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A long-awaited joint report was released Tuesday, April 17, 2007 by the U.S. Department of Justice and the U.S. Federal Trade Commission concerning the intersection of antitrust and intellectual property laws. The following article was written by Amanda Ernst, a Legal Reporter with Portfoliomedia.com
(This article first appeared in IP LAW 360, an online publication of PortfolioMedia.com and is reprinted with permission of author & publisher www.Portfoliomedia.com and www.law360.com )
DOJ, FTC: IP Practices Can Be Pro-Competitive
by Amanda Ernst
The report, entitled “Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition,” went into detail about IP practices that raise competition questions, including refusing to license a patent, collaboratively setting industry standards, patent pools and cross licensing agreements, restrictions of IP licenses, tying and bundling IP, and practices that extend a patent’s term.
“Intellectual property is a key driver of the U.S. economy and sound competition policy works to maintain a robust marketplace so that new products and services can flourish,” said Thomas O. Barnett, assistant attorney general for the DOJ’s Antitrust Division. “The Department of Justice is committed to ensuring that consumers benefit from both competitive markets and strong intellectual property rights protection and enforcement necessary to facilitate innovation.”
*All Content Copyright 2007, Portfolio Media, Inc.
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**Reprinted with Permission of both Publisher & Author
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The report concludes years of research by the DOJ and FTC on the intersection between antitrust and IP laws, following up on a series of hearings held by the agencies in 2002. The hearings, held for 24 days over 10 months, included over 300 panelists and more than 100 written comments.
The agencies said comments and panelists represented a diverse range of interests and industries, from biotechnology to computer software. Inventors, scholars, legal practitioners and economists gave input to the study.
The result of the agencies’ research is a 220-page report that reinforces policies found in the Antitrust Guidelines for Licensing of Intellectual Property, the enforcement rules the agencies follow when faced with antitrust cases involving intellectual property issues.
The study said Antitrust-IP Guidelines formed the foundation of the report’s analysis.
The guidelines generally find that “agreements involving intellectual property can be analyzed using the same antitrust rules applied to agreements involving any other property,” the report said.
“As the Antitrust-IP Guidelines suggest, many of the difficult questions that the agencies encounter in the application of antitrust principles to intellectual property stem from differences between the characteristics of intellectual property and other forms of property,” the report said.
The report went on to outline ways in which intellectual property differs from other types of property, reinforcing the idea that when the same principles are applied to different cases, different outcomes may result.
Though the report’s main conclusion was that the agencies would stick to current guidelines, it did feature some new opinions.
The report’s take on paying royalties beyond the life of a patent is particularly noteworthy. The agencies said, for the first time, that they did not view licensing agreements that pay out royalties longer than the patent’s life as suspicious from an antitrust point of view.
“This is significant because this is the first time the agencies have stated explicitly that they do not view these agreements as problematic under antitrust laws,” said Roger Fones, a partner at Morrison & Foerster LLP in the litigation department and antitrust practice group.
Fones also said the report was remarkable for what the agencies omitted, namely their thoughts on settlements in intellectual property litigation cases. Although the agencies look closely at settlements for any sign of anti-competitive behavior, there was no mention of this in the lengthy report.
The FTC and DOJ’s report serves to remind the antitrust community how the agencies see intellectual property and how they apply the law.
“Our nation’s antitrust and intellectual property laws share the goal of promoting innovation, which in turn greatly benefits our consumers,” said FTC Chairman Deborah Platt Majoras. “The FTC takes seriously our responsibility to tackle the difficult issues that can arise when the antitrust laws are applied to IP, often in settings where business practices are rapidly evolving. We endeavor to adopt policies that permit competition and innovation to thrive, and this report explains our current policy thinking.”
All Content Copyright 2007, Portfolio Media, Inc.
*All Content Copyright 2007, Portfolio Media, Inc.
| 648 Broadway, Suite 200 | New York, NY 10012 | www.law360.com
Phone: +1 212 537 6331 | Fax: +1 212 537 6371 | customerservice@portfoliomedia.com**Reprinted with Permission of both Publisher & Author