By Dennis Crouch
Courts have often identified patent rights as a form of monopoly. Perhaps this stretches back to the 17th century Statute of Monopolies that ended all letters patents and other government granted monopolies except for those covering novel inventions. Economists typically reject the categorization because modern patent rights by themselves do not create market power nor even the right to sell or use the invention. (Patent rights only grant the right to exclude others).
Interesting aspect of the Supreme Court’s decision in Medtronic v. Mirowski (U.S. 2014), is the way that the court subtly revives this prior form of thinking by quoting older precedent:
The public interest, of course, favors the maintenance of a well-functioning patent system. But the “public” also has a “paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.” Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806, 816 (1945). A patentee “should not be . . . allowed to exact royalties for the use of an idea . . . that is beyond the scope of the patent monopoly granted.” Blonder-Tongue Laboratories, Inc. v. University of Ill. Foundation, 402 U. S. 313, 349-350 (1971).
Now, the use of the monopoly term here does not appear carelessly placed but instead intentionally designed to link patent rights with the monopoly problem. This connotation is important for the Court’s policy argument that, like monopolies, patent rights need to be controlled. This follows Thomas Jefferson’s famous thoughts against monopolies but eventual support for patent rights that were limited in both scope and duration.
In a recent article addressing this issue from a European perspective, Sven Bostyn and Nicolas Petit argue that continued rhetoric linkage of patents with monopolies is problematic and may well serve “a hidden bureaucratic agenda, that of limiting patent protection through the backdoor, by using ex post antitrust remedies to alter the protective – and innovation-incentivising – patent statutes adopted ex ante by elected democratic organs.” See Bostyn & Petit, Patent=Monopoly: A Legal Fiction (December 31, 2013). The Bostyn-Petit characterization is likely relevant to US policymakers as well. I looked through the few years of Federal Circuit cases that mentioned “patent monopoly.” Time and again the court used the phrase as part of its explanation why patent rights should be limited with the excepting being cases that quote the Georgia Pacific factors. See, e.g., LifeScan Scotland, Ltd. v. Shasta Technologies, LLC, 734 F.3d 1361 (Fed. Cir 2013) (Judge Dyk); CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed. Cir. 2013) (en banc; Judge Lourie opinion); Brooks v. Dunlop Mfg. Inc., 702 F.3d 624 (Fed. Cir. 2012) (Judge Prost); Ritz Camera & Image, LLC v. SanDisk Corp., 700 F.3d 503 (Fed. Cir. 2012); SanDisk Corp. v. Kingston Technology Co., Inc., 695 F.3d 1348 (Fed. Cir. 2012) (Judge Reyna in Dissent); Akamai Technologies, Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012) (Judge Linn in Dissent); Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011) (Judge Bryson in Dissent); Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) (Judge Gajarsa in Dissent).