The Intersection of Antitrust and Intellectual Property Issues: A Report from the FTC Hearings

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The Conference: Antitrust for High-Tech Companies; Business Development Associates

San Francisco, CA

Date:
By: 
Susan DeSanti, Former Deputy General Counsel for Policy Studies

Introduction

I am very pleased to be here today to discuss how concerns about innovation arise in the context of both antitrust and intellectual property law, and to note some of the points at which those two bodies of law intersect. I am especially pleased because this is an audience comprised of people who are knowledgeable about the types of innovation issues that prompted, in part, the Federal Trade Commission’s hearings this fall on “Global and Innovation-Based Competition.” Those public hearings were initiated in order to assess whether changes in the nature of competition -- particularly for sectors of the economy such as high-tech companies -- require any adjustments to current antitrust enforcement policies. I will start by describing the premises for and purpose of the hearings, and then I will provide some highlights from hearing testimony that addressed the intersection of antitrust and intellectual property issues. As is customary, my remarks reflect only my views and do not necessarily represent the views of the Commission or any Commissioner.

The FTC’s Hearings on Global and Innovation-Based Competition

It would be fair to characterize the recent FTC hearings as the “brainchild” of our new Chairman, Robert Pitofsky, who presented the idea of public hearings as a way for the FTC to take a closer look at how the many competitive changes of the last few decades might have implications for antitrust and consumer protection enforcement policies. It is also fair to note that the Federal Trade Commission has a long and honored tradition of public hearings that have assisted enforcers and legislators in keeping up with new issues in the U.S. economy. For example, in the late 1920's, the FTC’s review of securities abuses led to enactment of the 1933 Securities Act. After World War II, the FTC’s examination of business trends led Congress to impose more stringent limitations on mergers.

The FTC’s “Global and Innovation-Based Competition” hearings were intended to address a more limited, although still formidable, set of topics related to changes in the nature of competition. Although many competitive changes were noted, most participants underscored the continuing vitality of the core principles of consumer protection and antitrust enforcement as the best means for ensuring that U.S. consumers have accurate information and competitive markets in which to select their purchases. The Commissioners, and others during the course of the hearings, reaffirmed the critical value of these core principles in safe-guarding the competitiveness of U.S. markets.

The hearings instead provided an opportunity to listen and learn about how competition in U.S. markets has changed during the last twenty years and what adjustments might be required to consumer protection and antitrust enforcement policies in order to keep pace with those changes. More than 50 businesses and business organizations participated, as well as many consumer protection advocates. We also received testimony from lawyers, economists, and academicians.

The Commission had initiated the hearings on the basis of two assumptions:

1) Global competition (imports, exports, cross-border investments, and international joint ventures) is expanding at a rapid rate.

2) Competition in some markets is evolving so that the competition centers as much or more around innovation than price.

The hearings statements and testimony clearly confirmed both assumptions. In addition, we received scores of proposals for adjustments to consumer protection and antitrust policies in light of these changes.

For the purposes of this speech, I will limit myself to giving you some examples of the more provocative and interesting issues that were raised during the hearings regarding the intersection of antitrust and intellectual property concerns.

Spurs to Innovation: Intellectual Property Protection and Competition

To set the framework for my discussion of hearings testimony, let me begin by setting out two dichotomies that are probably familiar to all of you. The first dichotomy is that both intellectual property protection and competition are necessary in order to spur innovation efforts,(1) but they each achieve that result through different means. Intellectual property law focuses on providing inventors and creators with a return on their work that is intended to remedy various “public good” problems that may arise in connection with intellectual property. Antitrust law focuses on maintaining competitive markets in which competition among inventors and creators provides the spur to innovation.

The second dichotomy is between first-generation and second- (or successive-) generation innovators. On one hand, the first-generation innovators emphasize their need for broad and strong intellectual property protection in order to reward their innovation efforts appropriately. On the other hand, follow-on innovators emphasize their need for access to the intellectual property of the first-generation innovators, so that follow-on innovators can develop the improvements to and next generation of the first-generation’s invention or creation.

