1. Whether valid exclusionary conduct can include a monopolist's unilateral refusal to license a patent or copyright or to sell a patented or copyrighted work.
2. Whether the district court's determination that Intel used patent technology to improperly restrain trade was erroneous.
1. Yes. The desire to exclude others from patent property is a presumptively valid business decision.
2. Yes. The antitrust laws do not cancel the patent holder's right to exclude others from patent property.
Intel Corporation (Intel) manufactures high performance computer microprocessors which are sold to producers of computer-based devices. These producers, called original equipment manufacturers (OEMs), use these microprocessors in products designed for a variety of uses. Intergraph Corporation (Intergraph) is an OEM that designs, produces, and distributes computers that produce computer-aided graphics.
Intergraph owns and uses patents for "Clipper" technology which is used in high performance microprocessors. In 1993, Intergraph ceased using its Clipper microprocessors in favor of Intel microprocessors. In 1994, Intel designated Intergraph a "strategic customer." As such, Intergraph was entitled to certain benefits, including access to proprietary information and products subject to non-disclosure agreements.
In late 1996, Intergraph charged certain Intel OEM customers with infringing its Clipper technology patents by using Intel microprocessors containing the technology. Intel and Intergraph engaged in negotiations to resolve the claims. Intergraph rejected all of Intel's proposals. As negotiations soured, Intel ceased to provide the special benefits reserved for strategic customers.
Intergraph sued Intel for infringement of the Clipper patents. Intergraph sought a preliminary injunction to prevent Intel from infringing the Clipper patents. Intergraph amended its complaint to charge Intel with violating antitrust laws. The district court found that Intergraph was likely to prove that Intel was a monopolist. The district court also held that, as such, it had violated sections 1 and 2 of the Sherman Act.
The Federal Circuit granted leave to appeal. The Court vacated the preliminary injunction order because Intergraph did not demonstrate a substantial likelihood of success to establish an antitrust violation by Intel. The Court also held that the district court's determination that Intel had used its intellectual property to restrain trade was erroneous.
The Court held that antitrust laws do not destroy a patentee's right to exclude others from patented property. The Court reasoned that while patent law does not immunize the patent holder from antitrust laws, the antitrust laws do not nullify the patentee's right to retain sole use and access to its patented property. The Federal Circuit held that the jury must consider the patent laws procompetitive effects and statutory protections. To this end, the Court adopted a rebuttable presumption that a monopolist's desire to prevent others from having access to its protected work is a valid business reason for any immediate harm to consumers.
The Federal Circuit also held that the district court erred because, while it recognized that there must be an anticompetitive intent, it ignored the fact that there was no competition between Intel and Intergraph. To state a claim invoking the Sherman Act, there must be a competitive relationship to force access to the property of another. Here, Intergraph only sought preferential treatment with respect to access to samples and technical assistance. The Court stated that the owner of proprietary information is under no obligation to provide such treatment or to provide such proprietary information.
Prepared by the liibulletin-patent Editorial Board.