Proposed Update Keeps DOJ/FTC IP Licensing Enforcement Guidelines High Level
A proposal by the DOJ and FTC to update joint guidelines for enforcing antitrust policy on IP licensing matters appears to be effective in modernizing the guidelines' high-level approach and avoids addressing several hot-button patent issues, said IP stakeholders in interviews. The agencies proposed last week to update their IP licensing antitrust guidelines to reflect IP-related court cases and changes in copyright, patent and trade secrets law since the original guidelines took effect in 1995. The changes included expansions in the lengths of copyright and patent terms, and enactment of the 2016 Defend Trade Secrets Act (see 1608120045).
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An update is “timely and warranted” because “a lot has changed in IP law” since 1995, said Computer and Communications Industry Association Vice President-Law and Policy Matthew Schruers. The guidelines have become “very patent-centric, which says a lot about where antitrust enforcers direct their attention on how different types of IP can affect competition,” Schruers said. “Regulators are more focused on patent markets than copyright markets,” notwithstanding the DOJ's recent review of the American Society of Composers, Authors and Publishers and Broadcast Music Inc. consent decrees (see 1608040066). The ASCAP/BMI consent decrees review is “the exception to the rule,” he said.
The proposed changes don't appear to be a “departure” from the agencies' basic principles for enforcing IP-related antitrust cases, which has centered on evaluating such cases “as they do with any other private property right,” said Tom Sydnor, visiting scholar at the American Enterprise Institute's Center for Internet, Communications and Technology. “I'm cautiously optimistic” the agencies' basic principles won't change in the course of gathering stakeholders' feedback, despite the outcry among some music licensing stakeholders about the controversial outcome of the ASCAP/BMI review, he said.
The proposal “really is a modest update” to the IP enforcement guidelines that appears to specifically reflect legislative and judicial changes in IP law, said Orrick Herrington antitrust lawyer Jay Jurata: “It's more noteworthy for what was left out” on ongoing issues affecting the patent marketplace. The proposal is “silent” on addressing patent assertion entities (PAEs), standard-essential patents (SEPs) and reverse payment settlements in patent cases, Jurata said. Public Knowledge Patent Reform Project Director Charles Duan told us he hopes the agencies will “consider discussing in the guidelines more contemporaneous business practices in the patent licensing field,” including PAEs and SEPs, based on feedback from stakeholders.
“I think the guidance is still very high level, which will keep lawyers in business analyzing more granular scenarios” on IP enforcement, Jurata said. He said multiple other countries' antitrust enforcement agencies have updated their IP guidelines in recent years to address SEPs, reverse payments and in some cases even PAEs. DOJ's decision to not propose addressing pressing patent issues in the guidelines update “arguably is a missed opportunity” for the agencies, said Hogan Lovells antitrust lawyer Logan Breed. The DOJ and FTC didn't comment.
The decision not to address PAEs and SEPs appears to be deliberate, given recent statements from FTC Chairwoman Edith Ramirez and DOJ Antitrust head Renata Hesse, Breed told us. The agencies' purpose was specifically to modernize the guidelines to reflect the past 21 years of legal updates, and they “didn't even cite” their own enforcement actions on PAEs and SEPs, including the FTC's 2015 enforcement action against PAE MPHJ Technology Investments (see 1503170029), Breed said. The agencies' decision to not address PAEs in the guidelines update may at least partially stem from a possible desire not to take action amid the ongoing debate on Capitol Hill about revamping patent law to curb PAE-led litigation abuse, he said.
The FTC also may be reluctant to issue guidelines on PAEs until the agency can complete its years-long study into those entities' business practice, Breed said. The decision not to address recent patent issues may reflect a possible lack of consensus within the DOJ and FTC on how to address those issues, an industry lobbyist told us. That may be especially true for the FTC's stance on PAEs given perceptions that the commissioners haven't formed a consensus on how to address the entities, the lobbyist said. A variety of reasons have been floated for the decision not to address PAEs and other recent issues in the guidelines update, but it's entirely possible the agencies wanted to “preserve flexibility” in applying the guidelines to the factors in disparate enforcement cases, Jurata said: “It could also be that they don't want to lock themselves into their current thinking on specific issues” in a high-level document.