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In Brief

US DOJ and FTC Propose Update to Antitrust Guidelines for Licensing of IP

18 August 2016
Mayer Brown In Brief

On Friday, August 12, 2016, the Antitrust Division of the US Department of Justice and the Federal Trade Commission announced a proposed “update” to their 1995 Antitrust Guidelines for the Licensing of Intellectual Property (“IP Guidelines”). Unlike with their 2010 “revision” of their Horizontal Merger Guidelines, the agencies are not proposing any significant changes to the IP Guidelines’ analytical approach, which has guided contemporary antitrust analysis of not just IP licensing but a wide range of business conduct. This means that the update remains silent on at least two important areas of agency IP activity. For example, the update contains no guidance on antitrust issues presented by settlements of IP infringement litigation, a key focus of the FTC in the pharmaceutical industry. And although both agencies have examined antitrust issues presented by alleged violations of commitments to license standard-essential patents on fair, reasonable and non-discriminatory (“FRAND”) terms, the proposed update does not even mention the subject. Instead, the update consolidates developments from the last two decades of US case law, adding a handful of uncontroversial tweaks to the agencies’ approach to IP licensing. The IP Guidelines’ focus remains on encouraging the combination of complementary resources through licensing while limiting a license’s potential for harming competition that was likely to have existed in its absence.

Some highlights:

  • Incorporating post-1995 Supreme Court decisions, the update confirms the agencies’ views that: (a) IP owners, even ones with market power, are generally under no obligation to license (Trinko); (b) IP rights do not necessarily convey market power (Illinois Tool Works); (c) minimum resale price maintenance agreements are subject to rule-of-reason analysis (Leegin); and (d) post-expiration patent royalty obligations—as opposed to royalties for post-expiration use—do not amount to enforcement of invalid IP rights (Kimble v. Marvel Entertainment).
  • Consistent with the 2010 Horizontal Merger Guidelines, relevant market definition is no longer the first step in every analysis of a license’s competitive impact, but it remains a key factor.
  • Markets for “innovation,” a new and controversial concept in 1995, are now solidified as a focus of potential competitive concern and are named more concretely as “research and development” markets.
  • The agencies’ pursuit of “sham” IP litigation is now more clearly linked to Professional Real Estate Investors’ requirement of both objective baselessness and subjective bad faith.
  • The agencies’ deferential approach to patent pools, through which numerous patent owners jointly license to users of standardized technologies, remains intact, implicitly rejecting calls for change from some dissatisfied licensees.

The agencies have invited public comments on their proposed update between now and Monday, September 26, 2016.

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