[Ip-health] FTC & DOJ report on patent rights and antitrust

[Judit Rius Sanjuan]

Yesterday the U.S. FTC and DOJ jointly issued a report on the
relationship between patent rights and antitrust policy.

According to the press release, the report=92s conclusions include the
following:

* 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 tension with the
antitrust laws.
* Conditional refusals to license that cause competitive harm are
subject to antitrust scrutiny.
* Joint negotiation of licensing terms by standard-setting organization
participants before the standard is set can be procompetitive. Such
negotiations are unlikely to constitute a per se antitrust violation.
The agencies will usually apply a rule of reason analysis when
evaluating these joint activities.
* The agencies evaluate the competitive effects of cross-licenses and
patent pools under the rule of reason framework articulated in the 1995
Antitrust-IP Guidelines.
* Combining complementary patents within a pool is generally
procompetitive. A combination of complementary intellectual property
rights, especially those that block the use of a particular technology
or standard, can be an efficient and procompetitive way to disseminate
those rights to would-be users of the technology or standard. Including
substitute patents in a pool does not make the pool presumptively
anticompetitive=96competitive effects will be ascertained on a
case-by-case basis.
* The agencies apply a rule of reason analysis to assess intellectual
property licensing agreements, including non-assertion clauses,
grantbacks, and reach-through royalty agreements.
* The Antitrust-IP Guidelines will continue to guide the agencies=92
analysis of intellectual property tying and bundling. 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 outweigh the anticompetitive effects. If a package
license constitutes tying, the agencies will evaluate it under the same
principles they use to analyze other tying arrangements.
* The agencies consider both the anticompetitive effects and the
efficiencies attributable to a tie or bundle involving intellectual
property.
* The starting point for evaluating practices that extend beyond a
patent=92s expiration is an analysis of whether the patent in question
confers market power. If so, these practices will be evaluated under the
agencies=92 traditional rule of reason framework, unless the agencies find
a particular practice to be a sham cover for naked price fixing or
market allocation.
* Collecting royalties beyond a patent=92s statutory term can be
efficient. Although there are limitations on a patent owner=92s ability to
collect royalties beyond a patent=92s statutory term, see Brulotte v. Thys
Co., 379 U.S. 29 (1964), that practice may permit licensees to pay lower
royalty rates over a longer period of time which can reduce the
deadweight loss associated with a patent monopoly and allow the patent
holder to recover the full value of the patent, thereby preserving
innovation incentives.

For the report: http://www.ftc.gov/opa/2007/04/ipreport.shtm

--
Judit Rius Sanjuan
Attorney
judit.rius@keionline.org

Knowledge Ecology International (KEI)
www.keionline.org / www.cptech.org
1621 Connecticut Ave, NW, Suite 500 Washington, DC 20009 USA
Tel.: +1.202.332.2670, Ext 18 Fax: +1.202.332.2673