I. Introduction
II. Evolution Of The Relationship Between Antitrust And Intellectual Property Law
IV. Current Antitrust Enforcement Concerns
V. Checklists For Antitrust Issues
VI. Conclusion
I. Introduction
Intellectual property and antitrust are especially relevant as we approach the new century because it is more important than ever to encourage innovation and competition, both of which enhance consumer welfare. Innovations are among the most valuable assets of American businesses, and in today's global economy, companies must innovate if they hope to survive and thrive. This is true in industries as diverse as computer hardware and software, biotechnology, aerospace, and pharmaceuticals. Companies generate wealth and employment by generating new ideas and developing them into improved products. Consumers, in turn, benefit enormously from these innovations.
Innovating companies--ranging from modest research boutiques to giant aerospace-defense contractors--all depend vitally on a legal framework that ensures a competitive market while protecting the rights of inventors and allowing innovators to profit from their ideas and inventions. Many attorneys bear responsibility for charting companies' paths through this framework. This responsibility is a real challenge because innovation moves so quickly and change is the norm. It is my hope that this article will make the job a little easier by enhancing knowledge of the antitrust aspects of the legal framework.
Due to my experience in private practice,(2) I understand that the natural predilection of some intellectual property practitioners is to view antitrust issues with a certain degree of antagonism. Since joining the Federal Trade Commission in October 1997, I have gained a broader perspective on the relationship between competition policy and intellectual property rights. Increasingly, many of the Commission's competition cases have an intellectual property component. Over time, I have found that the goals of intellectual property and antitrust law are not mutually exclusive and, in fact, are quite similar. In this article, I hope to demonstrate that the two disciplines are compatible and, importantly, that old notions should be dispelled. I will attempt to do so by providing an historical perspective on the interplay between antitrust and intellectual property law, and by discussing recent Federal Trade Commission ("FTC" or "Commission") and Department of Justice ("DOJ" or "Department") matters involving intellectual property issues. I will focus primarily on patent issues because most of the Commission's intellectual property antitrust enforcement matters have involved patents, although the principles I will discuss apply equally to all forms of intellectual property.
II. Evolution Of The Relationship Between
Antitrust And Intellectual Property Law
Although many attorneys now recognize the commonality of purpose between the antitrust and intellectual property laws, such commonality has not always been fully recognized. Earlier in this century, courts and enforcement agencies often regarded the two bodies of law as having an adversarial relationship. That "adversarial" thinking is outdated, and I would like to explain why. First, however, a brief historical overview gives important context to the current thinking about antitrust and intellectual property law.
A. Historical Review Of The Relationship Between Antitrust And Intellectual Property Law
For much of this century, courts and federal agencies regarded patents as conferring monopoly power in a relevant market.(3) A "relevant market" is an antitrust term of art that is used to determine which products compete with one another.(4) Historically, substitute products were not considered in the analysis of whether patents confer monopoly power.
The thinking that patent law and antitrust worked toward opposite purposes had another effect. In any given case, courts and the agencies had to find that one or the other concept took precedence. This meant that in many cases, the courts considered patents to be a government-endorsed exception to the antitrust laws. In fact, for a long time, the courts held that the patent exception was so broad as to immunize from antitrust scrutiny the conduct of firms holding patents. In one case, the Supreme Court even found that conduct involving price fixing merited immunity.(5)
In the middle of the century, the courts narrowed the immunity. Certain types of conduct still were considered to be outside the antitrust laws. Others, however, were not. A 1948 Supreme Court opinion described the boundaries of the immunity this way: "the possession of a valid patent or patents does not give the patentee any exemption from the provisions of the Sherman Act beyond the limits of the patent monopoly."(6) The Court had begun to recognize that the antitrust and patent laws could co-exist.
The trend towards narrowing the types of conduct exempt from antitrust scrutiny culminated in the 1970s with a now-infamous government policy called the "Nine No-Nos" that was first articulated in a speech by a DOJ official.(7) The Nine No-Nos were certain types of conduct that the Department always regarded as suspect and likely to unreasonably harm competition.(8) Such conduct was suspect because courts and agencies still tended to infer market power from the existence of a patent, without weighing the significance of substitutes for the patented technology or product.(9)
One no-no was that a patentee should not require a licensee to grant back patented improvements to the licensee's original technology.(10) Today, the agencies recognize that such grantbacks can have a greater positive than negative effect on competition, particularly where the original patentee competes with several other firms and the grantback is nonexclusive.(11)
Another big no-no was the setting of royalty payments in amounts unrelated to the sales volume of the patented product.(12) Once again, this conduct might not receive much attention today, particularly if a patentee were found to lack market power.
The other no-nos were: 1) tying of unpatented supplies; 2) post-sale restrictions on resale by purchasers of patented products; 3) tie-outs; 4) licensee veto power over the licensor's grant of future licenses; 5) mandatory package licensing; 6) restrictions on sales of unpatented products made by a patented process; and 7) specifying the prices a licensee could charge upon resale of licensed products.(13)
To summarize the historical overview, the antitrust and patent laws once were thought to represent opposing policies. This dichotomy was encouraged by the antitrust presumption that a patent not only conferred exclusive rights to one product or process, but also assured monopoly power in a relevant market, regardless of available substitutes.
B. Current Relationship Between Antitrust And Intellectual Property Law
Today, the federal antitrust enforcement agencies recognize a much closer and interconnected relationship between antitrust law and intellectual property rights.(14) The FTC and DOJ no longer consider the two bodies of law to conflict. The agencies' current thinking is summarized quite well in the Federal Circuit's 1990 opinion in Atari Games Corp. v. Nintendo of America, Inc., in which the Federal Circuit stated: "[t]he aims and objectives of patent and antitrust laws may seem, at first glance, wholly at odds. However, the two bodies of law are complementary, as both are aimed at encouraging innovation, industry and competition."(15)
This recognition of the complementary purposes of the antitrust and patent laws has been facilitated by the ongoing dialogue between the patent and antitrust legal communities.(16) The federal antitrust enforcement agencies have benefitted greatly from our exchanges with the intellectual property bar, and we at the FTC hope these discussions will continue.
C. Antitrust Guidelines For The Licensing Of Intellectual Property
The Antitrust Guidelines for the Licensing of Intellectual Property ("IP Guidelines"), issued jointly by the FTC and DOJ in 1995, describe the agencies' current complementary approach to applying antitrust principles in cases involving intellectual property rights.(17) The IP Guidelines were developed in cooperation with the intellectual property bar.
The integrated approach of the IP Guidelines embodies three basic principles. First, the federal antitrust authorities apply the same general antitrust principles to conduct involving intellectual property as to conduct involving any other form of property.(18) The agencies recognize, however, that intellectual property has important characteristics that distinguish it, such as ease of misappropriation. The antitrust analysis undertaken in cases involving intellectual property takes such differences into account. Nonetheless, the governing antitrust principles are the same.
The second principle is that the agencies do not presume that intellectual property creates market power in the antitrust context.(19)This is important because it represents a refinement of the thinking that characterized earlier periods of antitrust enforcement.
The third principle is that the agencies generally consider intellectual property licensing to be procompetitive.(20) The agencies recognize that intellectual property licensing often allows firms to combine complementary factors of production.(21) Licensing also can help integrate complementary intellectual property. Consumers may benefit from licensing because it can expand access to intellectual property and thus increase the speed and reduce the cost of bringing innovations to market.
