Term Paper: Antitrust and Intellectual Property

Pages: 15 (4477 words)  ·  Bibliography Sources: 5  ·  Level: Master's  ·  Topic: Law - Legal Issues  ·  Buy This Paper

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[. . .] Bid rigging is akin to price fixing in that a firm that is asking for bids on a project has preselected one of the bidders to win. The pooling of patents can actually be of an advantage to the market according to Sheila Anthony, the Commissioner of the Federal Trade Commission (FTC) President Bush, but becomes a problem "when a pooling arrangement harms competition among entities that are actual or potential competitors." The main focus of any of these violations is whether it is considered pro-competitive or anticompetitive behavior. The primary distinction here is that procompetitive actions are supposed to spur the competition and anticompetitive are not, they act as a negative influence. In general, the Department of Justice "weighs the likely procompetitive benefits against potential anticompetitive effects" (Bingaman). However, firms can use the potential procompetitive actions of one firm against it and file an antitrust case anyway.

In the case of intellectual property, the government seems to be less strict than they are with antitrust issues. But, there are cases when intellectual property can be regulated by the government if it is deemed to hinder competition. Also, intellectual property has to be proven original. Specious claims have been made before to the patent and trade office, and these are now being investigated for their validity.

Monopoly and Market Power

A monopoly can occur in any type of market because, although it may be difficult, a group can be formed that will be able to "corner" that product. "The term market refers to the group of consumers or organizations that is interested in the product, and is permitted by law and other regulations to acquire the product" (NetMBA). Thus, a market is not necessarily defined by the product or service that is being offered, but by the people who can purchase the product. Also, there is the issue of being able legally to purchase a product. If only one company can sell Uranium 235 to nuclear power plants (which is actually not the way it works), they would probably not be sued under the anti-competition rules because they sell a specialty product to a small number of consumers. It seems that antitrust suits are brought, mainly, when a large company or a group of relatively large companies is impinging smaller businesses (Goldman).

This brings up the point of whether it is more likely that large companies will face antitrust censure at a greater rate than small companies, and the answer to this seems to be yes. Of course, the justice department believes that they are not targeting an particular group of companies nor are they seeking out large wrong-doers. But, the evidence seems to point to the fact that larger companies do face a greater amount of scrutiny (Goldman). This could be because these types of companies are more visible, because the influence the buying ability of a larger mass of the population, or for other reasons (some believe that these decisions are often politically based (Cannon). The most likely reason though is that the companies influence the buying of a greater amount of customers. Since the purpose of the government in a republic is to protect the people, if a larger segment is being affected, they will receive the governments support. The Antitrust Division of the Justice Department has to investigate over one hundred cases per year (Bingaman) so their resources are stretched thin. Even though they may try to be as "fair and non-partisan" (Bingaman) as possible, they most likely, subconsciously, seek the larger cases because they are easier to win.

Cases exist where how large a company is seemed to matter when the case was decided. In Eastman Kodak v. Image Technical Service, two courts decided the case giving opposite verdicts, the second because of the relative size of Kodak (Bowen). In this case, Kodak stopped allowing business outside of their own network to buy new Kodak parts so that they could service Kodak proprietary equipment. The District court said that because the equipment was proprietary, and did not impinge on other copier companies, Kodak was within its rights to manage its business thus. The appellate court found differently. They stated that the smaller providers of service to Kodak machines were being stifled even though this was proprietary equipment and did not affect the market at large (Bowen). In comments analyzing the decision, the author of the summary stated that

"While superficially appealing, at bottom this explanation lacks coherence. Whether they self-service their equipment or not, rational fore-market consumers (those consumers who are not yet "locked in" to Kodak hardware) will be driven to Kodak's competitors if the price of Kodak equipment, together with the expected cost of aftermarket support, exceeds competitive levels" (Bowen).

The author's comment about this being superficially appealing is talking about the fact that it looks good to bring down a large company in favor of a group of small companies. However, when looked at logically, this is a non-case because consumers can just stop using Kodak equipment and patronize another manufacturer. The only problem is that the smaller, parasitic companies may lose business because of the action. If the goal in antitrust is to protect competition in order to protect the consumer, this case does not hold very much weight.

Essential Facilities

The size of a company does not always matter, but sometimes what the company does, in conjunction with the property it owns, does. "The essential facilities doctrine imposes liability when one firm, which controls an essential facility, denies a second firm reasonable access to a product or service that the second firm must obtain in order to compete with the first" (Pitofsky). What the doctrine is saying is that if a certain company holds a monopoly on a facility that is needed by others in order to compete, and there is no way that the facilities can be duplicated for a reasonable cost, then the company that owns the facility must allow the competitor use. The facility in question does not have to be a "brick and mortar building" it can be a newspaper (as was the case in Lorain Journal Co. v. United States) or it can be an electronic database (Associated Press v. United States) (Pitofsky). However, there have been many cases in which the facility needed by a competitor was a standard building.

In one case, Hecht v. Pro-Football, Inc., the court determined that "where facilities cannot be practicably be duplicated by would be competitors, those in possession of them must allow them to be shared on fair terms" (Pitofsky). In this case it was RFK Stadium in Washington, D.C., and the NFL believed that it had the right to use the facility because another could not be reasonably constructed. The court disagreed with the NFL though because they did have the resources to build a similar facility (Pitofsky). Therefore, the large company sometimes loses the case even when they are claiming that there has been anti-competition activity.

Intellectual Property

Competition is a positive aspect of the free market, but there are aspects to it that are sometimes troubling. Some believe that competition extends to what another actually owns. This is the case when someone pilfers intellectual property for personal gain. For many years the motion picture industry has been dealing with this fact because it is simple for employees or unscrupulous opportunists to steal money by somehow copying intellectual property. "According to the Motion Picture Association it is estimated that an excess of $3 billion is lost annually due to unauthorized copying, redistribution and pirating of movies" (Gudaitis, Poulos, and Johnson). The money lost is the reason for the amount of concern from the industry. The studios make a large gamble by producing a film, and they have to account for some amount of lost revenue due to intellectual property breach because the product is so hard to control. The industry's main defense is to take large violators to court, and to have TV spots and warnings at the beginning of the property regarding copyright infringement. Even after the product is purchased it is not wholly the property of the person who bought it because it contains property which reverts to the seller (Gudaitis, et al.). Thus, the motion picture industry must protect its property by any means that it can.

As a matter of fact, the U.S. Constitution guarantees copyrights to the American people. It states "Congress shall have the power to... promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries" (UCLA Library), in article 1 section 8. So, the founders thought that it was important enough to put in the constitution. The time periods for the various types of intellectual property (trade mark, copyright and patent) vary. Most patents now last 20 years and… [END OF PREVIEW]

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Antitrust and Intellectual Property.  (2012, April 3).  Retrieved July 22, 2019, from https://www.essaytown.com/subjects/paper/antitrust-intellectual-property/4296155

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"Antitrust and Intellectual Property."  3 April 2012.  Web.  22 July 2019. <https://www.essaytown.com/subjects/paper/antitrust-intellectual-property/4296155>.

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"Antitrust and Intellectual Property."  Essaytown.com.  April 3, 2012.  Accessed July 22, 2019.
https://www.essaytown.com/subjects/paper/antitrust-intellectual-property/4296155.