United States: Obama Administration Antitrust Enforcers Take Last-Minute IP Licensing Actions

David Kully is a Partner in the Washington D.C. office and Ieuan Mahony is a Partner in the Boston office


  • In the closing days of the Obama Administration, its antitrust enforcement agencies issued Antitrust Guidelines for the Licensing of Intellectual Property, reaffirming their views that IP licensing is usually procompetitive, but identifying some practices that rightsholders should avoid.
  • The FTC also sued Qualcomm over its licensing of patents essential to complying with standards for cellular communications, but its aggressive enforcement positions might not be pursued by the incoming Trump Administration.
  • Owners of patents, copyrights and other IP should be aware of the limitations that the antitrust laws place on their licensing activities.

As the Obama Administration drew to a close, its antitrust enforcers took two actions of note for those involved in intellectual property (IP) licensing. The first, the joint release by the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) of updated Antitrust Guidelines for the Licensing of Intellectual Property, describes how the antitrust enforcement agencies evaluate various IP licensing issues and reaffirms the agencies' views that IP licensing is generally procompetitive. The second, a lawsuit brought by the FTC against Qualcomm, reveals the views of at least the Obama Administration's FTC about the licensing of standard-essential patents (SEPs) – those embodying technology that has been incorporated by a standard-setting organization into an industry standard. While the antitrust agencies generally applaud the licensing of IP rights and believe that the antitrust and IP laws work in tandem to promote innovation and enhance consumer welfare, IP owners should be aware of the limits – revealed in these two recent actions and other enforcement activities – that antitrust law can place on IP licensing.

Updated IP Guidelines

The DOJ and FTC on Jan. 13, 2017 released the new Antitrust Guidelines for the Licensing of Intellectual Property, updating the Guidelines' original version issued by the agencies in 1995. The Guidelines articulate general enforcement policies of the agencies with respect to the licensing of patents, copyrights, trade secrets and know-how "to assist those who need to predict whether the [a]gencies will challenge a practice as anticompetitive."

The Guidelines first address the agencies' overarching principles and analytical framework in evaluating IP licensing activities, and then explain how those principles apply to particular licensing practices. Because IP licensing allows firms to combine "complementary factors of production," the antitrust agencies recognize that licensing is "generally procompetitive," and "in the vast majority of cases" they evaluate licensing practices under the "rule of reason," taking into account both the benefits and potential harms from the practices. The agencies do not presume that IP rights confer antitrust market power and, even when an IP owner possesses market power, the Guidelines state that that alone does not offend the antitrust laws or impose upon the owner an obligation to license the use of its technology to others. Field-of-use, territorial or other licensing restrictions often allow the IP owner to exploit its property as efficiently and effectively as possible and are often procompetitive.

The Guidelines identify examples of conduct that might attract significant scrutiny from the agencies and result in potential antitrust liability. One example is the joint licensing by owners of patents over competing technologies. Because the owners would, in the absence of the joint licensing arrangement, compete on price and other dimensions in the licensing of their patents, an agreement to license their rights jointly would extinguish that competition and likely constitute a per se antitrust violation. On the other hand, if the owners held patents over complementary technologies, licenses to both of which are necessary to produce a particular product, then the joint licensing would be regarded to be procompetitive and raise no issues under the antitrust laws. Cross licenses between firms that compete in the sale of products incorporating their technologies would also be per se illegal if they contained territorial restrictions that ended head-to-head competition between them in the sale of their products.

The Guidelines also identify a number of other licensing practices that the agencies would evaluate under the less-stringent "rule of reason." For example, the agencies would evaluate licenses containing resale price maintenance provisions – under which the licensor conditions a license on the licensee selling the product incorporating the technology at more than a specified price – under the rule of reason, considering the competitive benefits and harms from that agreement. Although conditioning the purchase of one product on the purchase of another can constitute per se illegal "tying," the Guidelines state that the agencies would, in the exercise of their prosecutorial discretion, consider the benefits and harms of such a provision in the IP licensing context under the rule of reason. Similarly, while "exclusive dealing" agreements, in which the licensee commits not to use competing technologies, can under some circumstances foreclose competition from competing technologies, they also can help promote the use of the licensor's technology and be procompetitive. The agencies will consider the benefits and harms of exclusive dealing arrangements under the rule of reason.

