DOJ/FTC IP Antitrust Guidelines Update Gets Mixed Reaction to High-Level Approach

U.S. International Trade Commissioner Scott Kieff urged DOJ and FTC to consider a “commercialization” approach to handling IP antitrust that “offers a view of exclusivity in IP that can further rather than frustrate FTC and DOJ stated interests in [antitrust], competition, and consumer protection.” The administrations of former Presidents Jimmy Carter and Ronald Reagan embraced the commercialization approach, which “views IP more in the tradition of private law, rather than public law,” Kieff said. A commercialization approach “does not ignore creators or inventors or creations or inventions themselves,” nor “does a focus on commercialization guarantee that IP rights cause more help than harm,” Kieff said.

The American Bar Association’s Antitrust and IP sections praised DOJ and the FTC for taking a high-level approach, saying the original guidelines “have largely withstood the test of time.” The ABA sections said they “understand that the proposed revisions do not anticipate changes in the way that the Agencies currently evaluate licensing practices, but rather are intended to more accurately reflect developments in relevant antitrust and intellectual property law since 1995.”

“Effective policy guidelines should describe the principles of interpretation that the enforcement agencies will use in particular situations,” said BSA|The Software Alliance. “The current Guidelines have accomplished this goal and the Proposed Updated Guidelines do not veer from this path.” There haven’t been “any fundamental changes to antitrust law as it relates to the licensing of intellectual property” since the '95, though DOJ and the FTC are right to incorporate more recent changes to U.S. law via Congress and federal courts, BSA said.

ACT|The App Association and several other tech groups objected to not addressing controversial IP issues, including SEPs and PAEs. ACT said it's concerned that the agencies didn’t reference or include any existing guidance on abuse of fair, reasonable and nondiscriminatory (FRAND) patent agreements, saying it could be “misinterpreted as a sign that such guidance is not important, or worse yet, no longer valid.” The guidelines should include language on FRAND commitments and SEPs or at least acknowledge that existing guidance exists, ACT said. “A complete omission of SEP-related developments in the Revised Guidelines may introduce uncertainty as to the effect of the existing work done by the Agencies."

Public Knowledge similarly urged DOJ and the FTC to better address SEPs and PAEs. SEPs should be addressed both in terms of FRAND agreements and of potential anticompetitive activity by standards bodies, “especially when those bodies are composed of patent-holding companies (rather than disinterested parties such as scientists),” PK said. “A standards consortium can also act anticompetitively by adopting technologies that benefit some competitors over others.” PAEs also present potential antitrust and competition issues, as evidenced by the FTC’s years-long study into those entities' business practices, PK said.

Apple, Cisco, HP and Intel were among 12 companies that jointly noted the lack of specific mentions of SEPs and FRAND agreements in the proposed guidelines. “There is already substantial guidance on these issues provided by the Agencies and US Courts, and [we] agree with the Agencies' previously-expressed concerns regarding the special circumstances attendant to SEP licensing, and potential ‘hold up’ or other abuses that can arise in connection with SEP licensing,” they wrote. “SEP issues can be significant and important matters for Agency oversight. Continued court development, agency enforcement oversight, and agency policy activities, may assist in providing further guidance to industry participants.” Intel said it agrees the omission of language on FRAND agreements “makes sense in light of the extensive guidance that the Agencies already have issued on this subject.”

Nokia and The Innovation Alliance were among those supporting not addressing SEPs and PAEs in the guidelines update. “There is no need to add a new guidelines section on SEPs or FRAND,” Nokia said. "Recent pronouncements issued by courts and antirust agen­cies provide enough guidance for stakeholders to resolve possible disputes on FRAND licensing in a way that best balances the interests of SEP holders and implementers of standards.” In "recent years, the Agencies have opined extensively on these topics in numerous speeches and other public statements, and will likely continue to comment in response to new developments,” the Innovation Alliance said. “Law in this area continues to evolve and it would be imprudent for the Agencies to articulate a rigid or one-size-fits-all statement of their current enforcement policy.”

DOJ and the FTC “correctly reject the invitation to adopt a special brand of antitrust analysis for SEPs in which effects-based analysis is replaced with unique presumptions and burdens of proof,” said George Mason University Scalia Law School’s Global Antitrust Institute. “SEP holders, like other IP holders, do not necessarily possess market power in the antitrust sense, and conduct by SEP holders ... does not necessarily result in harm to the competitive process or to consumers." Three University of California-Berkeley economics professors jointly backed including specific guidance on SEPs, which “would not require the Agencies to sail into uncharted waters.”

The Artists Rights Society criticized DOJ and the FTC for failing to adequately address modern copyright licensing issues in the proposed guidelines update. The guidelines mostly focused on patent issues and “completely ignore the anti-trust implications” of copyright and music licensing models created since the invention of the internet, ARS said. The society said its members “are especially reliant on the agencies of the federal government for protection from the predatory behavior of large companies that use their vast market power to divert rightfully earned copyright licensing royalties from lawful rights holders into corporate bank accounts.”