Antitrust Law and Policy

THE ESSENTIAL FACILITIES DOCTRINE UNDER U.S.
ANTITRUST LAW
Author(s): Robert Pitofsky, Donna Patterson and Jonathan Hooks
Source: Antitrust Law Journal, Vol. 70, No. 2 (2002), pp. 443-462
Published by: American Bar Association
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THE ESSENTIAL FACILITIES DOCTRINE
UNDER U.S. ANTITRUST LAW
Robert Pitofsky
Donna Patterson
Jonathan Hooks*
I. INTRODUCTION
Rightof accessto an essentialfacility controlledbya monopolisthas
long been a controversialsubject under U.S. antitrustlaw.If thefacility
istrulyessential,a denialofaccessmeansthemonopolist willbe immune,
at leastforsome time,to mostinstancesof competition. On the other
a
hand, policy that defines access generously encounters the rather
ideologicalcomplaint thatit a
representsgovernment "taking" ofprivate
property, and the more concern
practical that itwillbe likely reduce
to
incentives to innovate.Added to theseconflicting policyconcernsis the
furthercomplicationthat a simple declarationof access is seldom
enough,and thatgovernment authorities, judicial or regula-
legislative,
tory, must also define the terms of access - price,priority, and other
termsand conditionsof sale- usuallyon a basisthatrequirescontinu-
ing supervision.
If U.S. scholarshipwerethe lastwordon the subject,one wouldbe
led to concludethattheessentialfacilities doctrineshouldbe described
narrowly or fullyabandoned.1U.S. courts,however,when faced with
* RobertPitofsky is a ProfessorofLaw,Georgetown UniversityLawCenterand former
Chairman, U.S. FederalTradeCommission, 1995-2001.Donna Patterson is a Memberof
the Districtof ColumbiaBar and formerDeputyAssistant AttorneyGeneral,Antitrust
Division,U.S. DepartmentofJustice,1997-2000.JonathanHooks is a Memberof the
DistrictofColumbiaBar.Asexplainedinfra atpage445,thethreeauthorsfileda statement
in the Courtof FirstInstanceof the EuropeanUnion on behalfof NDC HealthCorp.
in connectionwithan appeal,discussingU.S. law on the subjectof the essentialfacili-
tiesdoctrine.
1See,
e.g.,3A Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law f 771c (2d
ed. 2002) (arguingthat"theessentialfacility doctrineis bothharmfuland unnecessary
and shouldbe abandoned,"buturgingin the alternative thatthedoctrinebe narrowed
to situationsof naturalmonopoly, price-regulatedmonopolyutilities,and publiclyowned
facilities
providedto firms at subsidizedrates);PhillipAreeda,Essential
Faälities:AnEpithet
in NeedofLimiting Prinäples, 58 Antitrust L.J.841, 852 (1989) (offering principlesto
limittheapplication oftheessentialfacilities
doctrine, suchas strengtheningthedefinition
443

444 Antitrust Law Journal [Vol.70
real instancesof monopolydominance,have not been so grudgingin

applicationof the doctrine.All agree thataccess should be accorded
cautiously, withseveralqualifying conditions;none concludesthatthe
rightcourse is to abandon the doctrinealtogether.
Anotherfactorthatmakestheessentialfacilities doctrineparticularly
important is the increase in the number of situations in whichthe
monopolist's dominance depends on intellectualproperty. As products
and servicesthatare theembodimentof ideas representan increasing
portionoftheeconomy, dominantmarket positionsbasedon intellectual
property become more significant.
The issue of essentialfacilitieshas attractedrenewedattentionin
Europein recentyearsbecauseof thecontroversy betweenIMS Health
Inc. and NDC HealthCorporation, twocompetitors in pharmaceutical
data servicesin Germany.
The marketat issueinvolvespurchasingdata regardingsalesof phar-
maceuticals in Germany, whichmustbe reportedin amountssufficiently
aggregatedto be anonymousin accordancewithGermanprivacylaw,
butin unitssmallenoughto devisemarketing strategies and tracksales
byarea (becausesucharea salesare used in compensating pharmaceuti-
cal sales personnel).To meet thissituation,pharmaceuticaldata are
reportedusinga "brickstructure" based upon theGermanpostalcode.
The vastmajority of pharmaceutical companiesuse the currentstruc-
ture- the "1860brickstructure" - and are committedto it,giventhat,
as notedabove,thecompensationof theirsalespersonnelis tiedto the
structure. Moreover, itis unclearthatanyotherstructure wouldbe legal,
giventhata secondstructure could,through cross-referencing, constitute
a violationof Germanprivacylaw.ThoughIMS Healthpreviously had
allowedothersto use the1860brickstructure - and itspredecessor, the
1845 structure - IMS asserteda copyright interest in the 1860 structure
forthe firsttimewhen a competitor, NDC, enteredthe market.IMS
successfully soughtinjunctions againsttheuse of the 1860 structure by
bothNDC and anothercompetitor.
Afteran extensiveinvestigation, the European Commission(EC)
orderedthatIMSgrantaccesstothe1860brickstructure on commercially
reasonableterms,and the EC decisionis now on appeal in the Court
ofFirstInstanceinLuxembourg. One issuethatemergedinthatlitigation
of "essential,"
permittingexceptionswherethe denial of access is based on legitimate
businessreasons,and onlyimposingaccess wherethe dutyto deal can be reasonably
supervised);MichaelBoudin,Antitrust and theSwayofMetaphor,
Doctrine 75 Geo. LJ. 395,
SupremeCourtdecisionsthoughtto establishthe essential
397-401 (1986) (criticizing
[ing] muchsupport"and urginglimitson thedoctrine).
doctrineas "notoffer
facilities

2002] Essential Facilities Doctrine Under U.S. Law 445
is whethera decisionby European authoritiesto grantaccess to the

allegedessentialfacility,especiallyone whosemarketpowerderivedin
part from a copyright, would open a gap betweenEuropean and U.S.
antitrustlaw.In responseto thatcontention,the authorsof thispiece
fileda statementin the Court of FirstInstancedescribingU.S. law
on the subject.We arguedthatthe EC's rulingis consistent withU.S.
jurisprudenceon the subjectof essentialfacilities.The remainderof
thisarticleconsistsofa revisedversionoftheCourtofFirstInstancefiling.
II. HISTORY AND CORE ELEMENTS OF THE

ESSENTIAL FACILITIES DOCTRINE
A. General Principles
The essentialfacilitiesdoctrinehas a long and respectedhistoryas
partof U.S. antitrust
law.Generallyseen as originatingin theSupreme
Court's 1912 decision in UnitedStatesv. TerminalRailroad Ass'n,2the
SupremeCourtand lowercourtsconsistently haveappliedtheessential
facilitiesdoctrinethroughout thiscenturyin appropriate,thoughlim-
ited,circumstances. U.S. courtshave long recognizedthatthe general
rulethata firmhas no obligationto deal withitscompetitors is subject
to certainexceptions.Whilein mostcircumstances "[a]ntitrustlaw . . .
does not requireone competitorto giveanothera breakjust because
failingto do so offendsnotionsof fairplay,"3the SupremeCourthas
recognizedthat"[t]he highvalue thatwe have placed on the rightto
refuse to deal with other firmsdoes not mean that the rightis
unqualified."4
2224 U.S. 383 (1912).
3TwinLabs.,Inc. v. WeiderHealth8cFitness,900 F.2d 566, 568 (2d Cir. 1990).
4
AspenSkiingCo. v.AspenHighlandsSkiingCorp.,472 U.S. 585,601 (1985); seealso
EastmanKodakCo. v. ImageTechnicalServs.,Inc.,504 U.S. 451,483 n.32 (1992) ("It is
truethatas a generalmattera firmcan refuseto deal withitscompetitors. But such a
rightis not absolute;it existsonlyif thereare legitimatecompetitive reasonsforthe
refusal.");LorainJournalCo. v. UnitedStates,342 U.S. 143, 155 (1951) (rightto refuse
to deal is "neitherabsolutenorexemptfromregulation").
As suggestedby thesebroad statements, some courtshave concludedthatantitrust
liabilityfora unilateralrefusalto deal mayboth includeand extendbeyondessential
facilitiesclaims.SeeCTC Communications Corp. v. Bell Atl.Corp.,77 F. Supp. 2d 124,
147 (D. Me. 1999) ("[I]t is notnecessarythat[plaintiff]eitherallegeor provethateach
of theservicesinvolvedin itsspecificclaimsis an essentialfacility
beforeit mayproceed
against[defendant] on itsclaimsofrefusaltodeal.") (citingData Gen.Corp.v.Grumman
Sys.SupportCorp.,36 F.3d 1147,1183-84 (1stCir.1994)). Some casesdescribea second
lineof"intent" caseswherea unilateral
refusaltodealcanbe heldtoconstitute monopoliza-
tionevenwherethereis no claiman "essential is beingdenied.See,e.g.,Byarsv.
facility"
BluffCityNewsCo., 609 F.2d 843, 855-56 (6th Cir. 1980); OfficialAirlineGuides,Inc.
v.FTC,630 F.2d920,925-26 (2d Cir.1980). However, suchadditionaltheoriesofliability
forunilateralrefusalsto deal are beyondthescope of thisarticle.