For public policy purposes, these two dichotomies require a difficult and delicate balancing of the value to innovation incentives that intellectual property protection and competition each provide. The tensions in this balancing exercise were addressed by the very first speaker at the hearings, Joseph Stiglitz, Chairman of the Council of Economic Advisors. Among other things, his opening remarks pointed out that firms may impede innovation by making overbroad assertions of intellectual property rights, and he explained this point as follows:

We often talk about how important patents are to promote innovation, because without patents, people don’t appropriate the returns to their innovation activity, and I certainly very strongly subscribe to that. . . . It was so important that it was included in the Constitution, so it gives you a sense of how important it was. On the other hand, some people jump from that to the conclusion that the broader the patent rights are, the better it is for innovation, and that isn’t always correct, because we have an innovation system in which one innovation builds on another. If you get monopoly rights down at the bottom, you may stifle competition that uses those patents later on, and so . . . the breadth and utilization of patent rights can be used not only to stifle competition, but also have adverse effects in the long run on innovation. We have to strike a balance.(2)

As the hearings continued, other participants had views and ideas about how best to achieve the balance between competition and intellectual property protection that Chairman Stiglitz had addressed on the first day. Those witnesses also addressed important issues, such as the value of intellectual property in promoting initial innovation, the scope of intellectual property protection and competition necessary to induce follow-on innovation, and the overall role of antitrust in stimulating innovation.

Patents and Innovation

In considering the value of intellectual property, most participants focused on patents. As you know, a patent gives an inventor exclusive property rights to an invention that meets the criteria for patentable subject matter and that satisfies statutory conditions of novelty, utility, and nonobviousness. Last year, the patent term was increased from 17 to 20 years in order to bring the U.S. patent term into conformity with that of foreign countries.

Testimony by Professor F.M. Scherer of Harvard University discussed studies that have examined, in various ways, the extent to which incentives derived from patent protection actually are the primary motivators of innovation efforts.(3) Such studies generally assessed the value of patents in inducing initial innovation. Interestingly, the results of several studies have shown that the majority of industries do not consider patents to be very important assets. In a study published by Richard Levin in 1987, firms in 130 lines of business reported that patents were the least important means of securing competitive advantages from new products.(4) These industries placed a higher value on business strategies like secrecy, being first with an innovation, the ability to move quickly down the learning curve, and sales or service efforts. In fact, 80 percent viewed investments in complementary sales and service efforts as a highly effective strategy for capturing a competitive edge from their research and development activities.(5)

On the other hand, in the Levin study, certain industries did perceive patents as being valuable to their innovation efforts. In pharmaceutical, inorganic and organic chemistry, and plastic materials industries, participants in the study considered patents to be an effective means of protecting new products. Hearings testimony from industry representatives corroborated those findings. In particular, representatives of the pharmaceutical and biotechnological industries emphasized the importance of patents to their respective industries.(6) In those industries, a patent is viewed as protecting the large, up-front investments necessary to the research and development of new drugs and biotechnologies.(7)

The Levin study is being replicated by Wesley Cohen at Carnegie Mellon University, and the results should be available shortly.(8) This time, the study will include businesses in other countries such as Japan, Germany, and England, as well as the United States, and will use more recent data. We are looking forward to examining those results when they are publicly available. Professor Scherer also cited a 1986 study by Edwin Mansfield,(9) who, in a survey of firms from 12 industries, found that only 14 percent of innovations overall (in a period from 1981-83) would not have been developed without patent protection.(10) Mansfield further concluded that 65 percent of pharmaceutical inventions and 30 percent of chemical inventions would not have been developed absent patent protection.(11) He also found that patent protection had no impact at all in four industries (office equipment, motor vehicles, rubber products, and textiles).

