Essential Data
Certain firms in theInternet economy may exclude competitors by refusing to deal data. Such conductmay impede innovation. But antitrust law lacks a coherent response to monopoly ofdata. This Comment proposes a policy inspired by duties to share. Over acentury ago, courts devised an “essential facilities” doctrine that requiredmonopolists to share inputs essential to competition with rivals. These inputsincluded phone lines and bridges. I contend that the essential facilitiesdoctrine sometimes should require open access to data.
This Comment proceedsin two Parts. Part Idescribes the problems with datamonopolies and provides an example of an essential data dispute. The Part goeson to explain the essential facilities doctrine and identify criticisms thatled to the doctrine’s rejection. It closes by describing an essential dataclaim. Part II contends that criticisms of the essential facilities doctrineattenuate when a dataset becomes the facility to which a rival seeks access.
I. online data and essential facilities
Part I has threesections. Part I.A explains the role of data in the online economy and providesan example of an essential data claim. Part I.B introduces the essentialfacilities doctrine, as well as the doctrine’s demise. Part I.C sets forth theelements of an essential data claim and situates the concept in commentary andprecedent.
A. Online Data
Sometimes data causedisputes. A company calledPeopleBrowsr faced onelate in 2012. According toPeopleBrowsr, itsservice helped clients monitor and analyze conversationsonline and relied on data from a social network called Twitter.1PeopleBrowsr also claimed that it had used Twitterdata for years.2 But Twitter toldPeopleBrowsrthat the social network would revoke access to its data at the end of November2012.3 Twitter alleged that its business model hadevolved.4According toPeopleBrowsr, Twitter thought themonitoring company no longer “fit.”5
PeopleBrowsr alleged that a Twitter shutoff “would [have]devastate[d]PeopleBrowsr’sbusiness.”6 So the company stated that it negotiatedwith Twitter for access.7PeopleBrowsr saidthat negotiations failed and then it sued.8 Shutoff,PeopleBrowsrsaid, would violate California competition law.9 “[C]ompetitionin the market for analysis of Twitter data” would founder and innovation in thedata’s use would slow.10 Not so, Twitter said: shutoffpreserved the incentives ofentrepreneurs to innovate and violated neither California nor federal antitrustlaw.11 Twitter, the company said, “has the right tocontrol its data.”12
This Commentchallenges that and similar claims. Refusals to deal data can helpfirms free ride on rivals’ investments and maintain monopoliesby excluding competitors.13 But courts supply no consistent response tothe antitrust questions that data pose:PeopleBrowsrand Twitter settled andPeopleBrowsr got access forabout eight months.14 Two software developers a decade apart suedonline marketplaces for withholding data and got no answer on their antitrustclaims.15 The Federal Trade Commission in 2011reportedly opened an inquiry into claims that Twitter hobbled a potential rivalby revoking access to data.16 The Commission never filed a complaint.17
B. The EssentialFacilities Doctrine and Its Critics
Antitrust lawgenerally preserves the “right[s] of trader[s] or manufacturer[s]” to choosethe “parties with whom [they] deal.”18 But in “limited circumstances” a refusal todeal violates Section 2 of the Sherman Act, which prohibits monopolization.19 Under the essential facilities doctrine, aduty to deal arises when a monopolist refuses to share inputs essential tocompetition despite the feasibility of doing so.20
The essentialfacilities doctrine dates at least to 1912, when “a group of railroad operatorsobtained . . . the only railroad bridges across the Mississippi River at St.Louis.”21 Because the “most extraordinary” topographyof the region rendered it “impossible for any railroad company to pass through. . . without using [the group’s] facilities,” the Supreme Court required thatthe group deal with outsiders on “just and reasonable terms.”22
The Supreme Courtnever adopted the essential facilities doctrine by name.23But lower courts and commentators drew on the doctrine.24The Court in 1972 made a power company share transmission wires with thecompany’s rivals.25 A decision of the Court a decade later requiredtwo ski mountains to continue offering a joint ticket after one sought towithdraw.26
Today, little remainsof the essential facilities doctrine. Commentators weakened the doctrine withthree criticisms. First, monopolists could not extract additional profits fromconsumers by refusing to deal.27So efficiency and not exclusion likely motivated behavior scrutinized by theessential facilities doctrine. Second, the doctrine weakened incentives tocompete: dominant firms would not erect infrastructure lest a court appropriatethe investment for a rival’s use.28Finally, the doctrine placed courts into the role of regulators, though theylacked the capacity to administer the sharing that the doctrine required.29 These concerns held sway: the Supreme Courtin 2004 denied “[]everrecogniz[ing]” the doctrine of essential facilities.30
C. Essential Data
This Comment arguesthat a claim to essential data—data essential to competition—should require thesame elements as a claim to an essential facility. First, the monopolist mustcontrol and deny access to the data that the plaintiff seeks.31 Second, competition must fail without thedata.32 Third, the plaintiff must lack means toduplicate the data.33 Fourth, the monopolist must have means toshare the data.34 Fifth and finally, an essential facilityplaintiff must demonstrate the defendant’s monopoly power in an antitrustmarket.35
Several recent claimsfit this description. One is Twitter’s attempt to disconnectPeopleBrowsr, discussed at the beginning of this Part. Asecond relates to a 2000 dispute between eBay and Bidder’s Edge, an aggregatorof auction prices36: eBay, which reportedly controlled eighty-sevenpercent of auction traffic,37 refused to deal with an ecosystem firm thatmade tools for users to access auction prices.38 A third concerns a dispute that reachedfederal court in 201239:Craigslist, a dominant provider of online classifieds, sued 3Taps, a start-up thatobtained and shared data based on Craigslist’s classifieds.40
Each dispute startedwith data created by users of a monopolist’s platform. Competitors could notduplicate the data because of network effects: each user who used themonopolist’s platform made that platform more valuable to every other user. Sono competing dataset emerged. For example, the set of messages that Twittercontrolled faced no competition from a rival network: users who wanted tolisten went where people were talking. The set of prices that eBay controlledfaced no competition from a rival auction: sellers went where people werebuying.41 The disputes in each case involved refusalsto deal monopolized inputs protected by barriers to entry. Those circumstancesinvite the application of the essential facilities doctrine.42
II. respondingto critics of the essential facilities doctrine
This Part contendsthat criticisms of the essential facilities doctrine attenuate when rivalsinvoke the doctrine against a defendant that has withheld data. Refusals todeal data may raise monopoly profits and lower consumer welfare. Essential dataremedies benefit consumers without depriving innovators of incentives toinvest. Finally, courts may administer access to data more easily than accessto physical facilities.
