Essential Facility - White & Case

This article appeared in slightly different form in February 2005 issue of The Computer &
Internet Lawyer.
This article considers the applicability of the essential
facilities doctrine to intellectual property rights. The
first section describes the origins of the essential
facilities doctrine and its development by the courts.
The second section discusses the particular issues
raised by intellectual property rights and describes
the approach of the courts in analyzing refusals to
license under the doctrine and Section 2 generally.
The third section discusses the recent decision of the
Supreme Court in Verizon Communications v. Law
Offices of Curtis V. Trinko, LLP, 1 and its likely impact
on the use of Section 2 of the Sherman Act and the
essential facilities doctrine to mandate access to
intellectual property rights. The article concludes that
mandating access to intellectual property rights,
already rare in practice, is likely to be further curtailed
in the wake of Trinko.
THE ORIGINS OF THE ESSENTIAL
FACILITY DOCTRINE
INTELLECTUAL PROPERTY AS
AN “ESSENTIAL FACILITY”
By M. Elaine Johnston, White & Case LLP
The essential facilities doctrine imposes liability
under Section 2 of the Sherman Act for denial of
access to a bottleneck or other unique asset when
those denied access cannot compete with the person
controlling the asset. “The ‘essential facilities’
doctrine is not [regarded as] an independent cause of
action [under the US antitrust laws], but rather as a
type of monopolization claim.” 2 As such, it is one of a
limited number of exceptions to the general principle
under U.S. antitrust law that a person is free “to
exercise his own independent discretion as to parties
with whom he will deal.” 3
The doctrine is generally regarded as having its
origins in United States v. Terminal R.R. Ass’n 4 in 1912,
when the Supreme Court ruled that a group of railroads
that jointly owned the only terminal in St. Louis
that could accommodate traffic from the west could
not deny access to competing railroads. The owners
had sought to prevent competing railroads from offering
transportation through the terminal and were
found to have engaged in both an illegal restraint of
trade in violation of Section 1 of the Sherman Act and
an attempt to monopolize in violation of Section 2. The
Supreme Court remanded the case to the district
court, requiring that an order be entered “providing
for the admission of any existing or future railroad to
joint ownership or control of the combined terminal
properties, upon such just and reasonable terms as
shall place such applying company upon a plane of
equality . . . with the present proprietary companies”. 5
In a later case, also commonly regarded as involving
application of the doctrine, Otter Tail Power Co. v.
United States, 6 the Supreme Court found that an
electric utility with a monopoly in the generation of
electricity and high-voltage transmission violated
Section 2 when it refused to sell at wholesale to a
municipality that wished to compete with the utility
in the retail market.
It should be noted that the Supreme Court did not
use the term “essential facilities” in either of these
decisions. Moreover, in the recent Trinko case, 7
discussed below, the Supreme Court described the
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doctrine as “crafted by some lower courts” 8 and
observed that “[w]e have never recognized such a
doctrine . . . and we find no need either to recognize
it or repudiate it here”. 9 Thus, the principles governing
the application of the doctrine have largely been
developed by the lower courts.
The leading modern case applying the essential
facilities doctrine is the decision of the Court of Appeals
for the Seventh Circuit in MCI Communications Corp. v.
AT&T. 10 MCI alleged that AT&T had refused to let MCI
connect its telephone lines to AT&T’s nationwide
system, thereby preventing MCI from competing
with AT&T in the long-distance telephone service
market. The Seventh Circuit found that AT&T’s refusal
constituted monopolization under Section 2 and set
forth a four-part test to establish liability under the
essential facilities doctrine:
(1) control of the essential facility by a monopolist;
(2) a competitor’s inability practically or reasonably
to duplicate the essential facility; (3) the denial of
the use of the facility to a competitor; and (4) the
feasibility of providing the facility. 11
As suggested by the wording in the test, the doctrine
applies only if there is a competitive relationship
between the firm with control of the facility and the
plaintiff. 12 This four-part test has been cited and
adopted by many other lower courts. 13
APPLICATION OF THE MMCCII TEST
The application of each prong of the four-part test set
forth in MCI is highly factually specific. In practice,
courts have been fairly stringent in making
determinations under each prong. As a result, it has
been relatively unusual for courts to impose liability or
mandate access under the essential facilities doctrine.
Control Of The Essential Facility
The first part of the test requires that the facility be
essential. Courts have applied the term strictly and
have not readily concluded that an asset is essential:
“a facility . . . will be considered ‘essential’ only if
control of the facility carries with it the power to
eliminate competition in the downstream market.” 14
Thus, in State of Illinois ex rel. Burris v. Panhandle E.
