Cases & Materials for

Antitrust and Misuse Aspects of Intellectual Property

Course IP 411

The John Marshall Law School
Center for Intellectual Property Law

Cases for IP 411

I. Introduction

A Constitutional Authority, Statutory Provisions & Rules

1. Constitutional Basis for intellectual property protection
Art. 1, Sec. 8, Cl. 8 Constitution of the United States
2. Statutory Bases for Patentability 35 U.S.C § § 101 , 102 , 103 , 112 and Infringement § 271
3. Basic Antitrust Statutes, 15 U.S.C. §§ 1, 2 (Sherman Act), § 13 (Robinson-Patman Price Discrimination) , § 14 Clayton Act Tie-ins , § 15 Civil Remedies , § 18 (Clayton 7 Mergers & Acquisitions) Federal Trade Commission Unfair Methods of Competition 15 USC § 45
4. Patent and Trademark Office Rules: 37 C.F.R. 56, 97, 98
5. Justice Department Guidelines, Intellectual Property, Joint Ventures

B. Background

1. Antitrust and Political Economics
2. The Patent Application Process

II Fraud and Misconduct During Patent and Trademark Office and Copyright Office Prosecution

A. The Duty of Disclosure in Patents

1. Duty and Consequences: Kingsland v Dorsey 338 U.S. 318, 70 S.Ct. 123, 94 L.Ed. 123 (1949)
2. Nondisclosure of Prior Art: Beckman Instruments, Inc. v. Chemtronics, Inc. 439 F.2d 1369, 165 U.S.P.Q. 344 (5th Cir., 1970)
3. Affirmative Misrepresentations: Grefco, Inc. v. Kewanee Ind. Inc. 208 U.S.P.Q. 232 (D. Del., 1980)
4. Exercise of Professional Judgment: Tokyo Shibaura Elec. Co. v. Zenith Radio Corp. 404 F.Supp. 547, 188 U.S.P.Q. 55 (D.Del., 1975)
5. Interrelation of Materiality and Intent: J.P. Stevens & Co. Inc. v. Lex Tex, Ltd., Inc. 747 F.2d 1553, 223 U.S.P.Q. 1089 (Fed. Cir., 1984)
6. Burden of Proof, Species of Fraud: American Hoist & Derrick Co. v. Sowa & Sons, Inc. 725 F.2d 1350, 220 U.S.P.Q.763 (Fed. Cir., 1984)
7. Burden of Proof, Species of Fraud: Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 46 USPQ2d 1097, ,1998-1 Trade Cas. ś72,100 (Fed Cir 1998)
8. Other Patent Fraud Cases

B. Trademark Fraud

Torres v. Torresela S. A. 808 F.2d 46, 1 U.S.P.Q. 2d 1483 (Fed. Cir., 1986)

C. Copyright Fraud

1. Derivative Works Disclosure: Russ Berrie v. Jerry Elsner 482 F. Supp. 980, 205 USPQ 320 (SDNY 1980)
2. Misconduct in Litigation: qad inc. v. ALN Assoc. 757 F Supp 901, 18 USPQ 2d 1122 (ND Ill, 1991)

III. Analytical Bases for misuse doctrine -- Equitable and Common Law Bases

A. Equity and Common Law

(1) Common law & Equity:

(a) Common law restraint of trade: Pope Mfg. Co. v. Gormully 144 U.S. 224, 36 L. Ed. 414, 12 S. Ct. 632 (1892) and
(b) Patents as Property: Pope Mfg. Co. v. Gormully & Jeffery Mfg. Co. 144 U.S. 248, 36 L. Ed. 423, 12 S.Ct. 641 (1892)
(c) Other Equity and Common Law Cases

