Antitrust and Innovation: The Antitrust & Intellectual Property Interface

Benjamin N. Cardozo School of Law, Fall 2007

Herbert Hovenkamp's Antitrust Enterprise (2005), the DOJ/FTC IP Licensing Guidelines (1995), and the IP2 report (2007) should be studied with respect to each of the topics below. The articles and decisions are supplementary readings. This syllabus is a work in progress. If you have links to decisions, etc. please send me an email.

I. Preliminary matters

Class 01: Growth, Productivity, and Innovation. The (macro-) economic context of the AT-IP interface (8/27/07)

Herbert Hovenkamp, Antitrust Enterprise, Ch.11
Richard Stallman, The Danger of Software Patents (Audio) (2002)
Cory Doctorow, How Hollywood, Congress, And DRM Are Beating Up The American Economy (2007)
Mark A. Lemley, A New Balance Between IP and Antitrust (2007)
Background: Measuring Economic Growth
Background: Angus Maddison's website on historic GDP and population data.

Class 02: The Structure of the U.S. Antitrust Laws (9/10/07)

Herbert Hovenkamp, Antitrust Enterprise, Ch.1, 2, 5 (Specifically: The rule of reason, p.106-7)
Horizontal agreements: Palmer v. BMG of Georgia, 498 U.S. 46 (1990)
Monopolization: Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, 540 U.S. 398 (2004)
Mergers: FTC v. Staples, Inc., 970 F. Supp. 1066 (D.C. 1997)
Vertical agreements: Leegin Creative Leather Products, Inc. v. PSKS, 127 S.Ct. 2705 (2007).

We will discuss relevant economic concepts as they come up, in particular:

Externalities, positive and negative
Free riding
Holdup
Network effects
Zero marginal cost production and "competition for the market."
Commons-based peer production

II. Unilateral conduct

Class 03: Market definition and market power (9/17/07)

Newsflash: The EU Microsoft case in light of today's CFI decision in Case T-201/04 [2007], Microsoft v. Commission of the European Communities. For further background, make sure to check out the recording of a great panel discussion on the background of the case with Mark Lemley, Tim Bresnahan, Tom Burt, Ian Forrester, Matthew Lynde, Hewitt Pate in the context of the (generally awesome!) Stanford Program in Law, Science & Technology.
Of hypothetical monopolists and SSNIP tests. Market definition under the 1992 Horizontal Merger Guidelines.
Innovation markets; Standard Oil v. United States, 283 U.S. 163 (1931)
The death of the "patent equals market power inference": Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006)
The goods, technology, and innovation market concept: IP Licensing Guidelines

Class 04: Market power (cont.) and refusals to license (9/24/07)

Aftermarket power; Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992) ("Kodak I")
Carl Shapiro, Aftermarkets and Consumer Welfare: Making Sense of Kodak, 63 Antitrust L.J. 483 (1995)
Jonathan Baker, Promoting Innovation Competition through the Aspen/Kodak Rule, 7 Geo. Mason L. Rev 495 (1999)
IP2, Ch.1

Class 05: Refusals to license in the US (cont.) and in Europe (9/30/07)

Image Technical Services, Inc. v. Eastman Kodak Co., 125 F.3d 1195 (9th Cir. 1997) ("Kodak II")
CSU LLC. v. Xerox Corp., 203 F.3d 1322 (Fed. Cir. 2000)
Case C-418/01, IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG, [2004] 4 CMLR 28 (excerpts).
Case T-201/04 [2007], Microsoft v. Commission of the European Communities (excerpts)
DG Competition Discussion Paper on the Application of Art. 82 of the Treaty to Exclusionary Abuses, Dec. 2005 (excerpts)

Class 06: U.S. v. Microsoft ("Microsoft III"); Monopolization and Attempted Monopolization Claims (10/8/07)

United States v. Microsoft ("Microsoft III"), 253 F.3d 34 (D.C.Cir. 2001) (Monopolization and attemped monopolization)
California Computer Products v. IBM ("CalComp"), 613 F.2d 727 (9th Cir. 1979)
C. R. Bard v. M3 Systems ("Bard"), 157 F.3d 1340 (Fed.Cir. 1998) (Excerpts only! This is one confusingly written opinion. Go to the dissent for the holding.)

