U.S. DOJ & FTC REPORT ON ANTITRUST ENFORCEMENT AND IP RIGHTS Promoting Innovation and Competition
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Conclusion Summaries
Chapt 1. THE STRATEGIC USE OF LICENSING: UNILATERAL REFUSALS TO LICENSE PATENTS
The Agencies’ Conclusions:
• Section 271(d)(4) of the Patent Act
does not create antitrust immunity
for unilateral refusals to license
patents.
• Statements in Supreme Court
jurisprudence support the
traditional understanding that the
unilateral right to refuse to grant a
patent license is a core part of the
patent grant.
• Antitrust liability for mere
unilateral, unconditional refusals to
license patents will not play a
meaningful part in the interface
between patent rights and antitrust
protections. Antitrust liability for
refusals to license competitors
would compel firms to reach out
and affirmatively assist their rivals,
a result that is “in some tension
with the underlying purpose of
antitrust law.”15 Moreover, liability
would restrict the patent holder’s
ability to exercise a core part of the
patent—the right to exclude.
• Conditional refusals to license that
cause competitive harm are subject
to antitrust liability.
Chapt 2 - COMPETITION CONCERNS WHEN PATENTS ARE INCORPORATED INTO COLLABORATIVELY SET
STANDARDS
The Agencies’ Conclusions:
• Ex ante consideration of licensing
terms by SSO participants can be
procompetitive.
• Joint ex ante consideration of
licensing terms by SSO participants
is unlikely to constitute a per se
antitrust violation. The Agencies
will usually apply the rule of
reason when evaluating joint
activities that mitigate hold up by
allowing potential licensees of the
standard to negotiate licensing
terms with IP holders. Such ex ante
negotiations of licensing terms are
most likely to be reasonable when
the adoption of a standard will
create or enhance market power for
a patent holder.
• An intellectual property owner’s
unilateral announcement of
licensing terms does not violate
section 1 of the Sherman Act.
• An intellectual property owner’s
unilateral announcement of price
terms, without more, does not
violate section 2 of the Sherman
Act.
• Bilateral ex ante negotiations about
licensing terms that take place
between an individual SSO
member and an individual
intellectual property holder outside
the auspices of the SSO are unlikely
(without more) to require any
special antitrust scrutiny because
intellectual property rights holders
are merely negotiating individual
terms with individual buyers.
• The Agencies take no position as to
whether SSOs should engage in
joint ex ante discussion of licensing
terms.
CHAPTER 3: ANTITRUST ANALYSIS OF PO R T F O L I O CRO S S - LICENSING AGREEMENTS
AND PATENT POOLS
The Agencies’ Conclusions:
• The Agencies will continue to
evaluate the competitive effects of
cross licenses and patent pools
under the framework of the
Antitrust-IP Guidelines. Given the
cognizable benefits and potential
anticompetitive effects associated
with both of these licensing
practices, the Agencies typically
will analyze both types of
agreements under the rule of
reason.
• Combining complementary patents
within a pool is generally
procompetitive
Including substitute patents in a
pool does not make the pool
presumptively anticompetitive;
competitive effects will be
ascertained on a case-by-case basis.
• The competitive significance of a
pool’s licensing terms will be
analyzed on a case-by-case basis
c o n s i d e r i n g b o t h t h e i r
procompetitive benefits and
anticompetitive effects.
• The Agencies will not generally
assess the reasonableness of
royalties set by a pool. The focus of
the Agencies’ analysis is on the
pool’s formation and whether its
structure would likely enable pool
participants to impair competition.
CHAPTER 4: V A R I A T I O N S O N INTELLECTUAL PROPERTY LICENSING PRACTICES
The Agencies’ Conclusion:
TheAgencies will continue to apply
the flexible rule of reason analysis
of the Antitrust-IP Guidelines to
assess intellectual property
licensing agreements, including
non-assertion clauses, grantbacks,
and reach-through royalty
agreements.
Chapter 5: ANTITRUST ISSUES IN THE TYING AND BUNDLING OF INTELLECTUAL PROPERTY RIGHTS
The agencies conclusion:
. The Antitrust-IP Guidelines will
continue to guide the Agencies’
analysis of intellectual property
tying and bundling. Pursuant to
the Antitrust-IP Guidelines, the
Agencies consider both the
anticompetitive effects and the
efficiencies attributable to a tie, and
would be likely to challenge a tying
arrangement if: “(1) the seller has
market power in the tying product,
(2) the arrangement has an adverse
effect on competition in the
relevant market for the tied
product, and (3) efficiency
justifications for the arrangement
do not out weigh the
anticompetitive effects.”25 If a
package license constitutes tying,26
the Agencies will evaluate it
pursuant to the same principles
they use to analyze other tying
arrangements.
CHAPTER 6: CO M P E T I T I V E ISSUES REGARDING PRACTICES THAT EXTEND THE MARKET POWER CONFERRED BY A PATENT BEYOND ITS STATUTORY TERM
The Agencies’ Conclusions:
• The starting point for evaluating
practices that extend beyond a
patent’s expiration is analyzing
whether the patent in question
confers market power.
• Standard antitrust analysis applies
to practices that have the potential
to extend the market power
conferred by a patent beyond its
expiration.
• Collecting royalties beyond a
patent’s statutory term can be
efficient. Although there are
limitations on a patent owner’s
ability to collect royalties beyond a
patent’s statutory term,28 that
practice may permit licensees to pay
lower royalty rates over a longer
period of time, which reduces the
deadweight loss associated with a
patent monopoly and allows the
patent holder to recover the full
value of the patent, thereby
preserving innovation incentives. |