(2) Equity and Unclean Hands

(a) Prosecution: Precision Instrument Manufacturing Co. v. Automotive Maintenance Mach. Co. 324 U.S. 806, 65 S.Ct. 993, 89 L.Ed. 1381 (1945)
(b) Relatedness to Patent, Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 78 L. Ed. 293, 54 S. Ct. 146 (1933)
(c) Intent to Abuse Registration Procedure: Copeland's v. CNV 945 F.2d 1563, 20 U.S.P.Q.2d 1295, 1991 WL 192, 233 (1991)
(d) Other Trademark Unclean Hands Cases

(3) Public Interest and Equitable Remedies

(a) Exclusionary Right: Continental Paper Bag Co. v. Eastern Paper Bag Co. 210 U.S. 405, 28 S.Ct. 748, 52 L.Ed. 1122 (1907)
(b) Harm to Public: City of Milwaukee v. Activated Sludge, Inc. 69 F.2d 577, 21 U.S.P.Q. 69 (7th Cir., 1934)
(c) Public Interest and "The Equities" Affecting Decision: Vitamin Technologists, Inc. v. Wisconsin Alumni Research Foundation 146 F.2d 941, 63 U.S.P.Q. 262 (9th Cir., 1945)

(4) Implied License

(a) Implied License and Commercial Remedies: McCoy v. Mitsuboshi Cutlery, Inc. , 67 F.3d 917, 36 U.S.P.Q.2d 1289 (Fed Cir., 1995)
(b) Express Licenses and Repair and Reconstruction: Aro Manufacturing Co., Inc. v. Convertible Top Replacement Co., Inc. 84 S. Ct. 1526, 12 L. Ed. 2d 457, 141 USPQ 681, 1964 Trade Cas. ś 71,132(1964)

B. Legal (or legalistic) approach: looking to common law, statutes, contracts, property law

(1) First Sale and Single License: United States v. General Electric Co. 272 U.S. 476, 47 S. Ct. 192, 71 L. Ed. 362 (1926)

Other Decisions Interpeting GE situations
(2) Transfer of Title: Transparent Wrap Mach. Corp. v. Stokes & Smith Co. 329 U.S. 637, 67 S.Ct. 610, 91L.Ed. 563 (1947)
(3) Federal Circuit Antitrust Law: Nobelpharma, supra. , Section I A .(7)

IV. Analytical Bases for misuse doctrine -- Government Grant and Reward

A. Government grant, exhaustion, beyond scope of grant

(1) Exhaustion, First Sale: Keeler v. Standard Folding Bed Co. 157 U.S. 659, 15 S.Ct. 738, 37 L.Ed. 766 (1895)
(2) Unpatented Items: Morton Salt Co. v. G. S. Suppiger Co. 314 U.S. 488, 492, 62 S.Ct. 402, 86 L.Ed. 363 52 USPQ 30, 1942 Trade Cas ś 56 (1942)
(3) Misuse, Tie-in Situations and Market Power: 35 USC § 271 (d)
(4) Exclusive Dealing: Berlenbach v. Anderson and Thompson Ski Co., Inc. 329 F.2d 782 (9th Cir., 1964)
(5) Process License and System Purchase with No Termination: Rocform Corp. v. Acitelli-Standard Concrete Wall, Inc. 367 F.2d 678 (6th Cir. 1966)
(6) Compilations and Scope of Copyright: F.E.L. Publishing v. Catholic Bishop of Chicago 214 U.S.P.Q. 409, 1982 Copy. L. Rep. ś 25,376, 1982-1 Trade Cas. ś 64,632 (7th Cir., 1982)
(7) Process Claims and Product Sales: Barber-Colman Co. v. National Tool Co. 136 F.2d 339, 58 U.S.P.Q. 2 (6th Cir 1943)
(8) Predatory Design and Patenting: C.R. Bard, Inc. v. M3 Systems, Inc. 157 F.3d 1340, 1998 U.S. App. LEXIS 24576, 48 USPQ 2d 1225, 1998-2 Trade Cas. ś 72,289 (Fed. Cir. 1998)
(9) Limited Time
- (a) Patent Term Exceeded: Brulotte v. Thys Co. 379 U.S. 29, 85 S. Ct. 176, 13 L. Ed. 2d 99, 143 U.S.P.Q. 264, 1964 Trade Cas. ś 71,287, 3 A.L.R.3d 761 (1964)
- (b) Copyright Term Exceeded & Other Misuse: Lasercomb America, Inc. v. Job Reynolds 911 F.2d 970, 1990 U.S. App. LEXIS 14278, 15 USPQ 2d 1846, Copy. L. Rep. ś 26,619, 1990-2 Trade Cas. ś 96,145, 18 Fed. R. Serv. 3d 130 (4th Cir 1990)
- (c) See also Rocform, supra. at 6
(10) Comprehensive Control of Resale: Ethyl Gasoline Corp. v. United States 309 U.S. 436, 60 S. Ct. 618, 84 L.Ed. 852, 44 U.S.P.Q. 614, 1940 Trade Cas. ś 56,013 (1940)

