United States: DOJ and FTC Call for Public Comments on Proposed Updates to Their IP Licensing Guidelines

On 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.1 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."2

The 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 . . . ."3 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.

Most 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.,4 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.,5 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."6 Another Supreme Court case referenced by the revised Guidelines is Kimble v. Marvel Entm't, LLC,7 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.

The 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.

In 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.

Perhaps 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.8 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.

Similarly, 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 2013.9 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. Public comments on the proposed Guidelines are due by Monday, September 26. Submitted comments will be made publicly available on the agencies' websites.

Footnotes

1 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 https://www.ftc.gov/news-events/press-releases/2016/08/ftc-doj-seek-views-proposed-update-antitrust-guidelines-licensing.

2 Antitrust Guidelines for the Licensing of Intellectual Property, U.S. Department of Justice and Federal Trade Commission, April 6, 1995, § 2.1.

3 FTC/DOJ Press Release.

4 547 U.S. 28 (2006).

5 551 U.S. 877 (2007).

6 FTC/DOJ Press Release.

7 135 S. Ct. 2401 (2015).

8 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(SouthKorea)  ; 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 http://chinaipr.com/2016/02/07/saic-announces-its-latestdraft-of-ip-abuse-guidelines(China ).

9 U.S. Federal Trade Commission, Patent Assertion Entities (PAE) study, https://www.ftc.gov/policy/studies/patent-assertionentities-pae-study .

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Hughes Hubbard & Reed LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Hughes Hubbard & Reed LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions