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Monday, October 18, 2004

Trinko and Carte Blanche

Even though Verizon v. Trinko narrowly focuses on telecommunications law, the Supreme Court decision has implications for antitrust more broadly and for the intersection between antitrust and intellectual property specifically. Since the decision was handed down in January 2004, it has been cited almost 40 times by courts and administrative bodies. I am writing an article on one of these decisions, Morris v. PGA, decided by the 11th Circuit in April 2004.

At issue in the case is access to real time golf scores at PGA golf tournaments. The Eleventh Circuit dismissed the Section 2 claim, finding a valid business justification in the PGA's need to protect its investment in the creation of a real time scoring system. In its analysis, the court cited the following sentence from Justice Scalia's decision in Trinko:

“the Sherman Act...does not give judges carte blanche to insist that a monopolist alter its way of doing business whenever some other approach might yield greater competition.”

I comment as follows:

"What this statement means has been a source of controversy among commentators. On its face, the Court seems to be saying that the Sherman Act requires judges to defer to a monopolist's decision on how to structure a market, an interpretation at odds with the pro-competition purpose of the Act. A more limited reading of Trinko, one consistent with the antitrust laws, would deny judges carte blanche to second guess Congress’ decision on how to structure certain industries, such as telecommunications, as monopolies. The problem is that the Eleventh Circuit does second guess Congress’ judgments on the scope of the monopoly protection granted under intellectual property laws. By allowing PGA to protect real-time scores using a business justification analogous to that used for intellectual property, the Eleventh Circuit expands the scope of the intellectual property grant to include what Congress exempted: data."

In other words, the Eleventh Circuit's reliance on Trinko is inapposite. In Trinko, the Court was deferring to how Congress defined a monopoly market. In Morris, however, the court is expanding the boundaries of the IP monopoly in the name of deference.

Any thoughts?

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Comments

I haven't read the PGA case, but I heard an NPR report on it. Based on what I had heard, I thought the ruling was based more on contract principles than IP or antitrust--i.e., the only way to collect this real time information would be to attend the golf tournament in person, and the only way to attend was via a ticket/license which limited your right to broadcast info in real time. The case was thus distinguished from the NBA case of a few years ago, where the service providing real time info was able to get the info just by watching the game on TV, since in the NBA (unlike the PGA) every second of every play is shown on live TV.

Posted by: Rich | Oct 19, 2004 1:27:15 PM

Rich:

You have the facts right. PGA restricted access to its real time scoring system (and the golf scores) through contract. The issue in the case was whether the terms of the contract violated the Sherman Act as monopolization of the market for real time golf scores. The Eleventh Circuit said no because it found a valid business justification for PGA's allegedly anti-competitive conduct. My point is the court was too deferential to the PGA's contractual arrangement because the arrangement conflicted with the treatment of facts under copyright law.

If the 2nd Circuit's Motorola case is the NBA case you mean, that case is different. It dealt with the use of state law misappropriation to protect real time sports scores. If I remember correctly, in that case, the court said that real time sports scores might be protected as "hot news" under the misappropriation doctrine, but that the NBA did not have a cause of action under the facts of the case.

Posted by: Shubha Ghosh | Oct 19, 2004 7:49:24 PM

After reading this part of the opinion, the following thoughts come to my mind:

Judges cannot by law order a monopolist to alter its business on the basis of a claim by a third party or competitor that the monopolist's way of doing business restricts competition / offer of newer or more efficient products.

The use of "might" seems to imply that if a third party is able to demonstrate that its approach does indeed enhance competition or customer benefit.
i.e. tthe claim has to be grounded, or put differently, competition be actually harmed.
That sounds fair enough, but restrictive as comapred with the EU's notion of an abuse of a dominant position under article 82 of the EC Treaty, which prevents "potential" abuse.

This difference of approach is, as far as I understand US antitrust, the center of the contrats between US and EU law.

In Europe, we tend to protect potential competition, competitors and consumers, at the risk of creating a competitive disadvantage for the dominant company. The Microsoft and Coca Cola cases are typical of this.
In both cases, chat was at stake was not the protection of consumers interests (I mean, you are free of downloading a free-linux from the net if you really don't want Win XP), but rather of the competitors.

The EU approach, in my opinion, in wrong and against the rationale of antitrust law.

I look forward to being able to use that Trinko case in a EU proceeding, though...

Posted by: Burps... | Oct 21, 2004 10:02:49 AM

seitensprung nrw http://seitensprung-nrw.mt-forum.com/

Posted by: seitensprung nrw | Jan 12, 2005 7:19:14 PM

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