The essential facilitydoctrine has been articulatedas a subset of the

so-called "refusalto deal" cases whichplace limitationson a monopolist's
abilityto exclude actual or potential rivalsfromcompetingwithit. The
doctrine is one long-standinglimitationon the general rule that a firm
has no obligation to deal with its competitors.5As stated by the Ninth
Circuit in Alaska Airlines,Inc. v. UnitedAirlines,Inc. "[T]he essential
facilitiesdoctrine imposes liabilitywhen one firm,which controls an
essentialfacility,denies a second firmreasonable access to a product or
service that the second firmmust obtain in order to compete with the
first."6Other courts of appeal have made similarstatements:"[A] busi-
ness or group of businesseswhichcontrolsa scarce facilityhas an obliga-
tion to give competitorsreasonable access to it."7 "[W]here facilities
cannot practicablybe duplicated bywould-becompetitors,those in pos-
session of them must allow them to be shared on fairterms.It is illegal
restraintof trade to foreclose the scarce facility."8
The Supreme Court firstarticulated this doctrine in UnitedStatesv.
Terminal RailroadAssfn.9
In TerminalRailroad,a group of railroadscontrol-
ling all railwaybridges and switchingyards into and out of St. Louis
prevented competing railroad servicesfromofferingtransportationto
and throughthatdestination.This, the court held, constitutedboth an
illegal restraintof trade and an attemptto monopolize.10
Since TerminalRailroad,the Supreme Court has reached similardeci-
sions in a series of cases:
• In AssociatedPressv. UnitedStates,11
the Supreme Court found that
the Associated Press bylawsviolated the Sherman Act by limiting
membershipin the organizationand therebyaccess to itscopyrighted
news services.
• In LorainJournalCo. v. UnitedStates12the Supreme Court considered
whetherthe defendantnewspaper,the onlylocal businesscirculating
news and advertisementsin the town,violated the Sherman Act by
5 See Caribbean Broad.

Sys.,Ltd. v. Cable & WirelessPLC, 148 F.3d 1080, 1088 (D.C.
Cir. 1998) ("A monopolist has no general duty to share his essential facility,although
there are certain circumstancesin which he must do so.").
6 948 F.2d 536, 542 (9th Cir. 1991).
7
Byars,609 F.2d at 856; seealso id. at 856 n.34 (citingAssociated Press v. United States,
326 U.S. 1 (1945)).
8 Hecht v. Pro-Football,Inc., 570 F.2d 982, 992 (D.C. Cir. 1977) (citation omitted).
9 224 U.S. 383 (1912).
10See id. at 409-10.
11326 U.S. 1 (1945).
12342 U.S. 143, 146-49, 156 (1951).

frombusinessesthatplaced advertise-
to acceptadvertising
refusing
mentswitha small radio station.The Court approvedan order
requiringthe newspaperto acceptadvertisements.
• In OtterTail PowerCo. v. UnitedStates™the Supreme Court found
thatthedefendant, whichsold electricity
an electricalutility at both
the retaillevel (directlyto consumers)and thewholesalelevel (to
municipalities whosoughttoresellelectricity atretail), had monopo-
lizedinviolationof theShermanActbyrefusing to supplyelectricity
at wholesaleso thatitcould insteadservicecustomers directly itself.
These SupremeCourtcases- and othercases- make clear thatthe
doctrinerendersa unilateralrefusalto deal subjectto
essentialfacilities
as
potentialliability a monopolization violationof Section2 of theSher-
manAct."The 'essentialfacilities' doctrineis notan independentcause
of action,but rathera typeof monopolizationclaim."14
Followingthissignificant lineofSupremeCourtprecedent,numerous
lowercourtshavefoundtheessentialfacilities doctrinepotentially appli-
cable in thoseextraordinary circumstances whereone firmuses itscon-
trolof a bottleneckto eliminateactual or potentialcompetitors. For
example, in a widely-citeddecision, MCI Communications v. AT&T Co.,15
the SeventhCircuitCourt of Appeals applied the essentialfacilities
doctrineto requirethemonopolisttelecommunications providerto pro-
vide access to itslocal servicenetworkto competitors in long-distance
services.Otherprominent casesapplyingtheessentialfacilities doctrine
includedecisionsthatentitiescontrolling stadiumsmustprovideaccess
on reasonabletermsto potentialcompetitors/owners of sportingteams
thatneed to use such bottleneckassets.16 In addition,in a varietyof
othercontexts, lowercourtshavefoundthedoctrinepotentially applica-
ble whereone firmwithmonopolycontroloveran assetthatservesas
a vitalinputforitscompetitors refusesto granta competitor access to
thatinput.17
13410 U.S. 366. 377-79 H973Ì.
14Kramerv. Pollock-Krasner Found.,890 F. Supp.250,257 (S.D.N.Y.1995); seealsoInt'l
AudiotextNetwork, Inc. v. AT&T Co., 893 F. Supp. 1207,1213 (S.D.N.Y.1994); Viacom
Int'lInc. v. Time Inc., 785 F. Supp. 371, 376 n.12 (S.D.N.Y.1992).
15708 F.2d 1081,1132-33 (7thCir. 1983).
16&s?Fishman v. EstateofWirtz,807 F.2d 520,539-40 (7thCir. 1986); Hecht, 570 F.2d
at 992-93.
17See,
e.g.,CTC Communications Corp.,77 F. Supp. at 147-48 (D. Me. 1999) (voicemail
servicesprovidedbylocal telecommunications companymayconstitute essentialfacility
forcompeting resellerof local telecommunications ; Apartment
services) Sourceof Phila-
delphiav. PhiladelphiaNewspapers, Civ.ActionNo. 98-5472,1999WL 191649,at *7-*10
(E.D. Pa. Apr.1, 1999) (dominantcitynewspapers could be essentialfacility
forplaintiff
apartment locatorservicewherenewspapers ran competingservice) ; DirectMedia Corp.