Pipe Line Co., 15 the Seventh Circuit found that access
to a pipeline was not essential because competitors
could interconnect with other pipelines and
construct new facilities. Similarly, the Tenth Circuit
held in McKenzie v. Mercy Hosp. of Independence
Kan. 16 that access to a hospital’s facilities was not
essential because the plaintiff doctor could treat the
majority of his patients in his clinic or office. 17
Inability To Duplicate
The second part of the test requires that a competitor
be unable practically or reasonably to duplicate the
essential facility. As the Ninth Circuit observed in City
of Anaheim, 18 the second part of the test is actually
subsumed in the first since the second part of the test
is relevant to whether the facility is “essential.”
The second part of the test was addressed by the
Seventh Circuit in Fishman v. Estate of Wirtz. 19 Wirtz
and Fishman were competing to acquire the
Chicago Bulls NBA franchise, and Wirtz, who controlled
the Chicago Stadium, refused to offer
Fishman a lease to the stadium.
The Seventh Circuit first affirmed the finding of the
district court that the stadium was essential and then
went on to find that the stadium “was not duplicable
without an expenditure that would have been
unreasonable in light of the size of the transaction such
duplication would have facilitated.” 20 This was in spite of
the fact that another stadium had been built shortly
after the events on which the case was based. The court
explained that the rationale for the doctrine was that
a potential entrant should not be required to enter
two markets simultaneously. 21 Even though others had
chosen to build a new stadium, that did not justify
Fishman’s being required to do the same if he wanted
to compete. Again, however, courts have applied
relatively stringent standards to this second part of the
test; it is generally not sufficient for a plaintiff to assert
that duplication is inconvenient or less economically
attractive than using the defendant’s facility. 22

Denial Of Access
The third part of the test requires that there be denial
of access to the facility. Denial need not be absolute;
it is enough that the plaintiff allege literal or
constructive denial through the imposition of unreasonable
terms. 23 Courts have not been prepared to
find denial of access based on a refusal to grant
access on terms that were preferred by the plaintiff,
however; 24 nor have they found poor service to
equate necessarily to a denial of service. 25
Feasibility Of Providing Access
The fourth part of the test requires that it be feasible
for the monopolist to provide access to the facility.
Like the other three prongs of the test, this is highly
factually specific. It is particularly difficult to distill
clear principles from the case law with respect to this
prong of the test, however, as courts have reached
conflicting conclusions in similar circumstances. For
example, in MCI, 26 the Seventh Circuit upheld a jury
finding that interconnection with AT&T’s lines was
feasible, while in S. Pac. Communications Co. v.
AT&T, 27 the D.C. Circuit found denial of access or
restrictive interconnection practices might be
justified by AT&T’s regulatory duties.
Overall, the modern case law tends on the whole to
be relatively sympathetic to the position of the
monopolist, so long as a reasonable business
justification can be made for denial of access. 28
When, however, a monopolist offers no business
justification for its action, a court may well find
access to be feasible. Moreover, when a monopolist
acts in a way that is counter to its own short-term
economic interests or offers an explanation for the
refusal of access that is simply unconvincing, a court
may well decide against the monopolist. 29
INTELLECTUAL PROPERTY AS AN
ESSENTIAL FACILITY
Tangible v. Intangible Assets
Most of the case law establishing or developing the
essential facilities doctrine has involved tangible or
hard assets constituting either a physical bottleneck
(e.g., a railway terminal in a critical location) or a
physical infrastructure that was not easily replicated
(e.g., electricity transmission lines, a stadium,
telephone line network). Over the last 30 years,
however, intangible assets, such as patents,
know-how and computer software, have become
increasingly important to the US and global economy.
The question arises as whether these types of
assets can also be “essential facilities” such that
access for competitors should be mandated through
a compulsory license or similar regime.
Intangible assets differ in a number of significant
respects from the hard assets at issue in the earlier
case law. First, an intangible asset does not by its
nature preclude the existence of another asset fulfilling
the same function; there may physically be
space only for one railway terminal or bridge in a
particular location, whereas the existence of a
particular patent does not in itself prevent the
existence of another competing patent.
Second, an intangible asset often has a shorter life
than the types of physical assets on which the
doctrine was based; a railway terminal, bridge, tunnel
or stadium may stand for a hundred years or
longer, while a patent is limited in life. Even when
the intellectual property in question is a trade secret
or copyrighted item so that the time period of legal
protection is potentially longer, in practice many
intellectual property rights lose their commercial
significance relatively quickly. Third, the body of
intellectual property law in the United States is based
on the basic principle that innovation will be
encouraged if innovators are permitted to benefit
exclusively from their inventions for some period of
time, a notion fundamentally at odds with a
compulsory licensing regime.
That said, intangible assets can in certain
circumstances present significant obstacles to the
emergence of competitors. While intangible assets
may not physically preclude the existence of other
assets fulfilling the same functions, “network effects”
can be a barrier to entry for competing technologies.
