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		<title>Intellectual Property &amp; Antitrust Issues: Licensing Restrictions</title>
		<link>http://www.patentbaristas.com/archives/2011/09/09/intellectual-property-antitrust-issues-licensing-restrictions/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=intellectual-property-antitrust-issues-licensing-restrictions</link>
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		<pubDate>Fri, 09 Sep 2011 19:01:39 +0000</pubDate>
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		<category><![CDATA[Licensing]]></category>
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		<description><![CDATA[
This is the third of a series of articles on IP and Antitrust issues. This article deals with some specific types of licensing restrictions. This is not an exhaustive list of practices that attract antitrust scrutiny. The licensing restrictions dealt with here are tying arrangements, tie-outs, royalty arrangements, exclusive dealings, cross-licensing, pooling and grant backs.

This blog [...]
Related posts:<ol>
<li><a href='http://www.patentbaristas.com/archives/2011/08/23/intellectual-property-antitrust-issues-licensing-practices/' rel='bookmark' title='Intellectual Property &amp; Antitrust Issues: Licensing Practices'>Intellectual Property &#038; Antitrust Issues: Licensing Practices</a></li>
<li><a href='http://www.patentbaristas.com/archives/2011/08/16/intellectual-property-antitrust-issues-market-power/' rel='bookmark' title='Intellectual Property &amp; Antitrust Issues: Market Power'>Intellectual Property &#038; Antitrust Issues: Market Power</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/05/05/lunch-learn-protecting-your-intellectual-property-in-turbulent-times/' rel='bookmark' title='Lunch &amp; Learn: Protecting your Intellectual Property in Turbulent Times'>Lunch &#038; Learn: Protecting your Intellectual Property in Turbulent Times</a></li>
</ol>]]></description>
			<content:encoded><![CDATA[<blockquote>
<h5 style="text-align: center;"><em><em>This is the third of a series of articles on IP and Antitrust issues.</em></em><em> </em><em>This article deals with some specific types of licensing restrictions. This is not an exhaustive list of practices that attract antitrust scrutiny. The licensing restrictions dealt with here are tying arrangements, tie-outs, royalty arrangements, exclusive dealings, cross-licensing, pooling and grant backs.</em></h5>
</blockquote>
<p>This blog installment deals with licensing restrictions. As mentioned in the previous post, IP is just one cog in the machine of production process and its value is truly enhanced only when combined with other factors. Frequently an IP owner will sell his rights in the IP to another, enter into a joint venture agreement with a view to further develop his IP, license or cross-license his IP so as to integrate his IP with that of another. Most of these arrangements seem innocuous but are apt to attract antitrust scrutiny if competition suffers harm or if the agreements are improperly drafted.</p>
<p>A “tying” or “tie-in” arrangement is defined as “an agreement by a party to sell one product… on the condition that the buyer also purchases a different (or tied) product, or at least that he will not purchased that [tied] product from any other supplier”. <em>Eastman Kodak Co. v. Image Technical Services, Inc.</em>, 112 S. Ct. 2072, 2079 (1992)</p>
<p>Tying may manifest itself in the requirement that a licensee purchase a product or service from the licensor as a condition of receiving a license, or a requirement that a licensee take a license on additional intellectual property as a condition of receiving the license it is seeking. In the Kodak case, tying-in was achieved by Kodak implementing a policy of selling replacement parts for micrographic and copying machines only to buyers of Kodak equipment who use Kodak service or repair their own machines.</p>
<p>Tying-in attracts antitrust scrutiny where (1) it involves two separate products or services; (2) that are tied together; (3) the supplier possesses market power in the market for the tying product; (4) the tie has an anti-competitive effect in the tied market; and (5) the tie affects a substantial volume of commerce. See <em>Jefferson Parish Hosp Dist. No. 2 v. Hyde</em>, 466 U.S. 2 (1984) where the dispute was regarding whether every patient undergoing surgery at the hospital must use the services of one firm of anesthesiologists and if not, whether the contract is illegal because it unreasonably restrains competition among anesthesiologists.</p>
<p>Tying-in assumes different forms such as package licensing, technological tying or tie-outs. Package licensing is not necessarily unlawful if both parties willingly enter into it and there is no coercion. As always market power is considered a deciding factor in such cases.</p>
<p>In the recent Microsoft case, technological tying is an issue that comes to the forefront. Technological tying involves using product design to combine two potentially separate products into one. In Microsoft’s case the operating system and internet browser were sought to be combined. The Court held that Microsoft’s exclusion of Internet Explorer from the Add/Remove Programs utility constituted exclusionary conduct. <em>United States v. Microsoft</em>, 253 F.3d 34, 66-67</p>
<p>Tie-out is essentially akin to restriction clause or a covenant not to deal in competing technologies. Such arrangements are a misuse of intellectual property and can attract antitrust scrutiny. Other kinds of restrictive covenants such as fields of use, prospective or existing customers, territories of work, price of object sold, quantity manufactured or the outputs of the licensee are also liable to be considered antitrust in nature.</p>
<p>Exclusivity refers to the license and whether the licensor can license the product in question to more than one licensee. Exclusive licenses are not illegal per se. However, an exclusive arrangement may attract antitrust scrutiny if the licensees or the licensor and licensee are in a horizontal relationship. (See Part II in the series for horizontal relations).</p>