Based on all of the research in this area (including his own), Professor Scherer concluded that large corporations have many incentives, other than the potential for patent protection, to engage in research and development. He characterized the most basic incentive as: “If you don’t keep running on the treadmill, you’re going to be thrown off.(12) He offered the caveat, however, that “the spectacular successes that sometimes come from patented products may provide a sort of demonstration effect and lure to other smaller firms that would like to make it big.(13) This means that the distribution effect of rewards to technical innovations will be highly skewed, because “a relatively few winners offset the losses of large numbers of losing R&D investments.(14)

We also heard testimony from industry representatives on the role of intellectual property in innovation. The Licensing Executives Society conducted a survey of its members to elicit their views on various intellectual property and antitrust issues.(15) LES is comprised of over 3900 professionals in the U.S. and Canada who are engaged in the transfer and licensing of technology and industrial and intellectual property. According to the LES survey, respondents believe that intellectual property is a valuable asset that helps U.S. companies to compete and that provides a competitive advantage.(16) Eighty-eight percent of respondents agreed that intellectual property adds value to a company. Others concurred. For example, Max Frankel of the American Intellectual Property Law Association testified that intellectual property protection is essential to promoting innovation and investment in new technologies.(17) Dr. William Coyne reported that 3M Corporation has built a strong intellectual property portfolio in each of its product areas, because patents are necessary to protect its innovation efforts.(18)

Another area of interest involved patent breadth and its potential effect on follow-on innovation. Like Stiglitz, some commentators have argued that overly broad patents will deter other firms from pursuing follow-on innovations, thereby making new entry more difficult and stifling competition.(19) In testimony at the hearings, Professor John Barton of Stanford Law School discussed this issue in the context of antitrust.(20) He asserted that the 1970's pattern of weak patent law and strong antitrust law has been replaced in the 1990's with a pattern of strong patent law and weak antitrust law. Professor Barton suggested that fundamental changes in the PTO’s issuance of patents and the Federal Circuit’s enforcement of patents have led to increasingly broad patents and to certain patent claims that cover basic research tools.

These changes have intensified two related problems, according to Professor Barton. First, broad patents and patents covering basic research may discourage incremental and follow- on research. Moreover, the negotiation of patent rights for the incremental or follow-on innovation could be difficult, because there would be only one monopoly rent to be split between the initial and the follow-on innovators.(21) Second, according to Professor Barton, when broad patents and basic research patents are at issue, cross-licensing that is the equivalent of patent pooling is likely to be encouraged.(22) This raises similar concerns regarding disincentives for follow-on innovation.

Professor Carey Heckman of Stanford Law School highlighted the problems that high- technology industries encounter in trying to achieve a balance between initial and follow-on innovation. In high-technology industries, many of the products and services are combinations of more than one company’s technology.(23) According to Professor Heckman, “Technology is multi-faceted, multi-dimensional; it doesn’t come in neat sequences. It’s difficult to characterize what’s going on. Overall, people just aren’t sure what is owned by someone else. We have all stood on the top of the shoulders of our predecessors. Early developers don’t want their technology ripped off, but new developers would say that it’s ridiculous to start from scratch.(24)

Some participants expressed concern that the creation of the United States Court of Appeals for the Federal Circuit has led to stronger and broader patent enforcement, which may have important implications for incremental and follow-on innovation. The Federal Circuit has exclusive jurisdiction of appeals from the U.S. Patent and Trademark Office with respect to patent applications and interferences and of appeals from judgments in civil actions for patent infringement.(25) The Federal Circuit was formed partly in response to concerns about lack of uniformity in patent law decisions.(26)

According to several participants, the trend of the Federal Circuit’s patent decisions has been to uphold patents against attack and thereby effectively to strengthen the value of patents. Professor Barton suggested that the creation of the Federal Circuit has “invigorated a nearly moribund patent law,” because the Federal Circuit is enforcing patents more than other courts in the past.(27) In patent infringements suits, the Federal Circuit has been more likely to find that the patent is valid and thus infringed, according to Cecil Quillen, Jr.(28) He writes that, as of three years ago, “something like two thirds or more of patents which are litigated now are found to be valid and infringed” in contrast to ten years before when “something like two thirds . . . were found invalid.(29)