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Network effects exist when the utility or value of a
product or service increases the more others use the
same product or service; thus a new entrant needs a
critical mass of users to be viable in the market, but
users will not adopt the new competing product or
service until it has achieved widespread acceptance.
Network effects can be found in physical networks
such as ATM banking machines or intangible
networks such as computer operating systems.
In S. Pac. Communications Co. v. AT&T, 30 the D.C.
Circuit affirmed the finding of the lower court that
there was an “applications barrier to entry [that] protect[ed]
a dominant operating system irrespective of
quality” 31 arising out of the characteristics of the
software market. That is, most consumers prefer to
buy an operating system for which a large number of
applications have been written and most software
developers prefer to write for operating systems
that already have been adopted by a large number
of consumers. Furthermore, particularly when
networks effects exist, continuing refinements to the
intellectual property rights may extend the effective
life of the technology.
Refusals To License Intellectual Property
In assessing the legality of refusals to license, the
approach of the courts has been to try to steer a course
between, on the one hand, disregarding the real
market power that an intangible asset may confer and,
on the other hand, undermining the rights traditionally
accorded a holder of intellectual property rights. In
general, the courts have recognized that there is no
obligation to license intellectual property rights that
have been lawfully acquired or developed. 32
The use of intellectual property rights in one market
to monopolize a second market has been subject to
antitrust scrutiny, however. While the essential facilities
doctrine may arguably not require the existence
of two vertically related relevant markets, one market
represented by the essential facility and a second
market whose competitors require access to the
essential facility if they are to be able to compete, 33
virtually all the cases involving refusals to license
intellectual property rights have been situations in
which there were two related markets and a company
in the first market was alleged to be using rights
derived from its position in that market to achieve
monopoly power in the second. For example,
Kodak34 and Xerox35 were alleged to be monopolizing
the downstream service market through rights
arising from their manufacture of photocopy
machines; Data General36 was alleged to be
monopolizing the downstream service market
through rights arising from its manufacture of
computers; and BellSouth37 was alleged to be
monopolizing the Yellow Pages market through
rights arising from its position as the local monopoly
telephone company. The courts have not questioned
the right of the holder of intellectual property rights to
enjoy exclusivity in the first market—it was never
suggested that Kodak, Xerox, or Data General were
obliged to license would-be competitors in the market
for the manufacture of photocopy machines or
computers, respectively—but have focused on the use
of rights to extend market power into the second
market. By focusing on the second market, the courts
have left intact the principle of In re E.I. duPont de
Nemours & Co., 38 that there is no § 2 violation when
a firm that has achieved an advantageous or
monopoly position in a market through legitimately
acquired know-how refuses to license the technology
to competitors in that market.
While some courts have analyzed refusals to license
by reference to the essential facilities doctrine,
others have conducted their analysis under general
§ 2 principles. Some courts have applied the highly
fact-specific, essential facilities test in MCI and have
concluded that the claim fails one of the four prongs;
generally, the courts have found that the intangible
rights were not “essential” or that they could be as a
practical matter be duplicated. Other courts have not
applied the MCI test but have instead used broader
§ 2 principles.
The cases involving Kodak, Xerox, and Data General
are generally regarded as among the most
significant recent decisions addressing refusals to

license, yet none of the courts applied a strict
essential facilities analysis. In terms of end result,
there are very few cases in which an obligation to
deal or license has been imposed, and to the
knowledge of the writer, none of these cases has
involved pure essential facilities analysis.
Cases applying the essential facilities doctrine
While most courts and commentators appear to
accept that the essential facilities doctrine potentially
applies to intellectual property, 39 there are relatively
few cases that have applied a strict essential facilities
analysis to refusals to license intellectual property. A
few courts have applied the MCI test; however, in
these cases, the assets have generally been found to
be non-essential or alternatively to be capable of
duplication. Thus, access has not been mandated.
Prior to the decision of the Supreme Court in Feist, 40
which held that a telephone listing did not qualify for
copyright protection, some cases arose out of the
refusal by telephone companies to make telephone
listings available to third parties that wished to produce
competing directories. In BellSouth Adver., 41
Donnelley, which had been sued for copyright
infringement by BellSouth, alleged in an antitrust
counterclaim that the copyrighted telephone listings
owned by the local telephone company were
“essential facilities” to which Donnelley had been
denied access. BellSouth argued, inter alia, that only
physical objects are “facilities” and that the doctrine
could not apply. The district court refused to grant
BellSouth summary judgment on the antitrust counterclaim,
stating that, “[a]lthough the doctrine of
essential facilities has been applied predominantly
to tangible assets, there is no reason why it could
not apply, as in this case, to information wrongly
withheld. The effect in both situations is the same: a
party is prevented from sharing in something
essential to compete.” 42
The court did, however, note that “[t]he application of
the essential facilities doctrine raises genuine issues
of material facts . . . . [s]pecifically, there are clear factual
disputes as to the essentiality of the data
Donnelley seeks and the availability of such data
from sources alternative to the Bell companies.” 43
In a case with similar claims and involving the same
parties as the Feist case, the district court did not
dispute the potential application of the essential
facilities doctrine but concluded that Feist had not
sustained its burden of proof on this theory of its
refusal to deal claim. The court stated that it was “not
convinced, based on the present record, that the
white pages listings [were] an “essential facility”; 44
the information could be independently obtained
from other sources, and there were no regulatory
restrictions in obtaining the information. Moreover,
while Feist had presented evidence that it would
require some effort and some cost to acquire the
information from other sources, it had not
persuaded the court that this was either impossible
or economically impractical. 45
Similarly, in Montgomery County Ass’n of Realtors,
Inc. v. Realty Photo Master Corp., 46 the district court
granted summary judgment on an essential facilities
claim relating to a group of realtors’ Multiple Listing
Service (MLS) because the plaintiff had offered no
evidence showing that it could not practicably
duplicate the MLS.