Class 07: U.S. v. Microsoft ("Microsoft III"); Tying, contractual, technological, and otherwise (10/15/07)

We will discuss the technological and legal arms race between those want to tie and those who want to unite. Among the means of tying are interface changes, authentication, DRM, contracts, IP, and the ever popular 17 U.S.C. 1201(a) of the Copyright Act as amended by the DCMA. Means of untying: reverse engineering, hacking, limitations internal to IP (first sale, fair use, exhaustion, reverse engineering, misuse), antitrust (tying, monopolization).

United States v. Microsoft ("Microsoft III"), 253 F.3d 34 (D.C.Cir. 2001) (Tying)
Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006). We will focus on the discussion of misuse.
Michael Meurer, Vertical Restraints and IP Law: Beyond Antitrust, 87 Minn. L. Rev. (2003) (Part III, frequency of use only).
Lexmark v. Static Control Components, 387 F.3d 522 (6th. Cir. 2004).
EFF White Paper: Unintended Consequences, Seven Years under the DMCA

III. Interlude: Fundamental Policy Questions: Exclusivity or Competition?

Class 08: Should we abolish IP protection? (10/22/07)

Michele Boldrin & David K. Levine, Against Intellectual Monopoly (2007)
John Perry Barlow, The Economy of Ideas (1993)
Fulbright Chair Speaker Series: John Perry Barlow and John Gilmore (2006)
Kai Raustiala & Christopher Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design (2007)

IV. Downstream licensing

Class 09: License agreements (10/29/07)

IP2, Ch.4 and Ch.6
Anatomy of a license agreement: License grant, improvements and grant-backs, royalty provisions, confidentiality, warranties, assignment, retention of rights, dispute resolution
Geographical and field of use limitations
Resale price maintenance after Leegin Creative Leather Products, Inc. v. PSKS, 127 S.Ct. 2705 (2007).
Grantbacks
Non-assertion clauses
Reach through licenses

V. Coordination among competitors

Class 10: Cross licenses and patent pools (11/05/07)

IP2, Ch.3
Fulbright Chair Speaker Series: Fred von Lohmann (2006)
Richard Gilbert, Antitrust for Patent Pools: A Century of Policy Evolution (2004)
Carl Shapiro, Navigating the Patent Thicket (2001)
MPEG-2 Business Review Letter (1997)
Patents in the MPEG-2 Pool as of 2007
3C DVD Business Review Letter (1998)
6C DVD Business Review Letter (1999)
DVD FAQ (Maintained by the DVD Licensing Body)
3G Business Review Letter (2002)
In re Summit Tech., Inc. et al. - Analysis of Proposed Consent Order to Aid Public Comment (1998)

Class 11: Cooperative standard setting

IP2, Ch.2
Mark A. Lemley, Ten Things to Do About Patent Holdups of Standards (and One Not to) (2006)
American Society of Mechanical Engineers Inc. v. Hydrolevel Corp, 456 U.S. 556 (1982)
Allied Tube v. Indian Head, 486 U.S. 492 (1988) (mostly about Noerr Pennington)
Radiant Burners v. People's Gas Light & Coke Co., 364 U.S. 656 (1961)
In the Matter of Dell Computer Corp., 121 FTC 616 (1995)
In re Rambus, 2006 WL 2330117
VITA Business Review Letter (2007)
IEEE Business Review Letter (2007)
Gerald F. Masoudi, Antitrust Enforcement and Standard Setting: The VITA and IEEE Letters and the IP2 Report (2007)
15 U.S.C. 4301-4305 (Standards Development Organization Advancement Act of 2004)

Class 12: "Reverse payment settlements," and default rules for dealing with uncertainty

Schering Plough v. FTC, 402 F.3d. 1056 (11 Cir. 2005)
In re Tamoxifen Citrate Antitrust Litigation, 2006 WL 2401244 (2d Cir. 2006)
In re Terazosin Hydrocloride Antitrust Litigation, 352 F. Supp.2d 1279 (S.D. Fla. 2005)
In re Cardizem CD Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003)