Clarifying the copyright misuse defense: The role of antitrust standards and first amendment values

Harvard Law Review

Volumn 104, Issue 6, 1991, Pages 1289-1308

[No Author Info available]

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0346186906     PISSN: 0017811X     EISSN: None     Source Type: Journal    
DOI: 10.2307/1341716     Document Type: Article

References (116)

1. See Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 492-94 (1942). See generally 8 E. LIPSCOMB, WALKER ON PATENTS §§ 28:32-28:36, at 335-67 (3d ed. 1989) (discussing patent misuse doctrine); 3 M. NIMMER & D. NIMMER, NIMMER ON COPYRIGHT § 13.09, at 13-142.1 to 13-148 (1990) (discussing the copyright misuse defense).
2. See, e.g., Morton Salt, 314 U.S. at 489-94; Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 518 (1917); American Securit Co. v. Shatterproof Glass Corp., 268 F.2d 769, 777 (3d Cir.) (compulsory package licensing), cert. denied, 361 U.S. 902 (1959).
3. See, e.g., Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970, 972-73 (4th Cir. 1990); Berlenbach v. Anderson & Thompson Ski Co., 329 F.2d 782, 783-85 (9th Cir.), cert, denied, 379 U.S. 830 (1964); National Lockwasher Co. v. George K. Garrett Co., 137 F.2d 255, 256 (3d Cir. 1943). Courts also have found misuse to include price-fixing, see United States Gypsum Co. v. National Gypsum Co., 352 U.S. 457, 472 (1957), territorial restrictions, see Robintech, Inc v. Chemidus Wavin, Ltd., 628 F.2d 142, 147 (D.C. Cir. 1980), fraud or other misbehavior in obtaining the patent or copyright, see Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 815-16 (1945), requirements that royalties be based on sales of unpatented end products, see Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 135 (1969), and extraction of royalties after the expiration of the patent, see Brulotte v. Thys Co., 379 U.S. 29, 33-34 (1964).
4. See, e.g., Morton Salt, 314 U.S. at 494. Ordinarily, the equitable defense of unclean hands requires an "immediate and necessary" connection between the plaintiff's misconduct and the subject matter of the litigation. See Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933). In misuse cases, however, courts require only that the alleged misconduct relate in some way to the patent or copyright at issue. See 8 E. LIPSCOMB, supra note 1, § 28:32, at 335-37; Lasercomb, 911 F.2d at 978.
5. 6 See, e.g., Lasercomb, 911 F.2d at 976; Allen-Myland, Inc. v. IBM Corp., 746 F. Supp. HARVARD LAW REVIEW [Vol. 104:1289 520, 549 (E.D. Pa. 1990); Data Gen. Corp. v. Grumman Sys. Support Corp., No. 88-0033-S, U.S. Dist. LEXIS 16427, at *7-8 (D. Mass. Dec. 29, 1988); Apple Computer, Inc. v. Formula Int'l, Inc., 562 F. Supp. 775, 782 (C.D. Cal. 1983), aff'd, 725 F.2d 521 (9th Cir. 1984).
6. See cases cited infra note 35.
7. See Lasercomb, 911 F.2d at 976.
8. In Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917), the owner of a patent on a film feeder used in motion picture projectors refused to license the feeder unless the licensee agreed to show only films leased from persons approved by the patent owner. The Court held that breach of the license condition did not constitute infringement on the ground that the tie-in extended the patent owner's power beyond the scope of its patent rights. See id. at 516-18. In Carbice Corp. v. American Patents Dev. Corp., 283 U.S. 27 (1931), the Court denied infringement relief to a patent owner who tied licenses of a patented refrigeration system to purchases of dry ice because "[c]ontrol over the supply of such unpatented material is beyond the scope of the patentee's monopoly." Id. at 33. Similarly, in Leitch Mfg. Co. v. Barber Co., 302 U.S. 458 (1938), the Court denied contributory infringement relief to the owner of a process patent who tied implied licenses to purchases of unpatented goods used in the process. The Court announced that "every use of a patent as a means of obtaining a limited monopoly of unpatented material is prohibited." Id. at 463. See generally Nicoson, Misuse of the Misuse Doctrine in Infringement Suits, 9 UCLA L. REV. 76, 79-84 (1962) (discussing doctrinal evolution).
9. 314 U.S. 488 (1942).
10. Id. at 493.
11. Id. at 490.
12. See id. at 490, 494.
13. See id. at 492 (noting "the equitable maxim that a party seeking the aid of a court of equity must come into court with clean hands").
14. Id. at 494.
15. Id. at 492. If one takes the "inherent" policy of patent law to be "to Promote the Progress of Science and the Useful Arts," U.S. CONST, art. 1, § 8, cl. 8, the Court's concern may have been that extensions of the patent monopoly to unpatented articles would undermine inventive activity by enabling patentees to obtain new monopolies without having to invent anything new. See Morton, 314 U.S. at 492; Nicoson, supra note 9, at 84. This concern, however, rests on the erroneous assumption that Suppiger's tying arrangement in fact threatened to reward it with a monopoly over salt. It is more likely that Suppiger used its tie-in as a metering device to Charge licensees based on the intensity with which they used the machines. See infra note 86.
16. Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680 (1944) (Mercoid II)', Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661 (1944) (Mercoid I). The alleged raiuse involved an arrangement under which Mid-Continent granted Minneapolis-Honeywell an exclusive license to use its "combination patent" for a domestic heating system in exchange tor royalty payments based solely on sales of a combustion stoker switch, an unpatented component of the patented system. See Mercoid I, 320 U.S. at 663. The Court found that the Purpose of the license restriction was to prevent the sale or use of stoker switches in the heating systems unless they were the switches manufactured by the licensee and that this practice constituted an improper extension of the patent monopoly. See id. at 663, 670.
17. See Mercoid I, 320 U.S. at 664-66, 669. Congress overruled this virtual nullification of contributory infringement doctrine in 1952 by adding 35 U.S.C. § 271(d), which allows a patentee to make and sell nonstaple goods used in connection with its patented invention, and § 271(c), which authorizes the patentee to exclude others, through suits for contributory infringement, from making or selling nonstaple goods. See Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 200-02 (1980); Act to Revise and Codify the Patent Laws, ch. 950, 66 Stat. 811 (codified at 35 U.S.C. § 271(c)-(d)). After Dawson, only tying arrangements involving staple articles of commerce, which are broadly defined in § 271(c), may qualify as patent misuse.
18. Mercoid II, 320 U.S. at 684.
19. Cf. Automatic Radio Mfg. Co. v. Hazeltine Research, Inc., 339 U.S. 827, 832-33 (1950) (emphasizing competitive effects). But see Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 139 (1969) (limiting Automatic Radio to its facts).
20. 22 See American Securit Co. v. Hamilton Glass Co., 254 F.2d 889, 895 (7th Cir. 1958) (indicating that violation of antitrust consent decree may constitute patent misuse); cf. Hartford-Empire Co. v. United States, 323 U.S. 386, 415 (1945) (drawing from Morton Salt the rule that "so long as the patent owner is using his patent in violation of the antitrust laws, he cannot restrain infringement of it by others").
21. See Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 200-02 (1980).
22. See Zenith, 395 U.S. at 140.
23. See, e.g., Dawson, 448 U.S. at 179, 198; Zenith, 395 U.S. at 135-36; United States Gypsum Co. v. National Gypsum Co., 352 U.S. 457, 465 (1957).
24. 334 U.S. 131 (1948).
25. 371 U.S. 38 (1962)
26. Block-booking is the practice of licensing certain films on the condition that the licensee take additional films from the licensor. See Paramount, 334 U.S. at 156.
27. Northern Pac. Ry. v. United States, 356 U.S. 1, 5-6 (1958); accord Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 14-15 (1984). The Court has defined a tying arrangement as "an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product." Northern Pacific, 356 U.S. at 5.
28. SeC Loew's, 371 U.S. at 45 ("The requisite economic power is presumed when the tying product is patented or copyrighted."). The Court observed that this principle "grew out of a long line of patent cases which had eventuated in the doctrine that a patentee who utilized tying arrangements would be denied all relief against infringements of his patent." Id. at 46 (citing Morton Salt and Motion Picture Patents). In addition, the Supreme Court may have implicitly recognized the copyright misuse defense in Broadcast Music, Inc. v. CBS, Inc., 44; U.S. 1 (1979), where it reversed and remanded an antitrust ruling "and the copyright misuse Judgment dependent upon it." Id. at 24.
29. 80 F. Supp. 843 (D. Minn. 1948), appeal dismissed sub nom. M. Witmark & Sons v. Berger Amusement Co., 177 F.2d 515 (8th Cir. 1949).
30. See id. at 844-46.
31. See id. at 846-48.
32. See id. at 849-50 (relying on Morton Salt and Mercoid I but also finding violations of Sherman Act §§ 1 and 2).
33. See Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970, 977 (4th Cir. 1990); United Tel. Co. v. Johnson Publishing Co., 855 F.2d 604, 610-12 (8th Cir. 1988); Supermarket of Homes, Inc. v. San Fernando Valley Bd. of Realtors, 786 F.2d 1400, 1408 (9th Cir. 1986); F.E.L. Publications, Ltd. v. Catholic Bishop, 214 U.S.P.Q. (BNA) 409, 413 (7th Cir.), cert, denied, 459 U.S. 859 (1982); Edward B. Marks Music Corp. v. Colorado Magnetics, Inc., 497 F.2d 285, 290 (10th Cir. 1974), cert, denied, 419 U.S. 1120 (1975). Some lower courts, on the other hand, have refused to recognize the copyright misuse defense absent explicit guidance from the Supreme Court. See, e.g., Rural Tel. Serv. Co. v. Feist Publications, Inc., 663 F. Supp. 214, 220 (D. Kan. 1987), aff'd without opinion, 916 F.2d 718 (10th Cir. 1990), cert, granted, in S. Ct. 40 (1990); Orth-O-Vision, Inc. v. Home Box Office, 474 F. Supp. 672, 686 (S.D.N.Y. 1979).
