Vol 7 No 1 - Roger Williams University School of Law
Vol 7 No 1 - Roger Williams University School of Law Vol 7 No 1 - Roger Williams University School of Law
unjustifiable anti-competitive conduct. In the United States, incases of a continuous relationship, this will be more likely toinfringe.200The recent Independent Service Organizations AntitrustLitigation201 decision highlights some of these issues. In thatcase, Xerox made high volume copiers and had adopted a policy ofrefusing to sell parts that were unique to its “Series 10” copiers toindependent service organizations (“ISOs”), including the companyCSU, unless they were also end users of such copiers.202 Thepolicy was expanded in 1987 to include all new products and theolder “Series 9” copiers.203 In 1989, the enforcement of the policywas tightened, which resulted in Xerox cutting off CSU’s ability todirectly purchase restricted parts.204 Xerox “also implemented an‘on-site, end user verification’ procedure to confirm that the partsordered by certain ISOs or their customers were actually for theirend user use.”205 That policy was applied to CSU, one of the moresuccessful ISOs.206In order to keep servicing Xerox equipment, CSU: used partsfrom used Xerox equipment; used parts obtained from other ISOsand used parts purchased from customers.207 In addition, CSUalso obtained parts from Rank Xerox, a European Xerox affiliate,until Xerox stopped that practice.208 Xerox settled an antitrustlawsuit with some ISOs and agreed to suspend its restrictive partspolicy and to license its diagnostic software for agreed uponperiods.209 CSU opted out of that settlement and filed suit,alleging that Xerox violated the Sherman Act by setting the priceson its patented parts much higher for ISOs than for end users inan attempt to force ISOs to raise prices.210 By that, the alleged200. See Otter Tail Power, 410 U.S. 366; Aspen Skiing, 472 U.S. 585.201. 203 F.3d 1322 (Fed. Cir. 2000).202. Id. at 1324203. Id.204. Id.205. Id.206. Id. Compare this case where Xerox said we will not sell you our parts unlessyou own the machine to the scenario in Kodak where Kodak said you cannot buy themachine unless you buy the service, which resulted in a finding of tying under section 1of the Sherman Act (no contract should unreasonably restrain trade). See EastmanKodak Co. v. Image Technical Servs., Inc., 504 U.S. 451 (1992).207. In re Indep. Serv. Orgs. Antitrust Litig., 203 F.3d at 1324.208. Id.209. Id.210. Id.
violation would then eliminate ISOs, including CSU, ascompetitors in the market of high-speed copiers and printers.Xerox responded with patent and copyright infringementcounterclaims and also contested CSU’s antitrust claims becausethey relied on injuries that they alleged were solely caused by therefusal to sell and license patented parts and copyrightedsoftware, which Xerox considered lawful.211In dismissing the antitrust claims against Xerox, the courtexplained:Intellectual property rights do not confer a privilege toviolate the antitrust laws. “But it is also correct that theantitrust laws do not negate the patentee’s right toexclude others from patent property . . . .”A patent alone does not demonstrate market power . . . .The patentee’s right to exclude, however, is not withoutlimit. As we recently observed in Glass EquipmentDevelopment Inc. v. Besten, Inc., a patent owner whobrings suit to enforce the statutory right to exclude othersfrom making, using, or selling the claimed invention isexempt from the antitrust laws, even though such a suitmay have an anticompetitive effect, unless theinfringement defendant proves one of two conditions.First, he may prove that the asserted patent was obtainedthrough knowing and willful fraud within the meaning ofWalker Process Equipment, Inc. v. Food Machinery &Chemical Corp. Or he may demonstrate that theinfringement suit was a mere sham to cover what isactually no more than an attempt to interfere directlywith the business relationships of a competitor. Here,CSU makes no claim that Xerox obtained its patentsthrough fraud in the Patent and Trademark Office; theWalker Process analysis is not implicated.. . . .. . . We therefore will not inquire into his subjectivemotivation for exerting his statutory rights, even though211. Id.
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violation would then eliminate ISOs, including CSU, ascompetitors in the market <strong>of</strong> high-speed copiers and printers.Xerox responded with patent and copyright infringementcounterclaims and also contested CSU’s antitrust claims becausethey relied on injuries that they alleged were solely caused by therefusal to sell and license patented parts and copyrighteds<strong>of</strong>tware, which Xerox considered lawful.211In dismissing the antitrust claims against Xerox, the courtexplained:Intellectual property rights do not confer a privilege toviolate the antitrust laws. “But it is also correct that theantitrust laws do not negate the patentee’s right toexclude others from patent property . . . .”A patent alone does not demonstrate market power . . . .The patentee’s right to exclude, however, is not withoutlimit. As we recently observed in Glass EquipmentDevelopment Inc. v. Besten, Inc., a patent owner whobrings suit to enforce the statutory right to exclude othersfrom making, using, or selling the claimed invention isexempt from the antitrust laws, even though such a suitmay have an anticompetitive effect, unless theinfringement defendant proves one <strong>of</strong> two conditions.First, he may prove that the asserted patent was obtainedthrough knowing and willful fraud within the meaning <strong>of</strong>Walker Process Equipment, Inc. v. Food Machinery &Chemical Corp. Or he may demonstrate that theinfringement suit was a mere sham to cover what isactually no more than an attempt to interfere directlywith the business relationships <strong>of</strong> a competitor. Here,CSU makes no claim that Xerox obtained its patentsthrough fraud in the Patent and Trademark Office; theWalker Process analysis is not implicated.. . . .. . . We therefore will not inquire into his subjectivemotivation for exerting his statutory rights, even though211. Id.
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