448 AntitrustLaw Journal [Vol.70
Anoften-cited decisionbytheTenthCircuitCourtofAppealsinAspen
Highlands SkiingCorp.v. AspenSkiingCo.18 appliedtheessentialfacilities
doctrinetoa skiresort'sdecisiontoterminate itslong-standingparticipa-
tionwitha competitor skiresort,in sellinga "multi-area"skiticketthat
gave customersflexibility to patronizeanyof the area's skiresortsat a
discountedprice.The courtdescribedthe"multi-area" ticketas an "essen-
tialfacility"
to whichthe defendantwas denyingaccess,withtheintent
to monopolizebyputtingthecompetitor skiresortout of business.The
courttherefore foundsufficient evidenceto imposeantitrust for
liability
refusalto deal.19The SupremeCourtupheld the findingof antitrust
but characterizedits determination
liability, under the more general
rubricof ShermanActmonopolization.20
B. Limitations on Applicability
The essentialfacilities doctrineis appliedcautiously, usuallyin excep-
tionalcircumstances thatmeetstrict requirements. Because thedoctrine
a
represents divergence from the general rule that even a monopolist
maychoosewithwhomto deal, courtshaveestablishedwidely-adopted
teststhatpartiesmustmeetbeforea courtwillrequirea monopolistto
grantitscompetitors accessto an essentialasset.Specifically, to establish
antitrust under
liability theessential doctrine, partymustprove
facilities a
fourfactors:21 "(1) controlof the essential bya monopolist;(2) a
facility
competitor's inabilitypractically reasonably duplicatetheessential
or to
facility;(3) the denial of the use of the facility to a competitor;and
(4) the of the to
feasibility providing facility competitors."22 Thistestfor
v.CamdenTel.&Tel.Co.,989F.Supp. 1211,1218-19(S.D.Ga. 1997) (accesstotelephone

company'ssubscriber forcompetingtelephonebook
phonelistcouldbe essentialfacility
producer, notwithstanding oftelephonecompany's
availability BellSouth
printedlistings);
Adver.& Publ'gCorp.v. DonnelleyInfo.Publ'g,Inc.,719 F. Supp. 1551,1566 (S.D. Fla.
1988) (applying doctrinetodirectory
essentialfacilities inwhichdefendant
listings phone
companyclaimedcopyright), rev'don other 999 F.2d 1436 (11thCir. 1993); see
grounds,
alsoColonialPenn Groupv. Am.Ass'nof RetiredPersons,698 F. Supp. 69, 72-73 (E.D.
Pa. 1988).
18738 F.2d 1509,1520-21 (10thCir. 1984).
19See id.
20See to considerthe
472 U.S. at 611. The Courtdid notfinditnecessary
AspenSkiing,
doctrinebecause it concludedthat"theevidenceamplysupportsthe
essentialfacility
verdict"thatthedefendant monopolist had violatedtheShermanActbyrefusing to deal
withitscompetitor. Id. at 611 n.44.
21Of course,if a courtwereto mandateaccess to an essentialfacility,it also would
need to addressthe processbywhichthe mechanicsof thataccess (price,etc.) woiM
be determined.
22MCI Communications, 708 F.2d at 1132-33.

antitrust
liability everycourtto consider
has been adoptedbyvirtually
claim.23
an essentialfacilities
Courtsrarelyimposeliabilityunder the essentialfacilitiesdoctrine,
in largepartbecause the doctrinerequiresa showingthatthe facility
controlledby the defendantfirmis trulyessentialto competition- i.e.,
constitutesan inputwithoutwhicha firmcannot competewiththe
monopolist.As theNinthCircuitCourtofAppealshas stated,"a facility
'controlledbya singlefirmwillbe considered"essential"onlyifcontrol
carrieswithit the powerto eliminate
of thefacility competition. . . .'"24
However,thiselementdoes notgo so faras torequirethattherestriction
cause thepartydenied access to go out of business.25
On a relatednote,the assetin questionmustnot be availablefrom
othersourcesor capable of duplicationbythefirmseekingaccess."[A]
willnotbe deemedessentialifequivalentfacilities
facility existor where
28See
Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1356, 1357 (Fed. Cir. 1999);
Caribbean Broad. Sys.,Ltd. v. Cable 8cWirelessPLC, 148 F.3d 1080, 1088 (D.C. Cir. 1998);
Ideal Dairy Farms, Inc. v. John Labatt, Ltd., 90 F.3d 737, 748 (3d Cir. 1996); City of
Anaheim v. S. Cal. Edison Co., 955 F.2d 1373, 1380 (9th Cir. 1992); Laurel Sand 8cGravel,
Inc. v. CSX Transp., Inc., 924 F.2d 539, 544 (4th Cir. 1991); Delaware 8c Hudson Ry. Co.
v. Consol. Rail Corp., 902 F.2d 174, 179 (2d Cir. 1990); Advanced Health-Care Servs.,Inc.
v. Radford Cmty.Hosp., 910 F.2d 139, 150-51 (4th Cir. 1990); Cityof Maiden v. Union
Elee. Co., 887 F.2d 157, 160 (8th Cir. 1989); Ferguson v. Greater Pocatello Chamber of
Commerce, Inc., 848 F.2d 976, 983 (9th Cir. 1988); McKenzie v. Mercy Hosp., 854 F.2d
365, 370 (10th Cir. 1988), overruledon othergrounds,117 F.3d 1137 (10th Cir. 1997);
Int'l Audiotext Network,Inc. v. AT&.T Co., 893 F. Supp. 1207, 1213 (S.D.N.Y. 1994);
Servicetrends,Inc. v. Siemens Med. Sys.,Inc., 870 F. Supp. 1042, 1055 (N.D. Ga. 1994);
Sunshine Cellular v. Vanguard Cellular Sys.,Inc., 810 F. Supp. 486, 497 (S.D.N.Y. 1992);
Data Gen. Corp. v. Grumman Sys. Support Corp., 761 F. Supp. 185, 192 (D. Mass. 1991).
24
CityofAnaheim,955 F.2d at 1380 n.5 (quoting Alaska Airlines,Inc. v. United Airlines,
Inc., 948 F.2d 536, 544 (9th Cir. 1991)); see also America Online, Inc. v. GreatDeals.net,
49 F. Supp. 2d 851, 862 (E.D. Va. 1999) ("An 'essential facility'is one which is not merely
helpfulbut vitalto the claimant's competitiveviability.")(quoting CyberPromotions,Inc.
v. America Online, Inc., 948 F. Supp. 456, 463 (E.D. Pa. 1996)); Hecht,570 F.2d at 992-93
("To be 'essential' a facilityneed not be indispensable; it is sufficientif duplication of
the facilitywould be economically infeasible and if denial of its use inflictsa severe
handicap on potential market entrants."); Twin Labs., Inc. v. Weider Health & Fitness,
900 F.2d 566, 568-69 (2d Cir. 1990); TCA Bldg. Co. v. NorthwesternRes. Co., 873 F.
Supp. 29, 39 (S.D. Tex. 1995); Driscoll v. City of New York, 650 F. Supp. 1522, 1529
(S.D.N.Y. 1987).
25See,
e.g.,AspenSkiing,472 U.S. at 594-95 (noting decline in- but not eliminationof-
plaintiff'sshare of the market for downhill skiing in Aspen); Aspen Skiing,738 F.2d at
1518 n.l 1 (rejectingargumentthatantitrustviolationrequires showingthatwithoutaccess
to facilityplaintiff"absolutelycannot bring its product ... to the market"); United States
v. Associated Press, 52 F. Supp. 362, 371 (S.D.N.Y. 1943) (finding liabilitywhile noting
thatit "would be possible ... to conduct some kind of newspaperwithoutany news service
whatever"),affa, 326 U.S. 1 (1945).

the benefitsto be derivedfromaccess to the alleged essentialfacility

can be obtainedfromothersources."26
Furthermore, thefinalfactorenumeratedin theMCI Communications
rule- feasibility
of providingaccessto competitors - makesevidentthat
doctrineis "carefully
theessentialfacilities delimited:theantitrust laws
be sharedifsuchsharingwouldbe
do notrequirethatan essentialfacility
impracticalorwouldinhibitthedefendant's abilitytoserveitscustomers
adequately."27Thus, the essential doctrine
facilities does not impose
where
liability a defendant monopolist has a legitimatebusiness(or
technological) for
justification declining access to thedisputedassetsto
itscompetitor.28
Giventhestringency of thewidely-adopted requirements setforthin
MCI Communications, U.S. courtsrarelyfindliability undertheessential
doctrine.Butevencourtsrejectingapplicationof thedoctrine
facilities
note thattheiranalysisis highlyfact-specific, ratherthancondemning
thedoctrineitself.29Similarly,
though commentators maydisagreewith
the applicationof the doctrineto a particularset of facts,even the
doctrine'smostprominentcriticsrecognizethatit is appropriateto
requirea monopolistto deal in certainexceptionalcircumstances.30
C. The Role of Intent

