Tying Arrangement. Public Interest Corp (PIC) owned and operated television station WTMV TV in Lakeland, Florida. MCA Television, Ltd., owns and licenses syndicated television programs. The parties entered into a licensing contract with respect to

Question

several television shows. MCA conditioned the license on PIC's agreeing to take another show, Harry and the Hendersons. PIC agreed to this arrangement, although it would not have chosen to license Harry if it had not had to do so to secure the licenses for the other shows. More than two years into the contract, a dispute arose over PIC's payments, and negotiations failed to resolve the dispute. In a letter, MCA suspended PIC's broadcast rights for all of its shows and stated that "

Answer 1

Tying arrangement
The court found that PIC had breached its contract with MCA and had infringed MCA's copy-rights, and awarded MCA damages. As for PIC's antitrust claim, the court found that the con-tract for "Harry" was an illegal tying arrangement, a per se violation of the Sherman Act, and not enforceable. The court concluded, however, that PIC was not entitled to damages. Both parties appealed to the U.S. Court of Appeals for the Eleventh Circuit. The appellate court affirmed the lower court's rulings on MCA's claims but vacated the award of damages and remanded for a new determination of the amount. As for the antitrust claim, the appellate court affirmed the lower court's conclusion that the "Harry" agreement was per se illegal under the Sherman Act but also remanded for a redetermination of damages. The appellate court said, "[S]uch . . . contracts are among those economic arrangements that will always be condemned under the rule of reason and will therefore always merit a finding of per se illegality." Why? "[B]ecause the licensor by virtue of its copyright is presumed to have economic leverage sufficient to induce his customers to take the tied product along with the tying item. . . . To de-termine whether the terms of the contract for ‘Harry' reflect coercive use of MCA's copyright, we must therefore look, not to the reason PIC found appealing the programs it wanted, but to the fact that it found unappealing the program it didn't. . . . Conditioning the licensing of the shows PIC did wish to license on its . . . purchase of ‘Harry' thus allowed ‘Harry' to best the competition for the slot it eventually filled on PIC's roster entirely apart from its intrinsic appeal to PIC's programmers. This is precisely the sort of anticompetitive effect the per se rule [is] intended to protect against."