Data essential tocompetition—essential data—can exist when firms act alone or with others.43 Courts have forced access in the latter casebut not the former.44 Firms that act alone may originate data orbuild platforms for others to originate data. Microsoft and Intel, for example,originated technical data45 essential to competition in downstream markets.Marina Lao has argued for access to data in such a case.46This Comment extends the case foraccess to platforms: that is, to firms whose data monopolies derive from userswho must originate data to consume the functionality that the firms’ technologyenables.
A. Motive to Refuse
Critics of theessential facilities doctrine begin by asking why monopolists would refuse todeal. Single monopoly profit theory holds that monopolists may extract monopolyrents from a market without selling to consumers.47 Assuming there is a competitive market forthe end product whose input the monopolist controls, monopolists may chargedownstream firms one fee or royalty per product and thereby induce downstreamfirms to produce only the monopoly quantity. The monopolist could do no betterif it sold to consumers itself.
Data monopolists inemerging industries lie beyond this model. First, one dataset can supply zeroor infinite final goods and services. When 3Taps gets data from Craigslist ads,3Taps can serve that data to anyone who wants to see goods and services listedfor sale on Craigslist’s exchange. Second, a data monopolist may lack theability to monitor the quantity of final goods and services produced using themonopolist’s data. When Bidder’s Edge scrapes prices from eBay, eBay may neverlearn that a user has viewed those prices on Bidder’s Edge. As a result,uncertainty may blur the final demand curve that a data monopolist faces.
If the monopolistcannot predict final demand and must make sunk investments in order to enterthe final market, the monopolist may prefer temporarily to deal with adownstream rival. The rival’s success or failure provides a proxy for otherwiseunobservable final demand. If the data monopolist retains the ability toterminate the rival’s access, then the monopolist has obtained a costlessoption on a downstream market. For example,PeopleBrowsrsaid that it started analyzing Twitter data on the basis of the social network’spromise to make that data available.48 Twitter,PeopleBrowsrsaid, refused to share data only afterPeopleBrowsrdemonstrated the existence of a lucrative market for analytics.49
So a data monopolistmight pursue a strategy of free riding that ends with a refusal to deal. Thatmeans that uncertainty about market opportunities makes real the monopolistthat Judge Richard A. Posner could imagine only “with difficulty”: themonopolist who “entice[s] new firms into its market only to destroy them.”50 If a plaintiff cannot bring an essentialdata claim to mitigate the threat of exclusion, then the risk of entry—and,therefore, the cost of innovation—will rise.
Data monopolistsmight also refuse to deal in order to protect their monopolies. A monopolistmay fear that a downstream rival’s tools will eventually supplant the monopolist’sproduct altogether.51 If the monopoly product provides to usersdata produced by a network, then refusal to share those data may impede a rivalthat seeks to develop a competing product. For example, according to Craigslist’srivals, they cannot promise market prices to buyers without Craigslist’s data.52 Or a social network’s rival might choose tochallenge the network by first attracting users with messages passed on theincumbent network.53Refusing to deal data forecloses such a tactic.
Data monopolists mayhave multiple motives for refusing to deal data to potential competitors.Courts should not automatically ascribe to those refusals theprocompetitive explanations put forward by critics of theessential facilities doctrine.54
B. Incentives to Invest
Critics next chargedthat the essential facilities doctrine distorted firms’ incentives to invest.55 The prospect of future antitrust liability“could significantly reduce the incentive of entrepreneurs to innovate in areas. . .involv[ing] essentialfacilities.”56 The Supreme Court’sTrinko decision adopted thisargument,57 which has since met with approval in courtsof appeal.58
However, antitrustlaw does not offer clear guidance about when a defendant’s argument aboutreduced incentives will suffice to rebut an essential facilities claim. TheSupreme Court last ruled for an essential facilities plaintiff inAspen Skiing Co. v. Aspen Highlands SkiingCo.59Aspen’sunanimous Court held that the prospect of profits from “exclusionary” conductdoes not justify a refusal to deal.60 But asEinerElhauge asserts, “[m]onopolizationdoctrine currently uses vacuous standards andconclusorylabels that provide no meaningful guidance about which conduct will becondemned as exclusionary.”61 So data monopolists’ claims that refusals todeal protect “incentives of companies to innovate and compete,”62 or reduce “free-riding on [the monopolist’s]substantial investment of time, effort, and expense,”63 presuppose the sufficiency of businessjustifications that antitrust law has yet to accept.
Moreover, theincentive claim rests on the ex ante expectations of entrepreneurs, but theexperience of the data monopolists identified in this Comment suggests thatfacility ownership did not motivate entry into the markets that the monopolistscame to dominate. For example, Twitter launched a tool to connect; earlymonetization discussions revolved around advertising.64 Craigslist began as its founder’s eventscircular; the site remained “wedded to the idea that [it] was a communityservice” years after its launch.65eBay’s firstrevenues came from transaction fees, and its business plan predicted future revenuefrom software licensing.66
This could change.Data licensing revenues at Twitter rose almost fifty percent in 2013, to $70million.67 In April 2014 the company boughtGnip, a data reseller.68 LinkedIn, a social network forprofessionals, received most of its 2013 revenue from hiring professionals whobought access to the network’s data.69
The application ofany essential data doctrine to those who invest in pursuit of data monopolieswill require finesse. But essential facilities precedents supply a frameworkfor such a future: the Supreme Court’s refusal-to-deal precedents imposesharing only after reviewing a monopolist’s reasons for exclusion.70 Whether those reasons may include monopolyprofits, if the profits require exclusion and motivate investment, remains anunresolved question.71Partial answers exist; courts and scholars view with skepticism justificationsadvanced by monopolists who deal with some, but not with rivals.72 Moreover, courts may scrutinize profferedjustifications for pretext, safeguarding ex ante incentives only where thoseincentives are endangered.73
C. Administrability
Finally, criticsquestioned courts’ capacity to identify and remedy anticompetitive refusals todeal.74 Thisadministrabilitycritique asserted that generalist judges’ reviews of novel practice and complexeconomics for “exclusionary” conduct became risky affairs.75 And once judges condemned refusals to deal, theycould not enforce remedies without taking on the burdens of a regulator.76
Essential dataremedies escape some of these criticisms. First, thenonrivalrouscharacter of data “facilities” relieves courts of the analytical effortotherwise required to prevent “congestion through competing uses” of physicalfacilities with finite capacity.77 Second, the data monopolist faces costs ofsharing that likely approach zero;78 any nonzero costs likely arise from marketsfor commoditized infrastructure, such as servers, bandwidth, or processors.Therefore, no sustained judicial inquiry into industry idiosyncrasies or extantplant characteristics would be necessary to determine the sharing costs borneby data monopolists.79
Finally, courts canpreserve incentives to invest by permitting data monopolists to recover theiraverage total costs.80Courts have long paired cost recovery with the essential facilities doctrine.81 The standard—which includes a reasonablereturn on capital—“reflects equilibrium in the market for investment.”82
The argument thatinnovators and their backers require higher than reasonable returns to capitalpresumes that one firm—but not others—can identify a superior investmentopportunity. Theories of efficient capital markets, however, deny that suchopportunities for arbitrage exist.83 Together, these observations suggest thatcourts may more easily administer access to data than to physical facilities.
