Concerted Refusals to License Intellectual Property Rights
Harvard Business Law Review Bulletin, Vol. 1, p. 21, 2011
5 Pages Posted: 18 Nov 2010 Last revised: 29 Dec 2013
Date Written: April 20, 2011
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 license was not misuse. This conclusion is troublesome because in its Independent Ink decision the Supreme Court virtually equated the scope of antitrust liability with the scope of misuse as defined by §271(d).
Broad legality for concerted refusals to license patents, and unused patents in particular, has serious implications for competition and innovation. A concerted refusal to license a factory or other productive asset can facilitate collusion by denying resources to rivals unless they can find alternative sources of supply. A concerted refusal to license an unused patent can go much further. Not only does it deny rivals that particular technology but it also prevents them from developing any technology independently that would infringe one or more of that patent’s claims.
Of course, not every concerted refusal to license should be unlawful per se. In antitrust, they are appropriately covered by the ancillary restraints doctrine. Naked agreements not to license are unlawful per se, while refusals reasonably necessary to further joint research or production would be unlawful only if market power and anticompetitive effects were proven. By contrast, reading §271(d) of the Patent Act to authorize all concerted refusals is likely to harm both competition and the incentive to innovate.
Keywords: patents, patent misuse, antitrust, boycotts, refusal to deal, licensing, blocking patents
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