<p>Grant backs require the licensee to grant the licensor the right to any intellectual property developed by the licensee. Such a provision can attract antitrust concerns if it limits the licensee’s incentive to innovate. According to the ABA Section of Antitrust Law, Intellectual Property Misuse: Licensing and Litigation (4<sup>th</sup> ed. 1997) the consequences related to a grant back may be antitrust depending on a number of reasons such as:</p>
<blockquote>
<p style="padding-left: 30px;">(1) whether the grant back includes technology that goes beyond the originally licensed intellectual property;</p>
<p style="padding-left: 30px;">(2) whether the grant back is in the form of an assignment, exclusive license, non-exclusive license or an option;</p>
<p style="padding-left: 30px;">(3) whether the licensee retains any rights under the intellectual property subject to the grant back;</p>
<p style="padding-left: 30px;">(4) the duration of the licensee’s grant back obligation;</p>
<p style="padding-left: 30px;">(5) the parties’ market power;</p>
<p style="padding-left: 30px;">(6) whether the parties are competitors;</p>
<p style="padding-left: 30px;">(7) whether the grant back is royalty-free;</p>
<p style="padding-left: 30px;">(8) the effect of the grant back on the parties’ incentive to innovate;</p>
<p style="padding-left: 30px;">(9) whether the licensor can sublicense the intellectual property that is the subject of the grant back; and</p>
<p style="padding-left: 30px;">(10) whether the grant back promotes dissemination of improvements developed by the licensee, increases the licensor’s incentive to license or otherwise increases competition and output in the relevant market.</p>
</blockquote>
<p>Cross-licensing and patent pooling as such do not attract antitrust scrutiny. However, there are instances where such arrangements have unlawful anti-competitive effects:</p>
<blockquote>
<p style="padding-left: 30px;">(1)     where the arrangements include collective price or output restraints and do not contribute to an efficiency enhancing integration of economic activity;</p>
<p style="padding-left: 30px;">(2)     where the patent pool is exclusive and (a) excluded firms cannot compete in the relevant goods or service market without access to the technology and (b) the pool participants collectively possess market power; and</p>
<p style="padding-left: 30px;">(3)     where the pooling arrangement discourage or deters members from engaging in research and development (e.g. if the pooling arrangement includes mandatory grant back obligations, particularly at low royalty rates).  <em>United States v. Krasnov</em>, 143 F.Supp. 184</p>
</blockquote>
<p>This concludes the series on IP and Antitrust issues. In conclusion, intellectual property and antitrust issues must be considered as a whole and not divest of one another. The purpose of IP laws is to provide incentives to future inventors and for dissemination and commercialization of new technology. The antitrust laws strive to achieve the same goal of promoting innovations and consumer welfare. In the end, of course, each case is unique and must be considered in light of its own facts and circumstances. The Agencies’ guidelines and the legislation in this area have to be applied to each case keeping the facts in mind. Ultimately however, the two areas of law must be seen as complementary in nature and not independent.</p>
<p>The next topic in this series deals with different types of licensing restrictions.</p>
<p>See part I here: <a title="Intellectual Property &amp; Antitrust Issues: Market Power" href="../../archives/2011/08/16/intellectual-property-antitrust-issues-market-power/">Intellectual Property &amp; Antitrust Issues: Market Power</a><br />
See part II here: <a title="Intellectual Property &amp; Antitrust Issues: Licensing Practices" href="../../archives/2011/08/23/intellectual-property-antitrust-issues-licensing-practices/">Intellectual Property &amp; Antitrust Issues: Licensing Practices</a></p>
<p style="text-align: center;"><strong><em><em><strong>Today’s post is by Guest Barista </strong></em>Shalini Menezes<em><strong> of </strong></em><a href="http://shalzs.blogspot.com/">::O.bi:t.er: D:ic.t:um</a>.</em></strong></p>
<p>Related posts:<ol>
<li><a href='http://www.patentbaristas.com/archives/2011/08/23/intellectual-property-antitrust-issues-licensing-practices/' rel='bookmark' title='Intellectual Property &amp; Antitrust Issues: Licensing Practices'>Intellectual Property &#038; Antitrust Issues: Licensing Practices</a></li>
<li><a href='http://www.patentbaristas.com/archives/2011/08/16/intellectual-property-antitrust-issues-market-power/' rel='bookmark' title='Intellectual Property &amp; Antitrust Issues: Market Power'>Intellectual Property &#038; Antitrust Issues: Market Power</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/05/05/lunch-learn-protecting-your-intellectual-property-in-turbulent-times/' rel='bookmark' title='Lunch &amp; Learn: Protecting your Intellectual Property in Turbulent Times'>Lunch &#038; Learn: Protecting your Intellectual Property in Turbulent Times</a></li>
</ol></p>]]></content:encoded>
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		</item>
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		<title>Intellectual Property &amp; Antitrust Issues: Licensing Practices</title>
		<link>http://www.patentbaristas.com/archives/2011/08/23/intellectual-property-antitrust-issues-licensing-practices/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=intellectual-property-antitrust-issues-licensing-practices</link>
		<comments>http://www.patentbaristas.com/archives/2011/08/23/intellectual-property-antitrust-issues-licensing-practices/#comments</comments>
		<pubDate>Tue, 23 Aug 2011 19:02:02 +0000</pubDate>
		<dc:creator>Guest Barista</dc:creator>
				<category><![CDATA[Guest Post]]></category>
		<category><![CDATA[Antitrust]]></category>
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		<category><![CDATA[Licensing]]></category>
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		<category><![CDATA[royalties]]></category>

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		<description><![CDATA[This is the second of a series of articles on IP and Antitrust issues.  This article deals with the need for licensing of intellectual property, licensing in the past and present and the antitrust concerns associated with it.

Possession of intellectual property is just one step in a chain of production and manufacturing. Once the patent [...]
