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FTC and DOJ Issue Revised Guidelines for Licensing of Intellectual Property

Since the Federal Trade Commission (FTC) and the Antitrust Division of the US Department of Justice (DOJ) first issued the Antitrust Guidelines for the Licensing of Intellectual Property (Guidelines) in 1995, both antitrust law and intellectual property law have evolved to adapt to modern technology and business relationships. Yet the guidance provided by the antitrust agencies had not been updated to reflect recent court precedent or enforcement policies.

On January 13, 2017, the FTC and the DOJ issued updated Guidelines following roughly six months of consideration and public comment. According to a statement by FTC Commissioner Maureen Ohlhausen, the new Guidelines “modestly update” the prior version and recognize that “IP issues are not a special case that requires a different competition jurisprudence.” Ohlhausen’s statement stressed the “commendable flexibility” of the 1995 Guidelines and applauded the update for reaffirming the agencies’ commitment to the basic principles of the original guidelines, including the following:

  1. The antitrust agencies will continue to “apply the same analysis to conduct involving intellectual property as to conduct involving other forms of property.”

  2. This analysis “do[es] not presume that intellectual property creates market power in the antitrust context.”

  3. The FTC and DOJ “recognize that intellectual property licensing . . . is generally procompetitive.”

The major change brought by this update was the inclusion of updated references to recent case law and statutes that have altered the agencies’ analysis over the last two decades. For example, the updated Guidelines state that the antitrust agencies “will apply a rule of reason analysis to price maintenance in intellectual property licensing agreement.” This statement reflects the Supreme Court of the United States’ 2007 decision in Leegin Creative Leather Products v. PSKS, which overruled long-standing precedent that resale price maintenance agreements were per se violations of the antitrust laws. Other major case law updates include Illinois Tool Works v. Independent Ink, where the Supreme Court held that a patent does not necessarily confer market power on its holder, and FTC v. Actavis (IP Update, Vol. 16, No. 7), where the Supreme Court discussed the elimination of a potential competitor by a drug manufacturer through a “pay-for-delay” scheme.

Practice Note: Missing from the update is more specific guidance on standard-essential patents; licensing on fair, reasonable and non-discriminatory (FRAND) terms; and patent assertion entities. Requests for guidance on these items were ubiquitous in the public comments, with 16 of the 24 comments referencing standard-essential patents or FRAND terms, and five comments discussing the evolving role of patent assertion entities. The FTC’s press release appeared to reference these comments and stated: “the agencies reiterate that the flexible effects-based enforcement framework set forth in the IP Licensing Guidelines remains applicable to all IP areas.”  

© 2021 McDermott Will & EmeryNational Law Review, Volume VII, Number 31
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