United States: DOJ And FTC Update Antitrust-Intellectual Property Licensing Guidelines

On August 12, 2016, the Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC) announced they are seeking public comments on the first update to the Antitrust Guidelines for the Licensing of Intellectual Property issued in 1995. The majority of the Proposed Guidelines update relevant authorities to reflect developments in court decisions, statutory law, the agencies' practice, and the agencies' guidance over the past 20 years, while leaving intact the main principles and substantive guidance of the 1995 Guidelines.

The agencies re-affirmed their commitment to three broad principles, namely that the agencies:

  • Apply the same antitrust analysis to conduct involving intellectual property as they apply to conduct involving other forms of property
  • Do not presume that intellectual property creates market power
  • Recognize that licensing intellectual property allows firms to combine complementary factors of production and is generally procompetitive

Proposed Guidelines § 2.0.1 The Proposed Guidelines confirm and clarify the agencies' analytical framework for (1) horizontal and vertical transactions involving intellectual property licensing, and (2) "research and development markets," a newly coined term in the Proposed Guidelines. What the Proposed Guidelines do not address include the agencies' enforcement positions with respect to patent assertion entities, royalties for standard-essential patents and pay-for-delay patent settlements – significant topics on which FTC and DOJ guidance would be welcome and that may draw public comment.

Resale Price Maintenance

Perhaps the most significant proposed change concerns the Guideline's discussion of minimum price restraints imposed by licensors on licensees' downstream sales or resales of products that incorporate licensed technology. Proposed Guidelines § 5.2. Consistent with the Supreme Court's decision in Leegin Creative Leather Prod., Inc. v. PSKS, Inc., 551 U.S. 877 (2007), the agencies propose to modify the 1995 Guidelines from the position of presuming that such vertical price restraints are per se anticompetitive to analyzing the restrictions under the rule of reason. Although licensors imposing minimum downstream prices would not draw per se challenges under federal law, the agencies note that some states continue to treat such restraints as illegal per se under their state antitrust laws. Proposed Guidelines § 5.2 & n. 69.

Refusal to License

The revisions also make explicit that the antitrust laws generally do not impose liability for a unilateral refusal to license intellectual property. In this respect, the Proposed Guidelines highlight the Supreme Court's decision in Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) and advise that "the antitrust laws generally do not impose liability upon a firm for a unilateral refusal to assist its competitors, in part because doing so may undermine incentives for investment and innovation." Proposed Guidelines § 2.1. The agencies nonetheless temper this statement in other areas of the Proposed Guidelines, for example, by stating that while market power does not impose on the intellectual property owner an obligation to license the use of that property to others, the agencies may impose licensing requirements to remedy anticompetitive harm or to prevent the substantial lessening of competition as the result of a merger. Proposed Guidelines § 3.1.

Research and Development Markets

The agencies plan to replace the concept of an "innovation market" with a "research and development" market. The agencies report that the proposed change is largely semantic and meant to reflect the agencies' actual experience with this mode of analysis. The agencies distinguish technology markets from research and development markets, with the technology market focused on existing technologies. By contrast, a research and development market focuses on the "assets comprising research and development" that are related to innovation to identify a "commercializable product" or "directed to particular new or improved goods or processes." The Proposed Guidelines provide that the agencies would only delineate a research and development market when the capabilities to engage in the relevant research and development can be associated with specialized assets or characteristics of specific firms. Proposed Guidelines § 3.2.3.

In assessing whether a restriction or arrangement has anticompetitive effects, the agencies will consider whether the restriction or arrangement is likely to lessen competition and/or reduce the pace of the development of new products. Consistent with the 1995 Guidelines, a joint venture or merger that combines competing research and development operations is unlikely to draw a challenge by the agencies if there are at least four other independently controlled entities that possess comparable capabilities and incentives to undertake such research and development. In evaluating whether research and development by one entity is a close substitute for efforts by another entity, the agencies will consider a number of factors, including the nature, scope and magnitude of the research and development efforts, their access to financial support and skilled personnel or specialized assets and their ability to commercialize innovations successfully. Proposed Guidelines § 4.3. The agencies also will consider whether restrictions or agreements among competitors as to research and development efforts will affect competition in markets for existing products.