B. Comparison of Analytical Approach - The Label License & Non-negotiated Licenses

(1) Products, Staple Items and License on Purchase Orders: Carbice Corp. of America v. American Patents Development Corp. 283 U.S. 27, 51 S.Ct. 334, 75 L.Ed. 819 (1931)
(2) Label Notice of Limitations on Use: General Talking Pictures Corp. v. Western Electric Co. 304 U.S. 546, 58 S.Ct. 849, 82 L.Ed. 1273 (1937)
(3) Label Notice - First Sale, Product and Process Leitch Mfg. Co. v. Barber Asphalt Co. 302 U.S. 458, 58 S.Ct. 288, 82 L. Ed. 371 (1938)
(4) Other Label License and Notice Cases

C. Economic/reward modern view

(1) Right To Exclude & Contributory Infringement Protecting Subject of Patent Dawson Chem. Co. v. Rohm & Haas Co. 448 U.S. 176, 188-93, 100 S. Ct. 2601, 65 L. Ed. 2d 696 (1980)
(2) Economic Effect on Public: Brunswick Corporation v. Riegel Textiles 752 F.2d 261, 224 U.S.P.Q. 756 (7th Cir., 1984)
(3) Misuse and Effect on Competitors: USM Corp. v. SPS Technologies, Inc. 694 F.2d 505, 1982-83 Trade Cas. ś 65,077, 216 U.S.P.Q. 959 (7th Cir, 1982)
(4) Contributory Infringement, Field of Use & Patent Reward: see also Studiengesellschaft Kohle, infra

V. Price

A Vertical Restraints

(1) Resale Price:
- (a) Patent Owner's Power to Control Price: GE, supra
- (b) Patent Owner's Power Used to Control Price at Channels of Distribution: United States v. Univis Lens Co., Inc. et al. 316 U.S. 241, 62 S. Ct. 1088, 86 L. Ed. 1408, 53 U.S.P.Q. 404 (1942)
- (c) Maximum Resale Price Maintenance: State Oil Company, v. Barkat U. Khan 522 U.S. 3, 118 S. Ct. 275, 1997 U.S. LEXIS 6705, 139 L. Ed. 2d 199, 66 U.S.L.W. 4001, 1997-2 Trade Cas. ś 71,961 (1997)
- (d) Process & Machine Patents used to Control Price of Product Barber-Colman Co. v. National Tool Co. supra, Section IV, A (8))
(2) License Price Terms As Misuse Defense:

Price Discrimination: USM v SPS (see above, Section IV, B (3))

B. Horizontal Price Controls

(1) Pervasive System to Control of Price: Ethyl Gasoline Corp. v. United States 309 U.S. 436, 460, 60 S.Ct. 618, 84 L.Ed. 852, 1940 Trade Cas. ś 56,013 (1940) (see above, Section IV)
(2) Pooling with price controls under cross licenses: United States v. Line Material Co. 333 U.S. 287, 68 S. Ct. 550, 92 L.Ed. 701, 76 U.S.P.Q. 399 (1948)
(3) Price Term in Multiple Cross Licenses Newburgh Moire Company, Inc. v. Superior Moire Company, Inc. 237 F.2d 283, 1956 Trade Cas. ś 68,487, 111 U.S.P.Q. 126 (3d Cir 1956)

