The snipe is an actual type of bird, but if you’ve seen the Pixar movie “Up,” you’re familiar with the snipe as a mythical bird that is the object of a fool’s errand.
In this post, we take a detour from patent and competition law and consider whether copyrights can be misused in an anti-competitive way, and if so, how.
Copyright holders need not license their works at all. See 17 U.S.C. § 106. When they do license, they have broad rights to license as they wish. See, e.g., UMG Recordings, Inc. v. MP3.com, Inc., 92 F. Supp. 2d 349, 352 (S.D.N.Y. 2000) (copyright holders can, within broad limits, curb the development of a derivative market by refusing to license a copyrighted work or by doing so only on limited terms); see also Wall Data Inc. v. Los Angeles County Sheriff’s Dep’t., 447 F.3d 769 (9th Cir. 2006) (strictly enforcing per-computer license for software).
Indeed, while copyright owners may choose to simply exclude others from their work, i.e. not to transfer their rights, courts have long-held that copyright holders may also use their limited monopoly to leverage the right to use their work on the acceptance of specific conditions. See Apple, Inc. v. Psystar Corp., 658 F.3d 1150, 1159 (9th Cir. 2011), petition for cert. filed, Dec. 27, 2011 (citing Metro-Goldwyn-Mayer Distrib. Corp. v. Bijou Theatre Co., 59 F.2d 70, 77 (1st Cir. 1932) (if motion picture license is subject to condition that its exhibition must occur at specified times and places, licensee’s exhibition at other times and places constitutes infringement)).
So, as an example, a software licensing agreement “may reasonably restrict the use of the software as long as it does not prevent the development of competing products.” Psystar, 658 F.3d at 1159. The Ninth Circuit interprets the phrase “prevent the development” of competing products quite literally. In only one case (Practice Mgmt. Info Corp. v. American Med. Ass’n, 121 F.3d 516 (9th Cir. 1997), amended, 133 F.3d 1140 (9th Cir. 1998), cert. denied, 524 U.S. 952 (1998)), has it upheld a copyright misuse defense – where the copyright licensor actually contractually prevented the licensee from using any other competing product. See Psystar, 658 F.3d at 1157.
So anti-competitive copyright misuse is not exactly the mythical snipe. It can in theory exist, but it is probably rare and confined to a very narrow habitat (contractual exclusive dealing). I suggest that it also may make little sense to apply the doctrine unless the defendant has some sort of relevant market power. Market power screens are used for tying and exclusive dealing claims generally, and in connection with patent claims in particular. Why would courts relax the screen because copyrights — whose use, at least generally speaking, has fewer potential anti-competitive effects than patents — are involved?