34. See Mitchell Bros. Film Group v. Cinema Adult Theater, 604 F.2d 852, 865 n.27 (5th Cir. 1979), cert, denied sub nom. Bora v. Mitchell Bros. Film Group, 445 U.S. 917 (1980); Broadcast Music, Inc. v. Moor-Law, Inc., 527 F. Supp. 758, 772 (D. Del. 1981), aff'd without opinion, 691 F.2d 490 (3d Cir. 1982).
35. See, e.g., Lasercomb, 911 F.2d at 978; Moor-Law, 527 F. Supp. at 772 n.24.
36. See, e.g., United Tel. Co. v. Johnson Publishing Co., 855 F.2d 604, 611 (8th Cir. 1988); K-91, Inc. v. Gershwin Publishing Corp., 372 F.2d 1, 2, 4 (9th Cir.), cert, denied, 389 U.S. 1045 (1968).
37. 911 F.2d 970 (4th Cir. 1990).
38. See id. at 979. Lasercomb and the defendant's employer, Holiday Steel, competed in manufacturing steel rule dies used to cut cardboard for boxes and cartons. Lasercomb developed a computer program called Interact which facilitated the design and manufacture of steel dies and licensed the software to Holiday Steel. See id. at 971-72. Holiday Steel made unauthorized copies of Interact in order to develop its own software, which virtually replicated Lasercomb's program. See id.
39. See id. at 979. Holiday Steel, however, was not subject to the license restriction. See id. at 971-72. The district court, analogizing from the antitrust rule of reason, had found Lasercomb's restrictive license agreement to be a reasonable attempt to protect against illicit copying. See id. at 977. The Fourth Circuit held that Lasercomb's restrictions went beyond legitimate protection and amounted to an effort "to suppress any attempt by the licensee to independently implement the idea which [the program] expresses." Id. at 978.
40. Id. at 973-74, 977. The court also adopted the traditional patent misuse precepts that a misuse "need not be a violation of antitrust law in order to comprise an equitable defense to an infringement action," id. at 978; that the misuse defense is available "even if the defendants themselves have not been injured by the misuse," id. at 979; and that the plaintiff "is free to bring suit for infringement once it has purged itself of the misuse," id. at 979 n.22.
41. See, e.g., Supermarket of Homes, Inc. v. San Fernando Valley Bd. of Realtors, 786 F.2d 1400, 1408 (9th Cir. 1986); Tempo Music, Inc. v. Myers, 407 F.2d 503, 507 (4th Cir. 1969). Other courts have also used equitable balancing approaches. See F.E.L. Publications, Ltd. v. Catholic Bishop, 214 U.S.P.Q. (BNA) 409, 413 & n.9 (7th Cir.) (reversing trial court finding of copyright misuse because balance of equities favored plaintiff), cert, denied, 459 U.S. 859 (1982); Alfred Bell & Co. v. Catalda Fine Arts, Inc., 191 F.2d 99, 105-06 (2d Cir. 1951) (balancing the policy of enforcing the antitrust laws against the policy of preventing piracy of copyrighted material).
42. See United States Gypsum Co. v. National Gypsum Co., 352 U.S. 457, 465 (1957); Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 492-93 (1942); Lasercomb, 911 F.2d at 976; American Securit Co. v. Shatterproof Glass Corp., 268 F.2d 769, 777 (3d Cir.), cert. denied, 361 U.S. 902 (1959).
43. See Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 136 (1969); Transparent-Wrap Mach. Corp. v. Stokes & Smith Co., 329 U.S. 637, 640-41 (1947); Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 665-66 (1944); Morton Salt, 314 U.S. at 491.
44. Professor Kaplow has remarked that if such an essentialist notion were indeed available, courts presumably would have little difficulty reaching consistent and enduring decisions. See Kaplow, The Patent-Antitrust Intersection: A Reappraisal, 97 HARV. L. REV. 1813, 1848 (1984). In reality, misuse doctrine has been characterized by indeterminacy and doctrinal vacillation. See, e.g., Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 188-99 (1980) (discussing the to and fro of patent misuse and contributory infringement doctrine); Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 518 (1917) (overruling Henry v. A.B. Dick Co., 224 U.S. 1 (1913)).
45. Motion Picture Patents, 243 U.S. at 511; see also Mercoid I, 320 U.S. at 666 (characterizing a patent as a "privilege" that is "limited to the invention which it defines").
46. Zenith, 395 U.S. at 136.
47. In Morton Salt, for instance, even assuming that Suppiger enjoyed an economic monopoly over its patented machine, it could not have increased its profits on the machine by charging an above-market price for the salt tablets used with it. See H. HOVENKAMP, ECONOMICS AND FEDERAL ANTITRUST LAW § 8.4, at 223-24 (1985). How patent or copyright owners opt to exploit their monopolies should be irrelevant, provided they do not restrain trade to a degree greater than that contemplated by the patent system and sanctioned by antitrust law.
