Competition and Intellectual Property Policy: The Way Ahead

Tags:

Prepared Remarks of before American Bar Association, Antitrust Section Fall Forum

Washington, D.C.

Date:
By: 
Timothy J. Muris, Former Chairman

I. Introduction

I am delighted to be here to discuss issues that involve both competition and intellectual property, or "IP," policy. Like many of you, I have followed closely issues at the intersection of antitrust and intellectual property and have also written about the proper nexus between antitrust and intellectual property.(1)

Today, I want to describe a new initiative by the federal antitrust authorities to develop a better understanding of how to manage the issues at the intersection of competition and intellectual property law and policy. Beginning early next year, the FTC and the Department of Justice will conduct hearings on the competition/intellectual property relationship. I will begin today by sketching the relationship between the antitrust and intellectual property regimes and the role of our hearings in contributing to the harmonization of these doctrines to maximize benefits for consumers. I will then describe some policy issues that we hope to address during the hearings. I will finish by reviewing current FTC initiatives that should benefit from the knowledge gained during the hearings. I note that the views expressed are my own and do not necessarily reflect the views of the Commission or other Commissioners.

II. The Antitrust/Intellectual Property Relationship

Antitrust law and policy have dramatically improved since the 1970s. That decade saw the infamous "Nine No-Nos,"(2) which many of us argued lacked both a sound economic foundation and a sufficient appreciation of the incentives for innovation that intellectual property and intellectual property licensing can provide. As in other areas of antitrust law, economic and legal scholarship have advanced the law in this area to make it now much more in accord with the public interest.(3) The 1995 DOJ/FTC Antitrust Guidelines for the Licensing of Intellectual Property(4) reflected antitrust law's recognition that policy should be consistent with the state of the law and economic learning. The Guidelines provide a balanced view of how to apply antitrust law to conduct involving the licensing of intellectual property.

Where are we now, in 2001, when so much of the world seems to be changing so quickly? There are those observers - including my predecessor, Robert Pitofsky - who ask whether we might be at yet another crossroads in the relationship between the two doctrines. Only this time, they say, perhaps it is intellectual property doctrine that is not showing a proper appreciation for the innovation that competition may spur. They argue that overly broad grants, interpretations, or applications of intellectual property rights may unduly limit competition. Still others question whether antitrust doctrine and antitrust enforcers have yet found the right balance between the two doctrines - especially in particular cases.

The tensions between the doctrines tend to obscure the fact that, properly understood, IP law and antitrust law both seek to promote innovation and enhance consumer welfare.(5) The goal of patent and copyright law, as enunciated in Article I section 8 of the Constitution, is "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." IP law, properly applied, preserves the incentives for scientific and technological progress - i.e., for innovation. Innovation benefits consumers through the development of new and improved goods and services, and spurs economic growth. Similarly, antitrust law, properly applied, promotes innovation and economic growth by combating restraints on vigorous competitive activity. By deterring anticompetitive arrangements and monopolization, antitrust law also ensures that consumers have access to a wide variety of goods and services at competitive prices.

Matters that involve both IP and antitrust can be exceedingly complex, both legally and factually. In important respects, the issues involve concepts of property rights. It is now well understood that an effective legal regime defining and protecting property rights is essential to a well-functioning competitive economy. IP law plays an important role in this overall property rights regime. As can other holders of property rights, a patent holder can attempt to preclude misappropriation of his IP rights.

Similarly, IP rights have limits. For example, one cannot assert ownership rights over property for which he lacks a valid title. Moreover, the doctrine of nuisance sometimes bars property owners from using their property to interfere with the rights of other property owners. Other limits on IP rights include prohibitions on abuse of the patent process and overbroad assertion of patent claims. Both of these prohibitions raise potential antitrust issues. Acquisition of patent rights also may raise Clayton Act Section 7 issues, just as with the acquisition of other property rights. In addition, there are broader public policy issues involving IP law. For example, if the patent review process is too permissive - e.g., patents are granted too easily for trivial or non-existent improvements that do not meet statutory requirements for patentability - competition through entry and expansion by others may be impeded.