C. Discriminatory Rates, Refusal to Negotiate

(1) Discriminatory Rate: La Salle Street Press, Inc. v. McCormick & Henderson, Inc. 445 F.2d 84, 170 U.S.P.Q. 305, 1971 Trade Cas. ś 73,600 (7th Cir. 1971)
(2) Refusal to Negotiate Package Licenses: Zenith Radio Corp. v. Hazeltine Research Inc. 395 U.S. 100, 89 S. Ct. 1562, 23 L. Ed. 2d 129 161 U.S.P.Q. 577, 1969 Trade Cas. ś 72,800 (1969)
but see 1999 Intel case
(3) Geographic Emile M. LaPeyre v. Federal Trade Commission 366 F.2d 117, 151 U.S.P.Q. 79, 1966 Trade Cas. ś 71,881 (5th Cir., 1966) see also FTC Act
(4) Other Price Discrimination Considerations

VI. Sec. 2 Monopolization/Attempt to Monopolize where Single firm conduct based on patent fraud or post grant misconduct, Enforcement as Anticompetitive Tool

A. Fraud and Antitrust Violations

Walker Process Equip., Inc. v. Food Machinery & Chemical Corp. 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965)

B. Misconduct and Antitrust

(1) Nature of Misconduct: Kearney & Trecker Corp. v. Giddings & Lewis, Inc. 452 F.2d 579, 171 USPQ 650, 1971 Trade Cas. ś 73,735 (7th Cir, 1971)
(2) Misconduct and Antitrust Injury: Kearney & Trecker Corp. v. Cincinnati Milacron Inc. 562 F. 2d 365 (6th Cir., 1977)

C. Litigation for Anticompetitive Purposes

(1) Maintenance of Litigation: Handgards, Inc. v. Ethicon, Inc. 601 F.2d 986, 202 U.S.P.Q. 342, 1979-1 Trade Cas. ś 62,625 (9th Cir, 1979) cert. denied, 444 U.S. 1025 (1980)
(2) Two Species of Antitrust Violation: Fraud and Frivolous: Nobelpharma, supra ,
(3) Frivolous Litigation: Professional Real Estate Investors, Inc., v. Columbia Pictures Industries, Inc. 113 S. Ct. 1920, 123 L. Ed. 2d 611, 61 U.S.L.W. 4450, 26 U.S.P.Q.2d 1641, 1993-1 Trade Cas. ś 70,207 (1993)

VII Single firm antitrust based on creation or acquisition of rights

A. New Line of Commerce
SCM Corp. v. Xerox Corp. 645 F.2d 1195, 209 U.S.P.Q. 889, 1981-1 Trade Cas. ś 63,876 (2d. Cir., 1981)
B. Single Product Evolution
United States v. Jerrold Electronics Corp. 187 F. Supp. 545 (E.D. Pa. 1960), affd per curiam, 365 U.S. 567 (1961)

C. Effect on Competition: United States v. Lever Bros. Co. 216 F. Supp. 887, 1963 Trade Cas. ś 70,770 (S.D.N.Y., 1963)
D. Trade Secrets and Anticompetitive Threats
CVD, Inc. v. Raytheon Inc. 769 F.2d 842, 1985 U.S. App. LEXIS 20974, 227 U.S.P.Q. 7, 1985-2 Trade Cas. ś 66,717 (1st Cir 1985)
E. Distribution and Breach of Agreement
Foundry Services, Inc. v. Beneflux Corp. 110 F.Supp. 857 (S.D.N.Y., 1953), rev'd on other grounds 206 F.2d 214 (2d Cir., 1953)

VIII Innovation, Restraints of Trade, Grantbacks.

