Antitrust and Intellectual Property

A. Introduction: Do Antitrust Laws Apply to Conduct Involving
The antitrust laws apply to conduct involving patents generally, with
only limited exceptions. As a general matter, conduct involving a patent
needs to be assessed under the antitrust laws in the same manner as
conduct not involving a patent. Patents that contribute to or create market
power are the most likely to raise significant antitrust issues, but patent
holders can sometimes be affected by the antitrust laws even under
circumstances that may not seem intuitively likely to be implicated by
the antitrust laws. 1
The issues raised by patent-related conduct may be better understood
by briefly examining the intersection of patents and antitrust under U.S.
law. Patent law and antitrust law are core components of U.S. law
regulating competition between firms. Antitrust laws are intended to
apply generally to competition and to ensure robust competition. In
contrast, the patent grant provides an innovator with a limited respite
from competition in exchange for the patent holder’s investment in the
invention and its contribution to the public domain by publishing the
patent. A patent has the potential to restrict competition because it
provides its holder with the right to exclude others, including
competitors, from practicing the claimed invention.
The juxtaposition of patent and antitrust laws is sometimes referred
to as presenting “tension” or “conflict” and often presents courts and
antitrust enforcers with difficult questions. In those instances in which a
patent right appears to conflict with antitrust law, it is sometimes not
1. For ease of discussion, except where noted otherwise, this chapter
addresses antitrust issues related to patents. Many of the topics discussed
in this chapter also apply to copyrights, trademarks, trade secrets, and
other forms of intellectual property protection, but a discussion of those
laws lies outside the scope of this chapter.
136 Frequently Asked Antitrust Questions
easy to determine whether, or to what degree, certain conduct is
protected from antitrust liability. The Supreme Court has provided only
limited guidance in this area to date. Lower courts, the U.S. Department
of Justice (DOJ), the Federal Trade Commission (FTC), and state
attorneys general sometimes differ in how they treat specific antitrust
issues that involve patents. Consequently, it often can be difficult to
provide simple “rules of the road” in this area of law.
Depending on the circumstances, each stage in the life-cycle of a
patent has the potential to present to the patent holder various antitrust
risks, including the risk of an investigation or enforcement action
brought by the DOJ, the FTC, state attorneys general, or private litigants,
any of which may result in significant expense even if the patent holder
is ultimately held not to have violated antitrust laws. Consequently, firms
that are acquiring or enforcing patent rights should consider whether
conduct that is contemplated will raise antitrust risks and, if so, whether
there are appropriate means of reducing such risks while accomplishing
bona fide business objectives.
In addition, the U.S. patent code2specifically addresses certain
issues that may bear on potential application of the antitrust laws, such as
the territorial scope of a patent license.3
Further, to the extent that certain uses of patents are treated as
“immune” from antitrust law, such immunity is typically not available
when the patent at issue has been procured through fraud or is being
enforced through a “sham” action by a patent holder who knows that the
patent is invalid or otherwise unenforceable.4
This chapter aims only to facilitate the identification of potentially
significant antitrust issues that may be raised by conduct involving
patents. To that end, it provides a brief, high-level overview of some of
the more significant antitrust risks that may arise during the life-cycle of
a patent. However, each of the topics addressed below merits detailed
analysis based on the specific facts at issue.
B. We Are Going to Acquire a Patent. Could That Raise Antitrust
Yes, acquiring a patent or an exclusive right to a patent can raise
both procedural and substantive antitrust issues.
4. See infra part F of this chapter.
Antitrust and Intellectual Property 137
First, the acquisition of a patent or a patent license5that is exclusive
as to all (including as to the patentee) may be reportable under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR),
regardless of whether the acquisition raises substantive antitrust issues.
While a detailed discussion of HSR rules lies outside the scope of this
chapter, HSR may be implicated if the value of the patent(s) (or
exclusive license) and other assets being acquired exceed $70.9 million
(2013 threshold).6If an HSR filing is required, the acquisition cannot be
closed prior to expiration of the applicable waiting period.7
Second, acquisitions of patents, exclusive licenses, and other assets
can raise substantive antitrust issues. In particular, such acquisitions are
subject to review under Section 7 of the Clayton Act, regardless of
whether they are reportable under the HSR Act. Section 7 bars
acquisitions of assets, including patents, where “the effect of such
acquisition may be substantially to lessen competition, or to tend to
create a monopoly.”8For example, if two firms propose to merge and
that merger would consolidate the only two types of patented technology
to make a type of product, the parties would need to consider whether
other products would sufficiently constrain their behavior postmerger,
such that the combination would not lessen competition in a relevant
market under Section 7.
Defining the relevant market that applies to the acquisition of a
patent or an exclusive patent license can raise issues that are not well
settled by existing case law. For example, while such a relevant market
may include a traditional product market, the DOJ and the FTC (taken
together, the “agencies”) have taken the position that the relevant market
may be defined as a so-called “technology market” that may be
comprised only of patents or patented technology or an “innovation
market” that involves only research and development relating to patents.9
5. For the antitrust implications of exclusive patent licensing, see infra part
C.1.c of this chapter.
6. The “size-of-transaction” threshold is amended annually to reflect
inflation and is announced by the FTC each January. Revised
Jurisdictional Thresholds of the Clayton Act, 78 Fed. Reg. 2406, 2407
(Jan. 11, 2013).
7. Please see Chapter III for additional discussion of the HSR process.
8. 15 U.S.C. § 18.
9. See, e.g., Cephalon Inc., 138 F.T.C. 583, 637 (2004) (analyzing the loss
in innovation competition that would likely result from the merger of two
manufacturers of brand-name pharmaceuticals); see generally U.S. DEPT

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