D. Consumer Welfare
The benefits ofaccess to data should also enter the analysis of courts confronted with claimsto essential data. In no markets do monopoly prices produce static deadweightloss more than in markets for information.84 Further, refusals to deal essential datastall innovation. Data power many applications: Twitter data have predictedsocial unrest and power outages and directed humanitarian aid.85 In that regard, data resemble technologiesthat support multiple rounds of innovation.86
Innovation scholarssuggest that unqualified control of such technology “tends to hinder technicalprogress.”87First movers focus on past experiences88 or lack expertise to develop allapplications.89Improvers who would build on data may fail to secure permission to do sobecause monopolists hold divergent beliefs about an improvement’s value.90
Broad exclusionrights favor innovation and consumer welfare when “the overall potential formodifications and improvements based on the original achievement is relativelyclear and bounded.”91 Little suggests that essential data fit thatdescription92: AOL failed to recognize that transactiondata could power the recommendation engine that Amazon built.93 Yahoo considered creating a spell check toolfrom users’ search engine queries, but it was Google that actually pursued theproject.94
The welfare case foran essential data doctrine has caveats. I have simplified questions of accessquality over which parties have litigated in the last twenty years.95 I have assumed that conduct that resemblesboth exclusion and justified competition excludes with frequency sufficient tojustify scrutiny.96 But the prima facie case remains: revitalizingessential facilities in the context of data may speed innovation and increaseconsumer welfare.97
Conclusion
This Comment hasargued that criticisms of the essential facilities doctrine carry less weightwhen a dataset becomes the facility. In the data context, the essentialfacilities doctrine captures suspect conduct and better withstands criticismslinked to ex ante incentives. Remedies that enforce access to data would entailless judicial inquiry into costs of service and facility capacity. The case forany essential data doctrine will evolve with the objectives of aspiring datamonopolists. But that case will always build on theallocativeinefficiencies of information monopolies and their negative effects oninnovation with data.
Essential dataimplicate networks through which consumers connect and transact—activitiesfundamental to Internet economies. Courts and agencies should consider whethera doctrine devised to safeguard competition in the last century has become moresalient in this one.
ZACHARY ABRAHAMSON*
Complaint ¶ 5,PeopleBrowsr, Inc. v. Twitter, Inc., No. CGC-12-526393 (Cal. Super. Ct. Nov. 27, 2012)(“By analyzing its 1000-day data mine of tweets,PeopleBrowsr empowers individual web users and organizations to find value in the massive volumes of data produced on Twitter. It also provides organizations deep insight regarding consumers’ reactions to products and services . .. .”).
Id. ¶¶ 9, 120; Mike Isaac,Data Nerds Revolt!PeopleBrowsr Takes Twitter to Court Over Alleged Anticompetitive Actions,All ThingsD (Nov. 28, 2012, 9:26 PM),http://allthingsd.com/20121128/data-nerds-revolt-peoplebrowsr-takes-twitter-to-court-over-alleged-anticompetitive-actions [http://perma.cc/VF7D-8ZCA].
David McAfee,Twitter,PeopleBrowsr Settle Dispute Over Data Access,Law360 (Apr. 29, 2013, 5:59 PM),http://www.law360.com/articles/436973/twitter-peoplebrowsr-settle-dispute-over-data-access [http://perma.cc/6BRL-J5WZ].
See Craigslist, Inc. v. 3Taps, Inc., 942 F. Supp. 2d 962, 982 (N.D. Cal. 2013) (bifurcating and staying discovery on antitrust counterclaims);see alsoeBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058, 1072-73 (N.D. Cal. 2000) (holding that a court evaluating whether to issue a preliminary injunction need not address an antitrust counterclaim);
AmirEfrati,Antitrust Regulator Makes Twitter Inquiries,Wall St. J., July 1, 2011,http://online.wsj.com/news/articles/SB10001424052702304450604576418184234003812 [http://perma.cc/TS9Z-URY2].
VerizonCommc’ns Inc. v. Law Offices of Curtis V.Trinko, 540 U.S. 398, 411 (2004) (stating that the Court has never recognized an essential facilities doctrine);see Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 611 n.44 (1985) (requiring ski mountains to continue offering a joint ticket but finding it unnecessary to consider the essential facilities doctrine).
See, e.g.,MCI, 708 F.2d at 1132-33; Hecht v. Pro-Football, Inc., 570 F.2d 982, 992 (D.C. Cir. 1977);see alsoPhillipAreeda,Essential Facilities: An Epithet in Need of Limiting Principles,58 Antitrust L.J.841, 847-52 (1990) (providing an overview of three Supreme Court cases often cited to support the essential facilities doctrine); BrettFrischmann & Spencer Weber Waller,Revitalizing Essential Facilities, 75Antitrust L.J. 1, 6-8 (2008) (discussing the traditional essential facilities doctrine).
See United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966) (“The offense of monopoly . . . has two elements: (1) the possession of monopoly power in the relevant market . .. .”); Viacom Int’l Inc. v. Time Inc., 785 F. Supp. 371, 376 n.12 (S.D.N.Y. 1992) (stating that the essential facilities doctrine is “more properly characterized as a label that may aid in the analysis of a monopoly claim, not a statement of a separate violation of law”);cf.Marina Lao,Networks, Access, and “Essential Facilities”: FromTerminal RailroadtoMicrosoft, 62SMU L. Rev.557, 583 (2009) (indicating that applying the essential facilities doctrine to information is imprudent where a firm lacks monopoly power in the market).
As in the case of Twitter, competitor complaints about eBay’s actions prompted agency scrutiny. John R.Wilke,Justice Department Looks into Efforts by eBay to Bar Entry of Software ‘Bots’,Wall St. J., Feb. 4, 2000,http://online.wsj.com/news/articles/SB949624391916067802 [http://perma.cc/89PD-VUGH]. The U.S. Department of Justice opened an antitrust investigation into the activities that gave rise to theBidder’s Edge litigation. Two years later, the probe concluded without action.Antitrust Probe Ends,Wall St. J. Eur., Mar. 27, 2002, at A6.
