Makan Delrahim, Assistant Att’y Gen., Antitrust Div., Dep’t of Justice, Remarks at the USC Gould School of Law’s Center for Transnational Law and Business Conference (Nov. 10, 2017)

This is a speech by US Department of Justice Assistant Attorney General Makan Delrahim regarding the appropriate approach to standard-setting organisations (SSOs) (and FRAND). As you may or may not know, he is a registered patent lawyer—the first head of the Antitrust Division to be so, so it is unsurprising that he has strong views on the topic. He seems to favour letting IP law run its course unimpeded (or, as he puts it: “Antitrust enforcers should . . . strive to eliminate as much as possible the unnecessary uncertainties for innovators and creators in their ability to exploit their intellectual property rights, as those uncertainties can also reduce the incentives for innovation.”), and only have antitrust intervene exceptionally (‘In case anyone is inclined to misunderstand my comments, let me clearly state that there is an important role for antitrust scrutiny in the standard setting context.’) As he colourfully puts it: ‘Once upon a time, and in their best mode, [SSOs]…

Vincent Angwenyi ‘Hold-up, Hold-out and F/RAND: The quest for balance’ (2017) Journal of Intellectual Property Law & Practice 12 (12) 1012

This paper – which can be found here –  provides a good (and straightforward) overview of the various sides of the debate on how to deal with the standardisation of intellectual property rights, standard essential patents (SEPs) and their licensing. It covers a bit of the same ground as the paper just reviewed in the post below, but in a more detailed fashion. The relevance and recent prominence of SEPs derives from the fact that end-products in a number of economic sectors now require the incorporation of numerous patented technologies (resulting in a so-called multi-component product). The production of multi-component products requires manufacturers to manage patent thickets (i.e. networks of overlapping IP rights owned by multiple patent holders) and to obtain licences from multiple rights holders. The alleged patent thicket problem is linked to the hold-up problem because the threat of an injunction by a right holder against a patent implementer who has already invested heavily in the manufacture of…

Jorge Padilla, John Davies and Aleksandra Boutin ‘The Economic Impact of Technology Standards‘

This Compass Lexecon report – which can be found here – argues that standards can lead to significant efficiencies: they not only solve coordination problems, they also seem to promote more rapid innovation than would otherwise be the case. Whether standards accelerate innovation depends greatly on who the ‘gatekeeper’ to the technology is. Among possible ‘gatekeepers’, the most pro-competitive one are voluntary standard setting organisations (SSOs). SSOs and the licensing arrangements they support enable a “market for technology,” in which smaller and specialized technology providers can thrive. As a result, competition authorities should be loath to interfere with the contractual arrangements that underpin the functioning of SSOs, should as clauses regarding FRAND terms. In more detail, the paper is structured as follows: The paper begins with an overview of why standards are valuable. Standards help certain industries achieve scale, giving users and suppliers the confidence to buy or make compatible products. While not exclusive to the IT sector, the ‘economics of…

Michael Mattioli ‘Patent Pool Outsiders’ (2018) 33 Berkeley Technology Law Journal 233

Patent pools reduce transaction costs that would otherwise persist whenever a product must rely on multiple patents. They address this problem by granting manufacturers and service providers permission to use the necessary patents through a single agreement. Licensees agree, in return, to pay standard royalty rates, which the pools divide among the patent holders. In this way, patent pools operate as cooperative licensing clearinghouses. By minimizing the number of licensing transactions that must take place for a product to be brought to the market, patent pools can significantly reduce transaction costs. These advantages are such that a growing number of economists and legal scholars are concerned that patent holders who refuse to join patent pools will undermine and sometimes entirely undo the benefits that patent pools deliver. If an important patent holder refused to join a patent pool and demanded greater royalties than it would otherwise receive as a member of that pool—i.e., supra-competitive prices—licensees would have to pay higher…

Jose Contreras and Peter Georg Pycht ‘Patent Assertion Entities and Legal Exceptionalism in the EU and the US’ (2017) Max Planck Institute for Innovation and Competition Research Paper no 17-11