Finally, the Guidelines establish a "safety zone" to give certain IP owners confidence that their licensing activities would not draw the attention of the enforcement agencies. Licenses that are not "facially anticompetitive" (such as a per se illegal agreement to jointly license competing technologies) would fall in the safety zone if (a) the licensor and licensee collectively account for no more than 20 percent of each market affected by the restraint, or (b) there are four or more independently controlled technologies that may be substitutable for the licensed technology at comparable cost.

FTC v. Qualcomm

One significant subject that the revised Guidelines do not address is the question of how the agencies will seek to apply the antitrust laws to the licensing of SEPs. Although there is general consensus that a patent holder acquires significant hold-up power when the technology covered by its patent becomes part of an industry standard, there remains some uncertainty and controversy concerning the obligations that the antitrust laws impose on the owners of SEPs. The DOJ and FTC did not attempt in their Guidelines to bring additional clarity to this area.

Only days after the Guidelines release, however, the FTC revealed its enforcement intentions in this area – or at least those of the Obama Administration's FTC – when it brought a lawsuit challenging Qualcomm's maintenance of a monopoly in baseband processors used for cellular communications through its SEP licensing.

The FTC alleges that Qualcomm has maintained a monopoly in baseband processors principally through its "no license-no chips" practice of insisting, as a condition of Qualcomm's supply of any of its baseband processors, that cellphone manufacturers license its patents. According to the FTC's complaint, Qualcomm's practice distinguishes it from all other suppliers of mobile-handset components, which sell their components without requiring a separate patent license, and from all other owners of SEPs. By withholding its essential baseband processors until a manufacturer licenses its SEPs, the FTC alleges that Qualcomm effectively denies licensees the opportunity to challenge the royalties Qualcomm demands as inconsistent with the commitments that Qualcomm made to standards bodies that it would license its patents on fair, reasonable, and nondiscriminatory (FRAND) terms. Further, by insisting that mobile-handset manufacturers license its SEPs, for which Qualcomm demands a royalty on each handset sale, regardless of whether the manufacturer uses a Qualcomm baseband processor or one supplied by one of Qualcomm's competitors, the FTC alleges that Qualcomm imposes an anticompetitive "tax" on its competitors' sales. Finally, the FTC alleges that Qualcomm obtained from Apple, in return for reduced fees for a license to its patents, a commitment to purchase Qualcomm baseband processors exclusively, denying competitors an opportunity to sell their competing processors to an important manufacturer and further entrenching Qualcomm's dominant position.

Past FTC cases – as well as other litigation concerning standard-essential patents –largely have focused on efforts on the part of patent holders to deceive standard-setting organizations1 or on efforts by SEP owners to deny licenses to its SEPs and seek injunctions against willing licensees.2 The FTC's Qualcomm case pushes the envelope in the application of the antitrust laws to SEP licensing by looking not at how Qualcomm acquired its market power or whether it is withholding licenses, but instead at how Qualcomm has chosen to license its lawfully obtained SEPs.

It appears likely, however, that the Qualcomm case represents a high-water mark in FTC enforcement aggressiveness, a position from which its enforcement will recede quickly. The FTC brought the Qualcomm case over the objection and dissent of the lone Republican Commissioner, Maureen Ohlhausen, who criticized the case as "an enforcement action based on a flawed legal theory . . . that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine U.S. intellectual property rights in Asia and worldwide." Under the Trump Administration, Republican Commissioners will hold a majority position at the FTC, potentially under the leadership of Commissioner Ohlhausen. A Republican-majority FTC potentially could dismiss the Qualcomm case voluntarily, but almost certainly will not pursue further actions on similar grounds against holders of SEPs.

Considerations for IP Owners

Owners of IP, particularly SEPs, should be aware that certain licensing activities can raise issues under the antitrust laws. Holland & Knight can help clients understand whether licensing practices might implicate antitrust concerns and how to approach licensing in ways that minimize the likelihood that competition issues will interfere with a client's ability to achieve its goals.


1 See Rambus Inc. v. FTC, 522 F.3d 456 (D.C. Cir. 2008)

2 See In the Matter of Robert Bosch GmbH, FTC Dkt. No. C-4377, Apr. 24, 2013

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
Shearman & Sterling LLP
Shearman & Sterling LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Shearman & Sterling LLP
Shearman & Sterling LLP
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