In addition to discussing general principles, the IP Guidelines apply the principles of particular licensing practices, such as arrangements that involve the cross-licensing, pooling, or acquisition of intellectual property.(22) These examples are useful in assessing the analysis that might apply to other practices.
III. Rule Of Reason Analysis
A. Overview Of The Rule Of Reason Analysis
The FTC and DOJ generally analyze restraints involved in licensing transactions and other agreements involving intellectual property using what antitrust law calls the "rule of reason."(23) The rule of reason analysis involves several steps. First, the agencies ask whether the restraint is likely to adversely affect competition.(24) Second, if there is a likely anticompetitive effect, the inquiry determines whether the restraint on competition is reasonably necessary to achieve procompetitive benefits, or efficiencies, that outweigh those anticompetitive effects.(25)
The rule of reason analysis applies several basic principles. The first step is to define the relevant market. Market definition has two dimensions: product market and geographic market.(26) The key issue in defining the relevant product market is identifying the existence of substitutes for a given product. As to determination of the relevant geographic market, a typical question would be whether, if the price of a domestically produced product goes up, customers will import a substitute product from another country. The fundamental question answered by relevant market definition is: which products actually compete with one another in the marketplace?(27)
Once the relevant market is defined, the agencies assess market power, which the IP Guidelines describe as "the ability profitably to maintain prices above, or output below, competitive levels [in a relevant market] for a significant period of time."(28) The agencies look at various factors in assessing market power. Market share--the percentage of a given relevant market (product and geographic) controlled by a particular company--often is a key determinant of market power.(29) Market share, however, may be an imperfect surrogate for market power. For example, the ability to exercise market power will depend on the ease with which new competitors can enter the market.
Where market power exists, the agencies examine how that power was or will be acquired. As the Supreme Court has stated, the market power of a single firm that is solely "a consequence of a superior product, business acumen, or historic accident" does not violate the antitrust laws.(30) Sometimes, however, market power may be acquired illegally--for example, through an agreement that unreasonably restrains competition. Moreover, even when market power is legally acquired, it can be illegally maintained.(31) Finally, even when a firm has legally acquired and maintained its market power, conduct by a firm with market power may be unlawful if it unreasonably harms competition.(32)
B. The Treatment Of Grantbacks Under The Rule Of Reason Analysis
As noted above, in the 1970s grantbacks likely would have provoked an antitrust challenge because of the DOJ's view that patents conferred market power.(33) Today, the federal antitrust authorities have a more refined view of the likely effect of grantbacks on innovation, competition, and consumer welfare. Grantback provisions are now evaluated under a more detailed rule of reason inquiry, in which we examine the likely effects of the grantback "in light of the overall structure of the licensing arrangement and conditions in the relevant markets."(34) The agencies also ask whether the licensor has market power, since market power no longer is presumed from patent ownership.(35)
The agencies recognize that grantbacks can be procompetitive, especially when they are non-exclusive.(36) The procompetitive benefits may include: 1) risk sharing between a licensee and a licensor; 2) incentives for the licensor to engage in further innovation based on the licensee's improved technology; 3) stimulation of first-generation innovation; and 4) encouragement of the licensing of improved first-generation innovation.(37) Grantbacks can affect competition adversely as well, however. Some grantbacks can reduce substantially a licensee's incentives to engage in research and development. The result might be to limit competition in research and development.
Generally, a non-exclusive grantback is less likely to produce anticompetitive effects because the licensee remains free to license its improvements to others.(38) Indeed, the agencies recognize that a non-exclusive grantback provision sometimes can be necessary to ensure competition. For example, without a grantback provision, the original licensor might be "prevented from effectively competing because it is denied access to improvements developed with the aid of its own technology."(39) On the other hand, even a nonexclusive grantback might have anticompetitive effects if it prevents the licensee from earning a return on its innovations.(40)
IV. Current Antitrust Enforcement Concerns
A focus on recent enforcement actions helps to illustrate how the principles articulated in the IP Guidelines translate into current enforcement priorities and intentions.
A. Patent Pooling
As the IP Guidelines state, the antitrust agencies regard patent pooling arrangements as "often procompetitive" because these arrangements can promote the dissemination of technology.(41) Possible procompetitive effects result from: 1) clearing blocking positions; 2) avoiding costly infringement litigation; 3) integrating complementary technologies; and 4) reducing transaction costs.(42)Concerns arise, however, when a pooling arrangement harms competition among entities that are actual or potential competitors.
A comparison of three recent matters illustrates how the antitrust agencies approach patent pooling. The first two patent pools were analyzed by DOJ under its business review letter procedure, pursuant to which DOJ reviews a prospective transaction and provides an advisory opinion at a company's request.(43) The third pool involved the Summit Technology/VISX enforcement action, which was recently settled by the FTC.(44)
1. DVD And MPEG-2 Technology Pools
DOJ reviewed two pools relating to Digital Versatile Disc ("DVD") technology. The first pool was proposed by eight electronics firms and Columbia University.(45) The pool concerned MPEG-2, a video data storage compression standard.(46) Video compression allows savings in data storage and transmission space, a technology used with DVD production. Participants proposed to pool 27 patents held by numerous different patentees. The pool planned to issue a blanket, nonexclusive license at a royalty rate agreed upon by the licensors.(47) The second pool was proposed by Philips, Sony, and Pioneer and concerned a pool of patents necessary to comply with the standards for the production of DVDs and DVD players.(48) In each case, DOJ declined to initiate an enforcement action based on the patent pool descriptions that were provided by the parties.(49)
The basic features of the MPEG-2 pool, which led DOJ to determine not to bring an enforcement action, likewise were present in the DVD pool. Thus, the following discussion will focus on the MPEG-2 pool. When reviewing proposed patent pool arrangements, however, it would be wise to review DOJ's business review letters in both cases in order to assure an understanding of the few features where the two pools differed.
DOJ based its conclusion not to pursue an enforcement action on half a dozen factors. First, the pool included only complementary, not competing, patents, each of which was deemed essential to compliance with the MPEG-2 standards.(50) The pooling agreement's definition of "essential" is particularly noteworthy in that it required (1) that there be no technical alternative to each patent that was included in the pool and (2) that the pooled patents be useful for MPEG products only in conjunction with each other.(51) The patent-holders were not pooling competing technologies, but rather assembling complementary components of a single technology.
Second, the licenses were non-exclusive.(52) Each covered patent would remain available on an individual basis from its individual licensor.(53) The pool thus would not be a mechanism for requiring licensees to take a package of multiple licenses they did not want. A requirement that multiple licenses be taken sometimes is called "tying" in antitrust analysis, and tying of licenses can harm competition under certain circumstances.
Third, the pool would use an independent expert to choose which patents were "essential" and could be included in the pool.(54) The pool thus avoided being over-inclusive or including patents that were competitive substitutes for other patents in the pool. The joint licensor, a separate entity with no intellectual property of its own at stake, would retain and pay the expert. In addition, because each member's royalties were based on the number of essential patents it contributed, the royalty structure gave the pool members a strong incentive to exclude other firms' non-essential patents.
Fourth, the pool promised equal access.(55) The portfolio would be offered on the same terms and conditions to all licensees. This "equal access" requirement would eliminate any potential for the pool to be used to disadvantage rivals to the pool members.
Fifth, unilateral competition with the standard was permitted, meaning that nothing in the agreement restricted licensors from developing alternative technologies.(56) Thus, the patent pool would not restrain innovation.