This paper – which can be found here – identifies similarities and differences between Europe and the US regarding the role that patent assertion entities play in patent policy and patent litigation; and seeks to determine whether the law applicable to PAEs is substantively different from the law governing patent litigation more generally. As explained in previous posts, Patent Assertion Entities (PAEs) are firms that are in the business of patent monetization: they acquire patents from a variety of sources and then seek to collect revenue from companies manufacturing and selling products covered by those patents. More pejoratively, PAEs are known as patent “trolls”. Many commentators and policy makers have described PAE litigation as a phenomenon distinct from ordinary patent litigation. A number of studies suggest that a significant portion of recent U.S. patent litigation is attributable to PAEs, and that PAE activity is significant in Europe as well. One recent study found that PAEs accounted for approximately 19% of…

Herbert Hovenkamp ‘Reasonable Patent Exhaustion’ (2018) University of Pennsylvania Law School Faculty Scholarship. 1790

Exhaustion is a typical figure of IP and competition law (and, in the EU, of free movement law as well). The principle is relatively straightforward: after a certain point, restrictions on use or sale of a product cannot be enforced by someone who would otherwise have the right to enforce such restrictions. Exhaustion is often also called the first sale doctrine, as the right to object to the use or sale of a product usually ends after the product is sold for the first time. For example, when someone grants a patent license to another person, the exhaustion rule says that the patentee may not by impose conditions on the patented product’s subsequent use or sale, nor enforce these conditions through a patent infringement suit. This paper – which can be found here –  provides an analysis of a recent US Supreme Court’s decision: Impression Products, Inc. v. Lexmark International, Inc., 581 U.S. 1523 (2017). The case concerned a patent…

Christopher Buccafusco, Mark A. Lemley and Jonathan S. Masur ‘Intelligent Design’ (2017) Coase-Sandor Working Paper Series in Law and Economics 831

While this is a paper – which you can find here – is mainly on IP law, I circulate it because it highlights two matters relevant for competition practitioners: (i) how the regulation of topics other than competition can significantly affect competition – and competition law; (ii) how debates about the scope of individual competition law doctrines (e.g. abuse of IP rights, etc.) are often disguised debates about how to reform these regulatory frameworks. In other words, and as I noticed in previous posts, competition law operates in wider social and legal contexts that must be acknowledged. The argument of this paper is that when designers can obtain exclusive intellectual property (IP) rights in the functional aspects of their creations, they can wield these rights to increase both the costs their competitors incur and the prices that consumers must pay for their  goods. IP rights’ holders do this by using their rights in ways that do not promote the goals…

Saurabh Vishnubhakat ‘The Antitrusting of Patentability’ (2018) Seton Hall Law Review: Vol. 48 : Iss. 1 , Article 2

This paper, which can be found here,  focuses mainly on developments regarding IP patents in the US – in particular the adoption of per se rules by courts regarding the validity of patents. As such, my review will be quite succinct. The paper’s main argument is that the use of antitrust-style judicial shortcuts is not appropriate in patent law. The paper is structured as follows: It begins by comparing IP and antitrust law: ‘Both systems grapple with the jurisprudential tension, inherent in managing error costs, between legal standards and legal rules. Only antitrust law, however, has evolved a systematic approach to managing decision costs.’ The author argues that patent law has begun to borrow from competition law’s adoption of both form-based rules and detailed effects’ assessments by using the doctrine of patent-eligible subject matter as a shorthand for the more fact-intensive and costly doctrinal inquiries into whether an invention is truly patentable. To demonstrate this point, the paper engages in a…

Steven Andeman ‘Overplaying the Innovation Card: Stronger Intellectual Property Rights and Competition Law’ Kritika: Essays on intellectual property (ed.) Peter Drahos, Gustavo Ghidini, Hanns Ullrich (Elgar, 2015) 17-58

This paper is already over two years old, but it provides a good overview of the main challenges that arise at the intersection of competition and IP law. The article’s thesis is that patents and copyrights seek to promote innovation by striking a balance between protecting initial inventor rights, on the one hand, and fostering follow-on or cumulative innovation, on the other. It conceptualises recent efforts to use competition law to limit the scope of IP law as attempts to limit excessive protections granted to original inventors by IP rights to the detriment of follow-on innovation. Examples of such interventions in Europe include compulsory copyright licensing remedies, the sanctioning of certain attempts to manipulate the IP regime in order to extend the scope and duration of existing IP rights, the prohibition of pay-for delay agreements, and the use of competition law to limit reliance by Standard Essential Patent (SEP) holders on patent injunctions. The paper is structured as follows: Section…