IP-Related Refusals to Deal-Part 2: Pretext and Misconduct as Standards

In the last issue of IEEE Micro (Jan.-Feb. 2000, pp. 9-12), Micro Law addressed the Kodak, Intel, and Xerox cases, largely from the vantage point of tactics. All of these cases involved a powerful manufacturer’s refusal to sell patented parts, or to license its intellectual property rights, to a rival. Kodak was unsuccessful in the San Francisco federal court of appeals and the US Supreme Court, while Intel succeeded in overturning an unfavorable district court “home town” decision on its appeal to the federal court of appeals. Xerox prevailed in the district court, and its appeal has been argued. The appeal is pending before the same court of appeals before which Intel prevailed. Intel and Xerox had the advantage of a court of appeals (the Federal Circuit in Washington, D.C.). That court tends to be favorable to the rights of intellectual property owners, and tactical decisions of the parties’ attorneys helped to steer the appeals to that court. (Their tactical decision was to make sure that the case had some kind of patent infringement claim in it. Kodak did not follow the same path.) Tactics are important and surely help determine an outcome. But the legal merits count also. Therefore, let’s explore in greater depth the legal theories on which a court might resolve this kind of controversy. When should a powerful manufacturer’s refusal to sell patented parts, or to license its intellectual property rights, to a rival be held to be an antitrust violation?