Related posts:<ol>
<li><a href='http://www.patentbaristas.com/archives/2011/08/16/intellectual-property-antitrust-issues-market-power/' rel='bookmark' title='Intellectual Property &amp; Antitrust Issues: Market Power'>Intellectual Property &#038; Antitrust Issues: Market Power</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/03/11/what-is-the-impact-of-gene-patents-and-licensing-practices/' rel='bookmark' title='What Is the Impact of Gene Patents and Licensing Practices?'>What Is the Impact of Gene Patents and Licensing Practices?</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/05/05/lunch-learn-protecting-your-intellectual-property-in-turbulent-times/' rel='bookmark' title='Lunch &amp; Learn: Protecting your Intellectual Property in Turbulent Times'>Lunch &#038; Learn: Protecting your Intellectual Property in Turbulent Times</a></li>
</ol>]]></description>
			<content:encoded><![CDATA[<h5 style="text-align: center;"><em><em>This is the second of a series of articles on IP and Antitrust issues.</em></em><em>  This article deals with the need for licensing of intellectual property, licensing in the past and present and the antitrust concerns associated with it.<br />
</em></h5>
<p>Possession of intellectual property is just one step in a chain of production and manufacturing. Once the patent has been procured, the product has to be manufactured or the process has to be applied towards manufacture. In case of an independent inventor, he usually does not possess the resources to carry out large-scale production. And in case of R&amp;D companies that are holder of the intellectual property, they either have subsidiary manufacturing units or outsource it to companies that do possess the requisite infrastructure to carry out large-scale production. In either case, the intellectual property must be properly licensed. Licensing, cross-licensing and other similar means of conveyance of  intellectual property facilitates integration of the licensed property with complementary factors of production. This type of arrangement proves beneficial to the inventor as well as the manufacturer and thereby consumers as it greatly reduces costs and provides incentives for inventions and improvements thereupon.</p>
<p>In the past, the approach toward licensing arrangements was quite unbending. The Department of Justice identified a list of forbidden practices (the “Nine No-Nos” of intellectual property licensing; first espoused by Bruce Wilson in “<a href="http://www.justice.gov/atr/public/guidelines/0558.pdf"><em>Patent and Know-How License Arrangements: Field of Use, Territorial, Price and Quantity Restrictions</em></a>”). The Nine No-Nos consisted of the following:</p>
<blockquote>
<ol>
<li>Royalties not reasonable related to sales of the patented products;</li>
<li>Restraints on licensees’ commerce outside the scope of the patent (tie-outs);</li>
<li>Requiring the licensee to purchase unpatented materials from the licensor (tie-ins);</li>
<li>Mandatory package licensing;</li>
<li>Requiring the licensee to assign to the patentee patents that may be issued to the licensee after the licensing arrangement is executed (exclusive grant backs);</li>
<li>Licensee veto power over grants of further licenses;</li>
<li>Restraints on sales of unpatented products made with a patented process;</li>
<li>Post-sale restraints on resale; and</li>
<li>Setting minimum prices on resale of the patent products.</li>
</ol>
</blockquote>
<p>It was an attempt by patent holders to extend the boundaries of their monopolies over unpatented supplies and to gain control over improvements of their innovations, to determine resale prices of their patented products or to engage in market allocation. (Gilbert R., &amp; Shapiro C., <a href="http://faculty.haas.berkeley.edu/shapiro/ninenono.pdf"><em>Antitrust Issues in the Licensing of Intellectual property: The Nine No-No’s Meet the Nineties</em></a>)</p>
<p>Recent times have however witnessed the shrinking of this list of No-No’s to just one: illegal tying.  (<em>In re Independent Servs. Orgs. Antitrust Litig</em>. (“Xerox”), 203 F.3d 1322).</p>
<p>The <em>Xerox</em> case (with allegations similar to Kodak case discussed in the last post) held that in absence of any illegal tying, patent holder may exclude others from making, using, selling or licensing the claimed invention free from liabilities under the antitrust laws so long as the antitrust effect is not extended beyond the scope of patents.</p>
<p>There are a limited number of cause of action arising from unlawful licensing practices (after the shrinkage of the nine no-no’s to one). They are:</p>
<blockquote>
<ol>
<li>Government actions: FTC or DOJ can initiate investigations based on anticompetitive practices. In the <em>U.S. v. Microsoft</em> case, FTC sought to investigate the competitive practices of Microsoft based on an agreement between Microsoft and IBM. The object of investigation was Microsoft’s use of its market power in PC operating systems and its licensing practices with original equipment computer manufacturers. The DOJ took over the investigation and brought against Microsoft the complaint of  unlawfully maintaining monopoly and unreasonable restrained trade by using exclusionary licensing agreements with manufacturers and requiring independent applications to sign onerous NDAs. The relief sought may be injunctive or criminal penalties.</li>
<li>Private Actions: Private claims arising from unlawful licensing arrangements may cause courts to impose penalties via damages.</li>
<li>Patent and Copyright misuse: Unlawful licensing arrangements might be deemed misuse and render the patent or copyright unenforceable. (Patent misuse is grist for a separate article.)</li>
</ol>
</blockquote>
<p>Finally, whether a particular licensing agreement violates antitrust statute or not depends on whether the relationship between parties is horizontal or vertical and what test is applied.</p>
