## Facts

- The Federal Trade Commission brought an administrative enforcement action against Xerox Corporation concerning competition in the U.S. office photocopier market.
- Xerox held a dominant position in office copiers, including very high shares in plain-paper copiers, a key segment for effective competition.
- The FTC alleged that entry and meaningful rivalry were difficult due to technological and capital barriers, including the need for access to plain-paper copying technology.
- Xerox had amassed a large portfolio of copier-related patents and, according to the FTC, sought to control patents relevant to copier technology through acquisition and related strategies.
- The FTC alleged Xerox used cross-licensing and other arrangements with potential rivals and offered licenses only on restrictive terms that limited licensees to less competitive product segments (e.g., coated-paper or low-speed plain-paper copiers).
- The FTC issued a complaint in 1972 asserting the challenged conduct maintained Xerox’s market power and foreclosed or severely limited potential competition.
- The matter concluded in a negotiated settlement; the FTC entered a Decision and Order on July 29, 1975, without litigated findings of fact or conclusions of law.

## Issues

1. Whether a dominant firm’s accumulation and exploitation of a broad patent portfolio, combined with restrictive licensing and related practices that limit rivals’ competitive options, constitutes an unfair method of competition under § 5 of the FTC Act.
2. Whether compulsory patent licensing and related conduct restrictions are appropriate remedial measures to address competitive harm attributed to exclusionary uses of patent rights.

## Decision

- The FTC entered a consent Decision and Order resolving the proceeding without a contested liability determination.
- Xerox was required to offer non-discriminatory licenses for essentially its office-copier patent portfolio on reasonable terms and to provide associated technical information and know-how to licensees.
- Xerox was required to discontinue and refrain from restrictive licensing and other challenged exclusionary practices identified by the FTC as maintaining its dominance and limiting competition.
- The order imposed forward-looking conduct obligations intended to reduce patent-based barriers to entry and enable effective competition in copier technologies.

## Legal Principles

- Section 5 of the FTC Act can reach conduct involving patent acquisition and licensing when the overall course of conduct functions to exclude competition or maintain monopoly power.
- Lawful patent rights do not immunize a dominant firm from antitrust scrutiny when patents are used as part of a broader scheme that forecloses rivals or confines them to inferior product segments.
- In administrative antitrust enforcement, a consent order may impose structural and conduct remedies—including broad compulsory licensing—when the agency concludes such relief is necessary to restore competitive conditions.

## Conclusion

The FTC resolved its monopolization-based allegations against Xerox through a consent order treating Xerox’s patent-portfolio strategy and restrictive licensing practices as unfair methods of competition and requiring broad, non-discriminatory patent licensing and related conduct restrictions designed to facilitate entry and competition in office copiers, particularly plain-paper technologies.


In re Xerox Corp., 86 F.T.C. 364 (1975)