Each additional market participant increases that market’s liquidity. Better prices result. A rival market with fewer participants will offer lower prices (for sellers) or higher prices (for buyers) than the incumbent. These inferior prices will induce buyers and sellers to trade on the incumbent market, further depriving the rival of liquidity.See Daniel M. Gray,The Essential Role of Regulation in Promoting Equity Market Competition, 1 Brook. J. Corp. Fin.& Com. L. 395, 397 (2007).
CompareGrillo v. Bd. of Realtors, 219 A.2d 635, 650 (N.J. Super.Ct. Ch. Div. 1966) (forcing access to a multiple listing service that was operated as a joint venture),withSolidFX, LLC v.Jeppesen Sanderson, Inc., 935 F. Supp. 2d.1069, 1083-84 (D. Colo. 2013) (rejecting the application of the essential facilities doctrine to aviation data that the defendant originated),and White Directory of Rochester, Inc. v. Rochester Tel. Corp., 714 F. Supp. 65, 70 (W.D.N.Y. 1989) (rejecting the application of the essential facilities doctrine to listings that utility originated).
NickBilton, Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal 244 (2013) (describing a potential Twitter rival that planned “to build a Twitter-network clone that could be used to divert people away from Twitter to an entirely new service”);see alsoDennis W. Carlton & Michael Waldman,The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries, 33RAND J. Econ. 194, 207 (2002) (“[T]he monopolist will sometimes deter entry into the primary market in period 2 by behaving in a manner that causes cohort 1 consumers to purchase complementary units from the monopolist.”).
See, e.g.,Bork, supra note 27, at 231; David J. Gerber, Note,Rethinking the Monopolist’s Duty to Deal: A Legal and Economic Critique of the Doctrine of ‘Essential Facilities,’ 74Va. L. Rev. 1069, 1084 (1988) (“The law should presume that efficiency motivates monopolists absent any anticompetitive incentive for refusals to deal.”).
Gregory J.Werden,The Law and Economics of the Essential Facility Doctrine, 32St. Louis U. L.J. 433, 473 (1987);see alsoCaswell O. Hobbs III et al.,Panel Discussion: Exclusionary Conduct, 57Antitrust L.J. 723, 742 (1988) (“[The monopolist]got out in front when it wasn’t at all clear that the [essential] facility was going to work, and now someone else wants to come along and help themselves [sic].”).
Gary Wolf,Why Craigslist Is Such a Mess,Wired, Aug. 24, 2009,http://archive.wired.com/entertainment/theweb/magazine/17-09/ff_craigslist?currentPage=2 [http://perma.cc/GFW4-7DX9].
Twitter, Inc., Annual Report (Form 10-K) 55 (Mar. 6, 2014),http://www.sec.gov/Archives/edgar/data/1418091/000095012314003031/twtr-10k_20131231.htm [http://perma.cc/FME4-QMTE].
SeeElizabethDwoskin &YoreeKoh,Twitter Agrees to Buy Data PartnerGnip,Wall St. J.,Apr. 15, 2014,http://online.wsj.com/news/articles/SB10001424052702304572204579503402564724312 [http://perma.cc/VDN-52AV] (noting that Twitter’s acquisition ofGnip was “a sign that [Twitter] wants a bigger role in analyzing tweets for businesses hungry for insights from social media”); Erin Griffith,Twitter Plays Defense with Deal forGnip,Fortune, Apr. 15, 2014,http://fortune.com/2014/04/15/twitter-plays-defense-with-deal-for-gnip [http://perma.cc/3XH6-ZG7P ] (“The deal marks a turning point for social data.”); Mike Isaac,WithGnip Buy, Twitter Starts Taking Its Data Business Seriously,Re/code (Apr. 15, 2014, 7:27 AM),http://recode.net/2014/04/15/with-gnip-buy-twitter-starts-taking-its-data-business-seriously [http://perma.cc/3MT5-MNCQ] (“Twitter didn’t quite take its data licensing revenue stream seriously for a long time . . . . Perhaps with theGnip acquisition, that stance has changed.”).
LinkedIn Corp., Annual Report (Form 10-K) 8-9, 48 (Feb. 13, 2014),http://www.sec.gov/Archives/edgar/data/1271024/000144530514000439/a20131231-10xkdocument.htm [http://perma.cc/36JR-FRLW].
SeeHovenkamp,supra note 55, at 339 (arguing that the essential facilities doctrine “requires a court to set terms and conditions of the sale, thus turning it into a kind of regulatory agency”); Frank H. Easterbrook,Essay: The Chicago School and Exclusionary Conduct, 31Harv.J.L. & Pub.Pol’y 439, 442 (2008) (“Anyone who thinks that judges would be good at detecting the few situations in which cooperation would do more good than harm has not studied the history of antitrust.”).
Frank H. Easterbrook,On Identifying Exclusionary Conduct, 61Notre Dame L. Rev.972, 977-78 (1986) (“Judges hearing antitrust cases have a lousy record in separating economic wisdom from fallacy.”);see also Novell, Inc., 731 F.3d at 1075 (describing the complexity of identifying exclusionary practice);Elhauge,supra note 61, at 255 (critiquing the “vacuous” standards used to determine which actions are exclusionary).
See, e.g., VerizonCommc’ns Inc. v. Law Offices of Curtis V.Trinko, 540 U.S. 398, 408 (2004) (“Enforced sharing . . . requires antitrust courts to act as central planners, . . . a role for which they are ill suited.”);Areeda,supra note 24, at 853; Frank H. Easterbrook,Correspondence:Workable Antitrust Policy, 84Mich. L. Rev.1696, 1700-01 (1986).
Spencer Weber Waller,Areeda, Epithets, and Essential Facilities, 2008Wis. L. Rev. 359, 373;seeFrischmann & Waller,supra note 24, at 13 (“For partially non-rivalrous resources of finite capacity, the cost-benefit analysis is more complicated because of the possibility of congestion through competing uses and users.”);cf. Hecht v. Pro-Football, Inc., 570 F.2d 982, 992-93 (D.C. Cir. 1977) (“[T]he antitrust laws do not require that an essential facility be shared if such sharing would be impractical or would inhibit the defendant’s ability to serve its customers adequately.”); United States v. AT&T, 524 F. Supp. 1336, 1360-61 (D.D.C. 1981) (describing “problems of feasibility and practicability” that courts may consider in context of essential facilities doctrine).
