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Manufacturer's Refusal to Sell Patented Parts and
Copyrighted Service Manuals Not an Antitrust Violation

A manufacturer may usually refuse to sell patented parts or copyrighted documents
without violating the antitrust laws, unless some exceptional circumstances are present.


Manufacturer's Refusal to Sell Patented Parts and Copyrighted Service Manuals Not an Antitrust Violation

A federal appeals court ruled that Xerox's refusal to sell patented replacement parts and copyrighted service manuals and diagnostic software for its copiers to independent service organizations ("ISOs") seeking to compete in the copier repair market did not violate the antitrust laws. (CSU L.L.C., et al. v. Xerox Corp., Fed. Cir., No. 99-1323). CSU filed suit claiming that Xerox's refusal violates the antitrust laws because it would eliminate CSU and other ISOs as competitors in the service market for copiers and printers. The district court granted summary judgment in favor of Xerox, holding that if a patent or copyright is lawfully acquired, the holder's unilateral refusal to sell or license its patented product or copyrighted expressions is not unlawful exclusionary conduct, even if it lessens competition.

The appeals court affirmed. A patent holder has the statutory right to exclude others from making, using or selling patented replacement parts without antitrust liability unless: (1) the patent was fraudulently acquired, (2) the refusal is part of an illegal tying arrangement, or (3) the patent holder maintains objectively baseless litigation motivated to competitively injure the defendant. In this case CSU did to show that one of these exceptional circumstances existed.

The unavailability of copyrighted service manuals and diagnostic software severely hampered the ability of ISOs to service Xerox equipment. Nevertheless, the court affirmed the manufacturer's right to refuse to sell or license these copyrighted expressions, in the absence of any evidence that the copyrights were unlawfully obtained or were used to gain monopoly power beyond the rights granted by Congress to a copyright holder.

 


Keeley, Kuenn & Reid, a Chicago based law firm with government relations affiliates in Washington, D.C., is engaged in the practice of business law, commercial litigation, employment law, taxation, antitrust, product liability, estate planning and legislative matters. Through its affiliates, the firm also meets its clients' needs in protecting intellectual property rights and international commercial law matters.

Keeley, Kuenn & Reid
200 S. Wacker Drive, Suite 3100
Chicago, IL 60606
Tel. No. (312) 782-1829
Fax. No. (312) 782-4868
Web: http://www.kkrlaw.com