Antitrust Law Remedies in Intellectual Property Cases Term Paper

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Antitrust and Intellectual Property

Antitrust Law Remedies in Intellectual Property Cases

In any research paper it is important to first define the terms used prominently in order to make sure that the reader understands what is being said. In this case, the two terms that require definition are antitrust and intellectual property. According to a definition from Cornell University Law School "Trusts and monopolies are concentrations of economic power in the hands of a few." Thus, antitrust legislation would logically follow as "designed to protect competition and protect free trade" (Putnam). Mark Putnam, a business ethics expert, goes on to say that "Basically, antitrust laws prohibit price-fixing, allocating territories, boycotts, or any other kind of conspiratorial or monopolistic behavior between companies that unfairly restrain free trade." Intellectual property, however, is different entirely from a trust. The United States Patent and Trademark Office (USPTO) which deals almost exclusively with intellectual property defines it as "imagination made real…the ownership of [a] dream, an idea, an improvement, an emotion that we can touch, see, hear, and feel…an asset just like your home, your car, or your bank account." By this, the USPTO means that it is an idea that can become commerce because the originator makes it tangible and saleable. It is the confluence of these two ideas that is more difficult to understand.

Any idea that a person has is that individual's idea alone, so it makes sense that the individual should have a monopoly on that thought. However, when it comes to certain ideas, novelty can come into question. Anne Bingaman, an Assistant Attorney General (in the antitrust division) during the Clinton Administration, explains this well in a speech presented at the Federal Circuit Judicial Conference in 1994. She first says that "The various intellectual property regimes reward innovation by giving rights to creators to exclude others from using their inventions or the expression of their ideas without compensation" (Bingaman). This is implicit in the law, but there is a problem with some patents for intellectual property, in that, they do not pass certain tests of originality. "The awarding of patent-like protection in the absence of an adequate showing of novelty and non-obviousness, for example, can harm competition without serving the interest of rewarding innovation" (Bingaman). The intellectual property must be, without question, original to deserve a patent, and one of the functions of the patent office is to ensure this uniqueness. Miss Bingaman finishes her thought by saying "Strong intellectual property rights and vigorous antitrust enforcement are two sides of the same coin in promoting the common objective of innovation." Thus, they are not opposed as may seem the case upon first examination, but tools that can be used to ensure innovation continues unfettered.

A recent example of this type is the case against Google brought by the European Union. It has been revealed that "while Microsoft and partner Yahoo! Inc. have about a quarter of the U.S. web-search market, Google has almost 95% of the traffic in Europe" (White). Court documents were recently filed by Expedia, adding to the suit brought earlier by Yahoo! And Microsoft. The specific complaint lodged by Expedia (a travel website) was that "Google introduced a flight-search service last year that excludes any link to online travel agencies, which hampers customers' comparison shopping" (White). Google has, in this instance, withheld the ability of consumers to use other sites which are, intellectually, the same as their own. Because of the lack of originality in the website that Google has and the websites that it is blocking, Google's competitors have brought this lawsuit to the EU courts.

History of Antitrust and Intellectual Property Legislation

Antitrust legislation was first passed in 1890 with the Sherman Act (FTC). The basic premise behind the new law was that companies which engaged in forming trusts were stifling competition which was damaging to free exercise of the market. Another facet of the law is that companies cannot collude to fix prices or to have a joint monopoly of a market. During the early part of the twentieth century trusts in the U.S. oil, steel and railway industries were broken up, and a sugar trust was also disbanded. Following the Sherman Act, "the Clayton Act was passed in 1914" (FTC). Original antitrust legislation did not contain language over the governing of mergers and acquisitions. The Clayton Act repaired this oversight by requiring that all such actions between companies had to be approved by the Federal Trade Commission (FTC) prior to being ratified.

In the late nineteenth century, workers and consumers began to protest the treatment they were receiving at the hands of, what was considered, the privileged few. Trusts and monopolies ruled consumption markets, and that caused the wronged consumers begin to make their case before legislators and the courts. The social movement was much like that of unionization. Because of the greed of a few, the many were being treated unfairly. Thus, the government got involved and protected the rights of its citizens which is its primary occupation.

Competition is a way of life in America, and it was envisioned as such by the founding fathers. Though specific mention of competition cannot be found in the Constitution, or any of the other founding documents, the idea of free competition abounds in those documents. Christopher Demuth writes that "competition is a foundation of our constitutional order and a critical means of achieving our aspirations. In particular, it shapes our common life through elections, the separation of powers, federalism, free speech and religion, and competitive enterprise." The author argues that the Constitution does mention competition because it is to be the very fabric of human life in the new republic. Too many times this right of man had been suppressed by a class of people who believed that they had the right to individual rule and oppression because of their name, accumulated power or wealth. The United States was founded on the principles of the individual rights of all citizens vs. The monopolistic "rights" of the few. "The First Amendment decrees a system of intellectual laissez faire in which ideas compete for influence and acceptance. And the whole structure supports and regulates an economy premised on open competition" (Demuth). The idea of the founders was that competition would abound in everything and that the people (the marketplace) would determine the winner.

Intellectual property law common to Western societies is thought to have originated in England in 1624 with the Statute of Monopolies (Dent). This statute gave authors their first guarantee that their own work was not to be plagiarized or used unless the author gave permission. This was followed in 1710 by the Statute of Anne which actually gave copyright protections. The early laws protected a class of endeavors which have become known as intellectual property. These included patents (which can be broken down into utility patents, design patents and plant patents), trademarks, trade secrets and copyrights (USPTO).

Sherman and Clayton Acts

The first two pieces of antitrust legislation in the United States were the Sherman act of 1890 and the Clayton Act of 1914. The Sherman Act was used "to combat anticompetitive practices, reduce market domination by individual corporations, and preserve unfettered competition as the rule of trade" (Legal Information Institute). The Sherman Act has three sections which "delineate and prohibit specific means of anticompetitive conduct; deal with end results that are anticompetitive in nature, and; extends the provisions…to U.S. territories and the District of Columbia" (Legal Information Institute). Because the Sherman Act was limited in its scope and there were a lot of different cases that were not covered by the Act, the Congress passed the Clayton Antitrust Act in 1914. This Act added provisions against "price discrimination between different purchasers, if such discrimination tends to create a monopoly; exclusive dealing agreements; tying arrangements; and mergers and acquisitions that substantially reduce market competition" (Legal Information Institute). The provisions in these laws have been manipulated by the courts as more issues have arisen, but they are seen as the foundation of modern antitrust law.

The United States federal government has jurisdiction to enforce the statutes when they occur within the District of Columbia or are between the U.S. And a foreign entity. Also, the federal government will adjudicate the case when it concerns all citizens within the borders of the United States. That is why AT&T, and others that are broad in scope like that are seen as federal court cases (Cannon). However, the federal court has no jurisdiction when the antitrust involves intrastate commerce. So, every state has legislation, most of which are patterned after Sherman and Clayton, that handle these types of cases within the state.

The offenses that are primarily considered in antitrust cases are price fixing, rigging bids, patent pooling and mergers (Anthony). Price fixing is exactly what it sounds like. Firms collude to fix a certain price of a commodity, and that working together in this form of arrangement is the issue. Anytime competition is negated or, at…[continue]

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