Cases applying general § 2 principles governing
refusals to deal
Other courts have analyzed refusals to license
without engaging in a formal application of the
essential facilities doctrine. Instead, they have
applied general principles of Sherman Act § 2
liability for refusals to deal, as set forth in Aspen
Skiing 47 and other cases. Most have not required
access to the intellectual property at issue.
In Aspen Skiing v. Aspen Highlands Skiing Corp., 48
the Supreme Court considered whether a competitor
with monopoly power had a duty to continue a
long-standing joint marketing arrangement with a
smaller competitor. The court recognized that “even
a firm with monopoly power has no general duty to
engage in a joint marketing program with a competitor.”
49 Since there appeared to be no valid business
justification for the termination and the monopolist
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appeared to be sacrificing short-term profits by its
decision, however, the court found that the
termination could properly be characterized as
exclusionary. 50 The court was clearly influenced by
the fact that the joint marketing agreement was
long-standing and that the monopolist had offered no
efficiency justification for its conduct.
Courts have differed in how they have assessed
whether a business justification is valid in the
intellectual property context. In Data Gen., 51 Data
General, a computer manufacturer that also
serviced its own computers, brought a copyright
action against a service competitor alleging
copyright infringement and misappropriation of
trade secrets relating to diagnostic software. The
competitor, Grumman, counterclaimed, based, inter
alia, on denial of access to the software.
The First Circuit referred to the essential facilities
doctrine but decided that it need not apply it, saying
that Grumman “need not tailor its argument to a
preexisting ‘category’ of unilateral refusals to deal.” 52
Instead, the court engaged in a discussion of the
conflicting goals of the copyright laws and the
antitrust laws, stating that “[w]e must not lose sight
of the need to preserve the economic incentives
fueled by the Copyright Act, but neither may we
ignore the tension between the two very different
policies embodied in the Copyright Act and the
Sherman Act, both designed ultimately to improve
the welfare of consumers in our free market
system.” 53 The court went on to say that “an author’s
desire to exclude others from use of its copyrighted
work is a presumptively valid business justification
for any immediate harm to consumers,” 54 though it
did note that “there may be rare cases in which
imposing antitrust liability is unlikely to frustrate the
objectives of the Copyright Act.” 55 The court found
that the refusal to license was not monopolization.
The Ninth Circuit in Image Technical Servs., 56 in a
case based on Kodak’s refusal to sell proprietary
parts (some of them protected by patent or
copyright) to independent service organizations
(ISOs), took a less deferential approach to an
assertion of valid business justification. The court
cited the decision of the First Circuit in Data General
with approval for the proposition that a refusal to
deal need not be analyzed under the essential
facilities doctrine 57 but then came to a very different
result than that reached by the First Circuit under
general § 2 principles. Kodak had argued that its
refusal to sell its patented or copyrighted parts to
ISOs was justified by its desire to profit from its
intellectual property rights and should be presumed
to be legitimately pro-competitive. Purporting to
follow Data General, the Ninth Circuit noted that the
presumption of legitimacy was rebuttable and may
“be rebutted by evidence of pretext. Neither the
aims of intellectual property law, nor the antitrust
laws justify allowing a monopolist to rely upon a pretextual
business justification to mask anticompetitive
conduct.” 58 The Ninth Circuit ruled that the failure of
the district court judge to give weight to the
intellectual property rights in the jury instructions was
harmless error and affirmed the order of the district
court requiring Kodak to supply parts to the ISOs.