<p>Horizontal relationship is construed when parties could be considered as actual or potential competitors in a relevant market in absence of the license. Parties are considered to be in a vertical relationship when they are in a complementary relationship, in different stages in the chain or production/distribution. Neither does the presence of a horizontal relationship does not in itself indicate anticompetitive practice nor does a vertical relationship guarantee the absence of the same. The classifications merely raise the possibility of the existence of anticompetitive practices. One can ask the following questions to determine of the licensee could compete lawfully with the licensor:</p>
<blockquote>
<ol>
<li>Did the licensee have the technical capability and/or resources necessary to enter the relevant market without the licensing arrangement?</li>
<li>Is there any evidence that the licensee had any intention of entering the relevant market absent the licensing arrangement in question?</li>
<li>Would the licensee have been precluded from entering the relevant market by the licensor’s intellectual property?</li>
</ol>
</blockquote>
<p>(<a href="http://www.dechert.com/library/Analyzing%20IP%20License%20-%20GGordon%205-02.PDF"><em>See Reference</em></a>)</p>
<p>Having asked these questions, one proceeds to the tests to be applied to licensing restraint: <em>Per Se v. Rule of Reason</em>. An antitrust rule of reason basically involves an inquiry into whether the consequences of the license are anticompetitive in nature and if so, whether the final pro-competitive outcome of such restraints outweighs the anticompetitive effects.</p>
<p>A <em>per se</em> analysis is that the licensing arrangement is to be treated as per se unlawful without an inquiry into whether it has any competitive benefits. Generally horizontal relationships are analyzed by the <em>per se</em> rule- as conduct that is so plainly anticompetitive that no inquiry is necessary. Price-fixing, market allocation, tying arrangements, <em>etc</em>., are all practices which must be analyzed by the <em>per se</em> rule.</p>
<p>The next topic in this series deals with different types of licensing restrictions.</p>
<p>See part I here: <a title="Intellectual Property &amp; Antitrust Issues: Market Power" href="../../archives/2011/08/16/intellectual-property-antitrust-issues-market-power/">Intellectual Property &amp; Antitrust Issues: Market Power</a></p>
<p style="text-align: center;"><strong><em><em><strong>Today’s post is by Guest Barista </strong></em>Shalini Menezes<em><strong> of </strong></em><a href="http://shalzs.blogspot.com/">::O.bi:t.er: D:ic.t:um</a>.</em></strong></p>
<p>Related posts:<ol>
<li><a href='http://www.patentbaristas.com/archives/2011/08/16/intellectual-property-antitrust-issues-market-power/' rel='bookmark' title='Intellectual Property &amp; Antitrust Issues: Market Power'>Intellectual Property &#038; Antitrust Issues: Market Power</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/03/11/what-is-the-impact-of-gene-patents-and-licensing-practices/' rel='bookmark' title='What Is the Impact of Gene Patents and Licensing Practices?'>What Is the Impact of Gene Patents and Licensing Practices?</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/05/05/lunch-learn-protecting-your-intellectual-property-in-turbulent-times/' rel='bookmark' title='Lunch &amp; Learn: Protecting your Intellectual Property in Turbulent Times'>Lunch &#038; Learn: Protecting your Intellectual Property in Turbulent Times</a></li>
</ol></p>]]></content:encoded>
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		<title>Intellectual Property &amp; Antitrust Issues: Market Power</title>
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		<comments>http://www.patentbaristas.com/archives/2011/08/16/intellectual-property-antitrust-issues-market-power/#comments</comments>
		<pubDate>Tue, 16 Aug 2011 16:16:43 +0000</pubDate>
		<dc:creator>Guest Barista</dc:creator>
				<category><![CDATA[Guest Post]]></category>
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		<guid isPermaLink="false">http://www.patentbaristas.com/?p=3932</guid>
		<description><![CDATA[This is the first of a series of articles on IP and Antitrust issues. This article introduces the topic and the governing laws and guidelines. The next few articles will deal with intellectual property licensing practices, patent pooling and cross-licensing, antitrust/anti-competitive issues in the field of licensing, effects of restrictions in intellectual property licenses and [...]
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<li><a href='http://www.patentbaristas.com/archives/2009/08/24/book-review-monday-the-business-of-intellectual-property/' rel='bookmark' title='Book Review Monday: The Business of Intellectual Property'>Book Review Monday: The Business of Intellectual Property</a></li>
<li><a href='http://www.patentbaristas.com/archives/2011/04/26/world-intellectual-property-day-2011-designing-the-future/' rel='bookmark' title='World Intellectual Property Day 2011: Designing the Future'>World Intellectual Property Day 2011: Designing the Future</a></li>
</ol>]]></description>
			<content:encoded><![CDATA[<h5 style="text-align: center;"><em>This is the first of a series of articles on IP and Antitrust issues. This article introduces the topic and the governing laws and guidelines. The next few articles will deal with intellectual property licensing practices, patent pooling and cross-licensing, antitrust/anti-competitive issues in the field of licensing, effects of restrictions in intellectual property licenses and the antitrust consequences of the bundling of various types of intellectual property rights.</em></h5>
