Antitrust Guidelines for the Licensing of Intellectual Property

• Author: Bradford P. Lyerla
• Pages: 243-276

appendix A

Antitrust Guidelines

fortheLicensing

ofIntellectual Property

These Guidelines supersede section 3.6 in Part I, “Intellectual Property Licensing Arrangements,”

*

and cases 6, 10, 11, and 12 in Part II of the U.S. Department of Justice 1988 Antitrust Enforcement

Guidelines for International Operations.

Antitrust Guidelines

for the Licensing

of Intellectual Property

Issued by the

U.S. Department of Justice*

and the

Federal Trade Commission

April 6, 1995

These Guidelines supersede section 3.6 in Part I, “Intellectual Property Licensing Arrangements,”

*

and cases 6, 10, 11, and 12 in Part II of the U.S. Department of Justice 1988 Antitrust Enforcement

Guidelines for International Operations.

Antitrust Guidelines

for the Licensing

of Intellectual Property

Issued by the

U.S. Department of Justice*

and the

Federal Trade Commission

April 6, 1995

These Guidelines supersede section 3.6 in Part I, “Intellectual Property Licensing Arrangements,”

*

and cases 6, 10, 11, and 12 in Part II of the U.S. Department of Justice 1988 Antitrust Enforcement

Guidelines for International Operations.

Antitrust Guidelines

for the Licensing

of Intellectual Property

Issued by the

U.S. Department of Justice*

and the

Federal Trade Commission

April 6, 1995

These Guidelines supersede section 3.6 in Part I, “Intellectual Property Licensing Arrangements,”

*

and cases 6, 10, 11, and 12 in Part II of the U.S. Department of Justice 1988 Antitrust Enforcement

Guidelines for International Operations.

Antitrust Guidelines

for the Licensing

of Intellectual Property

Issued by the

U.S. Department of Justice*

and the

Federal Trade Commission

April 6, 1995

243

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APPENDIX A

244

Table of Contents

1. Intellectual property protection and the antitrust laws ................ 1

2. General principles ...................................................... 2

2.1 Standard antitrust analysis applies to intellectual property .............. 3

2.2 Intellectual property and market power ................................ 4

2.3 Procompetitive benefits of licensing ................................... 5

3. Antitrust concerns and modes of analysis ............................ 7

3.1 Nature of the concerns ............................................... 7

3.2 Markets affected by licensing arrangements ........................... 7

3.2.1 Goods markets ................................................ 8

3.2.2 Technology markets ........................................... 8

3.2.3 Reseach and development: Innovation markets ................. 10

3.3 Horizontal and vertical relationships ...................................

.... 14

3.4 Framework for evaluating licensing restraints .......................... 16

4. General principles concerning the Agencies' evaluation of

licensing arrangements under the rule of reason ..................... 18

4.1 Analysis of anticompetitive effects ..................................... 18

4.1.1 Market structure, coordination, and foreclosure .................. 18

4.1.2 Licensing arrangements involving exclusivity .................... 19

4.2 Efficiencies and justifications ......................................... 21

4.3 Antitrust “safety zone” ................................................ 22

5. Application of general principles ...................................... 24

5.1 Horizontal restraints .................................................. 24

5.2 Resale price maintenance ............................................ 25

5.3 Tying arrangements .................................................. 26

5.4 Exclusive dealing .................................................... 27

5.5 Cross-licensing and pooling arrangements ............................. 28

5.6 Grantbacks .......................................................... 30

5.7 Acquisition of intellectual property rights ............................... 31

6. Enforcement of invalid intellectual property rights ................... 32

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Antitrust Guidelines fortheLicensing ofIntellectual Property 245

