Alexander Galetovic & Stephen Haber ‘The Fallacies of Patent Hold Up Theory’ (2017) Journal of Competition Law & Economics, 13(1) 1

This paper – which can be found here – criticises the patent hold-up theory, which underpins most antitrust concerns regarding SEPs. The first section describes patent hold-up theory, which is said to: “consist of five nested claims. First, that patent owners can systematically overcharge manufacturers for licenses to their patents through the economic mechanism of holdup—the opportunistic appropriation of a downstream firm’s quasi rents (revenues in excess of short-run costs). Second, that when there are multiple patent holders, each practicing holdup on a downstream firm, cumulative patent royalty rates become astronomically high—a phenomenon patent-holdup theorists termed “royalty stacking. Third, that the holdup problem is exacerbated when patented technologies are included in the industry standards necessary to make IT products interoperable and compatible. Fourth, that patent holdup, royalty stacking, and the inclusion of patented technologies in industry  standards are strangling innovation, most particularly in SEP-intensive IT products. Fifth, that the government must intervene to solve this problem; the market, left on…

Jorge L. Contreras, Fabian Gaessler, Christian Helmers, Brian J. Love ‘Litigation of Standards-Essential Patents in Europe: A Comparative Analysis’Berkeley Technology Law Journal (2018, forthcoming)

This paper – which can be seen here – provides a comparative empirical study of European patent litigation relating to standards essential patents (SEPs). The paper begins with a description of SEPs and, more interestingly for our purposes, of the contexts in which SEP litigation arises. The simpler type of litigation occurs when the holder of a SEP and its potential licensee disagree whether an offered royalty rate is, indeed, FRAND. However, some SEP holders’ transfer patents to non-practicing entities (NPEs), including patent assertion entities (PAEs), for a variety of financial and strategic reasons. This practice is sometimes referred to as “privateering”. There are already a number of well-known cases involving SEP assertions by PAEs and other NPEs.  Moreover, there is increasing evidence that operating firms, often participants in SDOs, have been transferring significant numbers of SEPs to PAEs for enforcement purposes in privateering transactions. PAEs accounted for approximately 19% of patent assertions between 2000 and 2008 in Germany and 9%…

Richard A. Epstein and Kayvan B. Noroozi ‘Why Incentives for “Patent Holdout” Threaten to Dismantle FRAND, and Why It Matters’ IP² Working Paper No. 17006

This paper – which can be found here – argues that existing regulatory and judicial activity has unduly protected implementers (i.e. potential licensees) against SEP holders. In particular, the authors: “stress that implementers owe a significant duty to negotiate FRAND licenses in good faith, which courts have largely overlooked and underenforced. We demonstrate that implementers’ good faith obligations are a critical component of basic FRAND architecture that is strictly necessary to the development of innovation-driven standards. (…) [FRAND enables] the standards development effort to yield commercial benefits that would not exist absent innovators’ voluntary participation. We show both theoretically and empirically that courts’ failure to appreciate these aspects of the FRAND bargain, combined with their over-reliance on liability rules, i.e., damages over injunctions, incentivizes the very patent holdout problem FRAND was intended to avoid. That outcome, in turn, has motivated innovators to reduce their participation in FRAND bargains, threatening to unravel a massive innovation-commercialization marketplace, and its innumerable positive externalities to…

Koren W. Wong-Ervin, Evan Hicks, and Ariel Slonim ‘Tying and Bundling Involving Standard-Essential Patents’ (2017) George Mason Law Review 24 1091

This paper – which can be found here –  slooks at whether it is “unfair” (and therefore unlawful) for a SEP holder to license its patents, including both SEPs and non-SEPs, on a portfolio basis. The basic argument is that “SEP and non-SEP portfolio theories of harm” advanced thus far are not economically sound (this is unsurprising, given that the very first sentence of the article is: “Competition agencies around the world have taken the unwarranted position that antitrust enforcement involving standard-essential patents (SEPs) upon which a patent holder has made an assurance to license on fair, reasonable, and nondiscriminatory (FRAND) terms should be subject to special rules or unique presumptions and burdens of proof” (emphasis is mine)). Instead, for these portfolios to infringe competition law there: “would have to be an exclusionary effect on other sellers because bundling thwarts buyers’ desire to purchase substitutes for one or more of the goods in the bundle from those other sellers to an…

Robin Cooper Feldman ‘Patent and Antitrust – Differing Shades of Meaning’ (2008) Virginia Journal of Law & Technology 13 5

This paper – which can be found here – focuses on how “patent law and antitrust law often use the same concepts and terminology with differing meanings and contexts.” The confusions this gives rise to “threatens any attempt to reconcile the two bodies of law. Most importantly, ignoring asymmetries can lead to both underprotection and overprotection of patent rights, as well as the improper application of antitrust laws”. The paper begins with a history of the relationship between IP and antitrust.  From the beginning, there were tensions between IP and antitrust, given that “patent law encourages monopoly and antitrust law opposes monopolization.” However, this terminology risks confusing things. Competition law “focuses its wrath on companies that try to gain or maintain monopoly power by inappropriately suppressing competition”. Patent law, on the other hand, “grants only a negative right, the right to exclude. That right brings the possibility of obtaining a monopoly in a given market, but a patent is certainly…