The Federal Circuit took a markedly different
approach in In re Indep. Serv. Orgs. Antitrust Litig, 59 a
case involving Xerox’s refusal to sell or license its
patented parts and copyrighted manuals and software
to ISOs. The court declined to follow Image
Technical Services, which it viewed as “a significant
departure from the First Circuit’s central premise [in
Data General] that rebutting the presumption would
be an uphill battle and would only be appropriate in
those rare cases in which imposing antitrust liability
is unlikely to frustrate the objectives of the Copyright
Act.” 60 The court found that, “in the absence of any
evidence that the copyrights were obtained by
unlawful means or were used to gain monopoly
power beyond the statutory copyright granted by
Congress,” 61 Xerox’s refusal to sell or license the parts
was not a violation of the antitrust laws.
There have been a number of commentators who
have discussed the differences of approach of the
Ninth and Federal Circuits; 62 however, the different

approaches taken by the courts may stem in part
from the fact that only 65 of the thousands of Kodak
parts were patented, whereas Xerox claimed patent
or copyright protection for all of the parts, manual,
and software at issue. That said, the approach of the
Ninth Circuit does seem at odds with that of other
courts in mandating supply to the ISOs and in
placing little weight on the right of a company to
profit from its legitimately acquired intellectual
property rights.
Summary of the position pre-TTrriinnkkoo
The pre-Trinko position regarding refusals to license
intellectual property rights may be summarized as
follows. There is generally no obligation to license
legitimately acquired or developed intellectual
property rights. The right to refuse to license even
legitimately acquired rights may not be absolute,
however, when it enables the holder of the rights to
extend market power into a related market. While
the essential facilities doctrine may in principle apply
to intellectual property rights, courts have not in
practice required licensing on the basis of the
doctrine, generally because the intellectual property
has been found to be non-essential or capable of
duplication. In the few cases in which access has been
mandated, it has been on the basis of general § 2
principles as set forth in Aspen Skiing. In applying
those principles, different courts have given varying
degrees of weight to intellectual property rights and,
as a result, have differed in their willingness to find a
valid business justification for the refusal to license.
One can speculate why the courts appear reluctant to
use the essential facilities doctrine in the intellectual
property context. One reason may be that analysis
under Aspen Skiing may give the courts more
flexibility than analysis under the fourth prong of the
MCI test. Courts may be concerned that, if the first
three prongs of the MCI test are fulfilled (surely a
possibility in some cases), it will be difficult for the
holder of the rights to show that licensing is not “feasible.”
While legitimate business justifications are
viewed as relevant to the fourth prong in the case of
a physical asset (e.g., monopolist’s need for the asset
itself, exposure under take-or-pay contracts), 63 there
is little precedent in essential facilities cases for
viewing the desire to reap profits from intellectual
property as making licensing not feasible (as
opposed to undesirable from a business standpoint).
THE IMPACT OF THE TTRRIINNKKOO DECISION
The decision of the Supreme Court in Trinko 64 arose
out of the Telecommunications Act of 1996 (the “1996
Act”), which imposes on an incumbent local
exchange carrier (LEC) the obligation to share its
telephone network with competitors, including the
provision of access to individual network elements
on an unbundled basis. 65 New entrants, so-called
competitive LECs, resell these unbundled network
elements (UNEs), recombined with each other or
with elements belonging to the LECs.
Verizon, the incumbent LEC for the state of New York,
had signed interconnection agreements with rivals
such as AT&T, setting forth the terms on which it
would make UNEs available. These agreements
were approved in 1997 by the state regulator,
New York’s Public Service Commission (PSC). Verizon
had also sought approval to enter the long-distance
market, which was contingent, inter alia, on fulfilling
its obligations to provide non-discriminatory access
to UNEs. The Federal Communications Commission
(FCC) granted approval in 1999.
Among the UNE obligations is the provision of
access to operations support systems (OSS), a set of
systems used by incumbent LECs to provide services
to customers and ensure quality. Without OSS
access, a rival cannot fill its customers’ orders. The
inter-connection agreements and the long-distance
authorization each specified how Verizon’s OSS
obligations would be met.
In late 1999, competitive LECs complained to the
regulators that many orders were going unfilled, in
violation of Verizon’s obligation to provide access to
OSS functions. The PSC and FCC opened parallel
investigations, which led to the imposition of
financial penalties, remediation measures, and
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additional reporting requirements on Verizon. Law
Offices of Curtis V. Trinko, LLP (Trinko), a New York
City law firm and a local telephone service customer
of AT&T, then filed a class action alleging that Verizon
had filled rivals’ orders on a discriminatory basis as
part of an anticompetitive scheme to discourage
customers from becoming or remaining customers
of competitive LECs in violation of § 2 of the
Sherman Act. The district court dismissed the
complaint in its entirety, concluding as to the
antitrust portion that Trinko’s allegations of deficient
assistance to rivals failed to satisfy the requirements
of § 2. 66 The Second Circuit reinstated the antitrust
claims, 67 and the Supreme Court granted certiorari,
limited to the question whether the Second Circuit
erred in reversing the district court.
