Refusal to license patented work is presumptively okay, but, case by case, that presumption may be rebutted by the context in which it appears.

In 1992, the Supreme Court addressed another refusal to continue dealing with a rival in Eastman Kodak Co. v. Image Technical Services, Inc. [T]he court held that "a monopolist's 'desire to exclude others'" from using its patented work "'is a presumptively valid business justification'" for any refusal to license. The court found that the [independent service operators] had rebutted the presumption, concluding that the jury "would have found Kodak's presumptively valid business justification rebutted on the grounds of pretext."

To the above, the Federal Trade Commission takes exception, reading case law to its own desires.

Today the Department of Justice ("the Department") issued a Report that, if adopted by the courts, would be a blueprint for radically weakened enforcement of Section 2 of the Sherman Act.

The Report flatly declares that unilateral refusals to deal with rivals "should not play a meaningful role in antitrust enforcement," regardless of a firm's monopoly power or the potential for foreclosure. The Department incorrectly implies that the Commission subscribed to this position in the agencies' joint April 2007 report on intellectual property issues ("IP Report"). The IP Report concluded that IP Report concluded that "mere unilateral, unconditional refusals to license will not play a meaningful part in the interface between patent rights and antitrust protection." That statement reflected the agencies' view that the simple act of refusing to license intellectual property may not constitute a violation of the antitrust laws. That view is consistent with the Supreme Court's holding in Illinois Tool Works that intellectual property may or may not confer monopoly power.

If a patent does confer monopoly power, however, then denial of access to the patented technology may not be a "mere" unilateral refusal to license intellectual property. A firm with monopoly power or near-monopoly power may violate Section 2 if it refuses to license to, or otherwise refuses to deal with, a rival. The Commission has never itself, or in conjunction with the Department, said otherwise. Indeed, the Supreme Court repeatedly has held, as it stated long ago in its Colgate decision, that when there is a "purpose to create or maintain a monopoly" there may be a duty to deal with a rival. Although the Court held in Trinko that a firm with monopoly power had no duty to deal with rivals when the public was protected by regulation of the firm's practices, the Court declared in Trinko that the right to refuse to deal with rivals is not unqualified. The Department acknowledges this aspect of Trinko in its Report but fails to apply such a standard to the conclusions in this chapter.