U.S. courtopinionsalso suggestthat,whilenot requiredto establish
antitrustliabilityundertheessentialfacilities doctrine, is particu-
liability
larlyappropriate when the denial of access is motivated an
by anticom-
petitiveanimus - usually demonstrated by change existingbusiness
a in
practices with a specific intentto harm rivals.For example,in applying
thedoctrinein Otter Tail*1the SupremeCourtciteda findingthatthe
"refusals
utility's to sell at wholesale[or otherwise provideaccessto the
26 SourceofPhiladelphia,1999 WL 191649, at *7; see also TwinLabs., 900 F.2d
Apartment
doctrine,"thefacility
at 569 (in manycases applyingthe essentialfacilities in question
was morethandominant;it was effectively the onlyone in town.");id. at 570 ("As the
mustshowmorethaninconvenience,
a plaintiff
word'essential'indicates, or evensome
economicloss; he mustshowthatan alternative is not feasible.");Cityof
to the facility
Maiden,887 F.2d at 163 n.6 (approvingpresentation claimto a jury
of essentialfacilities
withthe instruction had no realistic,economically
that"[i]f you findthat [plaintiff]
meansof obtainingwholesaleelectricity,
practicalalternative thenyou mustfindthat
[defendant!had a bottleneck monopoly.").
27Hechtv. Pro-Football,Inc.,570 F.2d 982,992-93 (D.C. Cir. 1977).
28See
CityofAnaheim,955 F.2d at 1381.
29See
IntergraphCorp. v. Intel Corp., 195 F.3d 1346, 1356, 1356 (Fed. Cir. 1999).
30See Areeda,
supra note 1, at 853 n.21 (noting that "MCI ... is probably correct [in
holding that] a monopolist must,when feasible, make its essential facilityavailable to a
competitorwho is unable to duplicate it.").
31410 U.S. 366,378 (1973).

essentialfacility]weresolelyto preventmunicipalpowersystems from

its
eroding monopolistic position."The Ninth in
Circuit CityofAnaheim*2
cited OtterTail as an appropriateinstanceforapplicationof essential
doctrinebecause "thesole reasonforthedenialof accessis to
facilities
maintaina monopoly."Othercourtshave similarly concludedthat"[a
monopolist]may not refuse to deal with[itscompetitor]ifitsrefusalis
motivated byanticompetitive animus."33
Mostrecently, in AspenSkiing, whichthe SupremeCourtdecided as
a straightforward "refusalto deal" case withoutreachingthe question
whetherthedefendant's was"essential,"
facility theCourtfoundcompel-
ling the anticompetitive intent demonstrated by the "decisionby a
monopolist to make an important change in the characterof the mar-
ket."34Because thedefendant'sdecisiondepartedfroma long-standing
profitablearrangement withits competitor,the jury's determination
thattherewas no validbusinessjustification forthe termination of the
was
arrangement amplysupported.35
Itisunsurprising thatanticompetitive animusisrelevanttoapplication
of theessentialfacilities doctrine.NumerousU.S. courtshaveheld that
a refusalto deal, coupled withan anticompetitive intent,maysupport
a findingof antitrust even
liability absent proof thatthewithheldinput
constitutes an "essentialfacility."In Intergraph Corp.v. IntelCorp.,the
FederalCircuitstatedthat"[a] 'refusalto deal' mayraiseantitrust con-
cernswhentherefusalis directedagainstcompetition and thepurpose
is to create,maintain,or enlargea monopoly."36 The SupremeCourt
has reachedthesame conclusion,notingin EastmanKodakCo. v. Image
Technical Servs.,Inc.,thattherightto refuseto deal "existsonlyif there
are legitimate competitive reasonsforthe refusal."37
D. Relationship Between the Essential Facilities Doctrine

and Broader Antitrust Policy
itsstatusas an exceptionalincursionintothegeneral
Notwithstanding
rule thatfirmsnormallymaychoose theirbusinesspartnerswithout
32955F.2dat 1381.
33Sunshine Cellular v.
Vanguard Cellular Sys.,Inc., 810 F. Supp. 486, 497 (S.D.N.Y. 1992) .
34
AspenSkiing,472 U.S. at 604.
35See id. at 603 (M[T]he
monopolist did not merelyreject a novel offerto participatein
a cooperative venture that had been proposed by a competitor.Rather, the monopolist
elected to make an importantchange in a patternof distributionthat had originated in
a competitivemarketand had persistedfor several years.").
36195 F.3d 1346, 1358
(Fed. Cir. 1999).
37504 U.S. 451, 483 n.32
(1992) (citing AspenSkiingCo., 472 U.S. at 602-05); see also
Image Technical Servs., Inc. v. Eastman Kodak Co., 125 F.3d 1195, 1210-11 (9th Cir.
1997) (citing Supreme Court precedents which limited the right to refuse to deal to

antitrustrestraint,the essential facilitydoctrine is consistentwith,and

supported,bythewelfare-enhancing goals of U.S. antitrustpolicy,which
aim to preserveand enhance competition.The doctrineseeks to prevent
a firmwith monopoly control over an essential asset from unlawfully
excluding actual or potentialrivals,or fromextendingitsmonopolyover
that asset to another stage of production (from an input market to a
finishedproduct market,for example). As one appeals court stated: "A
company which has monopoly power over an essential facilitymay not
refuseto make the facilityavailable to otherswhere thereis no legitimate
business reason for the refusal."38
This limitationon the discretionof dominant firmsisjustifiedby the
bedrock principle of antitrustpolicy,which is that consumer welfareis
enhanced byvigorouscompetition.Preservingcompetitionensures that
firmswill have efficiencyincentivesto lower costs and prices, and to
develop consumer welfare-enhancing innovations.
Moreover, this policyjustificationapplies not merelyin the case of
naturalmonopolies, but to intellectualpropertyas well. One commenta-
tor has noted thatpreservingcompetitionenhances, ratherthan under-
cuts, incentivesto innovate:
Allowinga patentholderwithmonopolypowerin thepatentedmarket

to refuseto deal withcompetitors in complementary marketswould
eliminatecompetition and reduceinnovationand consumerchoicein
complementary markets;and thosemarketswouldbecomedominated
bya singlefirm- themonopolistin thepatentmarket. In thelongrun,
suchexpansiveinterpretationoftherightsofa patentgrantwouldonly
diminish,notenhance,innovation in thecomplementary markets.39
III. APPLICABILITY OF THE ESSENTIAL FACILITIES

DOCTRINE TO INTELLECTUAL PROPERTY
A. Recent Cases
Though the "classic"applicationsof the doctrinehave related to natu-

ral monopolies, recent cases and U.S. enforcementpolicy demonstrate
that the essential facilitiesdoctrine applies to intellectual propertyno
less than to tangible assets. Numerous U.S. courts have squarely held
and otherwiseindicated that the essential facilitiesdoctrine applies to
situationswhere there was no "purpose to create or maintain a monopoly") (internal

quotation omitted).
38
CityofAnaheim,955 F.2d at 1379; see also InterfaceGroup, Inc. v. Mass. Port Auth.,
816F.2d9, 12 (1st Cir. 1987).
S9Marina Lao, Unilateral and theAntitrust
RefusalstoSellorLicenseIntellectual
Properly Duty
toDeal, 9 Cornell J.L. & Pub. Pol'y 193, 218 (1999).