<p>We live in a rapidly evolving world where intellectual property is fast replacing physical, real property as assets of a corporation. This means that laws existing for traditional business operations must be stretched to encompass this new form of property. Antitrust laws starting with the Sherman Act, Clayton Act and terminating into the Federal Trade Commission Act must be interpreted in light of their application to intellectual property.</p>
<p>Within intellectual property, as we know there exist several branches. However, we confine ourselves to patents specifically, as this is a dominant form of assets for most corporations. Discussing patents and antitrust laws in the same topic is quite ironic. While antitrust laws prohibit any contract in restraint of trade (See Section 1 of the Sherman Act below), patents on the other hand grant the patent holder unlimited, albeit negative rights of excluding competitors from making, using, selling or otherwise exploiting the invention. The Supreme Court in the <em>Standard Oil</em> Case interpreted Section 1 as prohibiting only restraints of trade that unreasonably restrict competition.</p>
<blockquote><p><em>Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court. <em>15  U.S.C. § 1</em><br />
</em></p></blockquote>
<p>So how does one bridge the gap between antitrust laws and patent laws? Is one to understand that patent laws are inherently monopolistic in nature? In which case, the Congressional intent in enacting the Sherman, Clayton and FTC Acts is questionable. Is it that patent laws are divest from the purview of antitrust laws or can they be viewed as two sides of the same coin- aiding and abetting one another in enhancing consumer welfare and promoting innovation?  “[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 actually complementary, as both are aimed at encouraging innovation, industry and competition.” <em>Atari Games Corp. v. Nintendo of America, Inc</em>., 897 F.2d 1572, 1576.  One may seek recourse to case laws, old and new, in addition to the various FTC reports in order to make sense of this conundrum.</p>
<p><a href="http://www.patentbaristas.com/wp/wp-content/uploads/2011/08/mr-monopoly.jpg"><img class="alignleft size-medium wp-image-3934" title="mr-money" src="http://www.patentbaristas.com/wp/wp-content/uploads/2011/08/mr-monopoly-300x300.jpg" alt="" width="152" height="152" /></a>If one is to subscribe to Judge Posner’s view, then one can arrive at a conclusion immediately as he held that exercise of monopoly power, including setting up monopolistic prices is not in contravention to antitrust laws as long as such monopoly was acquired by lawful means.</p>
<p>FTC’s last report on antitrust and patents addresses a number of issues such as refusals to license patents, collaborative standard setting, patent pooling, intellectual property licensing, the tying and bundling of intellectual property rights, and methods of extending market power conferred by a patent beyond the patent’s expiration.</p>
<p>Patents as discussed above grant exclusive rights to inventors to exclude others from exploiting the patented invention without appropriate license. These laws thus promote innovation, commercialization and further improvements by making public disclosure of the inventive steps mandatory.</p>
<p>Antitrust laws, for their part, ensure that new technologies, products and services are bought, sold, traded in a competitive environment. They also make sure that all commercial transactions are free from collusions, anticompetitive mergers and monopolistic tendencies.</p>
<p>The intellectual property laws and antitrust laws share a common goal in that they both promote innovation and consumer welfare by prohibiting actions such as imitation without compensation, monopolistic prices and an oligopoly, which inhibits a fair market. The two are thus wedded to each other.</p>
<p>The Antitrust-IP Guidelines have been an indispensable part of the Agencies’ analysis of intellectual property and antitrust issues. In brief, the guidelines emphasize three general principles:</p>
<blockquote>
<ol>
<li>Antitrust rules apply to intellectual property agreements as they would apply to agreements involving any other form of property.</li>
<li> Possession of any form of intellectual property does not by itself create a market power. The presence of substitutes for the patented product or process prevents exercise of market power and</li>
<li> That intellectual property licensing is not in contravention to competition issues as it allows firms to combine intellectual property rights with other complementary rights of production such as manufacturing and production facilities and workforces.  Antitrust-IP Guidelines §2-1</li>
</ol>
</blockquote>
<p>We end this segment with the analysis of a landmark care of <em>Image Technical Services, Inc., v. Eastman Kodak Co</em>., 125 F.3d 1195, which clarifies the concept of market power. Kodak manufactures and sells photocopiers and micrographic equipment as well as replacement parts for its equipment. Kodak began restricting plaintiffs’ access to its photocopier and micrographic parts. Kodak also secured agreements from their equipment manufacturers not to sell parts to the plaintiffs.</p>
<p>Section 2 of the Sherman Act reads <em>inter alia</em>, “Every person who shall monopolize, or attempt to monopoloze, or combine or conspire with any other persons, to monopolize any part of the trade or commerce…[commits a felony].”  15 U.S.C. §2</p>
<p>Market power can be shown to exist via circumstantial evidence or direct evidence. Circumstantial evidence must: “(i) define the relevant market, (ii) show that the defendant owns a dominant share of that market, and (iii) show that there are significant barriers to entry and show that existing competitors lack the capacity to increase their output in the short run.” <em>Rebel Oil Co. Inc., v. Atlantic Richfield Co.</em>, 51 F.3d 1421, 1434.</p>