Finally, the pool offered significant efficiencies.(57) The pooling arrangement reduced the time and expense required to accumulate the diverse licenses needed to make MPEG-2 products. By facilitating the creation of those products, the pool's effect was likely to be procompetitive.(58)
2. Summit Technology/VISX
The third patent pooling case involved an enforcement action initiated by the FTC. In March 1998, the FTC announced charges against Summit Technology, Inc. and VISX, Inc. regarding their pooling of patents related to photorefractive keratectomy ("PRK").(59) PRK is a form of eye surgery that uses lasers to reshape the cornea and frees many people from the need to wear glasses or contact lenses.(60)Summit and VISX were the only firms with Food and Drug Administration ("FDA") approval to market PRK equipment.
Summit and VISX licensed most of their PRK patents to a shell entity named Pillar Point Partnership.(61) This partnership then licensed the full portfolio of patents back to Summit and VISX, and only to Summit and VISX. Summit and VISX sold or leased PRK equipment to eye doctors and sublicensed the doctors to perform PRK procedures. The patent pooling arrangement required Summit and VISX to pay the Partnership a $250 fee each time a PRK procedure was performed. Summit and VISX, in turn, charged each of their respective sublicensees a $250 per-procedure fee. Neither Summit nor VISX had an incentive to reduce this fee because the patent pooling agreement obligated each firm to pay this amount to the pool.
The Commission's complaint alleged, first, that the agreement eliminated ongoing competition between Summit and VISX that otherwise would have existed in markets for PRK equipment, licensing of patents, and licensing of technology related to the procedure.(62) Second, the exclusive nature of the agreement restricted other firms' access to PRK technology by reducing each party's incentives to license PRK technology to other firms.(63) Third, the fee provisions significantly raised the prices that consumers paid for PRK procedures.(64) In the Commission's view, the $250 licensing fee paid to the Partnership effectively became a price floor for consumers' fees.(65)
In August 1998, these allegations were settled through a consent order that bars continuation of the pooling arrangement.(66)
3. MPEG-2 And Summit/VISX Patent Pools Distinguished Under Rule Of Reason
A comparison of the MPEG-2 and Summit/VISX pools is useful to show how the rule of reason balancing of procompetitive benefits and anticompetitive effects produced a different result in each case.
First, the MPEG pool was limited to patents that were useful for MPEG-2 products only in conjunction with the other patents.(67) In contrast, the Commission alleged that, in the absence of the patent pooling agreement, VISX and Summit could and would have competed with one another in the sale or lease of PRK equipment by challenging each other's patents, by avoiding or inventing around the patents, or by combining both tactics.(68)
Second, the exclusivity of the two pools differed.(69) The patents covered by the MPEG pool could be made available by the individual members, as well as by the pool. Conversely, the Summit/VISX pool prohibited unilateral licensing by either party.
Third, either Summit or VISX individually could veto licensing by the pool to other companies.(70) This veto power diminished the likelihood that either company's patents would be licensed to other PRK manufacturers. The complaint alleged that, in fact, the patents were not licensed to others. The MPEG pool, on the other hand, was specifically designed to facilitate licensing of the covered patents to a broad spectrum of other manufacturers on nondiscriminatory terms.(71)
In sum, the MPEG pool was designed to make new products possible, while the Summit/VISX pool appeared to do little more than grant the parties the power to control prices.
B. Mergers
Two recent mergers of pharmaceutical companies demonstrate the role of intellectual property in the Commission's antitrust analysis. The first case involved the merger of Ciba-Geigy and Sandoz, in which both companies were developing gene therapy technology.(72)The second matter involved Glaxo's acquisition of Wellcome, in which both companies were developing non-injectable migraine remedies.(73) In both cases, the Commission carefully crafted remedies to protect the large up-front investments necessary to discover and develop new drugs.
1. Ciba-Geigy/Sandoz (Novartis AG)
In March 1996, Ciba and Sandoz agreed to merge to form Novartis AG.(74) The FTC reached a consent agreement with the parties to address the competitive impact on the innovation of gene therapies.(75) At the time of the merger, no gene therapy product was on the market, but potential treatments were in clinical trials.
The FTC identified five relevant product markets relating to gene therapy, all of which were located in the United States.(76) The first relevant market encompassed the technology and research and development for gene therapy overall.(77) The other markets each involved the research and development, manufacture, and sale of a specific type of gene therapy, for cancer; graft-versus-host disease ("GVHD"); hemophilia; and chemoresistance.(78)
In the first market, for overall gene therapy, the Commission alleged that Ciba and Sandoz controlled the key intellectual property rights necessary to commercialize gene therapy products.(79) For each of the four specific gene therapy markets, the Commission asserted that the relevant market was highly concentrated and that Ciba and Sandoz were the two leading commercial developers of the gene therapy product.(80) Moreover, entry into the gene therapy markets was difficult and time-consuming because any entrant would need patent rights, significant human and capital resources, and FDA approvals.(81)
In a separate statement, the Commission majority said that the case presented "a post-merger picture of potentially life-saving therapies whose competitive development could be hindered by the merged firm's control of substantially all of the proprietary rights necessary to commercialize gene therapy products. Preserving long-run innovation in these circumstances is critical."(82)
The remedies centered, not surprisingly, on the intellectual property rights. The new company, Novartis, was required to grant to all requesters a non-exclusive license to certain patented technologies essential for development and commercialization of gene therapy products.(83) Depending on the patent, Novartis could receive an up-front payment of $10,000 and royalties of one to three percent of net sales.(84) Novartis also was required to grant a non-exclusive license of certain technology and patent rights related to specific therapies for cancer, GVHD, and hemophilia to a Commission-approved licensee.(85) Novartis could request from the licensee consideration in the form of royalties and/or an equivalent cross-license.(86)
Further, the merged company could not acquire exclusive rights in certain intellectual property and technology related to chemoresistance gene therapy.(87) The Commission said this would ensure that at least one other company had access to the needed gene sequences.(88)
In many mergers that raise antitrust concerns, the Commission orders divestitures.(89) In Ciba-Geigy, the Commission chose remedial licensing instead.(90) With respect to the development and commercialization of gene therapy products generally, competitors to varying degrees already possessed the hard assets, such as production facilities, research scientists, and technological know-how. What the competitors lacked were the patent rights to complementary technologies that they previously were able to obtain either through Ciba or Sandoz, but which, absent the Commission's order, would have been monopolized post-merger.
With respect to specific therapies for cancer, GVHD, and hemophilia, a new competitor was needed to replace the competition that would be lost through the merger.(91) Divestiture of hard assets and/or ongoing businesses, not just intellectual property rights, might have disrupted the merging parties' ongoing research and development efforts in a large number of other products not threatened by the merger. Such divestitures likely would have harmed, rather than helped, competition. Instead, the parties found a licensee, Rhone Poulenc-Rorer, that needed only to license certain intellectual property rights and technological know-how in order to compete effectively.(92) As Business Week noted at the time the settlement was announced, "The Trustbusters Get One Right."(93) I agree.