intellectualpropertyand other intangibles.When essentialfacilities

claimshavebeen raisedin thecontextof assetsprotectedbyintellectual
property laws- suchas copyrighted databasesor software- thesecourts
doctrinejust as theyhavewhenthe
haveapplied the essentialfacilities
undisputednaturalmonopoliesinvolvedutilities,transportation facili-
ties,or otherphysicalassets.Forexample,one district courtconsidered
a claimapplyingthe essentialfacilitiesdoctrineto telephonedirectory
listingsin which the defendant (the local telephonecompanyand a
of
publisher telephone claimed
directories) copyright protection.40The
courtsawno barrierto considering theclaimin thiscontext:"Although
the doctrineof essentialfacilitieshas been applied predominantly to
tangible there
assets, is no reason why it could not as
apply, in thiscase,
to information wrongfully withheld.The effectin bothsituations is the
same: a partyis preventedfromsharingin somethingessentialto
compete."41
othercourtsfoundno barriertoapplyingtheessentialfacili-
Similarly,
tiesdoctrineto intellectualproperty.42For example,in one prominent
case, Data GeneralCorp. v. GrummanSystems
SupportCorp.,45the court
appliedthedoctrinetoa claimthata competitor serviceproviderneeded
access to the copyrighted
diagnostic software producedby the system
manufacturer (whichcompeted in the serviceaftermarket). The claim
was
ultimately rejected because the court concluded that the factsdid
notsupporttheallegationthatthefacility - notbecause
was "essential"
the courtconcludedthatthe doctrinewas inapplicableto copyrighted
software.44
40SeeBellSouth Adver.&
Publ'g Corp. v. Donnelley Info. Publ'g, Inc., 719 F. Supp. 1551,
1566 (S.D. Fla. 1988), rev'don othergrounds,999 F.2d 1436 (11th Cir. 1993).
41Id. ; seealsoRural Tel. Serv.Co., Inc. v. FeistPubl'ns, Inc., 737 F.
Supp. 610, 617-20 (D.
Kan. 1990) (analyzingessentialfacilitiesdoctrinein contextinvolvingallegedlycopyrighted
telephone listings),rev'don othergrounds,506 F.2d 765 (10th Cir. 1992).
42See,
e.g.,Serv. & Training, Inc. v. Data Gen. Corp., 737 F. Supp. 334, 343-44 (D. Md.
1990) (allowing monopolization claim to proceed based on computer manufacturer's
unwillingnessto license diagnostic softwareto competitor computer repair service pro-
vider); see also Poster Exch., Inc. v. Nat'l Screen Serv. Corp., 431 F.2d 334, 338-40 (5th
Cir. 1970) (exclusive licensee of movie promotional materials, such as posters, could
constituteessential facilityrequired to supplyadditional materialsto competitordistribu-
tor); MontgomeryCounty Ass'n of Realtors, Inc. v. Realty Photo Master Corp., 878 F.
Supp. 804, 817 (D. Md. 1995) (considering essential facilitiesclaim as to copyrighted
real estate listing service; dismissingclaim because no evidence presented that service
constitutedan essential facility),affd,91 F.3d 132 (4th Cir. 1996).
43761 F.
Supp. 185, 191-92 (D. Mass. 1991), affd in part and remanded,36 F.3d 1147
(1st Cir. 1994).
44U.S. courtsare sensitiveto concerns that
limitingintellectualpropertyprotectionsmay
dampen incentivesfor innovation. However, the courts have recognized that permitting
antitrustliabilityin proper circumstancesappropriatelypromotes competition and, ulti-
mately,innovation as well. See,e.g.,Data General,36 F.3d at 1184-86. In Data General,the

Moreover,the doctrinehas been widelyapplied to otherintangible

assets;forexample,such intangiblesas serviceshave been held to be
In AT&T Co. v. NorthAmericanIndustries,Inc., for
essential facilities.45
example,theplaintiff "adequatelyallegedthatthecentralofficeservices
refuseditby[defendant]are essentialwithinthemeaningofthefederal
antitrust Courtshave also applied the doctrineto healthcare
laws."46
referral Giventhevariedcontextsin whichtheessentialfacili-
services.47
ties doctrinehas been applied, courtshave declined to impose any
limiton thekindsofproducts,services,
artificial or otherassetstowhich
the doctrinemayappropriately be applied.48
B. Lessons fromRefusal to Deal Cases

In consideringrelatedrefusalto deal claimsin severalrecentcases,
appellatecourtshave statedthatantitrust willattachnotwith-
liability
standingclaimsof intellectual
property protection.In ImageTechnical
Services,Inc. v. Eastman Kodak Co.,49the Ninth Circuit reviewed a jury
decisionthatKodak,a manufacturer ofcopiers,had illegally
and servicer
monopolized the lattermarket
forserviceof its copiersbyrefusingto
courtconsidereddefendant's argument that"allowing ownerstoexcludeothers
copyright
fromthe use of theirworkcreatesincentives whichultimatelyworkto the benefitof
consumers in the[alleged]serviceaftermarket" butconcludedthat"itmaybe inappropri-
ate to adoptan empiricalassumption thatsimply ignoresharmto thecompetitive process
causedbya monopolist's Id. at 1185.The court
unilateralrefusalto licensea copyright."
Inc. v.EastmanKodakCo.,125 F.3d 1195 (9th Cir. 1997) , expressed
in ImageTechnicalServices,
similarconcerns.Notwithstanding itsrecognition thatliability refusaltodeal
forunilateral
mightreducethe incentives to innovatethatnormallyflowfromintellectualproperty
protection,theKodakcourtrecognizedthatappropriate meritantitrust
situations interven-
tion.Seeid.at 1218-20.
45SunshineCellularv. VanguardCellularSys.,Inc., 810 F. Supp. 486, 497 (S.D.N.Y.
1992) (causeof actionstatedwhereessentialfacility allegedto be roamingagreementto
providebillingservicesforcompetitor cellulartelephoneservicecarrier).
46772 F.
Supp. 777,785 (S.D.N.Y.1991).
47&s?AdvancedHealth-CareServs.,Inc. v. RadfordCmty.Hosp.,910 F.2d 139,150-51
(4thCir.1990) (supplierof homehealthcare productsadequatelyallegedthataccessto
hospitalpatientsforpatientreferrals constituted AmericanHealthSys.,
essentialfacility);
Inv.v.VisitingNurseAss'nof GreaterPhiladelphia, No. CIV. A. 93-542,1994WL 314313,
at *13 (E.D. Pa. June29, 1994) (same;homehealthcare provider).
48As one courtstated,
doctrinedoes notunequivocally
The essentialfacilities be
requirethata facility
of a grandnatureas suggested bythedefendant, noris thedoctrinespecifically
inapplicabletotangibles suchas a manufacturer's spareparts."Theterm'facility'
canapplytotangibles suchas sportsorentertainment venues,meansoftransporta-
tion,thetransmission ofenergy orthetransmission ofinformationandtointangi-
bles suchas information itself.''
Tri-TechMach. Sales, Ltd. v. ArtosEng'g Co., 928 F. Supp. 836, 839 (E.D. Wis. 1996)
(quotingIrving Scher, Antitrust Advisor § 1.29 at 1-60(4thed. 1995)).
49125 F.3d 1195,1201-02 (9thCir. 1997).

deal in itspatentedreplacement parts(neededforrepairofthecopiers);

the awardrequiredKodak to sell such partson reasonabletermsto
plaintiff independentservicesorganizations (whocompetedwithKodak
toserviceKodakcopiers). After describing theessentialfacilities doctrine
as one theoryof a moregeneralunilateralrefusalto deal claim,50 the
court confrontedthe tensionbetweenattachingantitrust liabilityto
exclusionary acts (because "neitherpatentnor copyright holdersare
immunefromantitrust liability")and the principle that "patentand
copyright holders may refuse to sell or license protected work."51
Citing to an earlierSupreme Court decision in theKodakdispute,the
courtconcludedthatabuseofintellectual property rights(suchas patent
protection) could give rise to antitrust liability.52 Specifically,the
Supreme Court earlierhad rejected the contention that "becauseKodak
has onlyan 'inherent'monopolyin partsforits equipment. . . , the
antitrust lawsdo notapplyto itsefforts to expandthatpowerintoother
markets,"53 stating instead that "[t]he Court has held manytimesthat
powergainedthrough some natural or legaladvantagesuchas a patent,
copyright or business acumen can give riseto liabilityif'a sellerexploits
his dominantpositionin one marketto expand his empireinto the
next.'"54
The appellatecourtin the second Kodakcase thenreconciledthese
principlesbyconcludingthatthe intellectualproperty protectionpro-
videdonlya "presumptively validbusinessjustification" fora unilateral
refusalto deal.55In otherwords,a firmcould be subjectto antitrust
liabilityforrefusalto deal in protectedintellectualproperty wherethe
presumption of a valid reason not to license was rebutted byevidence
of anticompetitive intent.56 Such liabilityforrefusalto deal would,of
course, include situationswhere the intellectualpropertycould be
provento be an "essentialfacility."
The courtin Data General, whoseapproachwasadoptedbythe Kodak
court,addresseda similarscenario.Data General,a manufacturer of
50See id. at 1209-11.
51 Td at 191*
52See id. at 1216 ("the
[Supreme] Court in Kodak supposed that intellectual property
rightsdo not confer an absolute immunityfromantitrustclaims").
53Eastman Kodak Co. v. Image Technical Servs.,Inc., 504 U.S. 451, 479 n.29 (1992).
54Id. at 479.
Though it addressed tyingclaims, the Court's language is broad enough
to encompass monopolization claims based on a refusal to deal. See Lao, supra note 39,
at 201.
55SeeKodak,125 F.3d at 1218
(quoting Data Gen. Corp. v. GrummanSys.Support Corp.,
36 F.3d 1147, 1187 (1st Cir. 1994)).
56SeeKodak,125 F.3d at 1219
(citingAspenSkiingas an example where the presumption
was rebutted "where a monopolist made an importantchange in its practices").

computersand servicerof itsown products,refusedto provideaccess

toitscopyrighted diagnosticsoftware tofirms competingto servicethose
products.57A competitor-servicer allegedboththatsuchsoftware consti-
tutedan essentialfacility and thatData General'sunilateralrefusalto
deal could be construedmore broadlyas monopolization.While the
districtcourtdenied theessentialfacility claim (and itwasnotpursued
on appeal),58in considering themoregeneralrefusalto deal claim,the
courtof appeals held "thatwhileexclusionary conductcan include a
monopolist'sunilateralrefusalto licensea copyright, an author'sdesire
to excludeothersfromuse of itscopyrighted workis a presumptively
valid businessjustificationfor any immediateharm to consumers."59
However,thecourtnotedthat"wedo nothold thatan antitrust plaintiff
can neverrebutthispresumption, fortheremaybe rarecases in which
imposingantitrust is unlikelyto frustrate
liability the objectivesof the
Copyright Act."60
Thus, while thecourt showed some deferenceto intel-
lectualproperty (as
protections suggested by itsadoptionof a presump-
tion), itdeclinedto immunizerefusalto deal in suchprotectedmaterial
wherethatpresumption couldbe overcomebya showingofanticompeti-
tiveintent.
The U.S. CourtofAppealsfortheFederalCircuit, whichis responsible
formostcases involving patentissues,concluded,in IntergraphCorp.v.
thatcertaincasesmight
IntelCarp.,61 mandatedaccesstointellectual
justify
property. In thatcase, in the contextof plaintiffsdemand thatit be
allowedaccesstodefendant's intellectual
property(protectedtechnolog-
ical data relatedto defendant'smicroprocessor chips),thecourtnoted
thatsuch mandatory access maybe imposed- wherethe defendant's
refusalto licenseaccessto suchintellectualproperty demonstrates anti-
competitive intent.62
C. Messages fromthe U.S. EnforcementAgencies

enforcement
The U.S. antitrust agencies- theDepartmentofJustice
Divisionand theFederalTrade Commission
Antitrust - havetakenposi-
57SeeData General36 F.3d at 1152-55.

58See id. at 1156 n.13.
59Mat 1187.
60Id. at 1187 n.64; seealso id. at 1183-84
(citingAspenSkiingasan example of a unilateral
refusalto deal where the profferedbusinessjustificationwas rejected).
61195 F.3d 1346 (Fed. Cir. 1999).
62See id. at 1356, 1363. The D.C. Circuit has also suggested that it would follow this
analysis,rejectinga copyrightdefense to a claim of monopolization of operating systems
softwarethrough restrictivelicense terms as "border[ing] upon the frivolous"because

tionssuggestingthat,in appropriatecases, the essentialfacilitiesdoctrine

may be applied to intellectualproperty"bottlenecks."
On the most general level, the DOJ/FTC 1995 AntitrustGuidelines
forthe Licensing of Intellectual Property63(IP Guidelines) provide that
"[t]he Agencies apply the same general antitrust principles to conduct
involving intellectualproperty that theyapply to conduct involvingany
other formof tangible or intangible property."64 More directlyrelated
to allegations of monopolization, the IP Guidelines state that the use
of marketpower by an intellectual propertyholder will be treated no
differently than that of other monopolists:
If a patentor otherformof intellectual
property does confermarket
power,thatmarket powerdoesnotbyitselfoffendtheantitrustlaws....
Asin otherantitrustcontexts,
however,marketpowercouldbe illegally
acquiredor maintained, or,eveniflawfullyacquiredand maintained,
wouldbe relevantto the abilityof an intellectualproperty
ownerto
harmcompetition throughunreasonableconductin connectionwith
suchproperty.65
In addition to these policy statements,the enforcementactivitiesof
the U.S. agencies confirmthat theywill in fact pursue these kinds of
antitrustclaims in contextsinvolvingintellectualproperty.For instance,
one recent complaint filed by the FTC suggeststhat the U.S. antitrust
enforcementagencies willpursue unilateralrefusalto deal claims against
intellectualpropertyholders when such refusalsevidence anticompeti-
tiveintent.The FTC filed a complaint against Intel contending that its
refusalto provide access to patented and other informationregarding
its microprocessor chips to certain computer manufacturers,because
the manufacturersengaged in litigation against Intel, constituted an
antitrustviolation.66By extension, such claims are just as appropriate
when the more stringentstandardsof the essentialfacilitiesdoctrine are
met. In addition, in appropriate cases, the enforcementagencies have
"[intellectual propertyrightsdo not confera privilegeto violatethe antitrustlaws."United

States v. MicrosoftCorp., 253 F.3d 34, 63 (D.C. Cir. 2001).
63U.S.
Department of Justice & Federal Trade Commission, AntitrustGuidelines for
theLicensingof IntellectualProperty(1995), reprinted in4 Trade Reg. Rep. (CCH) f 13,132.
64Id. 2.1; see also id. 2.0 (a) ("[F]or the
§ § purpose of antitrustanalysis,the Agencies
regard intellectual property as being essentially comparable to any other form of
property.").
65Id. 2.2.
§
66See Intel
Corp.,FTC Dkt. No. 9288 (June 8, 1998) (Complaint); see also Charles L.
Freed, Antitrust and theDuly toLicenseIntellectual Antitrust, Fall 1999, at 33, 36
Property,
(noting that FTC brief cited Data Generaland Kodak as leading cases). Robert Pitofsky
was Chairman of the Federal Trade Commission at the time the Intelcase was initiated
and settled.

