The ability to compete on numerous markets today depends on access to technological standards. When standards are protected by standard essential patents (SEP), a license to use such SEPs will be ...required. There have been numerous disputes in various jurisdictions over refusals to license SEPs. Most recently, disputes concern access to SEPs by the manufacturers of components. Some SEP holders deny access to their standard essential patents to component manufacturers and prefer to license end product producers. This practice has become a highly contentious issue around the world. In particular, manufacturers of components who are denied access to SEPs claim that such refusals amount to violations of competition rules. The author examines this highly contested practice is an attempt to show when denying access to an SEP license could harm competition.
Whether SEP(Standard Essential Patent) owners’ multi-level licensing practices affect competition order in SEP related markets and violate antitrust law has been debated with regard to the decision ...of KFTC in 2017 Qualcomm case. The multi-level licensing practice has been explained as that a patent proprietor could impose different post-sale restrictions in each distribution channel even after the patent products have already been retailed through a legal sale process.
This licensing practice includes a refusal to license to part manufacturers for making SEP parts, which are performing SEP method patents, and post-sale restrictions for the clients of the SEP components (the final product manufacturers). First, the refusal to license to SEP part producers should be a violation of FRAND commitments. Secondly, the post-sale restriction could not be allowed under the first-sale doctrine according to 2017 Impression decision by the Supreme Court of the United States.
For this reason, this licensing practice by SEP owners should not be allowed any more. Actually, the multi-level licensing practice increases the risk of patent infringement and decreases the possibility of using standard technologies freely. Regardless of violation of patent principle, antitrust law could be applied to prohibit this patent strategy because of its anti-competitive effect, like exclusion of competitors in the SEP component market and the price-increase of the final merchandises with standard technologies.
Patents and copyrights are government sanctioned monopolies. In order to encourage innovation and investment in research, the government provides the owners of these intellectual property rights the ...power to control production of and exclusively use their inventions. Antitrust laws, on the other hand, limit restraints of trade in order to prevent the abuse of market power and protect competition. An imbalance of power between patents and antitrust, suggested by previous decisions of the Court of Appeals for the Federal Circuit, is fully realized in the recent decision In re Independent Service Organizations (ISO). The ISO decision demonstrates the Federal Circuit's decided preference for intellectual property rights over antitrust concerns. Ultimately, this bar to competition threatens innovation, and the broad protections of ISO might become a detriment to the intellectual property system.
In re Intel Corp Loew, Jeff
Berkeley technology law journal,
01/2000, Volume:
15, Issue:
1
Journal Article
Peer reviewed
A discussion is presented of the settlement decree in lawsuit filed by the FTC against Intel Corporation, charging Intel with violating section 5 of the Federal Trade Commission Act. The FTC alleged ...conduct constituting unlawful monopolization, unlawful attempts to monopolize, and unfair competition. The settlement order limits Intel's ability to withhold certain types of intellectual property from its customers for reasons relating to an IP dispute with that customer.
Intellectual property rights and competition policy are intimately related. In this paper I survey the economic literature analyzing the interaction between intellectual property law and competition ...law and how the boundary between these two policies is drawn in practice. Recognizing that intellectual property rights and competition law can interact in many different ways, the presentation focuses on several key issues. The economic literature on the interaction between competition law and intellectual property rights shows that these regulatory systems are consistent in terms of basic principles. Significant tensions exist, however, and it is difficult to balance IPR and competition law in practice. The significant differences in approach between the United States and the European Union simply reflect the underlying reality that efforts to achieve a sensible balance do not result in policy harmonization.
Intellectual property rights and competition policy are intimately related. In this chapter I survey the economic literature analyzing the interaction between intellectual property law and ...competition law and how the boundary between these two policies is drawn in practice. Recognizing that intellectual property rights and competition law can interact in many different ways, the presentation focuses on several key issues. The economic literature on the interaction between competition law and intellectual property rights shows that these regulatory systems are consistent in terms of basic principles. Significant tensions exist, however, and it is difficult to balance IPR and competition law in practice. The significant differences in approach between the United States and the European Union simply reflect the underlying reality that efforts to achieve a sensible balance do not result in policy harmonization.
Competition agencies around the globe are investigating whether a standard-essential patent (SEP) holder’s choice to license to the makers of downstream end-user devices, rather than to makers of the ...components of those devices, violates competition laws. Some authorities have already reached that conclusion. While much has been written about FRAND-assured SEPs, the literature to date focuses largely on the appropriateness of seeking and obtaining injunctive relief on such patents or on the meaning of “fair and reasonable,” and has largely ignored the “nondiscriminatory” prong of FRAND (fair, reasonable, and nondiscriminatory). This article analyzes what we observe to be the common industry practice of licensing on a portfolio basis at the end-user device level, and whether a patent holder’s refusal to license at only at the downstream end-user device level, and not at other levels of the production chain, may constitute an antitrust violation. We conclude that (1) whether the “nondiscriminatory” prong of the FRAND promise requires licensing at the component level is a fact-specific inquiry that depends upon the specific standard-development organization’s policy; (2) even if there is potential for a failure to comply with a FRAND assurance, that alone does not constitute an antitrust violation; and (3) the refusal to license at component level cannot be anticompetitive when the vertically integrated holder of one or more SEPs does not assert its patents against the makers of components but, instead, licenses its SEP portfolio to end-device manufacturers on FRAND terms.
In the European Union, competition policy regarding intellectual property related restrictions of competition has considerably changed in orientation. Whereas in the field of contractually agreed ...upon or concerted practices (Art.81 EC Treaty) licensing agreements, namely agreements on the ?transfer of technology?, benefit from a generous group exemption regulation, and whereas patent pools are assessed quite liberally, unilateral practices (Art. 82 EC Treaty), in particular refusals to licence and even patenting strategies, are looked upon with vigilance. This has not only resulted in some contradictory policy statements, but also led to an increased potential for conflict between the property owner?s autonomy of acquiring and exploiting his exclusive rights and the rules on competition, which all require a re-examination of the relationship between the system of protection of intellectual property, in particular the patent system, and competition law. Contrary to a generally held view, according to which the objectives of the system of intellectual property and of the rules on competition are complementary, the author sees the grant and the protection of exclusive rights as a sub-system of a competition-based ordering of markets, whose purpose is to promote inter-technology competition by enabling enterprises to enter into such competition for substitute technologies. Competition law, in its turn, is supposed to maintain a system of undistorted competition. As such, it is directed against any restriction of competition. It is not, however, aimed at correcting the system of intellectual property either in general or on a case-by-case basis, nor meant to compensate for any deficits of the system of protection. Rather, such ?regulation? of protection is a matter of the proper design and of the judicious application of the property system, of its limits, and of its inherent ?exceptions?. With this in view the author develops the idea of a functionalist and contextual construction of the reach of protection and of the implementation of its objectives, both of which will help to better understand and to circumscribe with more precision the autonomy, which the owner enjoys as regards the acquisition and the exploitation of exclusive rights. This thesis then is illustrated by a new approach to the conflicts, which may exist between patent protection and the concept of ?open standardization?.
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