September 1, 2016Client Alert

Proposed Update of the Antitrust Guidelines for Licensing Intellectual Property: FTC and DOJ Seek Public Comment

On August 12, 2016, the Federal Trade Commission and the Department of Justice’s Antitrust Division (the Agencies) invited interested parties to comment on the Proposed Update of the Antitrust Guidelines for Licensing Intellectual Property (IP Licensing Guidelines). The Agencies are accepting public comments until September 26, 2016. 

The IP Licensing Guidelines provide guidance regarding potential antitrust issues that may arise when licensing intellectual property. The IP Licensing Guidelines serve as an influential resource to the Agencies when analyzing antitrust and intellectual property issues (see, e.g., the 2007 joint report entitled Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition). 

The Proposed Update reflects the following three general principles:

  1. “For the purpose of antitrust analysis, the Agencies apply the same analysis to conduct involving intellectual property as to conduct involving other forms of property, taking into account the specific characteristics of a particular property right.”
  2. “The Agencies do not presume that intellectual property creates market power in the antitrust context.”
  3. “The Agencies recognize that intellectual property licensing allows firms to combine complementary factors of production and is generally procompetitive.”

See the Proposed Update Section 2.0.

In a Nutshell

The Proposed Update reflects a number of Supreme Court decisions that impact antitrust laws in the context of licensing intellectual property. For example, in Illinois Tool Works, Inc. v. Independent Ink, Inc., the Supreme Court applied the Agencies’ second general principle that intellectual property does not necessarily create market power (see, e.g., the Proposed Update Section 2.2). In further example, the Supreme Court overturned per se illegality inLeegin Creative Leather Products, Inc. v. PSKS, Inc. where the Supreme Court evaluated a resale price maintenance (RPM) agreement under the rule of reason. In light of the Court’s decision in Leegin, the Proposed Update provides for a rule-of-reason treatment to vertical price agreements (see, e.g., the Proposed Update Section 5.2). 

The Proposed Update also acknowledges Congress’ recent enactment of the Defend Trade Secrets Act of 2016, which recognizes misappropriation of trade secrets as a federal cause of action, and it reflects recent changes in patent term and copyright term. In addition, the Proposed Update reflects the Federal Trade Commission’s 2011 Evolving IP Marketplace Report (see, e.g., the Proposed Update Section 2.3) as well as the 2010 Horizontal Merger Guidelines (see, e.g., the Proposed Update Section 4.1.1). 

For the specific revisions included in the Proposed Update, the Agencies have provided a comparison of the Proposed Update to the 1995 IP Licensing Guidelines. 

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