When is Property Intellectual? The Leveraging Problem

Patents and copyrights protect inventions and expression; they do not protect products. This distinction, I argue in this essay, is a key to the antitrust problem of the "leveraging" of intellectual property. In a typical leveraging case, the manufacturer of a durable good, like a copier or computer, refuses to sell replacement parts for its equipment unless the purchaser also hires the manufacturer to service the equipment. Such a practice can be illegal under antitrust law, but when the leveraging products-in this example, replacement parts-are protected by patent or copyright, the manufacturer will often claim that the leveraging is a permissible use of its intellectual property. I argue in this essay that intellectual property rights should provide special protection from the antitrust laws only when the owner of the rights is truly denying access to the intellectual aspect of its property. That will never be the case when the owner's property is denied to one who will not use the intellectual property. In the recent Kodak and Xerox cases, independent service organizations sought access to the defendants' patented parts only in order to install them in the equipment of others. It was the equipment owners, not the service organizations, that benefitted from any inventions embodied in those parts. Hence, the defendants' patents should not have allowed them to deny the parts to the service organizations. Somewhat more broadly, intellectual property also should not allow owners of the property to discriminate among potential buyers or licensees if those buyers or licensees do not differ in their uses of the intellectual element of the property. That is, not only should a patent or copyright not give its owner the right to deny a product to one who would not use the invention or expression, but it also should not give the owner the right to deny the product to one who would use the protected work if the owner at the same time grants access to others who use it in the same way. Such discrimination where there is no difference in the use of the protected aspect of the property does not rest on a denial of access to the owner's intellectual property. A similar conclusion was in fact reached, though on somewhat different reasoning, in the Federal Trade Commission's recent case challenging Intel Corporation's licensing practices