INSTALLED BASE OPPORTUNISM AND THE SCOPE OF INTELLECTUAL PROPERTY RIGHTS IN SOFTWARE PRODUCTS

10 Wake Forest Intell. Prop. L.J. 323

The legal ambiguity over patent licensing poses obvious difficulties for antitrust enforcers tasked with prosecuting companies that monopolize markets in high-tech industries. Until recently, however, the Justice Department manifested little interest in pursuing cases that might clarify the law in this area. The agency under Bush brought no monopolization cases, as then-Sen. Barack Obama critically observed during his presidential run.

In the United States v. Microsoft decision almost nine years ago, the U.S. Court of Appeals for the District of Columbia made clear that the possession of a copyright does not confer immunity from monopolization liability on acts involving the restrictive licensing of the copyrighted work. In interpreting the anti-monopolization provisions (Section 2) of the Sherman Act, the courts have been less clear about the potential for liability that may arise from the refusal to license a patented product.

The Antitrust Division’s recently reported opening of an investigation into IBM’s conduct in the mainframe computer industry appears to confirm this shift in Section 2 enforcement, and raises the possibility that the agency will seek clarification from the courts as to whether and when the restrictive licensing of patented technology can give rise to monopolization liability. The investigation appears to arise from complaints that IBM has blocked competitors from building IBM-compatible mainframes by refusing to license patents needed to achieve compatibility, but may extend to a wider range of conduct.

Should the investigation lead to an enforcement action, the courts will have a further opportunity to clarify the antitrust obligations and intellectual property rights of a monopolist who relies primarily on patents, rather than copyrights, to protect its technology. Given IBM’s importance to the information technology industry as the owner of the world’s largest patent portfolio, such a case could be accurately described as the patent-oriented sequel to the Microsoft litigation, which itself had been cut short in 2001 by a regime change at the Justice Department.

In contrast to the D.C. Circuit’s dismissal of Microsoft’s copyright counterclaims, antitrust challenges to IBM’s current mainframe licensing practices thus far have encountered broad judicial deference to IBM’s patent rights. The purpose of this Article is to analyze and critique these contrasting approaches and to situate the current litigation and investigation involving IBM in the still-unsettled doctrinal context at the intersection of intellectual property and antitrust law.