<p>In this case, the court held that Kodak had held monopolies over the photocopier parts market as well as the micrographic parts market. Kodak tried to argue (unsuccessfully) that each part constituted a separate market and that the plaintiffs should demonstrate that they could not obtain nonpatented parts and that the failure to obtain that particular part was a result of Kodak’s monopoly over service.</p>
<p>However, it seems obvious that each of the numerous parts of equipment is required for functioning of the photocopier or micrograph. Therefore, the individual parts cannot be bifurcated into as many markets.</p>
<p>The second element of market share is thus calculated. A dominant share of the market carries with it the power to control the output across the market and thereby control prices. <em>Id.</em> at 1437.  Since Kodak controls nearly 100% of the parts market and 80-95% of the service market, with no readily available substitutes, it suffices to assume that Kodak controls the market.</p>
<p>The third factor of monopoly power is in regards to barriers to market entry and barriers to expansion. Common entry barriers include patents or other licenses, control of essential or superior resources, entrenched buyer preferences, high capital entry costs and economies of scale. <em>United States v. Syufy Enterprises</em>, 903 F.2d 659, 663. The court found Kodak to hold 220 patents, control of its designs and tools, brand name power and manufacturing capability. Kodak was also found to control its own original-equipment manufacturers through various contract arrangements. Court found a high barrier to entry to new manufacturers.</p>
<p>The Court also sought to harmonize antitrust principles with those of intellectual property. Despite the tension between the two, it is clear that –</p>
<blockquote>
<ol>
<li> patent holders are not immune from antitrust liability and</li>
<li> patent holders may refuse to sell or license protected work.</li>
</ol>
</blockquote>
<p>A monopolist who acquires a dominant position through obtaining intellectual property rights may violate §2 of Sherman Act if the monopolist exploits the dominant position to enhance monopoly in another market. Thus intellectual property rights do not confer an absolute immunity from antitrust liabilities.</p>
<p>In conclusion, the general understanding is that refusal on part of the patent holder to grant a license does not in itself create antitrust liabilities. It is only conditional refusals to grant licenses that create barrier to entry or future growth that give rise to antitrust claims.</p>
<p style="text-align: center;"><strong><em><em><strong>Today’s post is by Guest Barista </strong></em>Shalini Menezes<em><strong> of </strong></em><a href="http://shalzs.blogspot.com/">::O.bi:t.er: D:ic.t:um</a>.</em></strong></p>
<p>Related posts:<ol>
<li><a href='http://www.patentbaristas.com/archives/2008/11/13/trinkos-twist-a-new-antitrust-argument-against-product-hopping/' rel='bookmark' title='Trinko&#8217;s Twist: A New Antitrust Argument Against Product Hopping'>Trinko&#8217;s Twist: A New Antitrust Argument Against Product Hopping</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/08/24/book-review-monday-the-business-of-intellectual-property/' rel='bookmark' title='Book Review Monday: The Business of Intellectual Property'>Book Review Monday: The Business of Intellectual Property</a></li>
<li><a href='http://www.patentbaristas.com/archives/2011/04/26/world-intellectual-property-day-2011-designing-the-future/' rel='bookmark' title='World Intellectual Property Day 2011: Designing the Future'>World Intellectual Property Day 2011: Designing the Future</a></li>
</ol></p>]]></content:encoded>
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		<title>House Insists on its Prerogative of Fee Diversion       [Call Your Representative If You Think Differently]</title>
		<link>http://www.patentbaristas.com/archives/2011/06/20/house-insists-on-its-prerogative-of-fee-diversion-call-your-representative-if-you-think-differently/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=house-insists-on-its-prerogative-of-fee-diversion-call-your-representative-if-you-think-differently</link>
		<comments>http://www.patentbaristas.com/archives/2011/06/20/house-insists-on-its-prerogative-of-fee-diversion-call-your-representative-if-you-think-differently/#comments</comments>
		<pubDate>Mon, 20 Jun 2011 18:02:46 +0000</pubDate>
		<dc:creator>Guest Barista</dc:creator>
				<category><![CDATA[Guest Post]]></category>
		<category><![CDATA[fee diversion]]></category>
		<category><![CDATA[Patent Reform]]></category>

		<guid isPermaLink="false">http://www.patentbaristas.com/?p=3637</guid>
		<description><![CDATA[The one good feature of the “America Invents Act,” an end to fee diversion, is now removed.   Nothing remaining in the bill justifies the disruption and transition costs.  Please ask your representative to vote no, and ask your clients to do the same.  The bill is up for final vote on Wednesday [...]
Related posts:<ol>
<li><a href='http://www.patentbaristas.com/archives/2011/06/13/catch-22-will-fee-diversion-clause-derail-patent-reform-act/' rel='bookmark' title='Catch 22: Will Fee Diversion Clause Derail Patent Reform Act?'>Catch 22: Will Fee Diversion Clause Derail Patent Reform Act?</a></li>
<li><a href='http://www.patentbaristas.com/archives/2005/05/24/house-approves-the-stem-cell-research-enhancement-act/' rel='bookmark' title='House Approves the Stem Cell Research Enhancement Act'>House Approves the Stem Cell Research Enhancement Act</a></li>
<li><a href='http://www.patentbaristas.com/archives/2005/05/19/house-bill-may-ease-stem-cell-restrictions/' rel='bookmark' title='House Bill May Ease Stem Cell Restrictions'>House Bill May Ease Stem Cell Restrictions</a></li>
</ol>]]></description>
			<content:encoded><![CDATA[<p>The one good feature of the “America Invents Act,” an end to fee diversion, is now removed.   Nothing remaining in the bill justifies the disruption and transition costs.  Please ask your representative to vote no, and ask your clients to do the same.  The bill is up for final vote on Wednesday (it has already passed the Senate, this is the final major vote), so urgent action is required.</p>