Many of these and other issues cannot be addressed solely by enforcing the antitrust laws. They profitably can be addressed in our upcoming hearings, in which we anticipate that we will receive valuable input from business, consumer, and government representatives; the antitrust and intellectual property bars; economists; and academics. To develop appropriate policy, we must better understand a variety of practical considerations - that is, what are the practical business issues that companies confront on a regular basis, and what are the practical implications of various policy decisions? As always, our guiding consideration in developing policy is the impact on consumer welfare in both the short and long run.

As I have said, matters that combine IP and antitrust issues are likely to be complex. As usual, the devil is in the details.(6) We have learned much, but we need to know more. The FTC has a distinguished history in studying important public policy issues related to competition and consumer protection. The Commission's activities in recent years have been particularly notable.(7)

Because these issues present pressing public policy concerns, we will hold extensive hearings, starting this winter, to address issues that involve both competition and intellectual property policies. We are pleased that the Antitrust Division will join us in hosting these hearings. These hearings will help develop a greater understanding of how to manage concerns at the intersection between intellectual property and competition. The hearings will focus primarily on the implications of antitrust and patent law and policy for innovation and other aspects of consumer welfare. Copyright and trademark issues, as they arise in particular high-tech contexts, may also be considered. Let me turn now to a brief overview of some of the issues that have led to these hearings.

III. Brief Summary of Developments in Law and Policy

In the past two decades, several developments in the antitrust and IP systems may have had significant implications for competition and innovation in the American economy. I would like to highlight some of the more notable developments.

A. The Increasing Number of Patents

First, in recent years, the number of patents issued annually by the Patent and Trademark Office ("PTO") has increased substantially.(8)In 1980, for example, the PTO issued roughly 66,000 patents.(9) Twenty years later, the number had increased more than two and a half times to over 175,000.

Commentators have suggested many explanations for this increase, including the growth in innovation spurred by changes in the management of research;(10) the need for companies to protect themselves against infringement suits with blocking patents;(11) the increased consciousness among the business community of the financial gains to be achieved through patent mining;(12) and creation of the Federal Circuit.(13) Regardless of the reasons underlying this increase, we should consider whether there are implications for innovation and competition. On the one hand, some observers believe that this patent explosion could injure competition by making it more difficult for rival inventors to sell competing products. According to Professor Carl Shapiro, a "patent thicket" has formed, which he describes as "a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology."(14) Firms in certain industries are said to fear that it is "all too easy" to infringe another patent accidentally and thereby risk liability.(15) On the other hand, some observers believe that innovation currently is not hindered.(16)Moreover, even if there were a "patent thicket" problem, others state that firms have found a range of means to overcome these obstacles, including cross-licenses and patent pooling.(17)

We need to understand the recent trend of patent proliferation: What are the factors underlying the trend - an explosion of innovation, changes in business approaches to intellectual property, patent procedures at the PTO, or other causes? How does this trend affect the commercialization of new technology? If the central approaches to navigating a patent thicket involve cross-licenses and patent pooling, how should antitrust enforcement react to these practices? To the extent that such a patent thicket exists, how does it affect standard setting, for example when access to multiple patents in the hands of different patentees may be required to develop and implement a technological standard?

B. The Economic Life and Significance of Patents

Another dimension worthy of attention is the length of time a patent is economically important. A patent may be measured in terms of its "legal life" which, for utility patents, is 20 years from the date of filing the application.(18) As a practical matter, however, patent terms may also be considered in terms of "economic life," which measures the period during which the legal protection produces a positive cash flow.(19)

An issue to consider is whether, in practice, there may be a divergence between the legal life and the economic life of a patent. For instance, a patent's economic life may be shorter than its legal life if the patent is rendered obsolete by other technological advances prior to the expiration of its legal life.(20) In some industries, moreover, the economic life of patents may be increasingly shortened due to the pace of innovation. If so, does this phenomenon have competitive implications? Another issue to consider is whether, in some industries, strong technology companies can extend the economic significance of patents beyond their corresponding legal lives.(21)We need to understand how the economic significance of patents can be extended to determine whether conduct that extends economic significance benefits consumers.

C. The Changing Scope of Patents

Another development is an increased attention to how IP rights are defined and protected. The National Academies of Science ("NAS"), for example, has begun its own project about intellectual property rights in the knowledge-based economy.(22) In initiating this project, the NAS noted that intellectual property rights have been strengthened in this country since the early 1980s through legislation and judicial interpretations.