Professor Scherer agreed that the creation of the Federal Circuit has led to important, substantive changes in the law--changes, he argued, that were not intended by Congress. As a result, he reported, patents have been strengthened greatly, and firms are recognizing that a good patent is a powerful instrument to have. The impact of this change in the legal environment is that smaller firms, and even some rather large firms trying to develop a new product, are essentially finding themselves in a mine field, according to Professor Scherer. He suggested that “there are lots of unexploded patents out there, and you might step on one and have your corporate leg blown off.(30) Max Frankel also testified that the Federal Circuit has been more likely to rule in favor of the patentee in patent infringement suits, thus enhancing the value of a patent as protection for an innovation.(31)

Copyright and Innovation

Innovation issues were also discussed in the context of copyright. Of greatest interest to participants was whether, for purposes of promoting innovation, copyright is the best type of intellectual property protection for software. Participants were also concerned about what role copyright plays in stimulating innovation.

A copyright protects an author’s original and tangible expression of an idea, for a period of the life of the author plus 50 years. Unlike a patent, copyright protection for the initial expression can extend to subsequent, or follow-on, works that derive from the initial work.

In the opinion of some participants, copyright protection for software generally does not produce value on its own. Esther Dyson, president of EDventure Holdings, testified that copyright protection, especially in the software industry, in and of itself does not produce value, because the protected product is so rapidly overtaken by the next generation of products.(32) Instead, companies derive value from their brand name, the support services around their software, and their ability to continue to develop new versions of the software.

Ms. Dyson explained that in the software industry, venture capitalists do ask whether the software is copyrighted or patented; therefore, the existence of intellectual property does help a small company to raise money.(33) She reported, however, that this is now changing, because funders are beginning to understand that simply having something tangible to invest in will not get you very far. Rather, in her view, it is more crucial to invest in the software programmers who know how to produce the next product. Although Ms. Dyson stated that she did not object to strong patent and copyright protection for software, she viewed firms that enforced such protections as likely to be market bottlenecks to be “routed around.(34) Moreover, she cautioned that, if copyright protection is too broadly applied, then progress and development would be stifled, because “software, more than anything, is a series of inventions piled on top of each other.(35)

Robert Kohn, General Counsel for Borland International, expressed concern that overbroad copyright protection could stunt subsequent innovation in the software industry.(36) He observed that originality for purposes of copyright requires just a trivial level of creativity and characterized copyright protection as “uncritical and virtually automatic.(37) If copyright protection is extended to interface standards, he warned, then the consequent risk is that copyright owners will be overcompensated. Mr. Kohn suggested that patent law would seem to produce a more efficient level of protection for computer software. Professor Ernest Gellhorn of George Mason School of Law offered a similar view. He noted that one problem in granting a copyright for software is that copyright protection lasts 50 to 75 years, and there is no disclosure requirement.(38) In contrast, a patent lasts 20 years and an inventor is required to disclose publicly the subject matter of the patented invention.

Professor William Baxter of Stanford, Assistant Attorney General for Antitrust during the Reagan Administration, had the following observation on copyright as applied to computer software:

[T]he copyright laws really are not appropriate in their fundamental characteristics to do the job we expect them to do in the intellectual property area. [E]ssentially we want protection of functionality. And the copyright laws were not designed to provide protection for functionality. So they’ve sort of been forced and bent out of shape in order to do a job they were never intended to do.(39)

The Pros and Cons of Compulsory Licensing to Ensure Follow-On Innovation

Compulsory licensing was one possible remedy whose merits were debated by numerous participants at the hearings. Some participants argued that antitrust should be more receptive to compulsory licensing as a remedy. Others asserted, however, that compulsory licensing would stifle follow-on innovation.