48. See United States v. Paramount Pictures, Inc., 334 U.S. 131, 158 (1948); Morton Salt, 314 U.S. at 492; Fox Film Corp. v. Doyal, 286 U.S. 123, 127 (1932).
49. See, e.g., Blonder-Tongue Laboratories, Inc. v. University of Ill. Found., 402 U.S. 313, 343-44 (1971); Mercoid I, 320 U.S. at 665-66; Morton Salt, 314 U.S. at 491; Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970, 974 (4th Cir. 1990).
50. Congress arbitrarily set the patent life at 17 years and has not adjusted it for over a century, despite major doctrinal shifts in the judicially developed rules governing how patents may be exploited. See Kaplow, supra note 46, at 1819. Similarly, in specifying the duration of copyright protection. Congress in its 1790 copyright statute, Act of May 31, 1790, ch. 15, 1 Stat. 124, simply borrowed the 14-year renewable term that had endured in England since the Statute of Anne in 1710. In 1909 Congress doubled this term, see Act of Mar. 4, 1909, Pub. L. No. 60-349, 35 Stat. 1075, 1080, and in 1976 it abandoned any attempt at precision by opting instead for the life of the author plus 50 years, see Act of Oct. 19, 1976, Pub. L. No. 94-553. 90 Stat. 2541, 2572 (codified at 17 U.S.C. § 302(3) (1988)). See A. LATMAN, R. GORMAN & J. GINSBURG, COPYRIGHT FOR THE NINETIES 5-11 (3d ed. 1989).
51. See, e.g., P. AREEDA & L. KAPLOW, ANTITRUST ANALYSIS ¶ 184, at 172 (4th ed. 1988) (describing the patent as a "gross device that cannot possibly equate social value with reward or the need for additional inventive stimulus either generally or in particular cases"); Breyer, The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs, 84 HARV. L. REV. 281, 322 (1970) (arguing that the impetus for copyright protection "rests not upon proven need, but rather upon uncertainty as to what would happen if protection were removed").
52. See, e.g., P. AREEDA & L. KAPLOW, ANTITRUST ANALYSIS ¶ 184, at 172 (4th ed. 1988) (describing the patent as a "gross device that cannot possibly equate social value with reward or the need for additional inventive stimulus either generally or in particular cases"); Breyer, The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs, 84 HARV. L. REV. 281, 322 (1970) (arguing that the impetus for copyright protection "rests not upon proven need, but rather upon uncertainty as to what would happen if protection were removed").
53. See Lasercomb, 911 F.2d at 978; supra p. 1292.
54. Although a plaintiff's collateral antitrust violations do not constitute a valid affirmative defense in most civil actions, see Kelly v. Kosuga, 358 U.S. 516, 518 (1959); Bruce's Juices, Inc v. American Can Co., 330 U.S. 743, 750-52 (1947), antitrust defenses remain viable when the suit involves important federal rights, particularly in the patent or copyright area, where Congress has indicated that federal law is to have preemptive effect. See Kelly, 358 U.S. at 519; Fine, Misuse and Antitrust Defenses to Copyright Infringement Actions, 17 HASTINGS L.J. 315, 330 (1965).
55. See, e.g., BellSouth Advertising & Publishing Corp. v. Donnelley Info. Publishing Corp., 719 F. Supp. 1551, 1562-63 (S.D. Fla. 1988) (rejecting a misuse defense based on monopolization and essential facilities claims).
56. See, e.g., Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 136 (1969); Transparent-Wrap Mach. Corp. v. Stokes & Smith Co., 329 U.S. 637, 640-41 (1947); Morton salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 491 (1942); supra note 9; cf. Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 530 (1972) (noting "this Nation's historical antipathy to monopoly").
57. See, e.g., Note, Redefining Copyright Misuse, 81 COLUM. L. REV. 1291, 1307-14 (1981); Note, Standard Antitrust Analysis and the Doctrine of Patent Misuse: A Unification Under the Rule of Reason, 46 U. PITT. L. REV. 209, 210 (1984) [hereinafter Note, Standard Antitrust].
58. See, e.g., Note, Redefining Copyright Misuse, 81 COLUM. L. REV. 1291, 1307-14 (1981); Note, Standard Antitrust Analysis and the Doctrine of Patent Misuse: A Unification Under the Rule of Reason, 46 U. PITT. L. REV. 209, 210 (1984) [hereinafter Note, Standard Antitrust].
59. 35 U.S.C. §§ 101, 103 (1988).
60. See, e.g., F. SCHERER & D. ROSS, INDUSTRIAL MARKET STRUCTURE AND ECONOMIC PERFORMANCE 621-22 (3d ed. 1990).
61. A firm has market power if it can profitably price its product above the competitive level. Monopoly power is usually defined as a large degree of market power. See Landes & Posner, Market Power in Antitrust Cases, 94 HARV. L. REV. 937, 939-52 (1981).