With respect to definitions, some observers allege that, all too often, important patents - especially in biotechnology and software - are overbroad, and that overbroad patents can inhibit follow-on innovation.(23) Others contend that broad patents are essential to encourage high-risk research in entirely new fields.(24) This debate has been particularly heated in the context of basic research, about which it has been alleged that patents on particular genes or receptors will wall off entire fields of research without generating any marketable product development.(25)

The explosion of business method patents is also controversial.(26) The PTO sees the recognition of business method patents as the logical continuation of "an unbroken evolutionary path from mechanical technology."(27) Others have contended that the PTO has "allowed a number of patents on ideas that would not appear offhand to meet the usual standards for novelty and non-obviousness, such as the patent held by Sightsound.com which reputedly covers 'the sale of audio or video recordings in download fashion over the Internet.'"(28) Obvious questions arise: Has the recent explosion of business method patents reflected a commensurate increase in innovation? Or are such patents stifling, rather than promoting, innovation? What changes in procedure and presumptions have strengthened intellectual property rights during the past two decades? What have been the implications of these changes for both competition and intellectual property policy?

D. The Role of the Federal Circuit

The creation of the Federal Circuit in 1982 has affected the development of case law in both intellectual property and competition. The Federal Circuit was created to promote doctrinal uniformity in patent law.(29) It has exclusive jurisdiction over appeals from the PTO with respect to patent applications and from judgments in civil actions for patent infringement.(30) Since its inception, the Federal Circuit's scope has grown in at least two ways: through its expanding jurisdiction over antitrust issues and through the court's application of its own law rather than regional circuit law.(31) Because patent and competition issues frequently arise together, the Federal Circuit can play an increasingly important role in the development of competition law.(32) During the hearings, we will consider the Federal Circuit's substantive impact on competition law. That impact is defined, in the first instance, by its decisions regarding its jurisdictional scope. In the second instance, the court's choice of law defines its impact. I will discuss each point briefly.

By statute, the Federal Circuit has exclusive appellate jurisdiction over any district court case in which the district court's jurisdiction was based "in whole or in part"(33) upon "any civil action arising under any Act of Congress relating to patents."(34) Where is the jurisdictional line to be drawn? The Federal Circuit, while sitting en banc in Atari v. JS & A Group, has itself stated that "Achievement of increased uniformity in the substantive law of patents does not require that this court get its hands on every appeal involving an allegation that a patent law issue is somehow involved."(35) My purpose here is not to revisit how that line has been drawn in any one case, but rather to underscore what the Federal Circuit itself recognizes: some of its own jurisdictional rulings could promote forum shopping with regard to non-patent issues, including antitrust issues.(36)

Once the Federal Circuit asserts jurisdiction over a case with non-patent issues, the question then becomes which body of law the court will apply - the law from the regional circuit or Federal Circuit law? The Federal Circuit's initial response was to apply the regional circuit law,(37) but during the past few years it has changed its position. The court now states that it has "abandon[ed its] practice of applying regional circuit law in resolving questions involving the relationship between patent law and other federal and state law rights. Henceforth, [the Federal Circuit] will apply [its] own law to such questions."(38) Consistent with that general approach, the Federal Circuit had already issued a more specific ruling that "all antitrust claims premised on the bringing of a patent infringement suit" will be decided as a question of Federal Circuit law.(39)

The Federal Circuit's role in adjudicating competition matters is both complex and evolving.(40) It is thus appropriate to examine how the creation of the Federal Circuit, the development of its law and policy, its expansion of its jurisdiction, and its application of its own law affect the balance between intellectual property and antitrust.

