For a century-and-a-half, the Supreme Court has described perceived abuses of patents as conduct that reaches "beyond the scope of the patent." That phrase, which evokes an image of boundary lines in real property, was applied to both government and private activity and came to have many different meanings. Sometimes it was used offensively to conclude that certain patent uses were unlawful because they extended beyond the scope of the patent. Later it came to be used defensively as well, to characterize activities as lawful if they did not extend beyond the patent's scope. In the first half of the twentieth century, this doctrine was imported from patent law into antitrust law, where it has been widely used to assess license agreements or other contracts involving patents, as well as settlements of patent infringement lawsuits. The "scope of the patent" metaphor might remain useful for assessing conduct thought to be inconsistent with patent law, which has a legitimate concern with patent breadth. It is not a helpful tool for antitrust analysis, however. Offensive antitrust use of the scope of the patent test often identified practices as anticompetitive when they were in fact competitively harmless. By contrast, defensive antitrust uses created an enclosure that protected collusion or anticompetitive exclusion from antitrust scrutiny. The result could be socially costly collusive arrangements that were more profitable for the parties than the litigated solution, precisely because they limited output or increased price excessively. The dissenters' position in the Supreme Court's 2013 Actavis decision represents such a situation and one where the majority rightfully rejected the scope of the patent test for legality.
The Rule of Reason and the Scope of the Patent,
San Diego L. Rev.
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