62. Whereas competition constrains firms to price at marginal cost, a firm enjoying market power will maximize its profits by setting price above marginal cost. Marginal-cost pricing is a necessary condition to achieve allocative efficiency and to maximize consumer welfare. Pricing above marginal cost reduces consumer welfare because some consumers will not purchase what they otherwise would and will instead buy less attractive substitute goods. See P. SAMUELSON & W. NORDHAUS, ECO-NOMICS 482-88 (12th ed. 1985).
63. See Northern Pac. Ry. v. United States, 356 U.S. 1, 10 n.8 (1958); SCM Corp. v. Xerox Corp., 645 F.2d 1195, 1203 (2d Cir. 1981), cert, denied, 455 U.S. 1016 (1982); F. SCHERER & D. ROSS, supra note 60, at 622; Note, The Presumption of Economic Power for Patented andf Copyrighted Products in Tying Arrangements, 85 COLUM. L. REV. 1140, 1153 (1985); see also Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 37 n.7 (1984) (O'Connor, J., concurring) (criticizing the presumption as a "common misconception," and observing that "a patent holder has no market power in any relevant sense if there are close substitutes for the patented product"). Significantly, the Supreme Court has refused to presume market power for patented products in the context of Sherman Act § 2 monopolization claims. See Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 178 (1965).
64. See F. SCHERER & D. ROSS, supra note 60, at 177-84.
65. See 17 U.S.C. § 102 (1988).
66. See West Publishing Co. v. Mead Data Cent., Inc., 799 F.2d 1219, 1223 (8th Cir. 1986) (observing that "almost any ingenuity in selection, combination or expression, no matter how crude, humble or obvious, will be sufficient" to make a work copyrightable), cert, denied, 479 U.S. 1070 (1987).
67. See Goldstein, Infringement of Copyright in Computer Programs, 47 U. PITT. L. REV. 1119, 1128 (1986) (suggesting that courts have been less willing to allow copyright misuse defenses because of "an appreciation that works of literature, art and music are highly substitutable and that, in the usual case, copyright will not confer the degree of market power that the patent-misuse cases presuppose").
68. Computer programs are protected by copyright under 17 U.S.C. § 101 (1988). Courts have held copyright protection to encompass source code and object code, see, e.g., Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1246-47 (3d Cir. 1983), cert. dismissed, 464 U.S. 1033 (1984), the sequence, structure and organization of programs, see Whelan Assocs. v. Jaslow Dental Laboratory, Inc., 797 F.2d 1222, 1239 (3d Cir. 1986), cert. denied, 479 U.S. 1031 (1987), and the "look and feel" of a program's user interface, see, e.g., Lotus Dev. Corp. v. Paperback Software Int'l, 740 F. Supp. 37, 68 (D. Mass 1990).
69. See Menell, An Analysis of the Scope of Copyright Protection for Application Programs, 41 STAN. L. REV. 1045, 1045, 1052 (1989).
70. 797 F.2d 1222 (3d Cir. 1986), cert, denied, 479 U.S. 1031 (1987).
71. Id. at 1240.
72. See id. at 1238.
73. See Menell, supra note 68, at 1052, 1056.
74. See id. at 1082 (arguing that "the Whelan test enables first comers to 'lock up' bask 9 programming techniques"). 9
75. 807 F.2d 1256 (5th Cir.), cert. denied, 484 U.S. 821 (1987).
76. The court observed: "[t]he record supports the inference that market factors play a significant role in determining the sequence and organization of cotton marketing software, and we decline to hold that those patterns cannot constitute 'ideas' in a computer context." Id. at 1262.
77. This approach relies on copyright law's "merger" doctrine, which denies protection to expression that is inseparable from the underlying idea or process. See, e.g., Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1253 (3d Cir. 1983), cert. dismissed, 464 U.S. 1033 (1984); Herbert Rosenthal Jewelry Corp. v. Kalpakian, 446 F.2d 738, 742 (9th Cir. 1971).
78. See Menell, supra note 68, at 1046, 1082; Note, Idea, Process, or Protected Expressionl: Determining the Scope of Copyright Protection of the Structure of Computer Programs, 88 MICH. L. REV. 866, 881-82 (1990).
79. See supra notes 26-30.
80. See, e.g., A.I. Root Co. v. Computer/Dynamics, Inc., 806 F.zd 673, 676 (6th Cir. 1986) (rejecting an "absolute presumption" of market power, at least where copyrighted software had "close substitutes"); Digidyne Corp. v. Data Gen. Corp., 734 F.2d 1336, 1341-44 (9th Cir. 1984) (holding presumption to be rebuttable rather than conclusive and examining market conditions), cert. denied, 473 U.S. 908 (1985); Capital Temporaries, Inc. v. Olsten Corp., 506 F.ad 658, 663-64 (2d Cir. 1974) (distinguishing Loew's on its facts).
81. See, e.g., Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 140-41 (1969); Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970, 978 (4th Cir. 1990).