Professor Scherer discussed the results of various studies that he conducted to determine the competitive effects of compulsory licensing.(40) In assessing the effects of antitrust consent decrees in the 1940's and 1950's that subjected many companies to compulsory licensing of patents, Professor Scherer’s findings indicated that compulsory licensing had only a very minor negative effect on follow-on innovation. His studies reflected some of the following findings. First, the vast majority of firms reported that the compulsory licensing decrees had, at most, a very minor negative impact on their R&D investments. However, there was a statistically significant decline in patenting by firms subjected to compulsory licensing decrees, especially for those that had to license future as well as past licenses. Instead, the firms who sought fewer patents relied on secrecy to protect their inventions. Finally, with a few significant exceptions, compulsory licensing decrees generally did not result in any changes in market structure, leading Professor Scherer to question the extent to which such decrees actually remedied competitive problems. Professor Scherer did observe that extensive compulsory licensing of patents in the 1940's and 1950's did not prevent the U.S. from enjoying a period of extraordinary productive growth during the 1950's and 1960's.

Professor Barton advocated compulsory licensing as a remedy under certain circumstances. He suggested consideration of the French dependency licensing concept, in which, he reported, the “follow-on innovator has the right to obtain a compulsory license under some restricted set of conditions.(41) Such restrictions could “include at least [that] the second invention must be an extremely important invention.(42) According to this concept, the initial innovator also would receive a license to practice the improvement technology.

Robert Kohn advocated a compulsory licensing requirement for firms that dominate a market through an interface standard. In that scenario, he argued that the dominant firm should be required to “promptly and fully disclose to developers of complementary products all information regarding the standard for the purpose of allowing competitors to develop complementary products.(43) The compulsory license would be a “use” license, according to Kohn, and it would permit an understanding of how the specification works sufficient to develop complementary products that do not infringe the copyright; the license would be free. Professor Scherer agreed that, for bottlenecks that block any possible progress in software, “there ought to be some way of making those interfaces public domain, subject at most to a modest royalty.(44)

On the other hand, several participants were opposed to the compulsory licensing of intellectual property. LES survey respondents asserted that compulsory licensing would be detrimental to their businesses; 81 percent believed that compulsory licensing would not promote innovation in their client’s industry.(45) Lewis Platt of Hewlett Packard asked for clarification that the essential facilities doctrine would not be applied to intellectual property.(46) Richard Donaldson of Texas Instruments advocated that the antitrust agencies state that the rules governing patents and licenses are not being changed.(47)

Other FTC Consent Orders: Innovation Markets

A large part of the hearings focused on the concept of innovation markets. In particular, participants discussed the mechanisms that could be employed to evaluate market power in the context of innovation, and they debated the relative merits of three different approaches to the analysis of innovation markets. Some argued that it is possible to define markets for the current generation of products that will adequately take innovation concerns into account through an examination of innovation activities aimed at current generation products. Others favored a market definition that focused on future generation products, in which the goal would be to determine likely competitive effects in a future output market. Finally, some supported a pure innovation market analysis, which would focus on competition in the research and development process itself. An innovation market then would be defined with reference to a hypothetical monopolist’s ability to retard the pace of certain research and development.(48)

Most testimony cautioned against the inappropriate application or expansion of an innovation market analysis. I should note here that the Commission and its staff are very sensitive to the need to avoid a reduction in innovation efforts through an inappropriate application of antitrust analysis. FTC staff works to maintain competitive markets that encourage innovation, and at the same time, to accord due weight to existing intellectual property rights.

Mergers involving biotechnology or pharmaceutical research are one area, however, where the Commission has developed substantial expertise in analyzing competition in research and development and the implications of eliminating independent research tracks. Six years ago, for example, the FTC issued a consent in Roche Holding’s proposed acquisition of Genentech, after finding reason to believe that the acquisition would have eliminated independent research tracks on a number of biotechnological products.(49) Since then, the FTC has investigated and issued consent orders in pharmaceutical mergers that had significant overlaps in research and development and appeared likely to cause a lessening of competition in that R&D.(50) Most recently, after reviewing Hoechst AG’s acquisition of Marion Merrell Dow Inc., the Commission took action to preserve competition in the research and development of drugs used to treat three medical conditions: intermittent claudication (i.e., a painful leg cramping caused by arteriosclerosis); gastrointestinal diseases of ulcerative colitis and Crohn’s Disease; and tuberculosis.(51) Only once has the Commission alleged harm to competition in innovation in an industry other than pharmaceuticals or biotechnology.(52)

My expectation is that the Commission and its staff will continue to scrutinize carefully merger transactions that may involve innovation issues, to ensure both that existing competition is maintained as a spur to innovation and that no unnecessary or overbroad interpretation of antitrust concepts acts as a deterrent to innovation.

