Colm MacKernan is the Director of Origin Ltd, an Intellectual Property Consulting Firm in London. He represents high-tech companies based in Europe, North America and Asia on complex international matters.
“Apple is in a tricky position,” he says. “The core of its problem is that it sells OS X Leopard as a separate item from an Apple Computer ($129 on the Apple site.) This gives rise to an argument that Apple is engaging in “tying,” a practice that is often held illegal under many antitrust or competition laws, that involves requiring a purchaser (or licensee) to buy a product that purchaser may not want as a condition of obtaining the product it does want, i.e., if you want A, you must take B as well, or in this case if you want OS X you must buy an Apple computer. In effect this is similar to the problems Microsoft had when it sold Internet Explorer in combination with Windows and Media Player — although in that case Microsoft had the added handicap of being dominant, which subjected it to stricter scrutiny. That Apple is not dominant does not mean that Apple would not be subject to scrutiny, just that the “market power” leg of an illegal-tying case is weaker.
“Students of competition law will note that Patent and Copyright “misuse” in the US refers to commercial strategies that seek to extend the economic benefits of an item of intellectual property beyond is lawful scope. Typically misuse involves a violation of antitrust or competition law, most commonly illegal tying. The most common penalty in US law is to block enforcement of the relevant patents and copyrights. The other problem for Apple is that tying is specifically addressed in the European Licensing Guidelines, the Technology Transfer Block Exemption, the US Antitrust Guidelines for Licensing Intellectual Property as well as the Japanese and Korean guidelines. None “smile” on tying, although the US does say that it will not be treated as automatically illegal and quality-control cases can be made under the others. Now this does not mean that Apple would lose a case of copyright and patent infringement (many aspects of OS X Leopard are also subject to patent protection), but it does mean that they have a complicated case.”
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