Document Type : Research Paper

Authors

• Maryam Sharifi Renani ¹
• Mohammad Sadegh Teimoori ²

¹ Ph.D, Private Law, Faculty of Administrative Science and Economic, Isfahan University, Isfahan, Iran

² Assistant Professor, Department of Law, Isf, C., Islamic Azad University, Isfahan, Iran

Abstract

Introduction

The legal regime governing patents is to prevent the unauthorized imitation of patented intellectual property. At the same time, the principles of competition law and antitrust regulations promote fair competition and use in business practices. However, the restrictive power of competition laws against patent holders may create tensions, as patent owners may abuse their exclusive rights through monopolistic conduct. The key issue in this conflict is achieving a balance between competition law policies and intellectual property rights. The legislator has recognized the principle of contractual freedom in concluding various types of licensing agreements, as well as the rights of intellectual property owners; however, this does not imply that the abuse of such rights is permissible.
The legitimacy or illegitimacy of package licensing agreements remains an unresolved issue in both the legal literature and U.S. case law. More seriously, Iranian law contains no explicit provisions regarding package licensing agreements. The importance of establishing legislative criteria to determine the legitimacy or illegitimacy of such agreements—as well as the non-applicability of its illegitimacy—stems from the technical and technological advantages they may offer despite their potentially anti-competitive nature. In essence, there is a delicate balance between compliance with competition law standards on the one hand and the need to benefit from the technical and technological advantages of package licensing on the other, a balance that requires legislative intervention.

Literature Review

Years after the enactment of the Sherman Act, the U.S. Department of Justice issued a set of licensing guidelines in 1977. These guidelines identified nine terms—known as the Nine No‑No’s—that licensors were prohibited from imposing on licensees. This approach remained in place until 1988, when the Department of Justice issued new guidelines that repealed the prohibition on these nine terms. The Nine No‑No’s included terms that an intellectual property rights holder could impose on a licensee despite having no direct connection to the subject matter of the agreement. One item identified in the guidelines as impermissible was the inclusion of package licensing provisions.

Materials and Methods

This research adopted a qualitative and analytical legal approach, employing both descriptive and doctrinal methods. It first reviewed the historical evolution of American legislation concerning package licensing and examined how courts had ruled on the legitimacy or illegitimacy of package licenses. The research also explored the interpretive challenges posed by the Sherman Act, particularly regarding the meaning and scope of patent holders’ rights. In addition, judicial decisions issued by U.S. courts were analyzed to identify the prevailing case law. The methodology combined statutory interpretation, case law analysis, and theoretical reasoning to evaluate the relationship between patent holders’ rights and competition law. The study also applied principles of economic and legal analysis in intellectual property law to assess the social and economic consequences of such provisions in package licensing agreements.

Results and Discussion

What enables the licensor to grant a package license, in addition to the willingness to enter into such an agreement, is the close relationship among the items included in the package on the one hand and the licensee’s need for all of them on the other. Considering the principle of freedom of private contracts and the economic advantages of package licensing agreements, without denying their necessity and importance in global trade, it should nevertheless be noted that imposing such agreements on the licensee may constitute an abuse of rights. In this respect, requiring the licensee to accept items beyond the main subject matter of the agreement for which the licensee originally applied is clearly inconsistent with antitrust principles and rules.
An examination of the case law of the U.S. courts indicates a judicial tendency toward further narrowing the doctrine of abuse of rights. Their growing willingness to recognize the legitimacy of package licensing agreements reflects a trend that—although consistent with the exclusive nature of intellectual property rights and with respect for the principle of freedom of contract—is not without risks. In particular, it may contribute to the creation of anti‑competitive environment and encourage monopolistic behavior by intellectual property holders.

Conclusion

Concerning the Iranian context, the Law on the Implementation of the General Policies of Article 44 of the Constitution does not specifically address package licensing agreements; however, Article 45(1) of this law explicitly prohibits parties from conditioning a contract on the acceptance of terms unrelated to the subject matter of the agreement by nature or commercial custom. However, the mere connection among the items included in a package does not appear sufficient to justify the legitimacy of a package license.
It would therefore be appropriate for the legislator to consider necessity and indispensability, or at least complementarity among the packaged items as criteria for the legitimacy of such agreements. This approach would help prevent the anti-competitive practices of inventors while still recognizing the technical and technological advantages of package licensing and protecting the lawful monopoly rights of inventors. Furthermore, the invalidity of the objective of disruption in including such clauses in contracts constitutes a significant shortcoming in domestic law, which in turn merits legislative attention. By establishing clear criteria for the legitimacy of package licenses, the legislator could relieve victims of anti-competitive practices from the burden of proving fault and pursuing civil liability claims, while also providing clearer guidance to judges.

Keywords

• Licensing Agreement
• Abuse
• Competition
• Legitimacy
• Supreme Court of U.S

Main Subjects

• Private Law