<p>In order to pass the bill through the Senate, Sen. Coburn added language that would permanently end fee diversion.  Sen. Coburn’s amendment provided that all fees collected by the Patent Office would be available to the Office, with no possibility of tampering or mischief by Congress.</p>
<p>However, on Friday, House leadership leaked an agreement among Speaker Boehner and several committee chairmen regarding fee diversion, set out below.   Note that the agreed language essentially tracks today’s 35 U.S.C. § 42(b) and (c), except it gives a fancy name to the earmarked account that’s been in existence for 19 years.  It does not give the Office the right to spend the money it collects.  Former staffers for the Congressional appropriations process have confirmed that there is no practical difference—Congress will still be able to take funds raised by the Patent Office, and give the PTO worthless IOU’s in return.  IOU’s that the PTO cannot spend.  IOU’s that the PTO cannot count on for multi-year planning.  IOU’s that are useless for updating the PTO’s IT infrastructure.  IOU’s that cannot hire new examiners or raise pay for existing examiners.</p>
<blockquote><p><em>Sec. ___.  There is established in the Treasury a Patent and Trademark Fee Reserve Fund.  If fee collections by the Patent and Trademark Office for a fiscal year exceed the amount appropriated to the Office for that fiscal year, fees collected in excess of the appropriated amount shall be deposited in the Patent and Trademark Fee Reserve Fund.  To the extent and in the amounts provided in appropriations Acts, amounts in the Fund shall be made available until expended for obligation and expenditure by the Office for the purposes described in Section 42(c) of title 35, United States Code.</em></p>
</blockquote>
<p>Because of the way House procedural rules operate, there is no longer an opportunity to change this or amend it.  If the bill passes, fee diversion will continue.</p>
<p>If you haven’t already made up your mind on this bill, this should make it up for you.  The proponents have not been able to counter the showings by the folks who create start-ups that this bill takes away the legal machinery that venture capital and other investors need—star-tup formation will fall precipitously, along with the innovation and jobs that they create.  Proponents have been unable to give any numbers for cost savings of the bill that even approach the transition costs, let alone create savings after those transition costs are borne.  The one thing that united the proponents of the bill was an end to fee diversion, and that’s now gone.</p>
<p>Now it’s up to you.   All that’s required for the triumph of evil is for good people to do nothing.  But all that’s required to stop this bill is about 3000 phone calls from constituents.  Please go to <a href="http://www.house.gov">www.house.gov</a> and find your representative’s phone number, and phone today.  (Phone.  Emails won&#8217;t be read in time &#8212; the bill is up for a final vote Wednesday.)  Say these words:   “Please vote no on the rule for the patent bill, H.R. 1249, and vote no on final passage.”   (“Vote no on the rule” means “don’t allow the bill to come to the floor for a vote.”)  The person that answers the phone will not know enough to ask you detailed questions, those 19 words will do the trick.  Then call five of your clients and ask them to do the same.</p>
<p>Second, and far less important, please email me PatentProcedure [at] gmail [dot] com, the names of companies (name of company, city and state, name of contact person, and an email address) that would be willing to sign on to a letter stating opposition to the bill of fee diversion is not ended.</p>
<p style="text-align: center;"><strong><em>Today’s post is by Guest Barista David Boundy, Vice President and Assistant General Counsel for a well-known financial services firm.</em></strong></p>
<p>Related posts:<ol>
<li><a href='http://www.patentbaristas.com/archives/2011/06/13/catch-22-will-fee-diversion-clause-derail-patent-reform-act/' rel='bookmark' title='Catch 22: Will Fee Diversion Clause Derail Patent Reform Act?'>Catch 22: Will Fee Diversion Clause Derail Patent Reform Act?</a></li>
<li><a href='http://www.patentbaristas.com/archives/2005/05/24/house-approves-the-stem-cell-research-enhancement-act/' rel='bookmark' title='House Approves the Stem Cell Research Enhancement Act'>House Approves the Stem Cell Research Enhancement Act</a></li>
<li><a href='http://www.patentbaristas.com/archives/2005/05/19/house-bill-may-ease-stem-cell-restrictions/' rel='bookmark' title='House Bill May Ease Stem Cell Restrictions'>House Bill May Ease Stem Cell Restrictions</a></li>
</ol></p>]]></content:encoded>
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		<title>Patent Translation 101</title>
		<link>http://www.patentbaristas.com/archives/2011/02/15/patent-translation-101/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=patent-translation-101</link>
		<comments>http://www.patentbaristas.com/archives/2011/02/15/patent-translation-101/#comments</comments>
		<pubDate>Tue, 15 Feb 2011 15:01:09 +0000</pubDate>
		<dc:creator>Guest Barista</dc:creator>
				<category><![CDATA[Guest Post]]></category>
		<category><![CDATA[patents]]></category>
		<category><![CDATA[translations]]></category>

		<guid isPermaLink="false">http://www.patentbaristas.com/?p=3428</guid>
		<description><![CDATA[Translation has traditionally been one of the more over-looked aspects of the patent and intellectual property business, but with the IP landscape continuing to grow and expand across international borders, it has become a vital part of the overall “IP workflow.” Whether it’s translating a patent application for filing in another country, patent examiners at [...]