The Supreme Court Decision
The Supreme Court reversed the decision of the
Second Circuit, ruling that Verizon’s alleged insufficient
assistance in the provision of service to rivals was not
a recognized antitrust claim under the court’s refusalto-deal
precedents. 68 The decision is interesting for a
number of reasons and overall appears to be a
positive development for monopolists.
First, the court cast doubt on Aspen Skiing 69 as a
basis for liability in the vast majority of cases, saying
that “Aspen Skiing is at or near the outer boundary
of § 2 liability” 70 and concluding that the present case
did not “fit within [that] limited exception.” 71 The
court noted that in Aspen Skiing the defendant had
ceased participation in a cooperative, voluntary
venture that presumably had been profitable, thus
suggesting a willingness to forsake short-term profits
to achieve an anticompetitive end. In Trinko, there
was no prior conduct indicating the motivations for
the failure to fulfill obligations under the agreements.
Second, the court overruled (in a footnote) the
monopoly leveraging doctrine espoused by the
Second Circuit in Berkey Photo, Inc. v. Eastman
Kodak Co. 72 The Second Circuit had, in contrast to
other circuits, taken the position that antitrust liability
could arise out of the use of a monopoly position
in one market to gain a competitive advantage in
another, even if there was not an attempt to
monopolize the second market.
Third, the court, as mentioned above, described the
essential facilities doctrine as a creation of the lower
courts and declined either to recognize it or
repudiate it. 73 Thus, despite its asserted Supreme
Court origins, the court made clear that the doctrine
does not necessarily have the imprimatur of at least
the current Supreme Court.
Fourth, the court held that, even if it were to apply
the essential facilities doctrine, it would still find no
antitrust claim because the extensive provisions of
the 1996 Act made it “unnecessary to impose a
judicial doctrine of forced access.” 74 The court basically
adopted the position put forward in a leading
treatise that “essential facility claims should . . . be
denied where a state or federal agency has effective
power to compel sharing and to regulate its scope
and terms.” 75
Finally, the court was concerned that undue
expansion of § 2 liability could lead to costly false
positives: “[m]istaken inferences and the resulting
false condemnations ‘are especially costly, because
they chill the very conduct the antitrust laws are
designed to protect’ . . . . The cost of false positives
counsels against an undue expansion of § 2 liability.” 76
Case law prior to Trinko had imposed obligations to
deal on holders of intellectual property rights in very
few instances. Trinko’s narrow reading of Aspen
Skiing and its concerns about § 2 “false positives”
appear to reduce the circumstances in which any
monopolist will be viewed as having an obligation
to deal.
In light of Trinko, future impositions of a duty to
license intellectual property should be extremely
rare. Liability would appear to arise only when
(a) the monopolist is giving up short-term profits
through its refusal to license, thereby indicating
anticompetitive malice, (b) no other reasonable
justification is offered for the refusal, and (c) there is

a dangerous probability that the monopolist will
succeed in monopolizing the second market. An
alleged monopolist holder of intellectual property
rights that has never licensed those rights to third
parties appears to be in a strong position to argue
that its decision not to license is a legitimate
business decision that should not be second
guessed by the courts. In practice, it could be difficult
to establish that the monopolist is foregoing
short-term profits since the assertion will necessarily
be based on speculative data. A monopolist that has
previously licensed its rights may have to rebut a
presumption that it is foregoing short-term profits by
changing its policy but may well be able to do so
through establishing the benefits of bringing certain
functions in-house. Moreover, unless there is clear
evidence of an intent to monopolize, courts are likely
to accept a reasonable business justification offered
by the monopolist.
Furthermore, under Trinko, it is clear that the
essential facilities doctrine should not be applied in
contexts when there is a regulatory regime in place
that provides for access. There are few compulsory
licensing regimes in US law, 77 but when they do
exist, the doctrine will not apply.
1 Verizon Communications v. Law Offices of Curtis V. Trinko, LLP, 124
S. Ct. 872 (2004).
2 Kramer v. Pollock-Krasner Found., 890 F. Supp. 250, 257 (S.D.N.Y. 1995)
3 United States v. Colgate & Co., 250 U.S. 300, 307 (1919).
4 United States v. Terminal R.R. Ass’n, 224 U.S. 383 (1912).
5 Id. at 411.
6 Otter Tail Power Co. v. United States, 410 U.S. 366 (1973).
7 Trinko, 124 S. Ct. 872 (2004).
8 Id. at 880.
9 Id. at 881.
10 MCI Communications Corp. v. AT&T, 708 F.2d 1081 (7th Cir.), cert. denied, 464
U.S. 891 (1983).
11 Id. at 1132-33.
12 See, e.g., Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1357 (Fed. Cir. 1999)
(“the presence of a competitive relationship is fundamental to invoking the
Sherman Act to force access to the property of another”).