E. Refusals to Deal

Finally, tensions can also arise between antitrust and IP doctrines when a patent or copyright holder unilaterally refuses to license its intellectual property. The Federal Circuit's recent decision in Independent Service Organizations Antitrust Litigation(41) ("CSU v. Xerox") has highlighted this issue. In that case, Xerox unilaterally decided to stop supplying patented replacement parts and diagnostic software to a group of independent service organizations ("ISOs"). The ISOs challenged this conduct as an antitrust violation, alleging that Xerox's purpose was to undermine the ISOs' capacity to compete effectively in the service aftermarket. On appeal, the Federal Circuit upheld the district court's grant of summary judgment for Xerox, observing that:

[i]n the absence of any indication of illegal tying, fraud in the Patent and Trademark Office, or sham litigation, the patent holder may enforce the statutory right to exclude others from making, using, or selling the claimed invention free from liability under the antitrust laws.(42)

Commentators have had varied responses to this decision. Under one view, when faced with a monopolist patent holder's refusal to deal, antitrust doctrine may ask whether the monopolist "sacrificed profit available from exercising that monopoly power in order to exclude competition and thereby to create additional market power."(43) Areeda and Hovenkamp are more supportive of the Federal Circuit decision, observing that:

the patentee who has not engaged in other "misuse" of its patent by such devices as improper infringement suits or unlawful tying has an absolute right to refuse to license to others. If this rule should ever be less absolute, it would be when the patents at issue have been acquired, and even more when they are both acquired and unused.(44)

Some have argued that the Federal Circuit's decision appears to find substantial support in the plain language of 35 U.S.C. § 271(d)(4),(45) providing that "[n]o patent owner otherwise entitled to relief for infringement . . . of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having . . . (4) refused to license or use any rights to the patent." Nevertheless, perspectives on CSU v. Xerox continue to provoke debate: under what circumstances should there be limits on the rights of patent or copyright holders to refuse to deal? Should 35 U.S.C. § 271(d)(4) be changed or reinterpreted to reflect competition considerations? What are the implications for competition policy and innovation? These are among the issues that we will study in our upcoming hearings.

IV. Recent FTC Activities Involving Intellectual Property

An increasing number of the FTC's competition matters require the application of antitrust law to conduct relating to intellectual property. I would like to highlight a few of the areas the FTC has investigated, describing our analysis, results, and unresolved issues.

A. Pharmaceuticals and The Hatch-Waxman Act of 1984

The first area is generic drugs. The competitiveness of the pharmaceutical industry is crucial to American consumers.(46) The Hatch-Waxman Act of 1984 reflected an attempt to balance the benefits of greater competition from generic drugs with the benefits of having sufficient intellectual property protection to preserve the incentives to make the large, up-front, and risky expenditures necessary to develop new drugs successfully. The available research indicates that the Hatch-Waxman Act has reduced drug prices. The Congressional Budget Office estimated, for example, that by purchasing generic instead of brand-name drugs, consumers saved $8 billion to $10 billion on prescription drug purchases made at retail pharmacies in 1994.(47)

As is now well known, the FTC has actively investigated patent settlements between the manufacturers of "pioneer" drugs and competing generic drugs. The concern is that some settlements might limit the ability of a generic to compete beyond the limitations already imposed, such as by patent law and the Hatch-Waxman Act. FTC investigations have examined claims that Hatch-Waxman's provisions have been manipulated to delay or deter generic entry. Some makers of brand-name and generic drugs have entered into agreements under which the generic entrant is essentially paid not to compete. In Abbott/Geneva,(48) for example, the parties allegedly agreed that the generic manufacturer - in exchange for money paid by the branded manufacturer - would not enter the market until their patent litigation concluded; would not enter the market with any other generic version of the product; and would not relinquish the 180-day period of exclusivity given to it under Hatch-Waxman as the firm first to file an application to make a generic equivalent. Agreements of this type may unreasonably delay the entry of generic drug competition, potentially costing consumers hundreds of millions of dollars annually.

Other investigations involve unilateral conduct by branded manufacturers that may be designed to forestall competition. For example, some branded manufacturers list additional patents in the FDA's "Orange Book," often shortly before their original patents expire, enabling them to file patent infringement suits against generic drug firms poised to enter the market. Under Hatch-Waxman, such litigation triggers an automatic 30-month stay on FDA approval of the generic drug. If the listings do not meet statutory and regulatory requirements, then their inclusion in the Orange Book may constitute unlawful restraints on competition.