Other Updates

There are several other significant updates as well. For example, in the 1995 Guidelines, the agencies stated they "will not presume that a patent, copyright, or trade secret necessarily confers market power upon its owner"; however, they cautioned that "the law is unclear on this issue." The proposed update removes that qualification in light of the Supreme Court's decision in Illinois Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006), which definitively held that a patent cannot be presumed to confer market power.

Consistent with this revision are other updates highlighting the pro-competitive benefits of intellectual property cross-licensing and reflecting a greater permissiveness regarding common kinds of restraints and restrictions within intellectual property. For example, the proposed update seeks to recognize the legality of innovative licensing practices previously reviewed by the agencies, explaining that "DOJ has reviewed favorably several patent pools with safeguards in place to mitigate potential anticompetitive harms" and that "[a] number of the pooling arrangements that the Department of Justice reviewed contained mechanisms to narrow the scope of grantbacks, making them more likely to be procompetitive." Nevertheless, these safeguards are not required by the Proposed Guidelines, and the agencies continue to make clear that they "will assess the particular facts of every case." Proposed Guidelines §§ 5.5 & n. 84 and 5.6 & n. 85.

The Proposed Guidelines also recognize the use of partially exclusive licenses (such as field of use licenses); contain a more detailed explanation of the "sham litigation" exception to Noerr-Pennington immunity; and provide notice that the agencies may apply a merger analysis to "a transaction involving a license that does not fall within the traditional definition of an exclusive license but in substance transfers intellectual property rights and raises the same potential antitrust concern." Proposed Guidelines §§ 4.1, 5.7 and 6.

Additionally, the Proposed Guidelines incorporate new case law from the Federal Circuit, Transweb, LLC v. 3M Innovative Properties Co.,812 F.3d 1295, 1307 (Fed. Cir. 2016); Therasense , Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1290-92 (Fed. Cir. 2011) (en banc), clarifying that a heightened standard of proof applies to inequitable conduct claims and is now on par with that of Walker Process fraud in almost all respects, requiring "but for" materiality and specific intent to deceive, although inequitable conduct claims still incorporate an exception in cases of affirmative egregious misconduct. Proposed Guidelines § 6 & n. 92.

Proposed Guidelines Silent on Other Current and Significant Issues

The proposed changes do not seek to address several intellectual property issues that recently caused considerable discussion. For example, the proposed revisions are silent regarding the agencies' policy concerning patent-assertion entities (or "nonpracticing entities"), which are the subject of recent debate and a soon-to-be released FTC study,2 and that are addressed in recent guidelines in jurisdictions outside the United States. Nor do the Proposed Guidelines provide insight into the agencies' assessment of or proposed resolution for practices like "hold-up" conduct by owners of standard-essential patents that are subject to voluntary commitments to licensing on fair, reasonable, and non-discriminatory terms. The proposed update does, however, reference several prominent standard-essential patent cases in a footnote related to the discussion of technology markets. Finally, despite citing FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013), in discussing application of the rule of reason generally, the proposed update does not discuss future applications of that analysis to reverse-payment ("pay for delay") patent settlements, a legal tactic first used by branded drug manufacturers that has been a top priority of FTC enforcement in recent years.

The agencies seek comment on the proposed changes from "interested parties, including attorneys, economists, academics, consumer groups and the business community." Companies operating in the technology and intellectual property licensing arena should consider how the Proposed Guidelines might affect them – both as to changes proposed by the agencies and those areas in which the agencies declined to propose updates. The public comment deadline is September 26, 2016.


1 See also August 12, 2016 Press Release: FTC and DOJ Seek Views on Proposed Update of the Antitrust Guidelines for Licensing of Intellectual Property, https://www.ftc.gov/news-events/press-releases/2016/08/ftc-doj-seek-views-proposed-update-antitrust-guidelines-licensing.

2 The results of the FTC study have not yet been published. It is expected that any report on the study results will provide some insight into the specific practices of patent-assertion entities that the FTC views as detrimental to competition and policy decisions to reduce any identified harmful practices.

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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.


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.


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