458 AntitrustLaw Journal [Vol.70
imposedmandatory licensingrequirements forcompetitor

use of copy-
as
rightedsystems a condition of antitrust
resolving disputes.67
IV. HOW MANYRELEVANTMARKETSMUST BE PROVEN?
In manycases applyingthe essentialfacilities doctrine,plaintiffs are
bothcustomers (requiring theessential or
facility input) and competitors
of the partiesrefusingaccess to the essentialfacility. The prototypical
formulation of thedoctrinedescribestwovertically-related markets. For
example,"Otter Tail . . . standsfortheprinciplethat*amonopolistmay
notabuseitsmonopolypowerin one markettogainan improperadvan-
tageor todestroy threatened competition in an adjacentmarketinwhich
it also operates.'"68
However, thereisno requirement thata plaintiff alleginganticompetitive
denialof accessto an essentialfacility demonstrate theexistenceof two
separate relevant product markets. Instead, as demonstrated in recent
casesshapingthedoctrine,partiesmakingessentialfacilities claimsmay
simultaneously be customersand competitors of the alleged monopo-
lists- in a singlemarket.Forexample,in AspenSkiing, boththeplaintiff
and thedefendantoperatedcompetingskiresorts.The trialand appel-
late courtsdid not requireplaintiff to provethatthe alleged essential
facility- access to defendant's ski resort througha multi-area ticketoffer-
ing - itself
constituted a separateantitrust market distinct from theplain-
tiffsresort.Instead,thejuryfoundthattherelevantproductmarketat
issuewas "downhillskiingservicesin theAspen area, includingmulti-
area and multi-day lifttickets" - i.e., the monopolizedmarket(which
encompassed the essential ,69
facility)
The lowercourtopinionsin theAspenSkiingcase directly contradict
anyassertionthatthe essentialfacilitiesdoctrineonlyapplieswhena
companywithmarketpowersuppliesa productor servicethatsuppliers
67See,
e.g.,U.S. v. Thomson Corp., 949 F. Supp. 907, 925-31 (D.D.C. 1996) (approving
consent decree requiring merging legal publishers to provide mandatorylicensing of
copyrightedpagination systemto competitors); seealso U.S. v. RealtyMulti-List,Inc., Civil
Action No. 76-87-Col, 1982 WL 1878 (M.D. Ga. June 25, 1982) (approving settlement
containingmandatorylicensingprovisionforaccess to real estatelistingservicebycompet-
ing realtors).
68AT&T Co. v. NorthAm. Indus., Inc., 772 F.
Supp. 777, 784 (S.D.N.Y. 1991) (quoting
OfficialAirline Guides, Inc. v. FTC, 630 F.2d, 925 (2d Cir. 1980)); seealso, e.g.,Advanced
Health-Care Servs.,Inc. v. RadfordCmty.Hosp., 910 F.2d 139, 150 (4th Cir. 1990) (tt[T]he
central concern in an essential facilitiesclaim is whethermarketpower in one marketis
being used to create or furthera monopoly in another market."); Twin Labs., Inc. v.
Weider Health 8cFitness,900 F.2d 566, 568 (2d Cir. 1990) ("The policybehind prohibiting
denial of an essential facilityto a competitor ... is to prevent a monopolist in a given
market. . . fromusing its power to inhibitcompetitionin another market.").
69
AspenSkiing,738 F.2d at 1513.

or customersmusthave in order to compete.The AspenSkiingcourt

confronted a similarclaimbythe defendant, which"argu[ed]that. . .
a duty[todeal] can ariseonlyin different circumstances where,through
verticalintegration, one firmhas come to monopolizeor controlthe
supplyof a componentnecessary forproduction, distribution or sale of
a rival'sproductor service."70 The courtexplicitly rejected such conten-
tions: "We decline to adopt a narrowrule thatwould immunizean
unintegrated monopolist fromantitrust forrefusing
liability a competitor
accessto an essentialfacility in thesecircumstances. Verticalintegration
is not essentialto findinga violationof the antitrust lawsfora refusal
to deal underthe intenttest."71 Further,the courtwas "notconvinced
thattheessentialtouchstone ofbottleneck casesisverticalintegration."72
Lowercourtshave similarly applied the essentialfacilitiesdoctrine
irrespective of whethertheessentialfacility constitutesa separateverti-
cally-related productmarket.For example,one lowercourtconsidered
a disputebetweencellularprovidersin adjacent serviceareas.73The
plaintiffclaimedthata "two-way roamingagreement"(a billingarrange-
mentforcalls made fromthe competitor'sservicearea) betweenthe
twopartiesconstituted an "essentialfacility."74
Notwithstanding thatthe
plaintiff sought access to the competitor's cellularservice in the same
marketin whichit competed,thecourtheld thattheessentialfacilities
claimssurvived a motionto dismiss.
an appellatecourtreinstateda plaintiffsessentialfacility
Similarly,
claim afterit was dismissedby the trialcourtin Delawareàf Hudson
RailwayCo. v. Consolidated
Rail Corp.15
The case involveda disputebetween
tworailcompanies.Becausetheplaintiff had a morelimitedtracksystem
than the defendant,it requiredaccess to the defendant'stracksfor
portionsof certainshippingtrips- theend portion(or "shorthaul")-
to deliverto specificdestinations.
The defendant,whichpreviouslyhad
acquiescedin sucharrangements beforetherivalcarriers
begancompet-
70Id. at 1518.
71Id. at 1519 nil! see ahn id. at 1521 ( rf»if»rtincr
surh "restrirtivfanalvsis^i
72Id. at 1519 n.ll; seealso
James C. Burling,WilliamF. Lee & Anita K. Krug, TheAntitrust
Duly toDeal and Intellectual PropertyRights,24 J. Corp. L. 527, 531 (1999) ("Although the
essentialfacility
testhas been applied predominantly to cases in whicha monopolist
controlsa facility
deemedessentialto a competitor in a vertically-related at least
market,
one courthas appliedit in a case,involvingonlya singlemarket, in whicha monopolist
refusedto pursuea joint-venture witha competitor.")(citingAspenSkiing,
relationship
738F.2dat 1518).
73SeeSunshineCellularv.
VanguardCellularSys.,Inc.,810 F. Supp. 486,496-98 (E.D.
Pa. 1992).
74Id. at 497.
75902 F.2d 174 (2d Cir. 1990).

ing on price,refusedto allow access on reasonableterms.The court

definedthe "relevant market"as the "transportation
of newsprintfrom
easternCanada to the mid-Atlantic - a marketwhichwould
states"
"[defendant's]tracksused forshort
encompassthe "essentialfacility,"
Notwithstanding absenceof twoseparate,vertically-
haul routes."76 the
relatedmarkets, the appellatecourtfoundthatthe plaintiffsessential
facilities
claimcould proceed.77
As thesecasessuggest, theessentialfacilitiesdoctrinedoes notrequire
a plaintiffto distinguish neatly the relevant levelsof productioninto
twoseparaterelevantproductmarkets.It is sufficient to provethatthe
partiescompete - or would compete ifthe were
plaintiff permitted access
to thedefendant's assetin thesameultimatemarket.Thisis notto say
thatthe essentialfacilities doctrinedoes notapplywheretwovertically-
relatedmarkets are involved;obviously, as thecasescitedaboveindicate,
it capturessuch situationsas well.78 The guidingprinciple,however,is
thatU.S. courtssimplyare notconcernedwitha demonstration thatthe
essentialfacilityrelatesto a distinct
product market. The courtsrequire
onlythatthe plaintiff provethatthe facility is indispensableforcom-
petitionin a relevantproductmarket, is controlledbya monopolistwho
could practicallymake access available, and is not capable of
duplication.79
Giventhepolicyreasonsfortheessentialfacilities doctrine - preserv-
ing competitionat each phase of production,whetherdefinedas a
separatemarketor not- it is understandably irrelevant to U.S. courts
whether theessentialfacility as a vertically-related
atissueischaracterized
separatemarket,or as part of the marketin whichthe two parties
compete.The policyconcernis simplyto ensurecompetitionin the
market wherethetwopartiescouldcompetebutfortherefusaltoprovide
accessto theessentialasset;anycharacterizationof theessentialfacility
(beyondmeetingtheelementsthatproveit is,indeed,essential)would
be superfluousand artificial.
76Id. at 179.
77Seeid. at 180. The Court of
Appeals forthe Federal Circuit,though not itselfconfront-
ing a single-marketcase, agreed that the doctrine applies irrespectiveof whether the
situationinvolvesone marketor two. See IntergraphCorp. v. Intel Corp., 195 F.3d 1346,
1357 (Fed. Cir. 1999) ("Although the viabilityand scope of the essential facilitydoctrine
has occassioned much scholarlycommentary,no court has taken it beyond the situation
of competitionwiththe controllerof the facility,whetherthe competitionis in the field
of the facilityitselfor in a verticallyrelated marketthat is controlled by the facility.").
78See
supranote 68 and cases cited therein.
79See
supratextaccompanyingnote 22 (listingfactorsrequired to prove essential facili-
ties claim).