To determine whether strategies such as these are isolated examples or represent patterns of anticompetitive conduct, the Commission, as requested by Representative Waxman, currently is conducting a study of the generic drug industry. This study will help provide a more complete picture of how generic competition has developed under Hatch-Waxman. This study is certainly timely. Between 2001 and 2005, brand name drugs with combined U.S. sales approaching $20 billion will go off patent.(49) This change will provide an enormous opportunity for the generic industry and, conceivably, a commensurate challenge to the brand-name pharmaceutical industry, whose members may have an incentive and ability to slow or thwart the entry of competing generic drugs to protect the sales of branded drugs. Moreover, some Congressional representatives have evidenced interest in legislative reform of Hatch-Waxman.(50) Our study and our experience in investigating these issues should provide useful analysis to help policymakers strike an appropriate balance between competition and intellectual property protection.

B. Standard Setting

Standard setting is another area, in which the FTC has conducted investigations, that illustrates the tension between antitrust and intellectual property policy. Standards that rely on intellectual property can raise difficult competition issues. Although such standards are more common in the knowledge-based economy, some of these issues are not new.

I begin with an example of FTC involvement with standard setting and patents that is not from a high-tech setting - quite the contrary, it involved toilet valves. In 1985, at the end of my second tour at the FTC, the Commission entered into a consent agreement with the American Society of Sanitary Engineering ("ASSE").(51) The ASSE develops and sells plumbing product standards and seals of approval. Numerous state and local jurisdictions rely extensively upon ASSE standards and, in fact, many have adopted them into their building codes. Evidence of compliance with an ASSE standard thus confers important competitive benefits.

At issue was a small business that had developed an innovative toilet tank fill valve. The evidence indicated that this new valve protected against backflow, or water contamination. The manufacturers of this new valve also claimed that its unique design conferred a number of performance advantages over existing technology. The critical fact was that the new valve prevented backflow through a device other than the one the that ASSE standard specified. The ASSE refused to develop a standard for evaluating the ability of this new valve to prevent backflow. In fact, the ASSE had "a policy of refusing to develop a standard for a product which is patented or manufactured by only one manufacturer."(52) In essence, "the existing manufacturers did not sanction an innovative product unless they could also produce it."(53) The consent order required, among other things, that the ASSE stop refusing requests for issuance of a standard or modification of an existing standard for a product merely because only one or a small number of manufacturers patent or make the product.

More recently, anticompetitive issues in standard setting have arisen through attempts to influence the development of standards for which a firm holds relevant intellectual property rights. For example, in Dell, the respondent allegedly breached its commitment to disclose patents to a standard-setting organization before the organization developed a standard relying on those patents.(54) To settle the FTC charges, Dell agreed not to enforce its patent rights against computer manufacturers complying with the standard.

Standard-setting issues tend to elicit a wide range of reactions. Some commentators have argued that standards that rely on patents or other intellectual property rights present a great danger to competition (e.g., monopolization or a raising of rivals' costs).(55) "[T]he standard, if adopted, can imbue the technology with market power that it previously lacked."(56) Yet the ASSE matter reminds us that anticompetitive conduct also may involve the exclusion of innovative, patented products from the standard-setting process itself. After considering the conduct at issue in Dell, some observers concluded that to require members of a standard-setting organization to agree to disclose all relevant patents (or copyrights or patent applications) before a standard is chosen would place too great a burden on businesses and thus deter firms from participating in the standard-setting organization in the first place, thereby hindering innovation.(57) Others disagreed, asserting that the type of conduct alleged in Dell undermines the standard-setting process, impeding the innovations that may flow once a standard is established.(58)

The Commission's staff is assessing whether there may be other circumstances analogous to Dell that merit challenge. In any event, we could all benefit from a more complete understanding of the standard-setting process. It is important to explore practices in the standard-setting area and the manner in which tensions between competition and intellectual property protection typically get resolved. This is another area that we will further explore at the intersection of competition and intellectual property.

V. Conclusion

As this discussion suggests, considerable learning has occurred during the past twenty years about the issues at the intersection of antitrust and intellectual property. Yet, the discussion also reveals that we have much more to learn. As America's knowledge-based economy continues to grow, the competition/intellectual property interface will become increasingly more significant. Consequently, it is increasingly important that we ask these questions.