13 See, e.g., City of Anaheim v. S. Cal. Edison Co., 955 F.2d 1373, 1380 (9th Cir.
1992); City of Chanute v. Williams Natural Gas Co., 955 F.2d 641, 647 (10th Cir.),
cert. denied, 506 U.S. 831 (1992).
14 City of Anaheim, 955 F.2d at 1380 n.5 (quoting Alaska Airlines, Inc. v. United
Airlines Inc., 948 F.2d 536, 544-545 (9th Cir. 1991), cert. denied, 503 U.S. 977
(1992)).
15 State of Illinois ex rel. Burris v. Panhandle E. Pipe Line Co., 935 F.2d 1469 (7th
Cir. 1991).
CONCLUSION
Although not formally recognized by the Supreme
Court, the essential facilities doctrine is well
established in US jurisprudence. While its origins
were in cases addressing hard, physical assets,
some courts have viewed it as potentially applying
to intangible assets such as intellectual property
rights. Even in the case of physical assets, the courts
have applied the doctrine rigorously and have
mandated access in relatively few instances. In the
intellectual property context, courts that have analyzed
refusals to license under the essential facilities
doctrine have generally not ultimately required
access; those rare cases requiring access have been
based on general refusal to deal principles rather
than on the doctrine. The decision in Trinko endorses
judicial restraint and is likely to result in a more limited
application of the doctrine, including with
respect to intellectual property rights, and a further
narrowing of the circumstances in which access will
be required on the basis of the general principles.
M. Elaine Johnston is a partner at White & Case LLP
in New York, where her primary area of practice is
antitrust law.
16 McKenzie v. Mercy Hosp. of Independence Kan., 854 F.2d 365 (10th Cir. 1988).
17 Id. at 370.
18 City of Anaheim, 955 F.2d at 1380.
19 Fishman v. Estate of Wirtz, 807 F.2d 520 (7th Cir. 1986).
20 Id. at 540.
21 Id.
22 See, e.g., Alaska Airlines, 948 F.2d at 544-545 (rejecting essential facility
claim because denial of access would only impose financial burden on
excluded competitors, not eliminate them); Twin Labs, Inc. v. Weider Health
& Fitness, 900 F.2d 566, 570 (2d Cir. 1990) (“As the word “essential” indicates,
a plaintiff must show more than inconvenience, or some economic loss; he
must show that an alternative to the facility is not feasible.”).
23 Laurel Sand & Gravel, Inc. v. CSX Transp., Inc., 924 F.2d 539, 544-545 (4th Cir.),
cert. denied, 502 U.S. 814 (1991).
24 Cyber Promotions, Inc. v. America Online, Inc., 948 F. Supp. 456, 460 (E.D.
Pa. 1996).
25 Anserphone, Inc. v. Bell Atlantic Corp., 955 F. Supp. 418, 428-29 (W.D. Pa.
1996).
26 MCI, 708 F.2d 1081 (7th Cir.), cert. denied, 464 U.S. 891 (1983).
27 S. Pac. Communications Co. v. AT&T, 740 F.2d 980 (D.C. Cir. 1984), cert.
denied, 470 U.S. 1005 (1985).
28 See, e.g., City of Anaheim, 955 F.2d at 1380 (denial of access justified where
Edison needed to use the facility itself to obtain cheap power for its
customers); City of Vernon v. S. Cal. Edison Co., 955 F.2d 1373 (9th Cir. 1992)
9

10
(denial of relative size share access to Edison’s transmission lines justified
since it would have required Edison to cease using facilities it was using and
would have resulted in higher rates to customers); Burris, 935 F.2d 1469 (concerns
about liability under take-or-pay contracts justified refusal to transport
some of the plaintiff’s gas through pipeline); City of College Station v. City of
Bryan, 932 F. Supp. 877 (S.D. Tex. 1996) (unwillingness to wheel power justified
given lateness of plaintiff’s request, defendant’s inexperience in pricing
such transactions, lack of trust between parties due to another pending
lawsuit, and difficulties in negotiations between parties).
29 City of Vernon, 955 F.2d 1373 (no legitimate business justification for refusal
to integrate Vernon’s purchases from other sources upon reasonable
notice).
30 S. Pac. Communications Co. v. AT&T, 253 F.3d 34 (D.C. Cir.), cert. denied, 534
U.S. 952 (2001).
31 Id. at 55-56.
32 SCM Corp. v. Xerox Corp., 645 F.2d 1195, 1209 (2d Cir. 1981), cert. denied, 455
U.S. 1016 (1982) (no liability for refusal to license where patents lawfully
acquired); cf. Kobe, Inc. v. Dempsey Pump Co., 198 F.2d 416 (10th Cir.), cert.
denied, 344 U.S. 837 (1952) (where acquisition of patent conferred monopoly
power, refusal to license contributed to maintenance of monopoly); see also
US Department of Justice and Federal Trade Commission, Antitrust
Guidelines for the Licensing of Intellectual Property § 2.2 (1995) (“Nor does
such market power impose on the intellectual property owner an obligation
to license the use of that property to others.”).