82. Judge Posner has argued that misuse claims should be tested exclusively under antitrust taw. See Saturday Evening Post Co. v. Rumbleseat Press, Inc., 816 F.2d 1191, 1200 (7th Cir. 1987); USM Corp. v. SPS Technologies, Inc., 694 F.2d 505, 512 (7th Cir. 1982), cert. denied, 462 U.S. 1107 (1983). The Federal Circuit has suggested that so long as the alleged misuse does not fit a category of conduct held to be per se anticompetitive by the Supreme Court, courts should make a fact-specific inquiry into whether "the overall effect of the license tends to retrain competition unlawfully in an appropriately defined relevant market." Windsurfing Int'l, Inc. v. AMF, Inc., 782 F.2d 995, 1001-02 (Fed. Cir.), cert. denied, 477 U.S. 903 (1986); see also Atari Games Corp. v. Nintendo of Am., Inc., 897 F.2d 1572, 1576 (Fed. Cir. 1990) (merging misuse and antitrust principles); Senza-Gel Corp. v. Seiffhart, 803 F. 2d 661, 665 n.5 (Fed. Cir. 1986) (noting criticism of patent misuse doctrine but stating that the court would continue to uphold misuse claims squarely governed by Supreme Court precedent).
83. See PUB. L. No. 100-703, 102 Stat. 4676 (1988) (codified at 35 U.S.C. § 271(d)(4) & (5) (1988)).
84. See 134 CONG. REC. S17,148 (daily ed. Oct. 21, 1988) (statement of Sen. Leahy); 134 CONG. REC. Hio,648 (daily ed. Oct. 20, 1988) (Rep. Kastenmeier). The principal Senate sponsors also stated that courts should, as in antitrust rule of reason cases, evaluate the procompetitive benefits of a given tying arrangement and the business justifications proffered in its support. See 134 CONG. REC. S17,147 (daily ed. Oct. 21, 1988) (statement of Sen. DeConcini); id. at 817,148 (Sen. Leahy).
85. See Calkins, Patent Law: The Impact of the 1988 Patent Misuse Reform Act and Noerr-Pennington Doctrine on Misuse Defenses and Antitrust Counterclaims, 38 DRAKE L. REV. 175, 196-99 (1988) (noting that infringement defendants alleging tie-ins face a higher hurdle than antitrust plaintiffs, who still benefit from the presumption of market power for patented items).
86. Tying arrangements are proscribed because they may enable a seller to use its economic power in the market for the one product as "leverage" to gain a monopoly in the market for a second "tied" product and because they may allow sellers to erect entry barriers in the second market by requiring would-be rivals to offer two products in order to compete. See H. HOVENKAMP, supra note 49, §§ 8.4-.5, at 222-26.
87. See Baker, The Supreme Court and the Per Se Tying Rule: Cutting the Gordian Knot, 66 VA. L. REV. 1235, 1257-61 (1980). Tying licenses to purchases of staple goods enables the copyright owner to discriminate among licensees according to their intensity of use. Such "metering" may increase total output of the copyrighted work because low-volume users will be able to take licenses at a lower royalty rate. See Note, Standard Antitrust, supra note 58, at 235-38. Over the past two decades, the Supreme Court has modified its per se rule against tying arrangements, see supra p. 1293, to require more searching inquiry into the seller's actual economic power. Compare United States v. Loew's, Inc., 371 U.S. 38, 45 (1962) (harmonizing Morton Salt and Northern Pacific by holding that no showing of market power is required if tying product has "unique attributes") with United States Steel Corp. v. Fortner Enters., Inc., 429 U.S. 610, 620 (1977) (modifying this uniqueness test to require that courts ask "whether the seller has the power . . . to raise prices or to require purchasers to accept burdensome terms that could not be exacted in a completely competitive market"). See generally Baker, supra, at 1237-49 (tracing the Court's move to a stricter focus on market power). In Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984), the Court's most recent tying decision, the majority adhered in dicta to the presumption of market power for patented or copyrighted goods. See id. at 16. The Court's substantive approach, however, indicated a reluctance to find economic power based on factors other than a direct inquiry into market conditions. (Four Justices advocated abandoning the per se rule entirely and considering all tie-in cases under the role of reason.) The majority applied the per se test but concluded that a 30% share of the merket for the tying product did not establish sufficient market power to warrant per se condemnation and remanded for a rule of reason inquiry. See id. at 31-32.
