In recent months there have been indications from the Department of Justice that antitrust issues will be given closer scrutiny than they were given during the Reagan and Bush administrations and Assistant Attorney General Anne K. Bingaman, who is in charge of the Antitrust Department, has announced the creation of a task force to reformulate the Department's policy on intellectual property matters. Even before the task force has completed its report, however, the AAG has given a preview of her own thinking. In the licensing area, she has indicated that her greatest concern is where a license eliminates likely competition from alternative technologies, and she has pointed out that conditioning the grant of an intellectual property license on the licensee's purchase of another product is simply one aspect of "the general principle of the law against illegal tying." The impact of this increased scrutiny on patent license agreements remains to be seen.

An example of the changing climate in the courts is found in a recent Federal District Court decision In re Recombinant DNA Technology Patent and Contract litigation involving a patent license covering Genentech's patents and know-how for use in the production of human insulin and human growth hormones. Eli Lilly (Lilly), a licensee, was permitted to amend its pleadings to add the defense of patent misuse. Lilly argued that the provision in the license agreement allowing Genentech to terminate the license if Lilly sold recombinant insulin or human growth hormones produced without using the microorganisms or patented technology of Genentech constituted an illegal restraint of competition and impermissibly extended the statutory scope of Genentech's patent monopoly. Lilly argued that this termination provision used the patents to prevent others from using technology (a "tie-out") and constituted per se patent misuse. Therefore, Lilly argued that the licensed patents should be held to be unenforceable and requested summary judgment on this issue. Genentech argued that this termination provision was intended to prevent unauthorized use of its know-how and did not constitute patent misuse.

This termination provision appeared to the court to be an attempt by Genentech to use its patents as leverage and thus to be a "tie-out". The court stated that prior to the enactment of the Patent Misuse Reform Act of 1988, this tying arrangement would constitute per se patent misuse. In relevant part the Act reads:



Thus, because of the change in the law, the question to be determined was whether Genentech had the necessary market power and this requires a "rule of reason" approach. Since the determination of market power is a factual issue, the court denied Lilly's motion for summary judgment on the patent misuse issue.