33 See discussion in Robert Pitofsky, Donna Patterson & Jonathan Hooks, The
Essential Facilities Doctrine Under U.S. Antitrust Law, 70 Antitrust L.J. 443,
458-461 (2002); but cf. Paul D. Marquardt & Mark Leddy, The Essential
Facilities Doctrine and Intellectual Property Rights: A Response to Pitofsky,
Patterson, and Hooks, 70 Antitrust L.J. 847 (2003).
34 Image Technical Servs. Inc. v. Eastman Kodak Co., 125 F.3d 1195 (9th Cir.
1997), cert. denied, 523 U.S. 1094 (1998).
35 In re Indep. Serv. Orgs Antitrust Litig. CSU, L.L.C., 203 F.3d 1322 (Fed. Cir.
2000), cert. denied, 531 U.S. 1143 (2001).
36 Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147 (1st Cir. 1994).
37 BellSouth Adver. & Publ’g Corp. v. Donnelley Info. Publ’g, Inc., 719 F. Supp.
1551 (S.D. Fla. 1988), rev’d on other grounds, 999 F.2d 1436 (11th Cir. 1993).
38 In re E.I. duPont de Nemours & Co., 96 F.T.C. 653 (1980).
39 But see Abbott B. Lipsky, Jr. & J. Gregory Sidak, Essential Facilities, 51 Stan.
L. Rev. 1187 (1999).
40 Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991).
41 BellSouth Adver., 719 F. Supp. 1551.
42 Id. at 1566.
43 Id.
44 Id. at 620.
45 Id.
46 Montgomery County Ass’n of Realtors, Inc. v. Realty Photo Master Corp., 878
F. Supp. 804 (D. Md. 1995), aff’d, 91 F.3d 132 (4th Cir. 1996).
47 Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985). The
Tenth Circuit had upheld the defendant’s liability both generally and under
the essential facilities doctrine, see Aspen Highlands Skiing Corp. v. Aspen
Skiing Co., 738 F.2d 1509 (10th Cir. 1984), but the Supreme Court found it
unnecessary to address the essential facilities issue. 472 U.S. at 611, n.44.
48 Id., 472 U.S. 585.
49 Id. at 600.
50 Id. at 610-611.
51 Data Gen., 36 F.3d 1147.
52 Id. at 1184.
53 Id. at 1187.
54 Id.
55 Id. at n.64.
56 Image Technical Servs., 125 F.3d 1195.
57 Id. at 1211.
58 Id. at 1219.
59 In re Indep. Serv. Orgs. Antitrust Litig., 203 F.3d 1322.
60 Id. at 1329.
61 Id.
62 See, e.g., Peter M. Boyle, Penelope M. Lister & J. Clayton Everett, Jr.,
Antitrust Law at the Federal Circuit: Red Light or Green Light at the
IP-Antitrust Intersection?, 69 Antitrust L.J. 739 (2002).
63 See n.28, supra
64 Trinko, 124 S.Ct. 872(2004).
65 47 U.S.C. § 251(c)
66 Law Offices of Curtis V. Trinko v. Bell Atlantic Corp., 123 F. Supp. 2d 738
(S.D.N.Y. 2000).
67 305 F.3d 89 (2d Cir. 2002).
68 Trinko, 124 S. Ct. at 880.
69 Aspen Skiing, 472 U.S. 585.
70 124 S. Ct. at 879.
71 Id. at 880.
72 Berkey Photo had held that “a firm violates § 2 by using its monopoly power
in one market to gain a competitive advantage in another, albeit without an
attempt to monopolize the second market.” Berkey Photo, Inc. v. Eastman
Kodak Co., 603 F.2d 263, 275 (2d Cir. 1979), cert. denied, 444 U.S. 1093 (1980).
The Supreme Court in Trinko rejected this doctrine: “The Court of Appeals
also thought that respondent’s complaint might state a claim under
a ‘monopoly leveraging’ theory . . . . We disagree. To the extent the Court
of Appeals dispensed with a requirement that there be a ‘dangerous
probability of success’ in monopolizing a second market, it erred.” 124 S. Ct.
at 883, n.4.
73 124 S. Ct. at 880.
74 Id. at 881.
75 Id., citing P. Areeda & H. Hovenkamp, Antitrust Law, p. 150, 773e (2003
Supp.).
76 124 S. Ct. at 882, citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 594 (1986).
77 Examples include: the compulsory license provisions in the Copyright Act,
which provide for compulsory licenses for, inter alia, cable retransmission of
on-the-air broadcasts, satellite retransmission of on-the-air broadcasts, and
mechanical reproduction of musical performances; and the compulsory
patent license provisions in the Clean Air Act and the Atomic Energy Act.