2. Glaxo/Wellcome
The second merger, which also involves research and development of pharmaceuticals, was Glaxo's 1995 acquisition of Wellcome.(94)The FTC was concerned that the companies were competitors in the highly concentrated market for a specific type of advancement in migraine treatment.(95) The Commission alleged that the acquisition would eliminate actual competition between the two companies in researching and developing migraine remedies.(96) The Commission also alleged that the acquisition would reduce the number of research and development tracks for these migraine remedies and increase Glaxo's unilateral ability to reduce research and development of these drugs.(97)
Glaxo and Wellcome reached a consent agreement with the Commission that allowed them to proceed with their merger.(98) The agreement required the combined firm to divest Wellcome's assets related to the research and development of the migraine remedy.(99) Among those assets were patents, technology, manufacturing information, testing data, research materials, and customer lists.(100) The assets also included inventory needed to complete all trials and studies required to obtain FDA approval.(101) The acquirer, Zeneca Pharmaceuticals, had to be approved by the Commission.(102) The Commission's purpose in requiring this divestiture was to ensure continued research and development of Wellcome's potential product in the same manner in which the product would be developed without the merger.(103) The Commission believed the remedy would lessen the anticompetitive effects of the merger.(104)
The remedy in the Glaxo merger has been successful. Zeneca received FDA approval for its migraine drug, marketed under the name Zomig, within fifteen months after the Commission approved Glaxo's application to divest its migraine drug assets to Zeneca.(105)
C. Exclusive Licensing
A case currently pending in federal district court demonstrates how exclusive licensing arrangements may raise antitrust concerns. In December 1998, the Commission filed a complaint against Mylan Laboratories, the nation's second largest generic drug manufacturer, along with three other companies that participate in the generic drug industry.(106) These companies were charged with restraint of trade, monopolization, and conspiracy to monopolize the markets for generic lorazepam and clorazepate, two widely-used anti-anxiety drugs for which over 21 million prescriptions are written in the United States each year.(107)
As the complaint sets forth, generic drug manufacturers require FDA approval to market their products in the United States.(108) A generic drug manufacturer typically purchases an active pharmaceutical ingredient ("API") from a specialty chemical manufacturer.(109)The generic drug manufacturer then combines the API with fillers, binders, colorings, and other ingredients to create a finished product.(110)
To sell an API in the United States legally, an API supplier must establish a Drug Master File ("DMF") with the FDA.(111) A generic drug manufacturer, in turn, must reference a specific DMF when it applies for FDA approval to sell a generic drug.(112) For example, Mylan's applications to sell generic lorazepam and clorazepate tablets each referred to DMFs established by Profarmaco S.r.l., an Italian wholly-owned subsidiary of Cambrex Corporation.(113) Through a U.S. distributor named Gyma Laboratories of America, Inc., Profarmaco supplied most of the APIs for the generic versions of lorazepam and clorazepate sold in the United States.(114)
The complaint alleges that Mylan sought and obtained ten-year exclusive licenses for Profarmaco's DMFs for both the lorazepam and clorazepate APIs.(115) By obtaining total control over Profarmaco's supply of these APIs in the United States, Mylan would be able to prevent other generic drug manufacturers from gaining access to the raw materials needed to market competing products.(116) In return for these exclusive licenses, Mylan offered to pay Profarmaco, Cambrex, and Gyma a percentage of Mylan's gross profits on sales of lorazepam and clorazepate tablets.(117)
The complaint also alleges that Mylan sought a similar ten-year exclusive license from SST Corporation ("SST"), the U.S. distributor for a competing lorazepam API manufacturer, FIS, that once had supplied lorazepam API in the United States and still had a valid DMF.(118)Mylan sought this license despite the fact that Mylan's FDA application to sell generic lorazepam tablets made no reference to the DMF for this alternate source of lorazepam API, which meant that Mylan could not legally sell lorazepam tablets containing the FIS API sold by SST.(119) The complaint alleged that Mylan's intent in attempting to acquire the exclusive license from SST was to block access to the FIS API by Mylan's generic lorazepam competitors.(120) Again, Mylan offered to pay the distributor a percentage of gross profits on Mylan's sales of lorazepam tablets, even though the tablets would not even contain the FIS API.(121) SST turned down the exclusive licensing offer.(122) The Commission's complaint alleges that Mylan had no procompetitive justification for its conduct.(123)
According to the complaint, shortly after Mylan obtained exclusive licenses from Profarmaco and Gyma, Mylan significantly raised its prices for generic clorazepate and lorazepam tablets, in amounts ranging from 1,900 to as much as 3,200 percent.(124) An example in the complaint alleges that a 500-count bottle of 7.5 mg clorazepate tablets increased in price from approximately $11.36 to $377.00.(125) Mylan's competitors--other generic drug manufacturers--matched these price increases.(126) As a result, the complaint alleges that many purchasers have paid substantially higher prices for these drugs, and that patients also may have sought to save money by reducing the quantities of these important medicines that they use.(127)
In its complaint, the FTC sought a permanent injunction, along with disgorgement and restitution of $120 million from Mylan.(128) The U.S. District Court for the District of Columbia recently denied defendants' motions to dismiss the FTC's complaint.(129) While the entire decision is informative, one holding by the court deserves special mention here. Judge Thomas F. Hogan held that it is within the Commission's remedial powers to seek not only a cease and desist order but also disgorgement of profits from Mylan.(130) For those of us who are particularly interested in seeing the Commission craft strong and effective remedies, this holding is viewed as a victory for consumers who may have been forced to pay higher prices as a result of Mylan's alleged conduct. It remains to be seen what will happen as this case winds its way through the courts.
D. Single-Firm Conduct
1. Intel Corporation
The FTC's Intel case involved single-firm conduct in an intellectual property context. On August 6, 1999, the Commission announced that it had entered a final consent order in this matter.(131) The consent agreement was tailored to resolve a number of competitive concerns alleged in the Commission's June 1998 administrative complaint against Intel.(132)
When a monopolist uses unjustified exclusionary conduct to maintain its dominance, it raises serious competitive concerns by removing incentives to compete.(133) Typically, consumers benefit from competition in at least two ways: 1) competition brings lower prices; and 2) competition is a powerful spur to the development of new, better, and more diverse products and processes.(134) A monopolist's unjustified conduct that removes competitive incentives for other firms to innovate and challenge the monopolist's dominant position has a direct and substantial impact on future competition and consumer welfare.(135) Absent a legitimate business justification that outweighs these concerns, such conduct constitutes a violation of the antitrust laws.(136)
a. Complaint allegations
The Commission's complaint against Intel alleged that Intel has monopoly power in the worldwide market for general purpose microprocessors.(137) According to the complaint, Intel's market dominance is reflected in a market share approximating 80 percent of dollar sales and reinforced by high barriers to entry into the microprocessor market.(138)
The Commission believed that Intel had engaged in exclusionary conduct to maintain its dominance by coercing computer manufacturers, who also were actual or potential Intel competitors, into licensing their patented innovations to Intel to resolve intellectual property disputes.(139) If these manufacturers refused to grant the desired licenses, Intel denied them access to advance technical information and microprocessor product samples, and also threatened to withhold product from these customers.(140) It was particularly important that the manufacturers--which included Digital Equipment Corporation, Intergraph Corporation, and Compaq Computer Corporation--were long-term Intel customers who relied on the Intel information and product samples to design computer systems featuring Intel microprocessors.(141) In an intellectual property context, it is also noteworthy that intellectual property was at issue on both sides of the dispute: Intel's intellectual property and the intellectual property belonging to its customers.