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<li><a href='http://www.patentbaristas.com/archives/2009/06/16/mylan-gets-1-million-translation-fees-reduced/' rel='bookmark' title='Mylan Gets $1 Million+ Translation Fees Reduced'>Mylan Gets $1 Million+ Translation Fees Reduced</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/09/30/patent-office-would-like-your-opinion-101-interim-examination-instructions/' rel='bookmark' title='Patent Office Would Like Your Opinion on 101 Interim Examination Instructions'>Patent Office Would Like Your Opinion on 101 Interim Examination Instructions</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/07/10/medical-device-development-101-seminar/' rel='bookmark' title='Medical Device Development 101 Seminar'>Medical Device Development 101 Seminar</a></li>
</ol>]]></description>
			<content:encoded><![CDATA[<p>Translation has traditionally been one of the more over-looked aspects of the patent and intellectual property business, but with the IP landscape continuing to grow and expand across international borders, it has become a vital part of the overall “IP workflow.” Whether it’s translating a patent application for filing in another country, patent examiners at the U.S. Patent &amp; Trademark Office (USPTO) researching an application’s “patentability,” or supporting patent litigation, if you’ve never had to procure a high-quality, cost-effective translation before, know that it is not always an easy task.</p>
<p>As a buyer of translation services, whether you are a patent attorney, paralegal , patent agent, researcher at an IP services firm or even an inventor, there are a few tips to help you get the most for your money when it comes to translations!</p>
<p><strong><em>Translation Agency, Freelance Translator, or Machine Translation?</em></strong></p>
<p>There are three main options when it comes to obtaining a translation, with each having its own set of advantages and disadvantages. First of all is going with a translation agency. The advantages of using a translation agency are typically an integrated, comprehensive quality control process (usually based on the industry standard of “TEP” – Translation, Editing &amp; Proofreading, all done by separate linguists), the ability to provide “certified” translations, and the capacity to handle larger volumes in multiple languages and across a wider spectrum of subject matter expertise.</p>
<p>The main disadvantage of a translation company is usually price – of the three options presented here this will usually be the highest cost option, though as described the risks associated with the other options can mean that the higher initial cost is well worth it. , Contracting with individual freelance translators is another option, and usually less costly than working with a translation company. If you pursue this route, however, be prepared for the need to commit a significant amount of time to project management, as you will not only need to field any queries from the linguist, but often times coordinate with one translator and one separate editor per translation project.</p>
<p>Also, if you frequently handle patents in a wide variety of technical fields and languages, you would need to recruit and develop a fairly large pool of qualified linguists in order to meet your needs. Not to mention, most freelance translators have numerous clients, so when your urgent translation need arises, their time may already be booked. In the end, the amount of time necessary to manage all of these factors and contingencies can yield a hefty cost. Lastly, many freelance translators prefer to work through translation companies, as it affords them a degree of anonymity as well as relieves them of all of the associated administrative burdens, including invoicing and payment collection. If you do choose to explore this option, though, there are a number of resources online to find translators, such as the <a href="http://www.atanet.org/">American Translators Association (ATA)</a> website directory.The last option is the cheapest of the three, but also carries the most risk – machine translation. Machine translation technology, or translation software, has improved significantly in recent years, and does have some applicability to patent translations. Within the last couple of months, there have been a number of reports about the EU Patent Office submitting content to Google to feed into its “Google Translate” program to help boost its accuracy, and while some of the better machine translation programs can give you a fairly reasonable idea of the content of a foreign-language document, they still don’t come close to a professional, certified translation, which is often required for patent application filings, litigation, etc. If, however, you only need to get the gist of the meaning, machine translation may be a viable option.</p>
<p><strong><em>How to pick the right translation vendor!</em></strong></p>
<p>So, working with a translation company is probably your best bet. If you do decide to move forward with one, you want to make sure you select the best one to fit your needs, which usually involve cost, turnaround time, communication &amp; customer care, and quality.</p>
<p>The translation industry is a rapidly growing one, and competition is often fierce. With a low barrier to entry, there are literally tens of thousands of language service providers worldwide. You want to make sure you choose one that is reputable, which you can determine based on the number of years they have been in the business, a listing of past clients and even references. You should also make sure that they have specific experience in the highly-specialized field of patents. Different companies tend to specialize in a few specific areas, and you really wouldn’t want to deal with a company who normally handles health insurance applications to translate your patent for an advanced radiological imaging device!</p>
<p>You also want to make sure you understand their quality control process, how they recruit and evaluate their linguists, that they are following the industry standard of “TEP” on all of their translations, that they carry professional liability insurance, and that they are affiliated with a recognized organization, such as the American Translators Association (ATA) or <a href="http://www.alcus.org/">Association of Language Companies (ALC)</a>.</p>
<p>Also, remember the old adage of “you get what you pay for!” If the price they’re quoting seems too good to be true, it just may be! Technical document translations can be expensive, but when a bad translation can jeopardize your litigation or patent application, which could end up costing you and your client much more in the end, it is usually worth it to pay a little more to guarantee that you are getting the best possible quality. Most translation companies do offer volume discounts based on frequent or large requests, so be sure to inquire about those up front if you expect to have many translation projects over time.</p>
<p>Furthermore, make sure that you allow substantial time for the translation process. A general rule of thumb is about 2,000 words per day, plus additional time for editing and proofreading. While most translation providers do offer expedited services, and can usually integrate multiple linguists into a large, quick turnaround time project when needed, this may not allow for enough time for thorough quality control, and if multiple translators are working on the same document in order to meet a tight deadline, you will likely end up with some inconsistencies in terminology choice and style throughout the entire document.</p>
<p>Finally, make sure you provide any reference materials, previous related translations you may have had done, as well as any supporting documentation, such as graphs, charts and especially drawings, which go a long way in assisting the translator in conveying the intent of the inventor in describing his/her invention.</p>
<p>In the end, translation is a crucial, albeit often over-looked part of the patent business. It can be especially daunting when you have no familiarity with the language(s) in question, which is why it is important to make sure you find a service provider with whom you can develop a long-term relationship.</p>
<p style="text-align: center;"><strong><em><strong><em><em><strong>Today’s  post is by Guest Barista<strong><em> </em></strong></strong></em></em></strong></em></strong><a href="http://www.schreibertransblog.com"><strong><em>David Evseeff</em></strong></a></p>
<p>Related posts:<ol>
<li><a href='http://www.patentbaristas.com/archives/2009/06/16/mylan-gets-1-million-translation-fees-reduced/' rel='bookmark' title='Mylan Gets $1 Million+ Translation Fees Reduced'>Mylan Gets $1 Million+ Translation Fees Reduced</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/09/30/patent-office-would-like-your-opinion-101-interim-examination-instructions/' rel='bookmark' title='Patent Office Would Like Your Opinion on 101 Interim Examination Instructions'>Patent Office Would Like Your Opinion on 101 Interim Examination Instructions</a></li>
<li><a href='http://www.patentbaristas.com/archives/2009/07/10/medical-device-development-101-seminar/' rel='bookmark' title='Medical Device Development 101 Seminar'>Medical Device Development 101 Seminar</a></li>
</ol></p>]]></content:encoded>
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