Comments Sought as Feds Update IP Licensing Rules

     (CN) — Contemplating the first update to intellectual-property licensing guidelines in 21 years, the Justice Department has invited the public to weigh in.
     “Although the guidelines are sound, it is time to modernize them to reflect changes in the law since they were issued,” Acting Assistant Attorney General Renata Hesse said in a statement about the proposed update.
     The Justice Department’s Antitrust Division and the Federal Trade Commission issued the original antitrust guidelines on IP licensing back in 1995.
     Finding that the guidelines have been an “invaluable” enforcement tool in the intervening decades, the agencies said Friday that they are not trying to mess with a good thing.
     Without changing that approach to enforcement, however, the agencies said there is room to harmonize the guidelines with intervening changes in statutory and case law.
     “For example, Congress recently enacted the Defend Trade Secrets Act of 2016, creating for the first time a federal cause of action for misappropriation of trade secrets,” the Justice Department said in a statement.
     Officials have been living with certain other developments for much longer.
     In 1994, for example, when the IP licensing guidelines were on the verge of being issued, the Uruguay Round Agreements Act brought about 20-year patent terms, extended from a 17-year term from the date of grant.
     The Justice Department says copyright terms are also longer now than they were in 1995.
     Despite these changes, the Justice Department highlighted three basic principles of the IP licensing guidelines that it says remain soundly grounded.
     For one, “the agencies apply the same antitrust analysis to conduct involving intellectual property as to conduct involving other forms of property, taking into account the specific characteristics of a particular property right,” according to the DOJ’s release.
     The agencies also “do not presume that intellectual property creates market power,” and they recognize that IP licensing “is generally procompetitive.”
     “Licensing is a cornerstone of a strong system of IP rights because it offers one way that firms can maximize the value of their IP and realize an appropriate return on their investment,” FTC Chairwoman Edith Ramirez said in a statement. “These updated guidelines reaffirm our view that U.S. antitrust law leaves licensing decisions to IP owners, licensees, private negotiations and market forces unless there is evidence that the arrangement likely harms competition.”
     Plans for the update come nearly a decade after the FTC and DOJ released a 2007 joint report on the guidelines.
     The agencies emphasized that their proposed update does not expand the guidelines to reflect certain issues areas addressed in that 2007 report.
     Two Supreme Court cases that developed the case law on IP licensing warrant attention, as well, the agencies said.
     Both cases — Illinois Tool Works Inc. v. Independent Ink Inc. and Leegin Creative Leather Products Inc. v. PSKS Inc. — are over a decade old.
     The agencies said the 2006 case, Illinois Tool Works, supported their view “that a patent does not necessarily confer market power on the patentee.”
     Leegin, which was decided a year later, meanwhile overturned a nearly century-old view of per se illegality.
     The agencies say this precedent “held that resale price maintenance (RPM) agreements should be evaluated under the rule of reason.”
     “The IP Licensing Guidelines therefore have been amended to reflect rule-of-reason treatment of vertical price agreements,” according to the Aug. 12 statement.
     A more modern report that the new update reflects is the FTC’s 2011 paper on the “Evolving IP Marketplace.”
     The agencies they also considered the 2010 Horizontal Merger Guidelines in proprosing an update to the analysis of markets affected by licensing arrangements.
     “The proposed update retains the concept of ‘innovation markets,’ but refers to them as ‘Research and Development Markets’ to more accurately reflect how these markets have been defined in enforcement actions,” according to the Aug. 12 statement.
     New language in the proposed guidelines are meant “to reinforce their longstanding view that ‘the antitrust laws generally do not impose liability upon a firm for a unilateral refusal to assist its competitors, in part because doing so may undermine incentives for investment and innovation.'”
     Attorneys, economists, academics, consumer groups and the business community are among members of the public whose comment on the proposed guidelines the government seeks.
     Public comments can be emailed to ATR.LPS.IPGuidelines@usdoj.gov by Sept. 26.

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