On January 12, 2017, the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ), collectively the “Agencies” issued an update to the 1995 Antitrust Guidelines for the Licensing of Intellectual Property (IP) (the 2017 Guidelines and the 1995 Guidelines, respectively). The 1995 Guidelines set forth the Agencies’ analytical framework on how it assessed the antitrust ramifications of IP-related actions. The 2017 Guidelines incorporate changes, from the past twenty years, in regulations, antitrust jurisprudence, the Agencies’ policies on mergers, consistent with the 2010 Merger Guidelines, and enforcement.
First and foremost, the 2017 Guidelines do not alter the core analytical framework set forth in the 1995 Guidelines, namely: (1) the Agencies will apply the same antitrust analysis to conduct involving IP as to conduct involving other forms of property; (2) the Agencies will not presume that IP creates market power; and (3) the Agencies will recognize that IP licensing is generally procompetitive.
The 2017 Guidelines also continue to recognize an antitrust “safety zone”. Accordingly the Agencies will generally not contest a restraint in an IP licensing arrangement if: (1) it lacks, facially, an anticompetitive restraint, and (2) the licensor and licensee(s), in total, account for twenty percent or less in each relevant market impacted by the restraint.
There are, however, a number of changes worth noting in the 2017 Guidelines. By way of example, the 2017 Guidelines revises the previous position on resale price maintenance law and IP licensing agreements (i.e., it now allows IP license agreements to contain provisions on resale price that would be subject to a rule of reason analysis, consistent with federal antitrust law). The Agencies indicate in the 2017 Guidelines that they will also have discretion to pursue actions in certain, albeit undefined, circumstances in which a unilateral refusal to share IP with competitors raises antitrust issues.
Additionally, the 2017 Guidelines state that certain IP transfers may be analyzed as a merger even if there isn’t one. As such, the Agencies may apply a merger analysis framework to a sale of IP in any transaction in which an entity acquires through grant, sale or other transfer an exclusive IP license. The Agencies may also apply its merger analysis framework to any transaction involving an IP license that raises antitrust concerns, even if it is not a complete transfer of the related IP rights.
The Agencies, under the 2017 Guidelines, will also review and assess new technologies beyond the two year period set forth in the 1995 Guidelines. There are also some policy adjustments relating to research and development markets (which were named innovation markets in the 1995 Guidelines).
Finally, the 2017 Guidelines includes addressing certain changes to patent, copyright and trade secrets law, with the most notable addition being last year’s Defend Trade Secrets Act.
Click here to view the 2017 Guidelines: