The Antitrust Laws, Herbert J. Hovenkamp

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In the American Needle case the Supreme Court will consider whether the NFL’s decision to give an exclusive trademark license to one firm should be counted as “unilateral” on the NFL’s part, or rather as the concerted joint venture activity of the NFL’s individual member teams. The intellectual property in question is not trademarks in the NFL itself, but rather the trademarks and other intellectual property developed separately by each individual team, and which the teams in turn have licensed exclusively to the NFL.

In general, when a joint venture is engaged in its own business the unilateral characterization is …

The Obama Administration And Section Two Of The Sherman Act, Herbert J. Hovenkamp

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During the administration of President George W. Bush, the Antitrust Division was not enthusiastic about use of §2 of the Sherman Act to pursue anticompetitive single-firm conduct. Indeed, its most prominent contribution on the issue was the Antitrust Division’s §2 Report, which the Obama Antitrust Division withdrew only eight months after it was issued.This withdrawal was entirely in keeping with candidate Obama’s repeated promises to reinvigorate antitrust enforcement.

This essay analyzes the current state of antitrust and makes recommendations concerning structures and practices where increased §2 enforcement is warranted and those where it is not. Wise use of enforcement dollars …

Ip And Antitrust: Reformation And Harm, Christina Bohannan, Herbert J. Hovenkamp

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Antitrust and intellectual property law both seek to improve economic welfare by facilitating competition and investment in innovation. At various times both antitrust and IP law have wandered off this course and have become more driven by special interests. Today, antitrust and IP are on very different roads to reform. Antitrust reform began in the late 1970s with a series of Supreme Court decisions that linked the plaintiff’s harm and right to obtain a remedy to the competition - furthering goals of antitrust policy. Today, patent law has begun its own reform journey, but it is in a much earlier …

Patents, Property, And Competition Policy, Herbert J. Hovenkamp

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The decision to regulate involves the identification of markets where simple assignment of property rights is not sufficient to ensure satisfactory competitive results, usually because some type of market failure obtains. By contrast, if property rights are well defined when they are initially created and can subsequently be traded to some reasonably competitive equilibrium, then regulation is thought not to be necessary. In such cases the antitrust laws have a significant role to play in ensuring that the market can be as competitive as free trading allows. One problem with the patent system is that once a patent is granted …

Schumpeterian Competition And Antitrust, Herbert J. Hovenkamp

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Joseph Schumpeter's vision of competition saw it as a destructive process in which effort, assets and fortunes were continuously destroyed by innovation. One possible implication is that antitrust's attention on short-run price and output issues is myopic: what seems at first glance to be a monopolistic exclusionary practice might really be an innovative enterprise with enormous payoffs in the long run. While this may be the case, three qualifications are critical. First, one must not confuse the prospect of innovation with the scope of the intellectual property laws; their excesses and special interest capture cast serious doubt on the proposition …

The Walker Process Doctrine: Infringement Lawsuits As Antitrust Violations, Herbert J. Hovenkamp

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Antitrust law's Walker Process doctrine permits a patent infringement defendant to show that an improperly maintained infringement action constitutes unlawful monopolization or an unlawful attempt to monopolize. The infringement defendant must show both that the lawsuit is improper, which establishes the conduct portion of the violation and generally satisfies tort law requirements, and also that the structural prerequisites for the monopolization offense are present. The doctrine also applies to non-patent infringement actions and has been applied by the Supreme Court to copyright infringement actions. Walker Process itself somewhat loosely derives from the Supreme Court's Noerr-Pennington line of cases holding that …

Patent Deception In Standard Setting: The Case For Antitrust Policy, Herbert J. Hovenkamp

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Many patent applications are rejected upon initial submission, but they are almost never rejected with absolute finality. Further, subsequent to filing its original application a patent applicant might wish to write an application with broader or somewhat different claims, or perhaps add claims that were not made in the original application. Or it may wish to rewrite claims that had been rejected in the original application. A patent "continuation" is an application for additional claims made on a patent that was previously applied for.

Under generally accepted patent practices in the United States, when a subsequent continuation or divisional application …

The Intellectual Property-Antitrust Interface, Herbert J. Hovenkamp

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This historical overview examines the relationship between antitrust policy and intellectual property in the United States since 1890. Over most of this history, judges imagined far greater conflicts between antitrust policy and intellectual property rights than actually existed, or else relied on sweeping generalizations rather than close analysis. For example, they often assumed that the presence of an intellectual property right led to anticompetitive effects where there was no basis for finding any injury to competition at all. At the other extreme, they often concluded that an intellectual property right immunized seriously anticompetitive conduct even when the intellectual property statute …

Innovation And The Domain Of Competition Policy, Herbert J. Hovenkamp

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Antitrust policy and the IP laws are both concerned with practices that restrain competition unnecessarily by reducing the size of the public domain beyond that which the Constitution contemplates, or as Congress intended for them to be expanded. In fact, antitrust has a dual role as promoter of competition in IP intensive markets. It regulates both restraints on competition and restraints on innovation. The first line protector of the competitive process in innovation is the IP statutes themselves. The Constitutional Mandate to Congress to create intellectual property regimes in order to promote the Progress of Science and useful Arts is …

Restraints On Innovation, Herbert J. Hovenkamp

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Beginning with the work of Joseph Schumpeter in the 1940s and later elaborated by Robert W. Solow's work on the neoclassical growth model, economics has produced a strong consensus that the economic gains from innovation dwarf those to be had from capital accumulation and increased price competition. An important but sometimes overlooked corollary is that restraints on innovation can do far more harm to the economy than restraints on traditional output or pricing. Many practices that violate the antitrust laws are best understood as restraints on innovation rather than restraints on pricing.

While antitrust models for assessing losses that result …

Ip And Antitrust Policy: A Brief Historical Overview, Herbert J. Hovenkamp

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The history of IP/antitrust litigation is filled with exaggerated notions of the power conferred by IP rights and imagined threats to competition. The result is that antitrust litigation involving IP practices has seen problems where none existed. To be sure, finding the right balance between maintaining competition and creating incentives to innovate is no easy task. However, the judge in an IP/antitrust case almost never needs to do the balancing, most of which is done in the language of the IP provisions. The role of antitrust tribunals is the much more limited one of ensuring that any alleged threat to …

Unilateral Refusals To License In The Us, Herbert J. Hovenkamp, Mark D. Janis, Mark A. Lemley

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Most antitrust claims relating to intellectual property involve challenges to agreements, licensing practices or affirmative conduct involving the use or disposition of the intellectual property rights or the products they cover. But sometimes an antitrust claim centers on an intellectual property owner's refusal to use or license an intellectual property right, perhaps coupled with efforts to enforce the intellectual property right against infringers. The allegation may be that the intellectual property right is so essential to competition that it must be licensed across the board, or that a refusal to license it to one particular party was discriminatory, or that …