A. DOJ Guidelines for Intellectual Property http://www.usdoj.gov/atr/public/guidelines/ipguide.htm
Cases on Innovation, Restraints of Trade and Grantbacks
B. Grant back: TransparentWrap Mach. Corp. v. Stokes & Smith Co. supra III B 2
C. Pool with Grant back United States v. Associated Patents, Inc. 134 F. Supp. 74, 1955 Trade Cas. ś 68,092, 106 USPQ 129 (ED Mich 1955) aff'd sub nom, Mac Inv. Co. v. United States 350 U.S. 960, 76 S.Ct. 432, 100 L.Ed. 834 (1956)
D. Cartel and Innovation : United States v. National Lead Co. 332 U.S. 319, 67 S.Ct. 1634, 91 L.Ed. 2077, 73 USPQ 498 (1947) aff'g 63 F.Supp. 513, (S.D.N.Y., 1945)
E. Improvements Cross Licensed : United States v. Birdsboro Steel Foundry and Machine Co. 139 F. Supp. 244, 108 USPQ 42, 1956 Trade Cas. ś 68,293, (WD Pa, 1956)
F. Common Ownership via Litigation Settlement, Clyde M. Noll v. O. M. Scott & Sons Co. 467 F.2d 296, 175 U.S.P.Q. 392, 1972 Trade Cas. ś 74,180 (6th Cir., 1972)
G. Reasonableness in Licensing . Baker-Cammack Hosiery Mills, Inc. v. Davis Co. 181 F.2d 550, 85 U.S.P.Q. 94 (4th Cir., 1950)
H. Other Grantback cases - various interpretations and results

IX Vertical and Horizontal Restraints

A Multiple Parties: Timken Roller Bearing Co. v. United States 341 US 598, 71 S Ct 971, 95 L Ed 1199 89 U.S.P.Q. 462, 1951 Trade Cas. ś 62,837 (1951)
B Single "Person" Copperweld Corp. v. Independence Tube Corp. 467 U.S. 752, 104 S. Ct. 2731, 81 L. Ed. 2d 628, 52 U.S.L.W. 4821, 1984-2 Trade Cas. ś 66,065 (1984)
C. Combination: US v. E I DuPont de Nemours 118 F Supp 41 (aff'd 351 US 377 (1956)
D. Settlement and Cartelization: US v. Singer Mfg. Co. 374 U.S. 174, 83 S.Ct. 1773, 10 L.Ed.2d 823, 137 USPQ 808, 1963 Trade Cas. ś 70,813 (1963)
E. Vertical Restraints: Continental T.V., Inc. v. GTE Sylvania, Inc. 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed. 2d 568, 433 U.S. 36, 97 S. Ct. 2549, 1977-1 Trade Cas. ś 61,488 (1977)
F. Co-ownership as Horizontal, Not Vertical: United States v. Sealy, Inc. 388 U.S. 350, 87 S. Ct. 1847, 18 L. Ed. 2d 1238, 153 U.S.P.Q. 763, 1967 Trade Cas. ś 72,125 (1967)
G. Veto Power as Per Se Violation: United States v. Topco Associates, Inc. 405 U.S. 596, 92 S. Ct. 1126, 31 L. Ed. 2d 515, 173 U.S.P.Q. 193, 1972 Trade Cas. ś 73,904 (1972)
H. Dual Distribution: Norman E. Krehl v. Baskin-Robbins Ice Cream Company 664 F.2d 1348, 1982-1 Trade Cas. ś 64,449 (9th Cir 1982)
I. Terminated Distributors (Pre Khan cases)