Thus, I return to my initial announcement. The FTC, in conjunction with the Antitrust Division, will hold public hearings beginning in the winter of 2002 on "Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy." The hearings will consider the implications of competition and intellectual property law and policy for innovation and other aspects of consumer welfare. We will explore primarily the interrelationships between competition and patent policy, with some attention to other intellectual property issues as they arise in particular contexts. Standard setting, cross-licensing and patent pools, unilateral refusals to deal, other business practices, the proliferation of patents, the changing scope of patents, and the role of the Federal Circuit will be among the topics on the agenda. More specific topic and panel listings will be provided in upcoming Federal Register notices and press releases.

Through these public hearings, we will seek to gather facts about, and to enhance the understanding of, how the doctrines, practices, and policies of each discipline affect both initial and sequential innovation in today's economy. The goal is to promote discussion, learning, and consensus among the relevant government, business, and legal communities on these topics. I invite you to participate in these hearings. Thank you.

Endnotes:

1. See Timothy J. Muris, "The FTC and the Law of Monopolization," 67 Antitrust L.J. 693 (2000); Timothy J. Muris, "The Federal Trade Commission and the Rule of Reason: in Defense of Massachusetts Board," 66 Antitrust L.J. 773 (1998).

2. See Bruce B. Wilson, Deputy Assistant Attorney Gen., Remarks Before the Fourth New England Antitrust Conference, Patent and Know-How License Agreements: Field of Use, Territorial, Price and Quantity Restrictions (Nov. 6, 1970) (DOJ official's speech articulating what came to be called the "Nine No-Nos").

3. A significant step in this evolution was the Antitrust Division's repudiation of the "Nine No-Nos." See, e.g., Abbott B. Lipsky, "Current Antitrust Division Views on Patent Licensing Practices," Remarks Before the American Bar Association Antitrust Section (Nov. 5-6, 1981).

4. U.S. Department of Justice & Federal Trade Commission, Antitrust Guidelines for the Licensing of Intellectual Property (1995), available at <http://www.usdoj.gov/atr/public/guidelines/ipguide.htm>.

5. Consistent with this observation, courts have recognized that "[although] the aims and objectives of patent and antitrust laws may seem, at first glance, wholly at odds, . . . the two bodies of law are actually complementary, as both are aimed at encouraging innovation, industry and competition." Atari Games Corp. v. Nintendo of Am., Inc., 897 F.2d 1572, 1576 (Fed. Cir. 1990).

6. I myself have criticized the FTC's Intel case (In the Matter of Intel Corporation, Dkt. No. 9288 (1999)) as one where I felt the agency had not "examine[d] the effect of the conduct in detail." Muris, "The FTC and the Law of Monopolization," supra note 1, at 718.

7. Timothy J. Muris, "Chairman Robert Pitofsky: Public Servant and Scholar," Remarks Before the American Antitrust Institute, Second Annual Conference (Washington, D.C., June 12, 2001), available at </speeches/muris/muris010612.htm>.

8. Carl Shapiro, "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting," in Innovation Policy and the Economy, Volume I (Adam B. Jaffe et al. eds., forthcoming 2001), available at <http://haas.berkeley.edu/~shapiro/thicket.pdf> (citing the "flood of patents currently being issued by the PTO").

9. See United States Patent and Trademark Office, U.S. Patent Statistics, available at <http://www.uspto.gov/web/offices/ac/ido/oeip/taf/apat.pdf>.

10. Arti Kaur Rai, "Regulating Scientific Research: Intellectual Property Rights and the Norms of Science," 94 Nw. U.L. Rev. 77, 94 (1999).

11. See Wesley M. Cohen, Richard R. Nelson, & John P. Walsh, "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," (NBER Working Paper, 2000), available at <http://papersdev.nber.org/papers/W7552>; Bronwyn H. Hall & Rose Marie Ham, "The Patent Paradox Revisited: Determinants of Patenting in the US Semiconductor Industry, 1980-94," (NBER Working Paper, 1998), available at <http://www.nber.org/papers/w7062>.

12. Kevin G. Rivette & David Kline, Rembrandts in the Attic: Unlocking the Hidden Value of Patents (1999).

13. Robert P. Merges, "Uncertainty and the Standard of Patentability," 7 High Tech. L.J. 1, 8 (1992).

14. Shapiro, supra note 8.

15. Id.

16. Cf. Q. Todd Dickinson, Commissioner of Patents and Trademarks, Remarks at Cardozo School of Law (Oct. 24, 2000).

17. See United States Patent and Trademark Office, "Patent Pools: A Solution to the Problem of Access in Biotechnology Patents?" (Jan. 19, 2001), available at <http://www.uspto.gov/web/offices/pac/dapp/opla/patpoolcover.html>.