Intel's exclusionary conduct tended to reinforce its domination of the general purpose microprocessor market in at least three ways.(142) First, Intel would get preferential access to a wide range of technologies being developed by other firms in the industry.(143)Second, Intel's coercive tactics would force customers to license away patent rights, which would tend to diminish the customers' incentives to develop new and improved microprocessors or related technologies.(144) This behavior had the ability to harm competition and consumers by reducing innovation. Third, a computer maker's inability to enforce its patent rights would make it more difficult to develop and maintain a brand name based on superior technology.(145) Finally, Intel's exclusionary conduct was not reasonably necessary to serve a legitimate, procompetitive purpose.(146)
b. Terms of consent order
It is important to understand what the Intel order does not do. Specifically, it does not impose any kind of broad "compulsory licensing" regime upon Intel.(147) Intel is free to license to whomever it wishes--or to choose not to license it at all.(148) But once Intel does grant a license, and a computer manufacturer relies on the license to design computer systems based on Intel microprocessors, Intel cannot leverage its dominant position in microprocessors to extract intellectual property grants from its customers.(149)
The order protects the rights of Intel customers to seek full and fair market value for their intellectual property, free from the risk of losing necessary advance technical information or product.(150) The order prohibits certain conduct by Intel if such conduct arises in the context of an intellectual property dispute with an existing customer. First, Intel is prohibited from withholding or threatening to withhold certain advance technical information from a customer (or taking other specified actions with respect to such information).(151) Second, Intel is prohibited from refusing or threatening to refuse to continue to sell microprocessors to an existing customer.(152)
The order contains one noteworthy exception to the relief otherwise available. If a customer maintains the right to seek an injunction against Intel's manufacture, use, sale, offer to sell, or importation of Intel's microprocessors, the customer is not entitled to the order's protections.(153) In all likelihood, this exception would become available only if a customer tried to shut down Intel's core business pending resolution of an intellectual property dispute. This one exception is designed to strike an appropriate balance between the interests of Intel and its customers on a prospective basis.(154) Intel, like its customers, has a strong and legitimate interest in protecting and commercializing its intellectual property--an interest that can co-exist with the antitrust laws.
2. Dell Computer Corporation
a. Complaint allegations
A second case involving single-firm conduct was the Commission's action against Dell Computer Corporation.(155) The complaint involved Dell's membership in the Video Electronics Standards Association ("VESA"), a non-profit standards-setting organization comprising the vast majority of leading U.S. computer hardware and software manufacturers.(156)
In 1992, VESA was developing a standard for a computer bus design that later became known as the "VL-bus."(157) As part of the development and approval process, VESA required each member to certify in writing that the standard did not infringe any patents, trademarks, or copyrights owned by the member company.(158) On two occasions, Dell voted to approve the VL-bus standard and certified that the standard did not infringe its intellectual property.(159) After the standard became very successful, Dell asserted an earlier-issued patent against several computer manufacturers using the standard.(160)
In the Commission's view, this type of behavior imposed considerable costs upon competition and consumers.(161) The Commission alleged that further industry acceptance of the new standard was hindered and that systems using the VL-bus were avoided because of the patent dispute.(162) In addition, according to the Commission, uncertainty about the acceptance of the design standard raised not only the costs of implementing the new design, but also the costs of developing competing bus designs.(163) The Commission also was concerned that Dell's behavior would chill participation in private industry standard-setting.(164)
b. Terms of consent order
Dell and the FTC ultimately entered into a consent order prohibiting Dell from enforcing its patent against those who wanted to use the VL-bus standard.(165) The FTC's order also prohibited Dell from enforcing patent rights in the future when it intentionally failed to disclose those rights upon request of a standards-setting organization.(166)
As in Intel, Dell is interesting not only for what the FTC did, but for what it did not do. The decision is fundamentally patent-friendly and limited to the facts of this particular case, in part because the Commission had reason to believe that Dell had not acted in good faith to identify and disclose patent conflicts.(167) Barring other antitrust concerns, had VESA adopted the standard with the knowledge of Dell's patent interest, FTC action likely would not have been warranted.(168) Similarly, if VESA did not have policies requiring its members to act in good faith to identify patent conflicts, FTC action also might have been unlikely.(169) Relief in this case should not be read to impose a general duty to search, nor does this enforcement action suggest that standard-setting bodies should impose a duty to disclose.
To put Dell in a context that may be more familiar to intellectual property lawyers, note the Commission's statement that "the remedy in this case is consistent with those cases, decided under the concept of equitable estoppel, in which courts precluded patent-holders from enforcing patents when they failed properly to disclose the existence of those patents."(170) Under patent law, equitable estoppel is a complete defense against a charge of infringement.(171)
V. Checklists For Antitrust Issues
To assist practitioners in counseling their clients on the proper use of their intellectual property under the antitrust laws, the following three checklists regarding licensing, cross-licensing, and structuring more procompetitive intellectual property agreements may be useful to consider.
A. Licensing
The following questions should be asked regarding licensing arrangements:
First, does the intellectual property agreement, and any restraint that is part of the agreement, have a procompetitive justification? For example, licensing agreements may be justified because they facilitate the combination of a licensor's intellectual property with complementary factors of production owned by the licensee.(172) Antitrust concerns are more likely when such a procompetitive justification appears absent.
Second, do restraints in the licensing agreements further those procompetitive purposes, for example, by aligning the incentives of the licensor and the licensees to promote the development and marketing of the licensed technology and/or products that are the result of that technology, or by substantially reducing transaction costs?(173)
Third, if a procompetitive justification can be made for the agreement and any restraint therein, does the agreement qualify for "safety zone" treatment under the IP Guidelines?(174) If not, do the agreement and any included restraints have any possible anticompetitive effects? If there are possible anticompetitive effects, are the restraints "reasonably necessary" to achieve the asserted procompetitive effect?(175)
Be aware that an agreement or restraint with no procompetitive justification may be susceptible to a challenge by the antitrust authorities, especially where the agreement or restraint is of the type that always, or almost always, tends to raise price or reduce output, or is otherwise of a type that the courts have condemned per se, e.g., naked price-fixing, output restraints, market allocation, and group boycotts.(176)
B. Cross-Licensing
In cross-licensing situations (including patent pools), ask the following questions:
First, are the patents "blocking" or do they actually compete with each other?(177) In the latter context, cross-licensing may be anticompetitive.(178)
Second, how will future patents be treated? Are the participants obligated to contribute future patents? If so, are these future obligations restricted to improvements of the fundamental patents, or do they encompass anything the participants invent in the field? Obligations to contribute future patents can have the effect of stifling innovation, especially where such obligations are not limited to improvements of the fundamental patents.
Third, is the patent contribution uncompensated? A lack of compensation could reduce the parties' incentives to innovate.(179) Even if a reasonable royalty is allowed, innovation can be stifled where royalty amounts for new inventions are set by the rest of the pool, i.e., by the innovator's competitors.
Fourth, is the future obligation justified? For instance, a contribution obligation that is limited to improvement patents might be justified because it may insure against the possibility that a licensee might expropriate a patent's entire value in the field. Are members free to license their future patents independently of the pool, or is the pool the only way to get technology to the market? If the pool is the only alternative, what is the justification for this arrangement?
Fifth, is the cross-licensing related to a settlement of patent infringement litigation? In such settlements, parties may give up rights that they would otherwise vindicate if litigation costs and risks were not prohibitive. One consequence of such settlement compromises may be to align the settling patentees' interests against the interests of consumers. Thus, a proposed settlement's competitive effects must be analyzed carefully, with particular attention to whether the settlement may blunt competition that would otherwise take place.