See, e.g., eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d. 1058, 1063 (N.D. Cal. 2000) (explaining that aggregator requests comprised between 0.7 percent and 1.1 percent of data transferred by an auction site over ten months; the cost of service totaled between $45,323 and $61,804);cf. Maureen A. O’Rourke,Shaping Competition on the Internet: Who Owns Product and Pricing Information?, 53Vand. L. Rev. 1965, 1980-81 (2000) (suggesting that an access regime would not lead to a debilitating volume of access requests).
Brett M.Frischmann,Infrastructure: The Social Value of Shared Resources 176 (2012) (quoting John F. Duffy, Comment, Intellectual Property Isolationism and the Average Cost Thesis, 83Tex. L. Rev.1077, 1079 (2005));cf.Jeffrey L. Harrison,A Positive Externalities Approach to Copyright Law: Theory and Application, 13J.Intell. Prop. L. 1, 15 (2005) (“No costs beyond the minimum necessary to bring copyright-worthy works into existence should be incurred.”).
E.g., United States v. Terminal R.R.Ass’n, 224 U.S. 383, 411 (1912) (structuring a grant of competitor access upon “use, character, and cost of service”); United States v. Realty Multi-List, Inc., 629 F.2d 1351, 1386 (5th Cir. 1980) (holding that the defendant in an essential facilities case “must be allowed to establish fee schedules which allow it to recoup its costs of operation”).
See Kenneth J. Arrow,Economic Welfare and the Allocation of Resources for Invention,inThe Rate and Direction of Inventive Activity: Economic and Social Factors 609, 614–15 (Nat’l Bureau of Econ. Res. ed., 1962) (“If [the cost of transmitting information] were zero, then optimal allocation would obviously call for unlimited distribution of the information without cost.”).
ElizabethDwoskin,Twitter’s Data Business Proves Lucrative,Wall St. J., Oct. 7, 2013,http://online.wsj.com/news/articles/SB10001424052702304441404579118531954483974 [http://perma.cc/E356-E7XH].
Robert P. Merges & Richard R. Nelson,On Limiting or Encouraging Rivalry in Technical Progress: The Effect of Patent Scope Decisions, 25J. Econ.Behav. & Org. 1, 7 (1994) [hereinafter Merges & Nelson,The Effect of Patent Scope Decisions];cf.Frischmann,supra note 80, at 253 (“Intellectual infrastructure, such as basic research [and] ideas, . . .facilitat[es] a wide range of downstream productive activities . . . .”).
Merges & Nelson,The Effect of Patent Scope Decisions,supranote 86, at 1;seeRobert P. Merges & Richard R. Nelson,On the Complex Economics of Patent Scope, 90Colum. L. Rev. 839, 844 (1990) [hereinafter Merges & Nelson,Complex Economics];see alsoMerges & Nelson,Complex Economics, at 872 (offering theoretical justifications for the historical account).
SeeViktor Mayer-Schönberger & KennethCukier,Big Data 124 (2013) (arguing that data monopolists “don’t necessarily have the right skills to extract [data’s] value or to generate creative ideas about what is worth unleashing”); MarkLemley,Ex Ante Versus Ex Post Justifications for Intellectual Property, 71U. Chi. L. Rev. 129, 137 (2004) (“Creators are often terrible managers. They frequently misunderstand the significance of their own invention and the uses to which it can be put.”); SuzanneScotchmer,Standing on the Shoulders of Giants: Cumulative Research and the Patent Law, 5J. Econ.Persp.29, 32-35 (1991).
Merges & Nelson,The Effect of Patent Scope Decisions,supranote 86, at 5 (“Williamson’s theory . . . surely would lead one to suspect that it would be very difficult to work out licensing arrangements regarding rights to what may be found or created prior to knowing just what the inventions or discoveries will turn out to be.”).
*I would like to thank for suggestions Adam Adler, Adam Chandler, VictoriaCundiff, RaphaelGraybill, George Priest, Fiona Scott Morton, Brian Sweeney, and Richard Tao. I also thank for support family and HilaryOlivaFaxon. I am grateful for the contributions of MiriamHinman and Emily Barnet. All errors are mine.
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Complaint ¶ 5,PeopleBrowsr, Inc. v. Twitter, Inc., No. CGC-12-526393 (Cal. Super. Ct. Nov. 27, 2012)(“By analyzing its 1000-day data mine of tweets,PeopleBrowsr empowers individual web users and organizations to find value in the massive volumes of data produced on Twitter. It also provides organizations deep insight regarding consumers’ reactions to products and services . .. .”).
Id. ¶ 4.
Id. ¶¶ 9, 120; Mike Isaac,Data Nerds Revolt!PeopleBrowsr Takes Twitter to Court Over Alleged Anticompetitive Actions,All ThingsD (Nov. 28, 2012, 9:26 PM),http://allthingsd.com/20121128/data-nerds-revolt-peoplebrowsr-takes-twitter-to-court-over-alleged-anticompetitive-actions [http://perma.cc/VF7D-8ZCA].
Defendant Twitter, Inc.’s Notice of Motion and Motion to Dismiss Plaintiffs’ Complaint at 1,PeopleBrowsr, Inc. v. Twitter, Inc.,No. 4:12-cv-06120-EMC (N.D. Cal. Mar. 6, 2013).
Complaint,supra note 1, ¶ 114.
Id. ¶ 122.
Id. ¶ 120.
Id. ¶ 121.
Id. ¶ 155.
Id. ¶ 160.
Defendant Twitter, Inc.’s Notice of Motion and Motion to Dismiss Plaintiffs’ Complaint,supranote 4, at 9-12.
Id. at 11.
SeeinfraPart II.A.
David McAfee,Twitter,PeopleBrowsr Settle Dispute Over Data Access,Law360 (Apr. 29, 2013, 5:59 PM),http://www.law360.com/articles/436973/twitter-peoplebrowsr-settle-dispute-over-data-access [http://perma.cc/6BRL-J5WZ].
See Craigslist, Inc. v. 3Taps, Inc., 942 F. Supp. 2d 962, 982 (N.D. Cal. 2013) (bifurcating and staying discovery on antitrust counterclaims);see alsoeBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058, 1072-73 (N.D. Cal. 2000) (holding that a court evaluating whether to issue a preliminary injunction need not address an antitrust counterclaim);
AmirEfrati,Antitrust Regulator Makes Twitter Inquiries,Wall St. J., July 1, 2011,http://online.wsj.com/news/articles/SB10001424052702304450604576418184234003812 [http://perma.cc/TS9Z-URY2].
E-mail from ElizabethLordan, Pub. Affairs Specialist, Fed. TradeComm’n Off.of Pub.Affairs, to author (Sept. 17, 2014, 2:52 PM EST) (on file with author).
United States v. Colgate & Co., 250 U.S. 300, 307 (1919).