Table of Contents

1. Intellectual property protection and the antitrust laws ................ 1

2. General principles ...................................................... 2

2.1 Standard antitrust analysis applies to intellectual property .............. 3

2.2 Intellectual property and market power ................................ 4

2.3 Procompetitive benefits of licensing ................................... 5

3. Antitrust concerns and modes of analysis ............................ 7

3.1 Nature of the concerns ............................................... 7

3.2 Markets affected by licensing arrangements ........................... 7

3.2.1 Goods markets ................................................ 8

3.2.2 Technology markets ........................................... 8

3.2.3 Reseach and development: Innovation markets ................. 10

3.3 Horizontal and vertical relationships ...................................

.... 14

3.4 Framework for evaluating licensing restraints .......................... 16

4. General principles concerning the Agencies' evaluation of

licensing arrangements under the rule of reason ..................... 18

4.1 Analysis of anticompetitive effects ..................................... 18

4.1.1 Market structure, coordination, and foreclosure .................. 18

4.1.2 Licensing arrangements involving exclusivity .................... 19

4.2 Efficiencies and justifications ......................................... 21

4.3 Antitrust “safety zone” ................................................ 22

5. Application of general principles ...................................... 24

5.1 Horizontal restraints .................................................. 24

5.2 Resale price maintenance ............................................ 25

5.3 Tying arrangements .................................................. 26

5.4 Exclusive dealing .................................................... 27

5.5 Cross-licensing and pooling arrangements ............................. 28

5.6 Grantbacks .......................................................... 30

5.7 Acquisition of intellectual property rights ............................... 31

6. Enforcement of invalid intellectual property rights ................... 32

These Guidelines do not cover the antitrust treatment of trademarks. Although the same general

1

antitrust principles that apply to other forms of intellectual property apply to trademarks as well, these

Guidelines deal with technology transfer and innovation-related issues that typically arise with respect

to patents, copyrights, trade secrets, and know-how agreements, rather than with product-

differentiation issues that typically arise with respect to trademarks.

As is the case with all guidelines, users should rely on qualified counsel to assist them in

2

evaluating the antitrust risk associated with any contemplated transaction or activity. No set of

guidelines can possibly indicate how the Agencies will assess the particular facts of every case. Parties

who wish to know the Agencies' specific enforcement intentions with respect to any particular

transaction should consider seeking a Department of Justice business review letter pursuant to 28

C.F.R. § 50.6 or a Federal Trade Commission Advisory Opinion pursuant to 16 C.F.R. §§ 1.1–1.4.

See 35 U.S.C. § 154 (1988). Section 532(a) of the Uruguay Round Agreements Act, Pub. L. No.

3

103-465, 108 Stat. 4809, 4983 (1994) would change the length of patent protection to a term beginning

on the date at which the patent issues and ending twenty years from the date on which the application

for the patent was filed.

See 17 U.S.C. § 102 (1988 & Supp. V 1993). Copyright protection lasts for the author's life plus

4

50 years, or 75 years from first publication (or 100 years from creation, whichever expires first) for

works made for hire. See 17 U.S.C. § 302 (1988). The principles stated in these Guidelines also apply

to protection of mask works fixed in a semiconductor chip product (see 17 U.S.C. § 901 et seq. (1988)),

which is analogous to copyright protection for works of authorship.

1. Intellectual property protection and the antitrust laws

1.0 These Guidelines state the antitrust enforcement policy of the U.S. Department of

Justice and the Federal Trade Commission (individually, “the Agency,” and collectively, “the

Agencies”) with respect to the licensing of intellectual property protected by patent,

copyright, and trade secret law, and of know-how. By stating their general policy, the

1

Agencies hope to assist those who need to predict whether the Agencies will challenge a

practice as anticompetitive. However, these Guidelines cannot remove judgment and

discretion in antitrust law enforcement. Moreover, the standards set forth in these Guidelines

must be applied in unforeseeable circumstances. Each case will be evaluated in light of its

own facts, and these Guidelines will be applied reasonably and flexibly.2

In the United States, patents confer rights to exclude others from making, using, or

selling in the United States the invention claimed by the patent for a period of seventeen

years from the date of issue. To gain patent protection, an invention (which may be a

3

product, process, machine, or composition of matter) must be novel, nonobvious, and useful.

Copyright protection applies to original works of authorship embodied in a tangible medium

of expression. A copyright protects only the expression, not the underlying

4

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