Federal Trade Commission and Department of Justice Issue Report on Antitrust and Intellectual Property

The Federal Trade Commission and the Department of Justice (DOJ) today issued a joint report, “Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition,” to inform consumers, businesses, and intellectual property rights holders about the agencies’ competition views with respect to a wide range of activities involving intellectual property.

The report discusses issues including: refusals to license patents, collaborative standard setting, patent pooling, intellectual property licensing, the tying and bundling of intellectual property rights, and methods of extending market power conferred by a patent beyond the patent’s expiration.

“Our nation’s antitrust and intellectual property laws share the goal of promoting innovation, which in turn greatly benefits our consumers,” said FTC Chairman Deborah Platt Majoras. “The FTC takes seriously our responsibility to tackle the difficult issues that can arise when the antitrust laws are applied to IP, often in settings where business practices are rapidly evolving. We endeavor to adopt policies that permit competition and innovation to thrive, and this report explains our current policy thinking.”

The report follows a series of hearings jointly conducted by the agencies in 2002, entitled “Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy.” During 24 days of hearings spanning over 10 months, the agencies received submissions and heard testimony from more than 300 commentators who offered diverse perspectives and represented a wide range of interests, including those of the biotechnology, computer hardware and software, Internet, and pharmaceutical industries; independent inventors; and leading scholars and practitioners learned in antitrust law, intellectual property law, and economics.

“Intellectual property is a key driver of the U.S. economy and sound competition policy works to maintain a robust marketplace so that new products and services can flourish,” said Thomas O. Barnett, Assistant Attorney General for the Department of Justice’s Antitrust
Division. “The Department of Justice is committed to ensuring that consumers benefit from both competitive markets and strong intellectual property rights protection and enforcement necessary to facilitate innovation.”

The agencies’ analysis of intellectual property focuses on preserving competition and incentives for creativity and innovation. The report indicates that the FTC and DOJ will analyze the vast majority of conduct involving intellectual property rights using a flexible rule of reason approach that considers both the efficiencies of a particular activity as well as any anticompetitive effects it may create. With the agencies’ improved understanding of intellectual property, the agencies can better ensure that intellectual property and antitrust laws continue to achieve their common goals of “encouraging innovation, industry and competition,” according to the report. The report’s conclusions include the following:

The Commission vote to issue the report was 5-0.