Pacific Bell Tel. Co. v.LinklineCommc’ns, Inc., 555 U.S. 438, 447-48 (2009).
MCICommc’ns Corp. v. AT&T, 708 F.2d 1081, 1132-33 (7th Cir. 1983).
Thomas G.Krattenmaker & Steven C. Salop,Anticompetitive Exclusion: Raising Rivals’ Costs to Achieve Power Over Price, 96Yale L.J. 209, 234 (1986).
United States v. Terminal R.R.Ass’n, 224 U.S. 383, 397, 405, 411 (1912).
VerizonCommc’ns Inc. v. Law Offices of Curtis V.Trinko, 540 U.S. 398, 411 (2004) (stating that the Court has never recognized an essential facilities doctrine);see Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 611 n.44 (1985) (requiring ski mountains to continue offering a joint ticket but finding it unnecessary to consider the essential facilities doctrine).
See, e.g.,MCI, 708 F.2d at 1132-33; Hecht v. Pro-Football, Inc., 570 F.2d 982, 992 (D.C. Cir. 1977);see alsoPhillipAreeda,Essential Facilities: An Epithet in Need of Limiting Principles,58 Antitrust L.J.841, 847-52 (1990) (providing an overview of three Supreme Court cases often cited to support the essential facilities doctrine); BrettFrischmann & Spencer Weber Waller,Revitalizing Essential Facilities, 75Antitrust L.J. 1, 6-8 (2008) (discussing the traditional essential facilities doctrine).
Otter Tail Power Co. v. United States, 410 U.S. 366, 368-69, 382 (1973).
Aspen Skiing, 472 U.S. at 611.
Robert Bork,The Antitrust Paradox 229 (1978); Richard A. Posner,Exclusionary Practices and the Antitrust Laws, 41U. Chi. L. Rev.506, 523-24 (1974).
3BPhillip E.Areeda & HerbertHovenkamp, Antitrust Law ¶ 772 (3d ed. 2008).
Areeda,supra note 24, at 853; MichaelBoudin,Antitrust Doctrine and the Sway of Metaphor,75 Geo.L.J. 395, 401 (1986).
VerizonCommc’ns Inc. v. Law Offices of Curtis V.Trinko, 540 U.S. 398, 411 (2004).
See MCICommc’ns Corp. v. AT&T, 708 F.2d 1081, 1132-33 (7th Cir. 1983).
See Twin Labs., Inc. v.Weider Health & Fitness, 900 F.2d 566, 570 (2d Cir. 1990).
SeeMCI, 708 F.2d at 1132.
Seeid.at 1133.
See United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966) (“The offense of monopoly . . . has two elements: (1) the possession of monopoly power in the relevant market . .. .”); Viacom Int’l Inc. v. Time Inc., 785 F. Supp. 371, 376 n.12 (S.D.N.Y. 1992) (stating that the essential facilities doctrine is “more properly characterized as a label that may aid in the analysis of a monopoly claim, not a statement of a separate violation of law”);cf.Marina Lao,Networks, Access, and “Essential Facilities”: FromTerminal RailroadtoMicrosoft, 62SMU L. Rev.557, 583 (2009) (indicating that applying the essential facilities doctrine to information is imprudent where a firm lacks monopoly power in the market).
eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058 (N.D. Cal. 2000);
Bidder’s Edge Sues eBay, Claiming Unfair Business Tactics,Dow Jones Bus. News,Feb. 7, 2000.
As in the case of Twitter, competitor complaints about eBay’s actions prompted agency scrutiny. John R.Wilke,Justice Department Looks into Efforts by eBay to Bar Entry of Software ‘Bots’,Wall St. J., Feb. 4, 2000,http://online.wsj.com/news/articles/SB949624391916067802 [http://perma.cc/89PD-VUGH]. The U.S. Department of Justice opened an antitrust investigation into the activities that gave rise to theBidder’s Edge litigation. Two years later, the probe concluded without action.Antitrust Probe Ends,Wall St. J. Eur., Mar. 27, 2002, at A6.
Complaint, Craigslist, Inc. v. 3Taps, Inc., 942 F. Supp. 2d 962 (N.D. Cal. 2013) (No.CV-12-03816 CRB), 2012 WL 7061539.
Id.
Each additional market participant increases that market’s liquidity. Better prices result. A rival market with fewer participants will offer lower prices (for sellers) or higher prices (for buyers) than the incumbent. These inferior prices will induce buyers and sellers to trade on the incumbent market, further depriving the rival of liquidity.See Daniel M. Gray,The Essential Role of Regulation in Promoting Equity Market Competition, 1 Brook. J. Corp. Fin.& Com. L. 395, 397 (2007).
MCICommc’ns Corp. v. AT&T, 708 F.2d 1081, 1132-33 (7th Cir. 1983).
Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1350-51 (Fed. Cir. 1999) (acting alone); MarinCnty.Bd. of Realtors, Inc. v.Palsson, 549 P.2d 833, 842-43 (Cal. 1976) (acting with others).
CompareGrillo v. Bd. of Realtors, 219 A.2d 635, 650 (N.J. Super.Ct. Ch. Div. 1966) (forcing access to a multiple listing service that was operated as a joint venture),withSolidFX, LLC v.Jeppesen Sanderson, Inc., 935 F. Supp. 2d.1069, 1083-84 (D. Colo. 2013) (rejecting the application of the essential facilities doctrine to aviation data that the defendant originated),and White Directory of Rochester, Inc. v. Rochester Tel. Corp., 714 F. Supp. 65, 70 (W.D.N.Y. 1989) (rejecting the application of the essential facilities doctrine to listings that utility originated).
See Intergraph, 195 F.3d at 1357; Case T-201/04, Microsoft Corp. v.Comm’n, 2007 E.C.R. II-03601.
Lao,supranote 35, at 558-59 (2009) (arguing that a “theoretically sound basis for antitrust intervention” exists because sharing interoperability information permits competition for “a necessity” that facilities’ “natural monopoly characteristics or strong network effects” would otherwise bar).
See, e.g.,3BAreeda &Hovenkamp,supra note28, ¶ 773c (“[A] monopolist cannot earn double profits by monopolizing a second, vertically related market.”);Bork,supra note 27, at 229 (“[V]ertically related monopolies can take only one monopoly profit”); Posner,supra note 27, at 524.
Complaint,supra note 1, ¶¶ 27-33 (“PeopleBrowsr Built a Valuable Business in Reliance on Twitter’s Commitment to Keep Access to Its Data Open.”).
Id. ¶ 92 (“After encouragingPeopleBrowsr and other developers to develop innovative products that opened up lucrative new markets analyzing Twitter data, Twitter has now acted to take control of those markets.”).
