Copyright holders that separately lack market power but act in concert to restrain competition may be subject to private suits by injured consumers. Successful consumers can recover treble damages and attorneys fees under a Sherman Act suit. These principles may come into play as RIAA members file suits against alleged individuals who share copyrighted music, some of whom may choose to file countersuits for Sherman Act violations. Similar liabilities were discussed in the case of Microsoft, which had sufficient market power to be subject to such liabilities even when acting alone. See Unintended Consequences: Copyright Limits in Microsoft 2001. (Read more ... )
Judge Patel, in her February 2002 order in the Napster case, addressed Napster's allegations of antitrust violations as evidence of copyright abuse by plaintiff copyright holders. Napster's charges were that the RIAA plaintiffs acted in concert to enter the digital distribution market and agreed on license terms that enabled them to control prices and availability of music through the digital distribution channel. Judge Patel noted that the U.S. Justice Department was investigating similar allegations and allowed further discovery of potential evidence relevant to the misuse charges. She also ordered Napster to take certain steps to limit the use of its service for exchange of copyrighted files.
The discovery was not concluded. Within a few months Napster was shut down for inability to fully comply with the district court's orders protecting the copyright holders. Ultimately, over the objections of the other plaintiffs, its assets were sold to one of the plaintiffs, Bertlesmann, from which Napster had received funding and support over the years, and Napster went into bankruptcy.
Findlaw maintains Patel's opinion and other primary legal sources in a special page on the Napster Suit.
Shortly after Judge Patel's decision, Robert G. Badal wrote "Be Careful What You Ask For." It reviews the antitrust exposures that emerge with the enforcement of intellectual property rights. He reviews cases about potential liabilities for misuse and antitrust violation, specifically discussing patent pools, the "essential services" cases such as Aspen Skiing, plus the Microsoft and Napster decisions noted above. Badal raised the question whether intellectual property rights can constitute an "essential service," leaving the question open after noting its treatment in the 1999 decision in Intergraph Corp. v. Intel Corp.
IP Watchdog maintains a comprehensive suite of links to primary and secondary sources of study regarding antitrust law in the IP context.
Sharman Networks continues bringing antitrust charges against RIAA, despite early defeats, and RIAA has brought suits against other P2P networks such as iMesh. Neither side appears ready to back down, suggesting a fertile field for development of these issues in the future.
Posted by dougsimpson at September 27, 2003 02:34 PM | TrackBack