Reinforcing thisconclusion,numerouscourtshave emphasizedthat

it is the plaintiffs statusas a competitor
of the alleged monopolist - not
-
as its customer thatallowsa firmto seek reliefunder the essential
facilitiesdoctrine.Thus,courtsaddressing thethreshold issueofstanding
to assertan essentialfacilitiesclaimsuggestthatthevitalissueiswhether
plaintiff has a competitiverelationshipwiththeallegedmonopolistin the
relevantproduct - not whatthe relationshipis betweenthe plaintiff
and the defendantwithrespectto the assetalleged to be "essential."
Numerouslowercourtcases- particularly thosenotingtherecurring use
of "competitor" amongthefourrequirements foran essentialfacilities
claim- requiresimplythatplaintiffs demonstrate thattheyare competi-
tors(includingpotentialcompetitors) beingdeniedaccesstoan essential
facilitycontrolledbythe defendant-monopolist.80
The competitive relationshipbetweenthe parties - not the relation-
ship between the essential and
facility therelevant marketis thetouch-
stoneofliability undertheessentialfacilities doctrine.Thisis confirmed
bythedismissal ofessentialfacilities
claimsincontexts wheretheplaintiff
hasnotshownan adequatelycompetitive relationshipwiththedefendant-
monopolist.81
V. CONCLUSION
In thoserareand exceptionalcircumstances wherea facility is truly
essentialto competition, the anticompetitive
effectsof denial of access
are severe,and thereis no businessjustification
(and particularly when
thereis evidenceof a specificintentto injurea rival),U.S. courtswill
imposeantitrust fora monopolist'srefusalto licenseaccess to
liability
an essentialfacility.
The sameresultobtainsin thosecircumstances where
80See, Mid-South Grizzliesv. Nat'lFootballLeague,550 F. Supp. 558,570 (E.D. Pa.
e.g.,
1982) ("The doctrineis applicableonlywherea partyis beingdeniedaccessto something
necessary forthatpartytoengagein businesswhichis controlled byhiscompetitors"),affd,
720F.2d772 (3d Cir.1983); seealsoFergusonv. GreaterPocatelloChamberofCommerce,
Inc.,848 F.2d 976, 983 (9thCir. 1988) (essentialfacilitiesdoctrineappliesto refusalsto
deal withcompetitors); Interface Group,Inc. v. Mass.PortAuth.,816 F.2d 9, 12 (1stCir.
1987) (doctrineapplieswhenaccessdeniedto actualor potentialcompetitors); America
Online,Inc.v. GreatDeals.net, 49 F. Supp.2d 851,862 (E.D. Va. 1999) (doctrinerequires
thatplaintiff and defendantare competitors); Kramerv. Pollock-Kranser Found.,890 F.
Supp. 250, 257 (S.D.N.Y. 1995) ("the plaintiff mustbe a competitor of the defendant
monopolist whosefacility itseeksto employ");Driscollv. Cityof NewYork,650 F. Supp.
1522,1529(S.D.N.Y.1987); cf.Ad-Vantage Tel. Directory
Consultants,Inc.v.GTE Directo-
riesCorp.,849 F.2d 1336,1348 (11thCir. 1987) (describing AspenSkiing as aappl[ying]
in a situation wherethereis competition and competitors")
.
81See 195 F.3d at 1356 (applicationof theessentialfacility
Intergraph, theoryrequiresa
"competitive relationship"betweenthe parties);CaribbeanBroad. Sys.,Ltd. v. Cable &
Wireless PLC, 148F.3d 1080,1088-89(D.C. Cir.1998) (dismissing essentialfacilities
claim
wherecomplaintdid notadequatelyallegecompetitive .
relationship)

intellectualproperty(as withanyotherkindof property, tangibleor

intangible) isshown toconstitutean essential -
facilityi.e.,where itmeets
the fourfactorsset forthin MCI Communications:82 U.S. antitrust
law
permits a court to ordercompulsory licensingof such intellectual
prop-
erty.Indeed, notwithstanding the defendant-monopolist's arguments
againstapplyingthe doctrinewherethe subjectassetwas intellectual
property or in situationsthatdid not involveverticallyrelatedmarkets,
courtsin the UnitedStateshave applied thisrule in appropriatecases
likeKodak,Data General, and AspenSkiing. Whileit is important thatthe
essentialfacilitiesdoctrinenot be allowedto expand intoa vague and
amorphousset of "rights," the approachof mostlowercourtsin the
UnitedStates- applying thedoctrinecautiously and pursuanttolimiting
-
principles seemsto workwell.
82708 F.2d at 1132-33.


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THE ESSENTIAL FACILITIES DOCTRINE UNDER U.S.

This content downloaded from 140.182.72.211 on Wed, 9 Apr 2014 00:14:28 AM

This content downloaded from 140.182.72.211 on Wed, 9 Apr 2014 00:14:28 AM

real instancesof monopolydominance,have not been so grudgingin

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is whethera decisionby European authoritiesto grantaccess to the

II. HISTORY AND CORE ELEMENTS OF THE

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The essential facilitydoctrine has been articulatedas a subset of the

5 See Caribbean Broad.

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v.CamdenTel.&Tel.Co.,989F.Supp. 1211,1218-19(S.D.Ga. 1997) (accesstotelephone

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the benefitsto be derivedfromaccess to the alleged essentialfacility

C. The Role of Intent

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essentialfacility]weresolelyto preventmunicipalpowersystems from

D. Relationship Between the Essential Facilities Doctrine

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antitrustrestraint,the essential facilitydoctrine is consistentwith,and

Allowinga patentholderwithmonopolypowerin thepatentedmarket

III. APPLICABILITY OF THE ESSENTIAL FACILITIES

Though the "classic"applicationsof the doctrinehave related to natu-

situationswhere there was no "purpose to create or maintain a monopoly") (internal

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intellectualpropertyand other intangibles.When essentialfacilities

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Moreover,the doctrinehas been widelyapplied to otherintangible

B. Lessons fromRefusal to Deal Cases

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deal in itspatentedreplacement parts(neededforrepairofthecopiers);

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computersand servicerof itsown products,refusedto provideaccess

C. Messages fromthe U.S. EnforcementAgencies

57SeeData General36 F.3d at 1152-55.

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tionssuggestingthat,in appropriatecases, the essentialfacilitiesdoctrine

"[intellectual propertyrightsdo not confera privilegeto violatethe antitrustlaws."United

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imposedmandatory licensingrequirements forcompetitor

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or customersmusthave in order to compete.The AspenSkiingcourt

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ing on price,refusedto allow access on reasonableterms.The court

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Reinforcing thisconclusion,numerouscourtshave emphasizedthat

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intellectualproperty(as withanyotherkindof property, tangibleor

82708 F.2d at 1132-33.

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