August 12, the U.S. Department of Justice Antitrust Division (DOJ) and Federal
Trade Commission (FTC) announced a proposed update to their Antitrust
Guidelines for Licensing of Intellectual Property (the Guidelines), and called
for public comments. The Guidelines summarize the agencies' antitrust
enforcement policies with respect to the licensing of intellectual property protected
by patent, copyright, and trade secret law and primarily focus on antitrust
issues that arise in the context of technology transfers, innovation, and
research and development. According to the agencies, the purpose of the
Guidelines is to "assist those who need to predict whether the Agencies will
challenge a practice as anticompetitive."
Proposed Guidelines do not substantively modify the general principles outlined
in the 1995 Guidelines. According to an FTC press release, the objective of the
agencies' current effort is to "modernize the IP Licensing Guidelines
without changing the agencies' enforcement approach with respect to
intellectual property licensing . . . ." Thus, the proposed update
retains the same basic analytical framework set forth in the original version.
The draft also preserves the safe harbors offered in the 1995 Guidelines and,
as in those Guidelines, relies heavily on business review letters the DOJ
previously made public.
of the revisions reflect changes to statutory and decisional law since 1995.
For example, in the 1995 version of the Guidelines, the agencies took the
position that a patent does not necessarily confer market power on the
patentee, but acknowledged that the law was unclear on that issue. In Illinois
Tool Works, Inc. v. Independent Ink, Inc., the Supreme Court clarified the
law (citing the 1995 Guidelines) and agreed with the agencies, ruling that a
patent indeed does not necessarily confer market power. The proposed update
cites Independent Ink for that proposition. Additionally, the proposed update
recognizes changes to the rule-of-reason treatment of vertical price agreements
following the Supreme Court's 2007 ruling in Leegin Creative Leather Products,
Inc. v. PSKS, Inc., in which the Court held that minimum resale price
maintenance agreements are not per se illegal. The updated Guidelines reflect
the agencies' position that the Leegin "analysis applies equally to pricing
restrictions in intellectual property licensing agreements." Another
Supreme Court case referenced by the revised Guidelines is Kimble v. Marvel
Entm't, LLC, in which the Court confirmed that post-expiry patent royalties
are unenforceable-a policy that contrasts with the European approach whereby
parties can agree to extend royalty obligations beyond the period of validity
of the licensed intellectual property rights.
Proposed Guidelines also reflect statutory changes to the durations of patent
and copyright protection, and acknowledge the recent passage of the federal
Defend Trade Secrets Act, which provides a federal cause of action for theft of
trade secrets-an area previously governed exclusively by state law.
addition to acknowledging changes in law over the past twenty-plus years, the
Proposed Guidelines incorporate some new terminology. For instance, the
Proposed Guidelines replace the term "innovation market" from the
1995 Guidelines with "Research and Development Market"-a shift designed
"to more accurately reflect how these markets have been defined in
enforcement actions," according to the agencies. This newly adopted
terminology highlights the split between the U.S. and other countries, whose
antitrust agencies reject the notion of treating research and development differently
from the product markets that result from research and development activities.
most notable is what the Proposed Guidelines do not address-particularly when
compared with their foreign counterparts. The current effort to update the
Guidelines follows a series of analogous updates to national antitrust and
intellectual property guidelines across the globe (Japan, Canada, and South
Korea all adopted new antitrust and intellectual property licensing guidelines
in 2016, and agencies in China have announced proposed amendments to existing
guidelines) and marks the first time the agencies have amended the Guidelines
since 1995, when they were originally released. Unlike the Japanese, Korean,
Canadian, and Chinese guidelines, however, the Proposed Guidelines do not
express agency views on certain issues relating to standard essential patents
(SEPs) that have been the subject of global agency focus in recent years. For
example, whereas the recent amendments to the Japanese Guidelines address make
clear that refusing to license to a willing licensee or seeking an injunction
against a willing licensee are unfair trade practices "if they tend to
impede fair competition, even if the acts do not substantially restrict competition
in the product market and are not considered to be Private
Monopolization," the Proposed Guidelines are silent on this issue.
in contrast with the recently adopted licensing guidelines in Canada and Korea,
the Proposed Guidelines do not address agency views on patent assertion
entities/non-practicing entities (PAEs/NPEs) (aka patent trolls) whose primary
business is to buy and assert patents against operating companies using the
patented technology. The agencies' silence on this topic is likely due to the
fact that the FTC has yet to release the findings of an industry study of the
competitive effects of PAEs it has been undertaking since 2013. However,
should the agency announce its findings later this year, as expected, perhaps
they could be incorporated into the final revised version of the Guidelines. In
light of the agencies' call for public comments, companies who regularly engage
in IP licensing should carefully consider how the Proposed Guidelines might
affect their business, and whether they might benefit from agency guidance on
areas not addressed in the agencies' Proposed Guidelines.
comments on the proposed Guidelines are due by Monday, September 26. Submitted comments
will be made publicly available on the agencies' websites.
FTC and DOJ Seek Views on Proposed Update of the Antitrust Guidelines for
Licensing of Intellectual Property ("FTC/DOJ Press Release"), U.S.
Department of Justice and Federal Trade Commission, Aug. 12, 2016, available at
Antitrust Guidelines for the Licensing of Intellectual Property, U.S.
Department of Justice and Federal Trade Commission, April 6, 1995, § 2.1.
FTC/DOJ Press Release.
547 U.S. 28 (2006).
551 U.S. 877 (2007).
FTC/DOJ Press Release.
135 S. Ct. 2401 (2015).
See Intellectual Property Enforcement Guidelines, Canadian Competition Bureau,
Mar. 31, 2016, (CIPG), available at http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/vwapj/cb-IPEG-e.pdf/$file/cb-IPEG-e.pdf
(Canada); Kim & Chang, Amended IP Rights Guideline Takes Effect, June 27,
2016, available at http://www.internationallawoffice.com/Newsletters/Intellectual-Property/South-Korea/Kim-Chang/Amended-IP-Rights-Guideline-takes-effect
(South Korea); Guidelines for the Use of Intellectual Property under the
Antimonopoly Act, Japan Fair Trade Commission, 2007 (revised 2016) (JIPG),
available at http://www.jftc.go.jp/en/legislation_gls/imonopoly_guidelines.files/IPGL_Frand.pdf
(Japan); ChinaIPR Blog, SAIC Announces Its Latest Draft of IP Abuse Guidelines,
Feb. 7, 2016, available at
U.S. Federal Trade Commission, Patent Assertion Entities (PAE) study,