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…

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…

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…

David Teece and Edward Sherry ‘On Patent “Monopolies”: An Economic Re-Appraisal’ Antitrust Chronicle, Spring 2017

This paper – which you can find here – provides a short critical introduction to the intersection between IP and antitrust laws. It begins by pointing out the obvious:  in exchange for public disclosure, the patent system gives a successful patent applicant the right to exclude others from using the patented technology without her/his permission  for a period of time. The first instinct is to consider that this exclusivity amounts to a legal monopoly, which can make antitrust antennas start to tingle. However, it is now a truism that having an IP right does not mean one also has market power. Nonetheless, in the US a number of (older) decisions  refer to “patent monopolies.” This piece ask whether this “patent monopoly” language is useful, misleading, or something in between. Without surprise, the authors seek to argue that it is exceedingly misleading: simplistic assertions that patent rights constitute “monopolies” are not particularly informative or helpful. The argument starts by looking at the…

John M. Newman ‘Complex Antitrust Harm in Platform Markets’ Antitrust Chronicle 2017, Spring, Vol. 1(2)

This paper – which can be found here – develops a rather orthodox argument about market leveraging and foreclosure. In short, the argument is that: “Under certain conditions, digital platforms can harness the power of reputation to steer users to favored suppliers. This steering forecloses non-favored suppliers in a related, though distinct, relevant market. Where favored suppliers are able to split the resulting rents with the platform, the strategy s rational. The resulting foreclosure reduces efficiency and consumer welfare.” In short, “Platform markets exhibiting substantial algorithm-driven reputation competition can facilitate a unique type of competitive harm. This article briefly summarizes the marketplace evolutions that have fiercely intensified [algorithm driven] reputation competition. It then describes this novel second-order, out-of-market competitive harm that can arise as a result of certain conduct in such markets.” Given this, it is unsurprising that the paper begins with a discussion of why reputation is relevant to competition. Antitrust doctrine generally treats “consumer choice” as being good. Yet…

Friso Bostoen ‘Margin Squeeze – Where competition law and sector regulation compete’ (2017) 53 Jura Falconis 3

This paper – which you can find here – provides an overview of margin squeeze as an antitrust infringement – i.e. the situation where a dominant undertaking charges “a price for the product on the upstream market which, compared to the price it charges on the downstream market, does not allow even an equally efficient competitor to trade profitably in the downstream market on a lasting basis”. The paper also looks at the relationship between margin squeeze and sectoral regulation. The article starts with an overview of the different ways an undertaking can abuse its dominant position through pricing (chapter 2). It then defines margin squeeze (chapter 3), before looking at how margin squeeze is assessed in a number of EU cases (chapter 4) and into the role of the as-efficient-competitor test in identifying margin squeeze situations (chapter 5). It then discusses why some undertakings appear to be more susceptible to commit this abuse than others, and lists the traits such…

Unwired v Huawei [2017] EWHC 711 (Pat)

This judgment – which you can find here – is a recent UK court decision on FRAND terms. The factual background to this decision is convoluted (including five “technical” trials relating to the validity and infringement/essentiality of the relevant patents, which preceded the present trial regarding all competition law and FRAND issues), but the situation can be summarised shortly. Unwired Planet is a company that owns a number of worldwide patents, including many of the foundational technologies that allow mobile devices to connect to the Internet (4G, 3G and the like) – most of the relevant portfolio in this case was acquired from Ericsson. A number of these patents are essential to the relevant technical standards, and are thus deemed Standards Essential Patents (“SEPs”). The process of standardisation involves holders of patents which are essential to an international telecommunications standard declaring them to be essential to the relevant standards body –  in this case, the European  Telecommunications Standards Institute (“ETSI”). Standard…