C. Structuring Procompetitive Agreements: Other Factors To Consider
Licensing agreements can be written to include particular features that increase the likelihood of procompetitive results and, therefore, are less apt to raise antitrust concerns. For example, make the license non-exclusive--i.e., make patents available to others who are not parties to the arrangement. Along similar lines, allow each party to license its own patents independently, without requiring the consent of other parties. Include within the agreement only those patents that are complementary, not those in competition with one another.
VI. Conclusion
Issues of intellectual property and innovation have become central in our economy and, therefore, increasingly prominent in antitrust enforcement. Numerous areas of intellectual property law are being revised or expanded to adjust to current technologies. For example, Congress is considering legislation to expand intellectual property protection for factual databases and other collections of information.(180) Similarly, states are attempting to create a uniform system for enforcing intellectual property licensing agreements.(181)
We at the FTC are monitoring these developments. In recent years, our cases, hearings, and other dialogues with the intellectual property bar have endowed us with significant knowledge and experience about the nature of innovation in our economy. These experiences have helped to refine the Commission's appreciation for the crucial balance among competition, innovation, and intellectual property protection. In return, one hopes that continual exchanges among the Commission and the intellectual property and antitrust bars will help practitioners to better understand how the Commission approaches antitrust cases involving intellectual property issues. We encourage contacts with the Commission, including taking advantage of the useful resources at our web site, <http://www.ftc.gov>, whenever questions arise regarding the interplay between antitrust and intellectual property.
Going forward, I hope readers will share my belief that intellectual property and antitrust laws are no longer adversaries. Indeed, these laws share common purposes: to stimulate innovation and to confer benefits on the American economy and the American public.
Endnotes:
1. © 2000 Commissioner Sheila F. Anthony. Commissioner Anthony's remarks are adapted from her address at the Centennial Conference on Intellectual Property Law at the John Marshall Law School Center for Intellectual Property Law in May 1999, along with several other presentations on antitrust and intellectual property. The views expressed are those of Commissioner Anthony and do not necessarily reflect the views of the Federal Trade Commission or any other individual Commissioner.
2. I began my legal career specializing in intellectual property issues at a law firm in Washington, D.C. My private practice largely involved copyright and trademark issues, but with some patent litigation in the mix as well.
3. See Crown Die & Tool Co. v. Nye Tool & Mach. Works, 261 U.S. 24, 37 (1923) (citing Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405 (1908)).
4. See generally United States Department of Justice & Federal Trade Commission, 1992 Horizontal Merger Guidelines § 1.1 (as amended Apr. 8, 1997) </bc/docs/horizmer.htm> [hereinafter Merger Guidelines].
5. See E. Bement & Sons v. National Harrow Co., 186 U.S. 70 (1902) (patent pooling arrangement exempted from antitrust scrutiny even though pool amounted to outright price fixing with no apparent transfer of technology or other efficiency).
6. United States v. Line Material Co., 333 U.S. 287, 308, 76 U.S.P.Q. (BNA) 399, 408 (1948) (patent pool struck down on price fixing grounds apparently without examination of procompetitive effects of pool on innovation and consumer welfare).
7. See Bruce B. Wilson, Patent and Know-How License Agreements: Field of Use, Territorial, Price and Quantity Restrictions, in Antitrust Primer: Patents, Franchising, Treble Damage Suits 11, 12-14 (1970); see also Ky P. Ewing, Jr., Patent-Antitrust Enforcement, in 1969-1983 Trade. Reg. Rep. (CCH) 55883, 55887 & n.34 (1983).
8. See Wilson, supra note 6, at 15.
9. See, e.g., Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 161 U.S.P.Q. (BNA) 577 (1969).
10. See, Wilson, supra note 6, at 13. Grantbacks are arrangements where a licensee agrees to extend to the licensor of intellectual property the right to use the licensee's improvements to the licensed technology. See United States Department of Justice & Federal Trade Commission, Antitrust Guidelines for the Licensing of Intellectual Property § 5.6 (Apr. 6, 1995) <http://www.usdoj.gov/atr/public/guidelines/ipguide.htm> [hereinafter IP Guidelines].
11. See id.; see also infra Part III.B.
12. See Wilson, supra note 6, at 14.
13. See id. at 12-14.
14. See IP Guidelines, supra note 9, § 1.0.
15. 897 F.2d 1572, 1576, 14 U.S.P.Q.2d (BNA) 1034, 1037 (Fed. Cir. 1990) (citing Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 876-77, 228 U.S.P.Q. (BNA) 90, 100-01 (Fed. Cir. 1985)).
16. See, e.g., Anticipating the 21st Century: Competition Policy in the New High-Tech Global Marketplace (May 1996) (reporting the findings of FTC hearings on the subject).
17. See IP Guidelines, supra note 9.
18. See id. § 2.1, ¶ 1.
19. See id. § 2.2.
20. See id. § 2.3, § 3.1, ¶ 1 ("[I]ntellectual property licensing arrangements are typically welfare-enhancing and procompetitive.").
21. See id. § 3.4, ¶ 3.
22. See generally id.
23. See id. § 3.4, ¶ 1 (rule of reason applies in "vast majority of cases"); see generally FTC v. Indiana Fed'n of Dentists, 476 U.S. 447 (1986); NCAA v. Board of Regents of the Univ. of Okla., 468 U.S. 85 (1984); Broadcast Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1, 201 U.S.P.Q. (BNA) 497 (1979); 7 Phillip E. Areeda, Antitrust Law: An Analysis Of Antitrust Principles And Their Application § 1502 (1986).
24. See IP Guidelines, supra note 9, § 3.4, ¶ 1.
25. See id. § 3.4, ¶ 1. There is an important caveat to this analysis, however. The courts have regarded certain kinds of restraints to be so "plainly anticompetitive" in "nature and necessary effect" that they are condemned summarily. Id. at ¶ 2 (citing FTC v. Superior Court Trial Lawyers Ass'n, 493 U.S. 411, 433 (1990) and National Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679, 692 (1978)). Among those restraints held per se unlawful are: 1) naked price fixing; 2) agreements to restrict output or maintain minimum resale price; and 3) market divisions among horizontal competitors. See IP Guidelines, supra note 9, § 3.4, ¶ 2. Certain group boycotts also may be per se unlawful. The per se rules apply fully to licenses and other agreements involving intellectual property. In other words, these agreements are not spared from per se treatment just because they are related to intellectual property. See id. § 3.4, ¶ 3-4.
26. See Merger Guidelines, supra note 3, § 1.0.
27. Contrast supra Part II.A (historically, substitutes not considered because monopoly power presumed).
28. IP Guidelines, supra note 9, § 2.2.
29. See Merger Guidelines, supra note 3, §§ 1.5, 2.0.
30. United States v. Grinnell Corp., 384 U.S. 563, 571 (1966); see also United States v. Aluminum Co. of Am., 148 F.2d 416, 430, 65 U.S.P.Q. (BNA) 6, 19 (2d Cir. 1945) (Sherman Act not violated by attainment of market power solely through "superior skill, foresight and industry").
31. See, e.g., In re Intel Corp., No. 9288, ¶¶ 11-41 (FTC June 8, 1998) (complaint) </os/1998/06/intelfin.cmp.htm> [hereinafter IntelComplaint]. The Intel matter is discussed in greater detail infra Part IV.D.1.