88. See Baker, The Supreme Court and the Per Se Tying Rule: Cutting the Gordian Knot, 66 VA. L. REV. 1235, 1257-61 (1980). Tying licenses to purchases of staple goods enables the copyright owner to discriminate among licensees according to their intensity of use. Such "metering" may increase total output of the copyrighted work because low-volume users will be able to take licenses at a lower royalty rate. See Note, Standard Antitrust, supra note 58, at 235-38. Over the past two decades, the Supreme Court has modified its per se rule against tying arrangements, see supra p. 1293, to require more searching inquiry into the seller's actual economic power. Compare United States v. Loew's, Inc., 371 U.S. 38, 45 (1962) (harmonizing Morton Salt and Northern Pacific by holding that no showing of market power is required if tying product has "unique attributes") with United States Steel Corp. v. Fortner Enters., Inc., 429 U.S. 610, 620 (1977) (modifying this uniqueness test to require that courts ask "whether the seller has the power . . . to raise prices or to require purchasers to accept burdensome terms that could not be exacted in a completely competitive market"). See generally Baker, supra, at 1237-49 (tracing the Court's move to a stricter focus on market power). In Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984), the Court's most recent tying decision, the majority adhered in dicta to the presumption of market power for patented or copyrighted goods. See id. at 16. The Court's substantive approach, however, indicated a reluctance to find economic power based on factors other than a direct inquiry into market conditions. (Four Justices advocated abandoning the per se rule entirely and considering all tie-in cases under the role of reason.) The majority applied the per se test but concluded that a 30% share of the merket for the tying product did not establish sufficient market power to warrant per se condemnation and remanded for a rule of reason inquiry. See id. at 31-32.
89. See supra pp. 1297-98.
90. Similarly, in the case of other conduct alleged to constitute misuse - such as price-fixing, territorial restrictions, noncompetition covenants, or various royalty arrangements, see supra note 3 - courts should defer to antitrust law in vindicating the public policy favoring free competition. Unless the conduct has been deemed so likely to injure competition that it is banned per se under antitrust law, copyright courts should evaluate actual market effects under antitrust law's rule of reason. Courts must still wrestle with the question of what conduct by Patentees should be deemed to violate antitrust law, a complex inquiry that is beyond the scope of this Note. See, e.g., United States v. Line Material Co., 333 U.S. 287, 308-15 (1948); Kaplow, supra note 46, at 1816-20.
91. See, e.g., Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 558 (1985); Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975).
92. See Mazer v. Stein, 347 U.S. 201, 217 (1954); 17 U.S.C. § 102(b) (1988); see also Miller v. Universal City Studios, Inc., 650 F.2d 1365, 1368 (5th Cir. 1981) (stating that copyrights do not protect facts contained in an expressive work). This "idea/expression dichotomy" operates both as a limit on copyrightability and as a factor in assessing substantial similarity in infringement actions. See 1 M. NIMMER & D. NIMMER, supra note 1, § 2.03[D], at 2-34.
93. See Mazer, 347 U.S. at 217; Carol Barnhart, Inc. v. Economy Cover Corp., 773 F.2d 411, 418 (2d Cir. 1985).
94. Most commentators either have argued that copyright misuse should he defined exclusively by reference to antitrust law, see sources cited supra notes 58 & 81, or have endorsed a scope-of-the-grant approach analogous to traditional patent misuse doctrine, see Fine, supra note 55, at 335; Gibbs, Copyright Misuse: Thirty Years Waiting for the Other Shoe, 23 ASCAP COPYRIGHT L. SYMP. 31, 36-37 (1977); Nicoson, supra note 9, at 109-110.
95. See Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 151 (1989). The Supreme Court has repeatedly struck down attempts by states to provide additional protection to ideas beyond that conferred by patent law. See id. at 152.
96. Lear, Inc. v. Adkins, 395 U.S. 653, 668 (1969); accord Bonito Boats, 489 U.S. at 151-52, 156-57; cf. Menell, supra note 68, at 1076 & n.186 (observing that most computer programs do not manifest sufficient novelty or non-obviousness to qualify for patent protection).
97. See, e.g., Denicola, Copyright and Free Speech: Constitutional Limitations on the Protection of Expression, 67 CALIF. L. REV. 283, 289-93 (1979) The first amendment protects dissemination of all varieties of ideas, including information of primarily commercial or utilitarian value. See Bates v. State Bar, 433 U.S. 350, 363-64 (1977); Consumers Union of U.S., Inc. v. General Signal Corp., 724 F.2d 1044, 1049 (2d Cir. 1983), cert. denied, 469 U.S. 823 (1984); Triangle Publications, Inc. v. Knight-Ridder Newspapers, Inc., 626 F.2d 1171, 1176 & n.13 (5th Cir. 1980).
98. Conceiving copyright misuse in these terms is not without precedent. In Rosemont Enters, v. Random House, Inc., 366 F.2d 303 (2d Cir. 1966), cert. denied, 385 U.S. 1009 (1967), Howard Hughes had formed a corporation which purchased the copyrights to several Look magazine articles in order to create an infringement claim and prevent the defendant from publishing an unauthorized biography of Hughes. The concurring judges argued that infringement relief should be denied because Hughes's conduct frustrated copyright law's pro-dissemination purposes. See id. at 311 (Lumbard, C.J., concurring); see also Meeropol v. Nizer, 417 F. Supp. 1201, 1214 n.n (S.D.N.Y. 1976) (citing the Rosemont concurrence and suggesting that to use the copyright power to suppress unfavorable information or commentary would be a "misuse of the copyright laws"), aff'd in part and rev'd in part, 560 F.2d 1061 (2d Cir. 1977), cert. denied, 434 U.S. 1013 (1978); Note, A Regulatory Theory of Copyright: Avoiding a First Amendment Conflict, 35 EMORY L.J. 163, 186 (1986) (arguing that using a copyright to limit Public access to information "is an obvious misuse" of the copyright owner's rights).