Consultation Among Antitrust and Intellectual Property Agencies

Several participants suggested that the FTC increase its involvement in intellectual property matters due to the competition and innovation concerns that such matters raise. Professor Carey Heckman of Stanford Law School encouraged the Commission to make sure that agencies like the PTO and the Registrar of Copyrights understand the effects that their intellectual property decisions have on competition.(53) Doug Rosenthal emphasized the importance of establishing an ongoing dialogue between antitrust and intellectual property agencies.(54)

The FTC already has taken some steps in this direction. For example, in light of the innovation and competition issues surrounding intellectual property protection for software, several months ago, FTC staff submitted public comments on the PTO’s Proposed Examination Guidelines for Computer-Related Inventions.(55) It is possible that other circumstances will arise in which such comments will appear appropriate.

I will be happy to answer any questions that you may have at this time.

Footnotes:

(1)Some have noted that the theoretical and empirical economics literature is still undecided on whether increased market power or concentration results in decreased innovation efforts. (See, e.g., Tr. at 930-31 (Dennis Carlton); Tr. at 918 (Richard Rapp); Tr. at 993 (Michael Sohn).) However, none of the business witnesses at the FTC hearings questioned that competition had a role in fostering innovation; indeed, many business witnesses (and others) addressed the need to maintain competition in order to ensure innovation.

(2)Tr. at 24-25 (Joseph Stiglitz).

(3)Tr. at 3301-11 (F.M. Scherer).

(4)See Wesley M. Cohen and Richard C. Levin, Empirical Studies of Innovation and Market Structure, in Handbook of Industrial Organization 1059, 1092 (Richard Schmalensee & Robert D. Willig eds., 1989); Levin, Klevorick, Nelson & Winter, Appropriating the returns from industrial R&D, Brookings Papers on Economic Activity 783 (1987). See also Richard C. Levin, A New Look at the Patent System, 76 Am. Econ. Rev. 199 (1986).

(5)Cohen & Levin, Empirical Studies of Innovation and Market Structure, in Handbook of Industrial Organization at 1092.

(6)Tr. at 718-19 (Derek Schafer); Tr. at 719-20 (Alan Bloom); Tr. at 721 (William Green); Tr. at 722 (Charles Cooney).

(7)Tr. at 3301-17 (F.M. Scherer).

(8)Tr. at 3315-17 (F.M. Scherer).

(9)Tr. at 3304 (F.M. Scherer).

(10)Edwin Mansfield, Patents and innovation: An empirical study, 32 Management Science 173 (1986). See Cohen & Levin, Empirical Studies of Innovation and Market Structure, in Handbook of Industrial Organization at 1091-92.

(11)See supra note 5.

(12)” Tr. at 3308 (F.M. Scherer).

(13)” Id.

(14)” Id.

(15)Tr. at 3374 et seq. (Kenneth Nunnenkamp).

(16)Id.

(17)Tr. at 3385 (Max Frankel).

(18)Tr. at 205 (William Coyne).

(19)See, e.g., Robert P. Merges & Richard R. Nelson, Market Structure and Technical Advance: the Role of Patent Scope Decisions, in Antitrust, Innovation, and Competitiveness 186 (Thomas Jorde & David Teece eds., 1992); Kenneth W. Dam, The Economic Underpinnings of Patent Law, 23 J. Legal Stud. 247 (1994); Robert P. Merges & Richard R. Nelson, On the Complex Economics of Patent Scope, 90 Colum. L. Rev. 839 (1990).

(20)Tr. at 3409-20 (John Barton).

(21)See also Suzanne Scotchmer, Standing on the Shoulders of Giants: Cumulative Research and the Patent Law, 5 J. Econ. Persp. 29 (1991). See Suzanne Scotchmer & Jerry Green, Novelty and disclosure in patent law, 21 Rand J. Econ. 131 (1990).