To prove that a company has engaged in unlawful monopolization in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2, an antitrust plaintiff must establish that the defendant has monopoly power and has acquired or maintained that power through exclusionary conduct. See Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 596 n.19 (1985); United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966). Conduct is considered exclusionary if it involves "conduct, other than competition on the merits or restraints reasonably 'necessary' to competition on the merits, that reasonably appears capable of making a significant contribution to creating or maintaining monopoly power." Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d 227, 230 (1st Cir. 1983) (quoting 3 Phillip E. Areeda & Donald F. Turner, Antitrust Law ¶ 626, at 83 (1978)).
32. See IP Guidelines, supra note 9, § 2.2.
33. See supra notes 8-9 and accompanying text.
34. IP Guidelines, supra note 9, § 5.6, ¶ 3; see generally Transparent-Wrap Mach. Corp. v. Stokes & Smith Co., 329 U.S. 637, 645-48 (1947) (grantback provision in technology license not per se illegal).
35. See IP Guidelines, supra note 9, § 5.6, ¶ 3.
36. See id. ¶ 1.
37. See id.
38. See id. ¶ 2.
39. Id.
40. See, e.g., id. § 5.5, ¶ 5 (pooling arrangement that requires grantback at minimal royalties can reduce innovation).
41. Id. § 5.5, ¶ 1.
42. See id.
43. See 28 C.F.R. § 50.6 (1999). The FTC has a similar procedure for providing advisory opinions on prospective business activities.See 16 C.F.R. § 1.1 (1999).
44. See infra Part IV.A.2.
45. See Letter from Joel I. Klein, Acting Assistant Attorney General, Antitrust Division, Department of Justice, to Garrard R. Beeney, Esq. (June 26, 1997) <http://www.usdoj.gov/atr/public/busreview/1170.htm> [hereinafter MPEG Pool Letter].
46. See id.
47. See id.
48. See Letter from Joel I. Klein, Acting Assistant Attorney General, Antitrust Division, Department of Justice, to Garrard R. Beeney, Esq. (Dec. 16, 1998) <http://www.usdoj.gov/atr/public/busreview/2121.htm> [hereinafter DVD Pool Letter].
49. See id.; see also MPEG Pool Letter, supra note 44, at 16.
50. See MPEG Pool Letter, supra note 44, at 9.
51. See id. at 9-10.
52. See id. at 5.
53. See id. at 6.
54. See id. at 11.
55. See id. at 10.
56. See id. at 12.
57. See id. at 15.
58. See id. In 1999, the DOJ issued another business review letter in a matter involving another proposed DVD patent pool. See Letter from Joel I. Klein, Assistant Attorney General, Department of Justice, to Carey R. Ramos, Esq., counsel to Hitachi, Ltd. (June 10, 1999) <http://www.usdoj.gov/atr/public/busreview/2485.htm>. After setting forth an antitrust analysis similar to the ones in the two prior business review letters, the DOJ again declined to initiate an enforcement action. See id.
59. See In re Summit Tech., Inc. & VISX, Inc., No. 9286 (FTC Mar. 24, 1998) (complaint) </os/1998/9803/summit.cmp.htm> [hereinafterSummit Complaint].
60. See id. ¶ 4.
61. See id. ¶ 8.
62. See id. ¶¶ 25(c), 27(d).
63. See id. ¶¶ 25(b), 27(c).
64. See id. ¶¶ 25(a), 27(b).
65. See id. ¶ 13.
66. See In re Summit Tech., Inc. & VISX, Inc., No. 9286 (FTC Aug. 21, 1998) (Analysis Of Proposed Consent Order To Aid Public Comment) </os/1998/9808/d09286ana.htm>; see also In re Summit Tech., Inc. & VISX, Inc., No. 9286 (FTC Aug. 21, 1998) (Agreement Containing Consent Order To Cease And Desist As To Summit Tech., Inc.) </os/1998/9808/d09286suagr.htm>; In re Summit Tech., Inc. & VISX, Inc., No. 9286 (FTC Aug. 21, 1998) (Agreement Containing Consent Order To Cease And Desist As To VISX, Inc.) </os/1998/9808/d09286viagr.htm>; Summit and VISX Settle FTC Charges of Violating Antitrust Laws (Aug. 21, 1998) </opa/1998/9808/sumvisx.htm>.
The FTC litigated one portion of the case concerning whether one of the patents owned by VISX was obtained through intentional fraud, and the Administrative Law Judge ("ALJ") dismissed all remaining antitrust complaint allegations against VISX. Because this matter potentially could be appealed to the Commission, I am not at liberty to discuss the merits of the ALJ's Initial Decision and Order. See In re Summit Tech., Inc. & VISX, Inc., No. 9286 (FTC Aug. 21, 1998) (initial decision and order) </os/adjpro/d9286/index.htm>; see also FTC Judge Dismisses Remaining Allegations in Complaint Against VISX (June 4, 1999) </opa/1999/9906/visx.htm>.
67. See MPEG Pool Letter, supra note 44, at 3.
68. See Summit Complaint, supra note 58, at ¶ 8.
69. Compare MPEG Pool Letter, supra note 44, at 6 with Summit Complaint, supra note 58, at ¶ 9.
70. See Summit Complaint, supra note 58, at ¶ 10.
71. See MPEG Pool Letter, supra note 44, at 9-10.
72. In re Ciba-Geigy, Ltd., 123 F.T.C. 842 (1997). The other two product markets for which relief was obtained were corn herbicides and flea control products. See id. at 847-49.
73. In re Glaxo P.L.C., 119 F.T.C. 815 (1995).
74. See Ciba-Geigy, 123 F.T.C. at 844, ¶ 8.
75. See id. at 842.
76. See id. at 844-46, ¶¶ 9-13.
77. See id. at 844-45, ¶ 9.
78. See id.
79. See id. at 846, ¶¶ 14-15.
80. See id. at 847, ¶¶ 16-19.
81. See id. at 849-50, ¶¶ 25-26.
82. Id. at 895 (Separate Statement of Chairman Robert Pitofsky and Commissioners Janet D. Steiger, Roscoe B. Starek, III, and Christine A. Varney).
83. See id. at 874-76, pts. IX.B-C.
84. See id.
85. See id. at 873-74, pt. IX.A and 876-77, pt. IX.D.
86. See id.
87. See id. at 877, pt. IX.E; see also In re Ciba-Geigy, Ltd., Analysis to Aid Public Comment, 62 Fed. Reg. 409, 411-12 (Jan. 3, 1997) [hereinafter Ciba-Geigy Analysis].
88. See Ciba-Geigy Analysis, 62 Fed. Reg. at 412.
89. See Ciba-Geigy, 123 F.T.C. at 899 ("[Divestiture] is a remedy that would be simple, complete, and easily reviewable. Normally, divestiture would be the remedy of choice.").
90. See id.
91. See Ciba-Geigy Analysis, 62 Fed. Reg. at 411.
92. See Ciba-Geigy, 123 F.T.C. at 873-74, pt. IX.A and 876-77, pt. IX.D.
93. The Trustbusters Get One Right, Bus. Wk, Jan. 20, 1997, at 104.
94. See In re Glaxo P.L.C., 119 F.T.C. 815 (June 1995).
95. See id. at 816, ¶¶ 5-8.
96. See id. at 817, ¶ 10(a).
97. See id. at 817, ¶ 10(b)-(c).
98. See id. at 817-18.
99. See id. at 820-21, pt. II.
100. See id. at 819-20, pt. I.G.
101. See id.
102. See id. at 820-21, pt. II.B; see also Letter from Donald S. Clark, Secretary, Federal Trade Commission, to Jeremy A.W. Strachan, Glaxo P.L.C. (Sept. 6, 1996) </os/1996/9609/c3586div.htm> (granting application for approval of divestitures to Zeneca).