18. Mohammad S. Rahman, "Patent Valuation: Impacts on Damages," 6 U. Balt. Intell. Prop. L.J. 145, 147 (1998).

19. Id.

20. Id. Some have argued, for example, that the economic life of patents in the software industry may be shorter than the legal life of those same patents. Julie E. Cohen & Mark A. Lemley, "Patent Scope and Innovation in the Software Industry," 89 Cal. L. Rev. 1, 56 (2001).

21. See, e.g., infra Part IV.A.

22. See generally, <http://ip.nationalacademies.org>.

23. See Suzanne Scotchmer, "Standing on the Shoulders of Giants: Cumulative Research and the Patent Law," 5 J. Econ. Persp. 29 (1991).

24. See, e.g., Carmen Matutes et al., "Optimal Patent Design and the Diffusion of Innovations," 27 RAND J. Econ. 60 (1996); Howard F. Chang, "Patent Scope, Antitrust Policy, and Cumulative Innovation," 26 RAND J. Econ. 34 (1995).

25. See Michael A. Heller & Rebecca S. Eisenberg, "Can Patents Deter Innovation? The Anticommons in Biomedical Research," 280 Science 698 (1998).

26. See, e.g., Shapiro, supra note 8 (computer-related business method patents have risen from 1000 in 1997 to over 2,500 in 1999); Q. Todd Dickinson, Commissioner of Patents and Trademarks, Remarks before the National Academies (Feb. 2, 2000) (noting that business method patent filings doubled between FY 1998 and FY 1999, from 1,300 to 2,600). There appears to be a recent decrease in the approval of such patents. Brenda Sandburg, "Patent Office Approves Fewer Business-Method Applications," 12/21/2000 N.Y.L.J. 5 (col. 2).

27. See United States Patent and Trademark Office, "Automated Financial or Management Data Process Methods (Business Methods)," available at <http://www.uspto.gov/web/menu/busmethp/index.html>.

28. Shapiro, supra note 8.

29. "[T]he central purpose [according to the Federal Circuit's enabling act] is to reduce the widespread lack of uniformity and uncertainty of legal doctrine that exist in the administration of patent law." H.R. Rep. No. 97-312, at 23 (1981).

30. See 28 U.S.C. § 1295.

31. See James B. Gambrell, "The Evolving Interplay of Patent Rights and Antitrust Restraints in the Federal Circuit," 9 Tex. Intell. Prop. L.J. 137 (2001); James B. Kobak, "The Federal Circuit as a Competition Law Court," 83 J.Pat. & Trademark Off. Soc'y 527 (2001). See, e.g., Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318 (Fed. Cir. 1998); Critical-Vac Filtration Corp. v. Minuteman Int'l, Inc., 233 F.3d 697 (2d Cir. 2000); Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059 (Fed. Cir. 1998).

32. Rochelle Cooper Dreyfuss, "The Federal Circuit: A Case Study in Specialized Courts," 64 N.Y.U. L. Rev. 1 (1989). See also Rochelle C. Dreyfuss, Forums of the Future: The Role of Specialized Courts in Resolving Business Disputes, 61 Brook. L. Rev. 1, 17-18 (1995).

33. 28 U.S.C. § 1295(a)(1).

34. 28 U.S.C. § 1338(a).

35. Atari, Inc. v. JS & A Group, Inc., 747 F.2d 1422, 1429 (Fed. Cir. 1984), overruled on other grounds in Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059 (Fed. Cir. 1998).

36. Atari, 747 F.2d at 1437.

37. Id.

38. Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1358-59 (Fed. Cir. 1999), overruling Cable Elec. Products, Inc. v. Genmark, Inc., 770 F.2d 1015 (Fed. Cir.1985). See also Interpart Corp. v. Italia, 777 F.2d 678 (Fed. Cir.1985); Hunter Douglas, 153 F.3d at 1318.

39. Nobelpharma AB, 141 F.3d at 1068, overruling Cygnus Therapeutics Systems v. ALZA Corp, 92 F.3d 1153 (Fed. Cir. 1996); Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861 (Fed. Cir. 1985); Atari, Inc., 747 F.2d at 1422.