Sandra Marco Colino, Niamh Dunne, Knut Fournier, Sofia Pais, Derek Ritzmann ‘The Lundbeck case and the Concept of Potential Competition’ (2017) Concurrences n° 2-2017

This paper – which can be found here – contains the reflections of a number of legal scholars about European decisions regarding reverse settlement payments (also known as “pay for delay” agreements). Reverse settlement payments consist of payments by the owner of IP rights to entities that are challenging such rights in court – and they are particularly important in the pharmaceutical sector, where producers of generic drugs may challenge the IP of branded drugs, and the owner of the drug may pay the generics’ company not to challenge his/her/its IP (and, thus, not to enter the market). As noted in the introduction: “Schemes of this nature are bound to set off alarm bells in the mind of the antitrust erudite. Delaying the entry of would-be competitors would almost certainly entail pushing back the benefits typically derived from a competitive market, the very ones that competition law was designed to protect. And yet the fact remains that, when reverse payment agreements are entered…

Matthew Sipe ‘Patent Privateers and Antitrust Fears’ (2016) 22 Mich. Telecomm. & Tech. L. Rev. 191

this paper – which can be found here – deals with the relationship between patent assertion entities (a.k.a. patent trolls) and antitrust. This relates to privateering,  a practice through which a firm sponsors the assertion of IP claims by third parties (so-called patent assertion entities (“PAEs”)) with the ultimate objective of raising competitors’ costs without disclosing who is ultimately behind this practice. However,  PAEs act for themselvesin most cases, and their actions are not necessarily anti-competitive. PAEs are merely entities that acquire and enforce patents without actually practicing them – their business model is predicated on acquiring licensing fees from entities that actually provide goods and services (so-called “operating entities”). PAEs have been severely criticised, and it has been suggested that antitrust be deployed against them.  At first glance, the nexus between antitrust law and PAEs seems clear: if litigious patent trolls are unfairly deteriorating the markets for various patented goods, antitrust law can step in and reassert the proper rules…

C. Scott Hemphill ‘Intellectual Property and Competition Law’ in Rochelle C. Dreyfuss & Justine Pila eds., Oxford Handbook of Intellectual Property Law (OUP, 2018))

This recent chapter – which can be found here –  provides an overview of the IP-antitrust field. It begins by noticing that Government enforcers and private plaintiffs have recently advanced a wide range of antitrust claims against IP rights holders. These include, among others, the alleged abuse of a standard setting process by a patentee, joint price setting by means of a blanket license for copyrighted musical works, and anticompetitive settlements of patent litigation. The author notes that: “These examples arise distinctively in the context of IP. They can be viewed as a kind of special-purpose antitrust law, although the principles applied are more general.” The paper seeks to provide an overview of the interaction between IP and antitrust. While excluding some sectors – e.g. mergers and vertical licenses – it covers most relevant examples of such interactions. The paper’s ultimate argument is that, beyond its core right to exclude rivals from the scope of an IP right, IP restricts…

John Taladay ‘Measuring the Impact of Injunctive Relief on Innovation’ (2017) Antitrust Chronicle Vol. 1 · SPRING 2017

This paper – which can be found here –  focuses on the impact of injunctions, or more specifically the lack of the availability of an injunction, on an innovator’s investment decision. It argues that; “(1) it is possible to measure the impact that a “no injunction” in patent infringement actions will have on innovation investment, and that (2) such a policy will necessarily reduce investment in innovation. The reduction in investment is caused by the delay in receipt of licensing revenues that will result from eliminating the potential for injunctions, because this delay will negatively affect the inventor’s expected return on investment.” It also holds that “that interest awards [as an alternative to injunctions] are inadequate to eliminate the reduced incentive to invest in innovation.” The paper begins with a disquisition of the relationship between IP and antitrust. “Antitrust and intellectual property law are often said to be compatible in that they are both supposed to encourage innovation. The intellectual…

Paul R. Michel & Matthew J. Dowd ‘The Need For “Innovation Certainty” At The Crossroads Of Patent And Antitrust Law’ Antitrust Chronicle (2017) Vol. 1(1)

This paper – which we can find here – looks at the impact that antitrust can have on the legal, regulatory and political context in which innovation occurs. The argument, while focusing on the US, is simple and stark. Patent and antitrust law are crucial to create an optimal innovation environment: patent law incentivises innovation by awarding exclusive rights that encourage investment while requiring the public disclosure of inventions. Antitrust law incentivises innovation by maximizing competition in a free marketplace and allowing innovators to disrupt markets and existing market power. Working within these legal regimes, private firms innovate and commercialize their products. They also create efficient transaction mechanisms, such as standard setting organizations (“SSOs”) and FRAND (“fair, reasonable, and non-discriminatory”) licensing agreements for standard essential patents (“SEPs”), so that innovators and their investors can efficiently obtain a return on their capital. However, during the past ten years, innovation certainty in the United States has decreased dramatically, and the decrease is…