103. See Glaxo, 119 F.T.C. at 820-21, pt. II.B.
104. See id.
105. See Letter from Robert Temple, M.D., Director, Office of Drug Evaluation I, Food and Drug Administration, to Kevin McKenna, Ph.D., Zeneca Pharmaceuticals (Nov. 25, 1997) <http://www.fda.gov/cder/ foi/nda/index97.htm> (approval of New Drug Application No. 20-768 for Zomig (zolmitriptan)).
106. Federal Trade Comm'n v. Mylan Lab., Inc., No. 1:98CV03114 (TFH) (D.D.C. amended complaint filed under seal Feb. 8, 1999) <http://www. ftc.gov/os/1999/9902/mylanamencmp.htm> [hereinafter Mylan Complaint]; see also Mylan, Nation's Second Largest Generic Drug Maker, Charged with Restraint of Trade, Conspiracy & Monopolization (Dec. 21, 1998) </opa/1998/9812/mylanpv.htm>.
107. See Mylan Complaint, supra note 105, ¶ 15.
108. See id. ¶ 12.
109. See id. ¶ 13.
110. See id.
111. See id. ¶ 14.
112. See id.
113. See id. ¶ 16.
114. See id. ¶¶ 9, 16, 22.
115. See id. ¶¶ 19-23, 26.
116. See id. ¶ 19.
117. See id. ¶ 23.
118. See id. ¶¶ 16, 24. SST Corporation serves as the U.S. distributor for Fabricca Italiana Sintetici ("FIS"), an Italian chemicals concern that manufactures lorazepam API and maintains a valid DMF with the FDA. See id. ¶ 16. SST sells FIS API to several generic drug manufacturers other than Mylan. See id.
119. See id. ¶¶ 16, 24.
120. See id. ¶ 28.
121. See id. ¶ 24.
122. See id. ¶ 28 (alleging that, at November 1997 meeting, SST's president explained to a Mylan vice president that SST would decline Mylan's offer, in part due to antitrust concerns).
123. See id. ¶¶ 33-34.
124. See id. ¶ 29.
125. See id.
126. See id.
127. See id. ¶ 31.
128. See id. (Prayer for Relief).
129. Federal Trade Comm'n v. Mylan Labs., Inc., 62 F. Supp.2d 25, 32 (D.D.C. 1999).
130. See id. at 36-37.
131. See In re Intel Corporation, No. 9288 (FTC Aug. 3, 1999) </os/1999/9908/inteld&o.htm> [hereinafter Intel Order].
132. See Intel Corp.; Analysis to Aid Public Comment, 64 Fed. Reg. 14246 (Mar. 24, 1999) [hereinafter Intel Analysis] </ os/1999/9903/d09288intelanalysis.htm>; see also FTC Accepts Settlement of Charges Against Intel (Mar. 17, 1999) </opa/ 1999/9903/intelcom.htm>.
133. See Intel Analysis, 64 Fed. Reg. at 14247 (citing Eastman Kodak Co. v. Image Technical Serv's, 504 U.S. 451, 483 & n.32 (1992); Aspen Skiing Co. v. Aspen Highlands Skiing Co., 472 U.S. 585, 596 (1985); Barry Wright Corp. v. ITT Grinnell Corp., 714 F.2d 227, 230 (1st Cir. 1983); United States v. Grinnell Corp., 384 U.S. 535, 570-71 (1966); Lorain Journal Co. v. United States, 342 U.S. 143, 154 n.7 (1951)).
134. See Intel Analysis, 64 Fed. Reg. at 14247.
135. See id.
136. See id.
137. See Intel Complaint, supra note 30, ¶¶ 4-6.
138. See id. ¶¶ 6-10.
139. See id. ¶¶ 11, 13, 18-19, 26-29, 35, 39.
140. See id. ¶¶ 13, 19, 26-29, 35.
141. See id. ¶¶ 16, 24-25, 33.
142. See Intel Analysis, 64 Fed. Reg. at 14247.
143. See id.
144. See id.
145. See id.
146. See id.
147. See id. at 14247-48.
148. See Intel Order, supra note 130, pt. II.B.
149. See id. pt. II.A.
150. See Intel Analysis, 64 Fed. Reg. at 14248.
151. See Intel Order. supra note 130, pt. II.A.
152. See id.
153. See id.
154. See Intel Analysis, 64 Fed. Reg. at 14248.
155. In re Dell Computer Corp., 121 F.T.C. 616 (1996).
156. See id. at 617, ¶ 4.
157. See id. at 617, ¶ 6. A computer bus is a mechanism by which instructions are communicated between a computer's central processing unit and its peripheral devices, e.g., video display monitor. See id. at 627-28.
158. See id. at 617, ¶ 7.
159. See id. at 617, ¶¶ 5-7.
160. See id. at 617-18, ¶ 8.
161. See id. at 624 (Statement of The Federal Trade Commission).
162. See id. at 618, ¶ 9(a)-(b).
163. See id. at 618, ¶ 9(b)-(c).
164. See id. at 618, ¶ 9(d).
165. See id. at 620, pts. II-III.
166. See id. at 621, pt. IV.
167. See id. at 624.
168. See id. at 624-25 & 625 n.4 (citing Potter Instrument Co., Inc. v. Storage Tech. Corp., 641 F.2d 190, 211 U.S.P.Q. (BNA) 493 (4th Cir. 1981); Wang Lab. Inc. v. Mitsubishi Elec. Am. Inc., 29 U.S.P.Q.2d (BNA) 1481 (C.D. Cal. 1993); Stambler v. Diebold, Inc., 11 U.S.P.Q.2d (BNA) 1709, 1715 (E.D.N.Y. 1988)).
169. See id. at 617, ¶ 7.
170. Id. at 624-25; see also A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1028, 22 U.S.P.Q.2d (BNA) 1321, 1324-25 (Fed. Cir. 1992).
171. See supra note 166 and accompanying text and citations.
172. See IP Guidelines, supra note 9, § 3.4, ¶ 3.
173. See id.
174. Under the IP Guidelines, a "safety zone" defines conduct that, absent extraordinary circumstances, the federal antitrust agencies have promised not to challenge. Id. § 4.3.
175. Id. § 4.3, ¶ 4.
176. See, e.g., §§ 3.4, 4.3 n.30, 5.2-5.3 (examples of potential per se antitrust violations).
177. See id. § 5.5, ¶ 5 & example 10.
178. See id. § 5.5, ¶ 2.
179. See id. § 5.5, ¶ 5.
180. See, e.g., 145 Cong. Rec. S8252 (Daily ed. July 12, 1999) (statements of Sen. Patrick Leahy supporting intellectual property protection for databases).
181. See, e.g., The National Conference of Commissioners on Uniform State Laws, Uniform Computer Information Transaction Act §§ 211, 405, 506-07, 809, 812-13 (1999 annual meeting draft) <http://www.law.upenn.edu/ bll/ulc/ulc_frame. htm>.