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St. Mary's Law Journal

Authors

Larry R. Patton

Publisher

St. Mary's University School of Law

Abstract

Tying Arrangements within the Franchise market suppress competition by denying competitors free access to the market for a tied product. A tie-in or tied product is an item, distinguishable from the franchise itself, forced upon a franchise, to secure the license. The two defenses used in validating a tied product are: (1) that the tying product in “good will” serves a satisfactory purpose in conjunction with the tied product, and (2) the tied protect serves to protect the quality of the trademarked product. This study examines case law and how the application of the Sherman and Clayton Anti-Trust Acts in patent and copyright law addressed the negative economic effects of tied products in franchises. In the Siegel v. Chicken Delight Inc. case of 1972, the court finally summarized the elements of what constitutes a valid tie-in product. An unlawful tying arrangement must show: (1) that the scheme identifies two distinct products, (2) that the tying product restrains competition, and (3) that a “not insubstantial” amount of commerce is affected. The latter two elements are not as significant and have been less difficult for the franchisee to prove. The recent focus has been on the difficulty in showing the distinction of the two products in question. If the defense successfully asserts that in the protection of the trademark, the tied product is so necessary as to be part of the packaged franchise and only one product truly exists, the case dies. The ultimate concern in illegal tying cases is not whether a tying arrangement exists, but if it is reasonable. The important question is, therefore, what is the main purpose of the tying arrangement?

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