40. Most recently, it has come to the fore in In re Independent Service Organizations Antitrust Litigation, 203 F.3d 1322 (Fed. Cir. 2000), cert. denied, CSU, L.L.C. v. Xerox Corp., 121 S.Ct. 1077 (2001), discussed below.

41. Id.

42. Id. at 1327 (the Federal Circuit, reaching essentially the same conclusion in relation to copyrights, observed that "the owner of the copyright, if [it] pleases, may refrain from vending or licensing and content [itself] with simply exercising the right to exclude others from using [its] property," Id. at 1328).

43. Brief for the United States as Amicus Curiae at 11-12, CSU, L.L.C. v. Xerox, 121 S.Ct. 1077 (2001) (No. 00-62) (quoting Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 605 (1985) and citing Robert H. Bork, The Antitrust Paradox 144 (2d ed. 1993) on predatory conduct). See also Robert Pitofsky, "Challenges to the New Economy: Issues at the Intersection of Antitrust and Intellectual Property," 68 Antitrust L.J. 913, 921-22 (2001).

44. Phillip Areeda & Herbert Hovenkamp, Antitrust Law, (Supplement 2001) at ¶704.1. I have cited approvingly Professor Hovenkamp's discussion of the closely-related Kodak opinion in the Ninth Circuit (Image Technical Servs. Inc. v. Eastman Kodak Co., 125 F.3d 1195 (9th Cir. 1997)). See Muris, "The FTC and the Law of Monopolization," supra note 1, at 707-08, n. 57 (2000) ("Hovenkamp has predicted that the Ninth Circuit's rule [in Kodak], if widely adopted, would be 'incapable of administration' and likely to 'create a litigation nightmare.'") (quoting Herbert Hovenkamp, "Antitrust Remedies for Intellectual Property Bottlenecks," Presented at the European University Institute's 1998 EU Competition Policy Workshop: Competition Policy in Communications Network Markets (Nov. 13-14, 1998)).

45. Cf. Brief for the United States as Amicus Curiae at 9-11, CSU, L.L.C. v. Xerox, 121 S.Ct. 1077 (2001) (No. 00-62).

46. Timothy J. Muris, "Antitrust Enforcement at the Federal Trade Commission: In a Word - Continuity," Remarks Before the American Bar Association, Antitrust Section Annual Meeting (Chicago, Ill., Aug. 7, 2001), available at </speeches/muris/murisaba.htm>.

47. Congressional Budget Office, "How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry" (July 1998), available at <http://www.cbo.gov/showdoc.cfm?index=655&sequence=0>.

48. In re Abbott Laboratories and Geneva Pharmaceuticals, Inc., Dkts. C-3945 and C-3946 (March 16, 2000), available at </os/2000/03/index.htm#16>.

49. National Institute for Health Care Management, "Prescription Drugs and Intellectual Property Protection," 3 (Aug. 2000).

50. The Senate Judiciary Committee recently approved the Drug Competition Act of 2001, S. 754, a bill that requires drug companies to file with the federal antitrust agencies certain agreements that might delay generic entry. Kristen Hallam, "Cipro Debate Prompts Approval of Generic-Drug Bill," Bloomberg, Oct. 18, 2001, available at <http://www.bloomberg.com>.

51. American Society of Sanitary Engineering, Dkt. C-3169, 106 F.T.C. 324 (1985). The members of the ASSE businesses include plumbing equipment manufacturers and designers.

52. Id. at 329.

53. James L. Langenfeld & Louis Silvia, "Federal Trade Commission Horizontal Restraint Cases: An Economic Perspective," 61 Antitrust L.J. 653, 664 (1993).

54. Dell Computer Corp., Dkt. C-3658,121 F.T.C. 616 (1996).

55. James J. Anton & Dennis A. Yao, "Standard-Setting Consortia, Antitrust, and High-Technology Industries," 64 Antitrust L.J. 247, 261 (1995).

56. Id.

57. See, e.g., Dell, 121 F.T.C. at 632-33 & n.11, 635-36 (Dissenting Statement of Commissioner Mary L. Azcuenaga).

58. Id. at 626.