(22)Tr. at 3417 -20 (John Barton).

(23)Tr. at 1834-38 (Carey Heckman).

(24)” Id.

(25)28 U.S.C. § 1292.

(26)See Stanley M. Besen & Leo J. Raskind, The Law & Economics of Intellectual Property, 5 J. Econ. Persp. 3, 8 (1991).

(27)Barton prepared statement, at 1.

(28)Written comments from Cecil D. Quillen, Jr. (Dec. 6, 1995) (citing Jon F. Merz & Nicholas M. Pace, Trends in Patent Litigation: The Apparent Influence of Strengthened Patents Attributable to the Court of Appeals for the Federal Circuit, J. Patent & Trademark Office Society (Aug. 1994)). See Besen & Raskind, The Law & Economics of Intellectual Property, 5 J. Econ. Persp. at 8.

(29)” Id. (citing Jerome G. Lee, The Most Significant Patent Cases Relating to the Question of Obviousness Under 35 U.S.C. Sec. 103, at 2. Read at the Annual Meeting of the ABA, Aug. 12, 1986).

(30)” Tr. at 3316 (F.M. Scherer).

(31)Tr. at 3399 (Max Frankel).

(32)Tr. at 3319 (Esther Dyson).

(33)Tr. at 3324-25 (Esther Dyson).

(34)” Tr. at 3329-30 (Esther Dyson).

(35)” Tr. at 3332 (Esther Dyson).

(36)Tr. at 3334 et seq. (Robert Kohn).

(37)” Tr. at 3346-47 (Robert Kohn).

(38)Tr. at 1177-79 (Ernest Gellhorn).

(39)Tr. at 3618-19 (William Baxter).

(40)Tr. at 3313 (F.M. Scherer).

(41)” Tr. at 3415 (John Barton).

(42)” Id.

(43)” Tr. at 3343 et seq. (Robert Kohn).

(44)” Tr. at 3357-58 (F.M. Scherer).

(45)Prepared Statement of Results of Licensing Executives Society Survey.

(46)Tr. at 41-42 (Lewis Platt).

(47)Tr. at 805-06 (Richard Donaldson).

(48)Antitrust Guidelines for the Licensing of Intellectual Property (issued by the U.S. Department of Justice and the Federal Trade Commission, April 6, 1995).

(49)Roche Holding Ltd., 113 F.T.C. 1086 (1990) (Commissioner Owen dissenting) (research and development of: vitamin C production process; therapeutics for treatment of human growth hormone deficiency; and CD4-based therapeutics).

(50)Glaxo plc, C-3586 (June 14, 1995) (research and development of non-injectable drugs for the treatment of migraine); Boston Scientific Corp., C-3573 (May 5, 1995) (Commissioner Azcuenaga concurring in part and dissenting in part) (research and development of intravascular ultrasound imaging catheters); Wright Medical technology, Inc., C-3564 (March 23, 2995) (research and development of hand implants); American Home Products Corp., C- 3557 (Feb. 14, 1994) (Commissioner Azcuenaga concurring) (research and development of a rotavirus vaccine). See The Upjohn Company/Pharmacia Aktiebolag, FTC File No. 951-0140 (Oct. 27, 1995) (proposed consent agreement) (research and development of topoisomerase I inhibitors for colorectal cancer treatment).

(51)Hoechst AG, C-3629 (Dec. 5, 1995).

(52)Sensormatic Electronics Corp., C-3572 (April 21, 1995) (Commissioner Azcuenaga concurring in part and dissenting in part) (research and development of disposable labels for source labelling and of processes to manufacture disposable labels).

(53)Tr. at 1831-32 (Carey Heckman).

(54)Tr. at 3420-29 (Douglas Rosenthal).

(55)Comment of the Staff of the Federal Trade Commission, Dkt. No. 9505 31 44- 5144-01. The PTO issued a draft final version of the Guidelines in December 1995. Draft Final Version, Examination Guidelines for Computer-Related Inventions at 3, U.S. Patent & Trademark Office (Dec. 27, 1995).