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Abstract:
Patents and copyrights protect inventions and expression; they do not protect products. This distinction, I argue in this essay, is a key to the antitrust problem of the "leveraging" of intellectual property. In a typical leveraging case, the manufacturer of a durable good, like a copier or computer, refuses to sell replacement parts for its equipment unless the purchaser also hires the manufacturer to service the equipment. Such a practice can be illegal under antitrust law, but when the leveraging products-in this example, replacement parts-are protected by patent or copyright, the manufacturer will often claim that the leveraging is a permissible use of its intellectual property.

I argue in this essay that intellectual property rights should provide special protection from the antitrust laws only when the owner of the rights is truly denying access to the intellectual aspect of its property. That will never be the case when the owner's property is denied to one who will not use the intellectual property. In the recent Kodak and Xerox cases, independent service organizations sought access to the defendants' patented parts only in order to install them in the equipment of others. It was the equipment owners, not the service organizations, that benefitted from any inventions embodied in those parts. Hence, the defendants' patents should not have allowed them to deny the parts to the service organizations.

Somewhat more broadly, intellectual property also should not allow owners of the property to discriminate among potential buyers or licensees if those buyers or licensees do not differ in their uses of the intellectual element of the property. That is, not only should a patent or copyright not give its owner the right to deny a product to one who would not use the invention or expression, but it also should not give the owner the right to deny the product to one who would use the protected work if the owner at the same time grants access to others who use it in the same way. Such discrimination where there is no difference in the use of the protected aspect of the property does not rest on a denial of access to the owner's intellectual property. A similar conclusion was in fact reached, though on somewhat different reasoning, in the Federal Trade Commission's recent case challenging Intel Corporation's licensing practices.

Abstract:
Some argue that "information intermediaries" are the solution to the costs imposed by the ease of communication on the World Wide Web. Intermediaries are agents that facilitate relationships between buyers and sellers, and information intermediaries serve this role for information markets. Information intermediaries are said to reduce the costs of communication on the Web by helping users locate information (through portals, like Yahoo, and search engines, like AltaVista), by helping them filter information (through organizations like NetNanny), and by restricting how Web sites gather and use information (through privacy-certifying organizations, like TRUSTe).

My purpose in this essay is to question whether information intermediaries are likely to provide consumers with useful and objective information. For many intermediaries, it may be more profitable, at least in the short term, to accept payments to skew the information they provide to consumers than it would be to provide objective information. And there may be little to restrain such conduct, because there may be little profit, again in the short term, in providing consumers with information about it, such information being a public good. Whether longer term factors, such as consumer experience and reputational effects, will cause intermediaries ultimately to provide objective information is less clear.

To the extent that the market currently does not provide competition sufficient to induce information intermediaries to serve their users, the legal doctrines directed at maintaining competition might provide appropriate remedies. Those doctrines are contained largely in the various bodies of law addressing unfair competition, and particularly in the laws against false advertising and in antitrust law. It is the latter that is likely to be more useful, though the former might be applicable in some instances. However, to the extent that these legal remedies deny intermediaries the opportunity to provide non-objective information, they might make the intermediaries unprofitable in their current forms. In the end, information intermediaries might become public sector entities, like libraries, or the intermediaries might begin charging users directly for the information they provide.

Abstract:
Patentees sometimes license their inventions through field-of-use licenses, which permit licensees to use the inventions, but only in specified ways. Field-of-use licensing is often procompetitive, because the ability to provide different licensing terms for different users can encourage broader licensing of inventions. But in recent United States cases, the Federal Circuit Court of Appeals and lower courts have upheld field-of-use licenses prohibiting activities that licensees would otherwise have been permitted by patent law, such as the repair and resale of patented products. The recent cases rely on the Federal Circuit's decision in Mallinckrodt, Inc. v. Medipart, Inc., where the court effectively allowed the patentee to use contract to avoid limitations on infringement liability. The opportunities that Mallinckrodt made available to patentees were anticipated by several commentators at the time of the decision in 1992, but the exploitation of those opportunities has recently accelerated. This article seeks to demonstrate the dramatic expansion of patent law that has resulted, and to do so specifically by showing how the courts have allowed patentees to expand the range of acts that constitute patent infringement. The article also briefly compares these effects in patent law to the analogous effects of shrink-wrap licenses and the DMCA in copyright law, and it assesses the potential for similar expansion of patent infringement liability in Europe.

Abstract:
The current legal tests for monopolization and abuse of dominance are unsatisfactory. In both the U.S. and the EC, the tests ask whether the dominant firm engaged in exclusionary conduct, a standard that is notoriously vague. But both jurisdictions also offer a more fruitful analytical approach in asking whether the defendant's conduct had legitimate or objective business justifications. In the U.S., this criterion has led defendants and the U.S. antitrust agencies to argue that monopolization requires a sacrifice of short-term profits, at least in certain circumstances. This essay argues that the sacrifice-of-profits test is an appropriate one, but that it should be understood more specifically to ask whether a dominant firm has excluded its competitors from an input and whether the monopolist has sacrificed profits in doing so. Understood in this way, the test is consistent with both U.S. and EC law. Moreover, the essay shows that with this additional specificity, the test is neither as favorable for defendants as its proponents suggest nor as dangerous as its opponents fear.

Abstract:
When an industry standard incorporates a patented invention, the demand for products that comply with the standard has two components. Some of the demand may be for the inherent technical advantages of the invention; the patentee is generally entitled to revenues attributable to this demand. But some of the demand is for the benefits of standardization, such as interoperability, and the patentee is not entitled to revenues attributable to this demand. From this point, the article draws two conclusions. First, the amounts to which a patentee is entitled, either in litigation or in licensing negotiations, should be calculated by determining the portion of demand that is attributable to its invention. In some cases, there will be evidence from which one can make this determination directly; in others, there may be no such direct evidence, but it may still be possible to draw inferences regarding the contributions of the patentee. Second, because the contributions of the standard itself, like interoperability, are economically distinct, the "owner" of a standard - typically a standard-setting organization - should be allowed to negotiate license fees with the patentee of an invention incorporated in the standard.

Abstract:
It is generally said that patent races cause overinvestment, because when several entities are racing to create and patent an invention, only one can win the race and acquire the patent. As a result, the investments of the losers in the race are wasted. In this article, I address the opposite problem: underinvestment in patent races. Underinvestment can occur, I show, when a participant that would ultimately win a patent race has reason to believe that it will lose the race, and therefore drops out. This can occur when the participant suffers some early setbacks in its research, but does not know whether its competitors have had similar problems. In such circumstances, the participant may believe that it has fallen behind and quit the race, when it would have won if it had continued. In some circumstances, all the participants in a race can believe that they will lose the race, and all may abandon the race.

Both overinvestment and underinvestment are caused by a lack of information. Overinvestment occurs when a participant incorrectly chooses to continue its research because it does not know that it will ultimately lose the race. Underinvestment occurs when a participant incorrectly chooses to discontinue its research because it does not know that it will ultimately win the race. Most previous commentators on patent races have focused on overinvestment because they have assumed that participants have complete information about their competitors' progress. Under that assumption, a participant that encounters early difficulties in its research knows if its competitors have encountered similar difficulties, and therefore knows that it continues to have a chance to win the race. In fact, though, participants in patent races rarely have knowledge of their competitors' progress. I propose several possible approaches to dealing with this information problem.

Although I show in the article that the underinvestment problem could occur with different numbers of race participants and different likelihoods of research success, it is difficult to know how significant the problem is in practice. I am in the process of seeking the relevant information on how, specifically, these decisions are made in research enterprises, and this information may shed some light on that question. Tentative information suggests that the problem could be a significant one in the pharmaceutical industry.

Abstract:
Section 402 of the Sarbanes-Oxley Act of 2002 prohibits loans from publicly traded corporations to their officers or directors. Although the statute is worded broadly, there are some insider loans, such as travel advances, that Congress probably did not intend to prohibit. The SEC has chosen not to provide an authoritative interpretation of section 402, though, so the section's scope is unclear. Twenty-five prominent law firms have responded to this lack of clarity by issuing a 'position paper' assessing the legality of various types of loans under section 402. The firms conclude that, of the types of loans they consider, none violates the section. For some types of loans, like travel advances, their conclusions seem reasonable. But in other cases the firms' conclusions are questionable. For instance, the firms conclude that although section 402 prohibits material modifications of pre-existing loans, forgiveness of such loans is permissible.

This article asks whether the firms' collective interpretative effort might be an antitrust violation. The article asks, first, whether the law firms have agreed on interpretations of section 402, and, second, whether such an agreement would violate the antitrust laws. On the first question, the firms do seem to have agreed on their interpretations. Although it is possible that the firms are not following the interpretations they present in the position paper, the paper itself says that the firms concur in its conclusions. And at least one of the firms had, prior to the issuance of the position paper, advised its clients not to engage in several of the practices described by the paper as permissible. As to whether such an agreement would be a violation, there are no real efficiencies in acting collectively, and doing so may lead the firms to offer more permissive advice. If they agree on such advice, they not only avoid being disadvantaged ex ante by competition from other firms offering permissive advice, but are less subject to ex post second-guessing if their advice turns out to be wrong. And even if permissive advice is what their corporate clients (i.e., their clients' officers) want to hear, that advice might ultimately injure the clients if it turns out to be wrong.

Moreover, one might view the injured 'consumers' as the shareholders of the clients, or the public, both of which are entitled to have legislation operate without collective private efforts that impose particular legislative interpretations. Although in some respects this would be a novel antitrust theory, the Supreme Court has on several occasions objected to private agreements of non-lawyers that it has viewed as akin to private legislation.

Abstract:
This article proposes a new antitrust analysis for sellers' practices seeking to increase demand for their products. These demand-increasing practices can be broadly divided into two categories (which nevertheless overlap): coercive ones, like tying, and deceptive ones, like manipulating product standards. These practices have been addressed by the Supreme Court only through ad hoc tests designed for particular practices; antitrust law has no general theory for analyzing them. This leaves the lower courts with no guidance in considering claims of coercion that do not involve tying, as in the recent challenge to Moody's practices in the debt-rating market, or claims of deception that do not involve standard-manipulation, as in cases challenging false advertising as an antitrust violation. In this article, I propose that a practice that increases demand for one product be treated as an antitrust violation only if it imposes costs on buyers of some other product. Under this test, antitrust law would not condemn procompetitive demand-increasing practices like product improvements. The costs of such practices e.g., product development costs are borne only by those who buy the products in which those costs are invested. In contrast, coercion (as defined in the article, not as defined in current tying law) can allow sellers to shift the costs of increasing demand for one product to buyers in another market. Similar distortions are created by manipulation of a product standard, which can impose costs on all users of a standard, even those who do not buy the manipulator's product, but not by false advertising, which typically imposes costs only on those led to buy the advertiser's product. The article also applies the proposed cost- shifting test to demand-increasing practices that are not easily labeled as coercive or deceptive, and the test produces sensible results in those cases as well. When cost- shifting distortions are present, the demand-increasing practices that cause them can be said to have foreclosed competition on the merits, in the words of the Supreme Court, and should therefore be condemned.