Olympia Equip. Leasing Co. v. W. Union Tel. Co., 797 F.2d 370, 376 (7th Cir. 1986).
See, e.g., United States v. Microsoft Corp., 253 F.3d 34, 64 (D.C. Cir. 2001) (finding that the developer of an operating system violated Section 2 of the Sherman Act by excluding technologies with the potential to challenge the operating system’s monopoly).
Defendant 3Taps, Inc.’s First Amended Counterclaim at 46-49, Craigslist, Inc. v. 3Taps, Inc., 942 F. Supp. 2d 962 (N.D. Cal. 2013) (No.CV-12-03816 CRB), 2012 WL 8233034.
NickBilton, Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal 244 (2013) (describing a potential Twitter rival that planned “to build a Twitter-network clone that could be used to divert people away from Twitter to an entirely new service”);see alsoDennis W. Carlton & Michael Waldman,The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries, 33RAND J. Econ. 194, 207 (2002) (“[T]he monopolist will sometimes deter entry into the primary market in period 2 by behaving in a manner that causes cohort 1 consumers to purchase complementary units from the monopolist.”).
See, e.g.,Bork, supra note 27, at 231; David J. Gerber, Note,Rethinking the Monopolist’s Duty to Deal: A Legal and Economic Critique of the Doctrine of ‘Essential Facilities,’ 74Va. L. Rev. 1069, 1084 (1988) (“The law should presume that efficiency motivates monopolists absent any anticompetitive incentive for refusals to deal.”).
HerbertHovenkamp, Federal Antitrust Policy: The Law of Competition and Its Practice 340 (4th ed. 2011) (“Forced Sharing Undercuts Incentives to Develop Alternative Sources of Supply.”).
Gregory J.Werden,The Law and Economics of the Essential Facility Doctrine, 32St. Louis U. L.J. 433, 473 (1987);see alsoCaswell O. Hobbs III et al.,Panel Discussion: Exclusionary Conduct, 57Antitrust L.J. 723, 742 (1988) (“[The monopolist]got out in front when it wasn’t at all clear that the [essential] facility was going to work, and now someone else wants to come along and help themselves [sic].”).
VerizonCommc’ns Inc. v. Law Offices of Curtis V.Trinko, 540 U.S. 398, 407-08 (2004) (“[Forced sharing] may lessen the incentive for the monopolist, the rival, or both to invest in those economically beneficial facilities.”).
See, e.g., Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1072 (10th Cir. 2013); Cablevision Sys.Corp. v. FCC, 597 F.3d 1306, 1322 (D.C. Cir. 2010);MetroNetServs.Corp. v. Qwest Corp., 383 F.3d 1124, 1131 (9th Cir. 2004).
Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 611 (1985).
Id. at 608 (declining to find business justification in defendant’s interest in “reducing competition in the Aspen market over the long run”).
EinerElhauge,Defining Better Monopolization Standards,56 Stan. L. Rev.253, 253 (2003).
Defendant Twitter, Inc.’s Notice of Motion and Motion to Dismiss Plaintiffs’ Complaint,supranote 4, at 11.
Complaint,supra note 39, ¶ 144.
Bilton,supra note53, at 109.
Gary Wolf,Why Craigslist Is Such a Mess,Wired, Aug. 24, 2009,http://archive.wired.com/entertainment/theweb/magazine/17-09/ff_craigslist?currentPage=2 [http://perma.cc/GFW4-7DX9].
Adam Cohen, The Perfect Store: Inside eBay 71-72 (2002).
Twitter, Inc., Annual Report (Form 10-K) 55 (Mar. 6, 2014),http://www.sec.gov/Archives/edgar/data/1418091/000095012314003031/twtr-10k_20131231.htm [http://perma.cc/FME4-QMTE].
SeeElizabethDwoskin &YoreeKoh,Twitter Agrees to Buy Data PartnerGnip,Wall St. J.,Apr. 15, 2014,http://online.wsj.com/news/articles/SB10001424052702304572204579503402564724312 [http://perma.cc/VDN-52AV] (noting that Twitter’s acquisition ofGnip was “a sign that [Twitter] wants a bigger role in analyzing tweets for businesses hungry for insights from social media”); Erin Griffith,Twitter Plays Defense with Deal forGnip,Fortune, Apr. 15, 2014,http://fortune.com/2014/04/15/twitter-plays-defense-with-deal-for-gnip [http://perma.cc/3XH6-ZG7P ] (“The deal marks a turning point for social data.”); Mike Isaac,WithGnip Buy, Twitter Starts Taking Its Data Business Seriously,Re/code (Apr. 15, 2014, 7:27 AM),http://recode.net/2014/04/15/with-gnip-buy-twitter-starts-taking-its-data-business-seriously [http://perma.cc/3MT5-MNCQ] (“Twitter didn’t quite take its data licensing revenue stream seriously for a long time . . . . Perhaps with theGnip acquisition, that stance has changed.”).
LinkedIn Corp., Annual Report (Form 10-K) 8-9, 48 (Feb. 13, 2014),http://www.sec.gov/Archives/edgar/data/1271024/000144530514000439/a20131231-10xkdocument.htm [http://perma.cc/36JR-FRLW].
See, e.g., Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 608 (1985).
Elhauge,supranote 61, at 310;seeNovell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1075-77 (10th Cir. 2013).
See Olympia Equip. Leasing Co. v. W. Union Tel. Co., 797 F.2d 370, 377 (7th Cir. 1986);Elhauge,supra note 61, at 312.
See, e.g.,Aspen Skiing, 472 U.S. at 609.
SeeHovenkamp,supra note 55, at 339 (arguing that the essential facilities doctrine “requires a court to set terms and conditions of the sale, thus turning it into a kind of regulatory agency”); Frank H. Easterbrook,Essay: The Chicago School and Exclusionary Conduct, 31Harv.J.L. & Pub.Pol’y 439, 442 (2008) (“Anyone who thinks that judges would be good at detecting the few situations in which cooperation would do more good than harm has not studied the history of antitrust.”).
Frank H. Easterbrook,On Identifying Exclusionary Conduct, 61Notre Dame L. Rev.972, 977-78 (1986) (“Judges hearing antitrust cases have a lousy record in separating economic wisdom from fallacy.”);see also Novell, Inc., 731 F.3d at 1075 (describing the complexity of identifying exclusionary practice);Elhauge,supra note 61, at 255 (critiquing the “vacuous” standards used to determine which actions are exclusionary).