X Single Firm Non Price Restraints

A. Contributory Infringement, Misuse & Reward Rationale: United States of America v. Studiengesellschaft Kohle, m.b.H. 670 F.2d 1122, 1981-2 Trade Cas. ś 64,394, 212 U.S.P.Q. 889 (DC Cir 1980)
B. Distribution Restrictions on bulk sales: United States v. Glaxo Group Ltd. 410 U.S. 52, 93 S.Ct. 861, 35 L.Ed. 2d 104, 176 U.S.P.Q. 289, 1973-1 Trade Cas. ś 74,323 (1973)
C. Requirements Contracts: BaldwinLimaHamilton Corp. v. Tatnall Measuring Syst. Co. 169 F. Supp. 1, 120 U.S.P.Q. 34, 1958 Trade Cas. ś 69,358 (D Pa, 1958)
D. Rocform, supra. SectionIV A (6)

XI Multiple firm antitrust based on combinations of non-price practices, licensing, multiple firm package licenses

A. Legitimate Settlements

(1) Conflicting Patents and Cross License: United States v. Birdsboro, supra, VIII E
(2) Ownership: Clyde M. Noll v. O. M. Scott & Sons Co. supra, VIII F
(3) Reasonableness in Licensing. Baker-Cammack Hosiery Mills, Inc. v. Davis Co. supra, IX G

B. Joint Ventures and Economically Efficient Cooperation

(1) Know how transfer and patent cross licensing: United States v. Westinghouse Elec. Corp. 648 F.2d 642, 31 Fed. R. Serv. 2d 952, 1981-1 Trade Cas. ś 64,112 (9th Cir., 1981) affirming 471 F. Supp. 532 (N.D.Cal. 1978)
(2) Reasonableness in patent licensing: Standard Oil Co. (Indiana) v. United States 283 U.S. 163, 182, 51 S.Ct. 421, 75 L.Ed. 926 (1931)
(3) Reasonableness in Copyright Licensing: Buffalo Broadcasting v. ASCAP 744 F2d 917, 223 U.S.P.Q. 478, 1984 Copy. L. Rep. ś 25,710, 1984-2 Trade Cas. ś66,204 (2d Cir., 1984)
(4) Joint Venture & Cross License to Exploit Process, Multiple patents on multiple steps, Cutter Laboratories v. Lyophile-Cryochem Corp. 179 F.2d 80, 84 U.S.P.Q. 54 (9th Cir 1949)

C. Restraints Unreasonable, Impact on Price

Standard Sanitary Mfg. Co. v. United States 226 U.S. 20 (1911)

XII Tie ins involving patents and intellectual property

A. Development of Per Se Rule and Market Power

(1) Tie in generally: International Business Machines Corp. v. United States 298 U.S. 131, 56 S.Ct. 701, 80 L.Ed. 1085 (1936)
(2) Recognition of Market Power: International Salt Co., Inc. v. United States 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20, 75 U.S.P.Q. 184 (1947)
(3) Presumption of Market Power: United States v. Paramount Pictures, Inc. 334 U.S. 131, 68 S. Ct. 915, 92 L. Ed. 1260, 77 U.S.P.Q. 243 (1948)
(4) Express Presumption of Market Power: United States v. Loew's, Inc. 371 U.S. 38, 83 S.Ct. 97, 9 L.Ed. 2d 11, 135 U.S.P.Q. 201 (1962)

B. Single Products, No Coercion & Market Definition

(1) Single Product and Service mark: Bernard Susser et al. v. Carvel Corporation 332 F.2d 505, 141 U.S.P.Q. 609, 1964 Trade Cas. ś 71,103 (2d Cir, 1964)

(2) Single Product Market and/or No Coercion: Jefferson Parish Hospital District No. 2 v. Hyde 466 U.S. 2, 104 S. Ct. 1551, 80 L. Ed. 2d 2, 1984-1 Trade Cas. ś 65,908 (1984)

(3) Real World Rather Than Academic Economic Factors: Eastman Kodak Co. v. Image Tech. Serv. Inc. 504 US 451, 112 S Ct 2072, 119 L. Ed 2d 265 (1992)

C.