99. See Bonito Boats, 489 U.S. at 156.
100. The statute extends copyright protection to all "original works of authorship fixed in any tangible medium of expression." 17 U.S.C. § 102(a) (1988).
101. See supra pp. 1303-04.
102. See 17 U.S.C. § 107 (1988). The statute highlights the pro-dissemination policy behind the fair use defense by identifying "criticism, comment, news reporting, . . . scholarship, or "search" as purposes that will excuse infringement. Id.; see also Note, Remedies for Copyright Infringement: Respecting the First Amendment, 89 COLUM. L. REV. 1940, 1947 (1989) (describing the fair use defense and the idea/expression dichotomy as "the courts' current tools for protecting first amendment interests").
103. To the extent anyone's bad conduct is put on trial, it will be the defendant's. See, e.g., Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 556-65 (1985) (noting that "fair use presupposes 'good faith' and 'fair dealing'" in comparing the defendant to a "plagiarist" and a "chiseler" and condemning its "piracy" of a "purloined manuscript").
104. See Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 451 (1984).
105. See W. PATRY, THE FAIR USE PRIVILEGE IN COPYRIGHT LAW 399-401 (1985) (arguing that reverse engineering of software to develop competing programs is not fair use because of its commercial purpose).
106. See supra p. 1300.
107. See Whelan Assocs., Inc. v. Jaslow Dental Laboratory, Inc., 797 F.2d 1222, 1226-27 (3d Cir. 1986), cert. denied, 479 U.S. 1031 (1987).
108. See supra p. 1300 (discussing Plains Cotton Coop. Ass'n v. Goodpasture Computer Serv., 807 F.2d 1256 (5th Cir.), cert. denied, 484 U.S. 821 (1987)).
109. See H.R. REP. No. 1476, 94th Cong., 2d Sess. 65, reprinted in 1976 U.S. CODE CONG. & ADMIN. NEWS 5659, 5679 (describing fair use as an "equitable rule of reason"); Time, Inc. v. Bernard Geis Assocs., 293 F. Supp. 130, 144 (S.D.N.Y. 1968) (calling fair use "entirely equitable and so flexible as virtually to defy definition").
110. See, e.g., Meeropol v. Nizer, 560 F.2d 1061, 1068 (2d Cir. 1977) (stating that fair use offers a "means of balancing the exclusive right of a copyright holder with the public's interest in dissemination of information"); New York Times Co. v. Roxbury Data Interface, Inc., 434 F. Supp. 217, 226 (D.N.J. 1977) (finding fair use where defendant's copying "serve[d] the public interest in the dissemination of information").
111. The Copyright Act instructs courts to consider four factors in evaluating fair use defenses: the "purpose and character" of the defendant's use, the "nature of the copyrighted work," the "amount and substantiality" of the material used, and the "effect of the use upon the potential market" for the copyrighted work. 17 U.S.C. § 107 (1988).
112. See infra note 113.
113. See Weinreb, Fair's Fair: A Comment on the Fair Use Doctrine, 103 HARV. L. REV. 1137, 1138 (1990).
114. See Levai, Toward a Fair Use Standard, 103 HARV. L. REV. 1105, 1105-07 (1990).
115. See id. at 1110. Judge Leval would uphold a fair use defense where the defendant's use "serves the copyright objective of stimulating productive thought and public instruction without excessively diminishing the incentives for creativity." Id. 'The divergent approaches to fair use taken by the district court and the Second Circuit in Selinger v. Random House, Inc., 650 F. Supp. 413 (S.D.N.Y. 1986), rev'd, 811 F.2d 90 (2d Cir.), cert. denied, 484 U.S. 890 (1987), illustrate how judicial application of fair use doctrine depends on the court's understanding of the fundamental policies at stake. Author J.D. Salinger, on "itensely private man, sued to enjoin publication of a biography that quoted extensively from unpublished personal letters Salinger had written years before. In his district court opinion, Judge Leval emphasized the "educational value," and "social usefulness" of a biography of a "figure of great public interest." Id. at 423-25. He indicated that the outcome of weighing the Public interest against an author's interest in privacy depended on the social value of the contribution that the infringing work promised to make to the dissemination of ideas in society. See id. at 426. Reversing Judge Levai, the Second Circuit gave much greater weight to Salinger's personal interest in privacy and secrecy and less to society's interest in the diffusion of knowledge. The court downplayed the social value of disseminating Salinger's letters and placed special emphasis on the fact that they were unpublished. See Salinger, 811 F.2d at 96-97. Like Judge Levai, the Second Circuit marched through the four statutory factors, see id. at 96-99, but it used them as a springboard for injecting equitable considerations rather than as a template for promoting copyright law's utilitarian purposes.
116. Because the court found that the license restriction contravened the copyright policy limiting protection to expression and not ideas, the court need not have inquired whether the license restrictions impermissibly restrained trade.