See, e.g., VerizonCommc’ns Inc. v. Law Offices of Curtis V.Trinko, 540 U.S. 398, 408 (2004) (“Enforced sharing . . . requires antitrust courts to act as central planners, . . . a role for which they are ill suited.”);Areeda,supra note 24, at 853; Frank H. Easterbrook,Correspondence:Workable Antitrust Policy, 84Mich. L. Rev.1696, 1700-01 (1986).
Spencer Weber Waller,Areeda, Epithets, and Essential Facilities, 2008Wis. L. Rev. 359, 373;seeFrischmann & Waller,supra note 24, at 13 (“For partially non-rivalrous resources of finite capacity, the cost-benefit analysis is more complicated because of the possibility of congestion through competing uses and users.”);cf. Hecht v. Pro-Football, Inc., 570 F.2d 982, 992-93 (D.C. Cir. 1977) (“[T]he antitrust laws do not require that an essential facility be shared if such sharing would be impractical or would inhibit the defendant’s ability to serve its customers adequately.”); United States v. AT&T, 524 F. Supp. 1336, 1360-61 (D.D.C. 1981) (describing “problems of feasibility and practicability” that courts may consider in context of essential facilities doctrine).
See, e.g., eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d. 1058, 1063 (N.D. Cal. 2000) (explaining that aggregator requests comprised between 0.7 percent and 1.1 percent of data transferred by an auction site over ten months; the cost of service totaled between $45,323 and $61,804);cf. Maureen A. O’Rourke,Shaping Competition on the Internet: Who Owns Product and Pricing Information?, 53Vand. L. Rev. 1965, 1980-81 (2000) (suggesting that an access regime would not lead to a debilitating volume of access requests).
See Town of Concord, Mass. v.Bos. Edison Co., 915 F.2d 17, 25 (1st Cir. 1990) (describing the difficulties of administering access remedies).
Brett M.Frischmann,Infrastructure: The Social Value of Shared Resources 176 (2012) (quoting John F. Duffy, Comment, Intellectual Property Isolationism and the Average Cost Thesis, 83Tex. L. Rev.1077, 1079 (2005));cf.Jeffrey L. Harrison,A Positive Externalities Approach to Copyright Law: Theory and Application, 13J.Intell. Prop. L. 1, 15 (2005) (“No costs beyond the minimum necessary to bring copyright-worthy works into existence should be incurred.”).
E.g., United States v. Terminal R.R.Ass’n, 224 U.S. 383, 411 (1912) (structuring a grant of competitor access upon “use, character, and cost of service”); United States v. Realty Multi-List, Inc., 629 F.2d 1351, 1386 (5th Cir. 1980) (holding that the defendant in an essential facilities case “must be allowed to establish fee schedules which allow it to recoup its costs of operation”).
Frischmann,supra note 80, at 176.
Cf. Duffy,supranote 80, at 1078-79 (“If investors in intellectual property creation were recovering more than their average fixed costs needed to produce the intellectual property, something would seem wrong. But what would be wrong is that the market in investment would not be in equilibrium.”).
See Kenneth J. Arrow,Economic Welfare and the Allocation of Resources for Invention,inThe Rate and Direction of Inventive Activity: Economic and Social Factors 609, 614–15 (Nat’l Bureau of Econ. Res. ed., 1962) (“If [the cost of transmitting information] were zero, then optimal allocation would obviously call for unlimited distribution of the information without cost.”).
ElizabethDwoskin,Twitter’s Data Business Proves Lucrative,Wall St. J., Oct. 7, 2013,http://online.wsj.com/news/articles/SB10001424052702304441404579118531954483974 [http://perma.cc/E356-E7XH].
Robert P. Merges & Richard R. Nelson,On Limiting or Encouraging Rivalry in Technical Progress: The Effect of Patent Scope Decisions, 25J. Econ.Behav. & Org. 1, 7 (1994) [hereinafter Merges & Nelson,The Effect of Patent Scope Decisions];cf.Frischmann,supra note 80, at 253 (“Intellectual infrastructure, such as basic research [and] ideas, . . .facilitat[es] a wide range of downstream productive activities . . . .”).
Merges & Nelson,The Effect of Patent Scope Decisions,supranote 86, at 1;seeRobert P. Merges & Richard R. Nelson,On the Complex Economics of Patent Scope, 90Colum. L. Rev. 839, 844 (1990) [hereinafter Merges & Nelson,Complex Economics];see alsoMerges & Nelson,Complex Economics, at 872 (offering theoretical justifications for the historical account).
Merges & Nelson,Complex Economics,supra note 87, at 873.
SeeViktor Mayer-Schönberger & KennethCukier,Big Data 124 (2013) (arguing that data monopolists “don’t necessarily have the right skills to extract [data’s] value or to generate creative ideas about what is worth unleashing”); MarkLemley,Ex Ante Versus Ex Post Justifications for Intellectual Property, 71U. Chi. L. Rev. 129, 137 (2004) (“Creators are often terrible managers. They frequently misunderstand the significance of their own invention and the uses to which it can be put.”); SuzanneScotchmer,Standing on the Shoulders of Giants: Cumulative Research and the Patent Law, 5J. Econ.Persp.29, 32-35 (1991).
Merges & Nelson,The Effect of Patent Scope Decisions,supranote 86, at 5 (“Williamson’s theory . . . surely would lead one to suspect that it would be very difficult to work out licensing arrangements regarding rights to what may be found or created prior to knowing just what the inventions or discoveries will turn out to be.”).
Id. at 7.
Mayer-Schönberger &Cukier,supranote 89, at 103 (“[T]he importance of data’s reuse is not fully appreciated in business and society. . . . [M]any Internet and technology companies have been unaware until recently how valuable data’s reuse can be.”).
Id. at 105.
Id. at 112.
See, e.g., VerizonCommc’ns Inc. v. Law Offices of Curtis V.Trinko, 540 U.S. 398, 403 (2004).
Frank H. Easterbrook,When Is It Worthwhile to Use Courts to Search for Exclusionary Conduct?, 2003Colum. Bus. L. Rev.345, 345 (“The big problem lies in this: competitive and exclusionary conduct look alike.”).
Cf.Frischmann & Waller,supra note 24, at 11-12 (arguing that infrastructure management regimes that incorporate “openaccess[]” and nondiscriminatory terms “facilitate[] competition downstream, innovation and experimentation with new uses, and often the generation of positive externalities”).
*I would like to thank for suggestions Adam Adler, Adam Chandler, VictoriaCundiff, RaphaelGraybill, George Priest, Fiona Scott Morton, Brian Sweeney, and Richard Tao. I also thank for support family and HilaryOlivaFaxon. I am grateful for the contributions of MiriamHinman and Emily Barnet. All errors are mine.