Aligned goals of antitrust & IP: tension between antitrust & IP is superficial. They share complementary goals. Both aim at encouraging innovation, industry, and competition, enhance consumer welfare. [My thought: that’s true in a sense, but not entirely, I think. The two can be in actual tension in some specific situations, such as reverse payments or grantbacks. Are these proper uses of patents or anticompetitive uses?]
Antitrust perspective on monopolies: no prohibition on lawfully obtained monopoly power. It’s the act of monopolization that is prohibited. Elements: monopoly power in relevant market, exclusionary or predatory conduct.
DOJ/FTC Guidelines: antitrust principles apply to IP; patents do not equal market power; licensing IP can be procompetitive. Illinois Tool Works (2006) vindicated the view that patents do not equal market power.
Antitrust challenges to licensing agreements generally evaluated under rule of reason. Per se applied only under narrow circumstances, e.g., price fixing or market allocation.
Common antitrust concerns arising in licensing of technology: agreements among competitors may facilitate pricing coordination or output restrictions, preservation of market power or constraining development of future technology. Agreements among noncompetitors can also facilitate price coordination by competitors (e.g., restraints imposed on licensees). Also exclusivity agreements, e.g., exclusive cross licenses between competitors.
Safety zones: no challenge from agencies when it’s not the type of restraint typically warranting per se treatment and licensor/licensees account for 20% or less of each relevant market. Additional safety zones when technology or innovation markets affected: not a per se violation, and 4 or more additional substitutable technologies (or entities with characteristics and incentive to undertake R & D) in the market.
FRAND provisions in IP licensing agreements: tend to mitigate many of the most common antitrust concerns. No exclusive cross-licenses solely among competitors, less risk of price coordination or output restriction, reduced ability to tie or leverage patent into different market.
Note evolution in antitrust law away from independent monopoly leveraging claim as expressed in Berkey Photo (603 F.2d 263, 275) to modern view as expressed in Trinko (540 U.S. at 415 n.4).
FRAND and monopoly leveraging: once patent adopted into standard, patent holder could obtain market power in additional markets. But FRAND intended to prevent this. Quotes Posner’s opinion in Apple v. Motorola, 869 F. Supp. 2d at 913. [My question: Is he equating holdup with leveraging? I’m not sure I would. Anderson: No, but trying to calculate the FRAND royalty ex ante bears some similarity to the old leveraging claim in that remedy would be taking away he monopoly advantage gained from leveraging.]
Potential FRAND antitrust pitfalls: no blanket immunity from antitrust scrutiny, SSOs may be used to facilitate collusion, FRAND may preclude claims for injunctive relief [why is this an antitrust pitfall?].
Rebecca Haw: How SSOs operate is mysterious to me. Factually, how does standard setting work and what is their status under antitrust law? Anderson: not always clear. But similar issues with trade associations, competitors getting together. No per se problem, but can be used as vehicle for achieving anticompetitive ends. Can have questions re boycotts, for example. Fact intensive.
Bill Page: FRAND is ambiguous. SSOs are disinclined to specify it more because of antitrust problems. Anything more they can do? Anderson: if organization comes closer to setting rate, begins to sound like buyers’ cartel. [My thought: there is also an informational problem of not knowing what rate to set ex ante, see, e.g., papers by Doug Lichtman, Mario Mariniello.]
Page: What about requiring everyone in SSO to participate in patent pool? Anderson: could establish it as a condition.
Jorge Contreras: Problem is that patent pools are expensive to set up: need an essentiality analysis for each patent. Unless it’s sure it’s going to be adopted, no one wants to set this up in advance. As for SSO rate setting, regulators have backed off from taking too hard a line in their public statements (but of course we don’t know what courts would do). But SSOs don’t want to do it.
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