US: IP and Antitrust

United States antitrust laws seek to encourage free and open competition by preventing exclusionary conduct that threatens the competitive process. Intellectual property rights (IPR) laws, by contrast, are designed to encourage innovation by granting IPR holders a limited statutory right to exclude competition. Compared to many jurisdictions, US law balances this tension more frequently in favour of the IPR holder. In the United States, IPR holders are generally allowed to enforce their statutory right to exclude and to unilaterally decide to whom (if anyone) they will license their IPR¹ and on what terms.² Still, holding IPR does not confer a privilege or immunity to violate the antitrust laws.³ IPR holders risk violating those laws when they unlawfully acquire IPR (eg, through fraud on the rights-granting agency, typically the United States Patent and Trademark Office), or with respect to lawfully acquired IPR by:

• enforcing those rights in bad faith (for example, against parties as to whom there is no colourable infringement claim);
• leveraging IPR beyond the scope of the rights granted to obtain competitive benefits not attributable to those rights; or
• acting collectively, rather than unilaterally, when enforcing those rights.

Beyond these more common areas of antitrust risk, the interface between antitrust and IPR law has been a subject of increasing interest to the Department of Justice (DoJ) Antitrust Division and the Federal Trade Commission (FTC). Through enforcement efforts, advocacy filings and legislative outreach,⁴ the agencies have challenged the acquisition and assertion of IPR rights in an effort to ‘determine the correct balance between the rightful exercise of patent rights and a patent holder’s incentive and ability to harm competition through the anti-competitive use of those rights’.⁵

This article will provide a general background regarding the laws governing the IP–antitrust interface (with particular emphasis on patents),⁶ then focus on three areas of current interest: patent acquisitions; the use of injunctive remedies in disputes relating to standard essential patents; and patent and reverse payment settlements.

The antitrust–IP interface

Antitrust claims are typically asserted by an alleged infringer (typically a competitor or potential competitor) as an affirmative defence (‘patent misuse’) or as a claim or counterclaim under the Sherman Antitrust Act, 15 USC section 1 et seq. Occasionally, an IP-related antitrust claim is brought by a direct or indirect consumer of the patent holder’s products or the antitrust agencies.

A patent misuse defence, if successful, prevents the patent holder from enforcing the patent during the period of misuse; it does not provide a basis for affirmative relief through an award of damages. The Federal Circuit’s decision in Prince Corp v ITC identified the elements and significantly limited the scope of the defence.⁷ In Prince, the accused importer claimed the patent holder’s efforts to suppress technology that was competitive with the patents in suit constituted misuse of those patents. Rejecting the claim, the Federal Circuit limited the defence to actions that a patent holder may have taken to enlarge the physical or temporal scope of the patent in suit (eg, tying).⁸ Because the alleged anti-competitive conduct at issue related to technologies other than the patents in suit, it could not form the basis of a patent misuse defence.⁹

Because Prince has limited alleged infringers’ ability to invoke patent misuse as a defence, some parties have turned to antitrust claims under the Sherman or Clayton Acts. Such challenges address the defendant’s anti-competitive conduct within an economically defined relevant market, which may be broader than the scope of any patent asserted by the defendant. The antitrust laws also allow for the award of injunctive relief, treble damages and attorneys’ fees.¹⁰ The most common patent antitrust claims arise as follows:

• the patent holder seeks to enforce patents that were obtained by fraud on the Patent and Trademark Office (a Walker Process claim);¹¹
• the patents were unlawfully obtained in violation of section 7 of the Clayton Act, which prohibits acquisitions that substantially lessen competition, or section 2 of the Sherman Act, which prohibits monopolisation;¹²
• the patent holder’s infringement claims are objectively baseless ‘in the sense that no reasonable litigant could realistically expect success on the merits’ and the enforcement efforts conceal an attempt to interfere directly with a competitor’s business relationships through the use of the governmental process, as opposed to the outcome of that process, as an anti-competitive weapon (the sham exception to the Noerr-Pennington doctrine);¹³
• the patent holder has engaged in licensing or other conduct (eg, settlement activity) that exceeds the scope of the patent;¹⁴ or
• there has been fraud or other unfair conduct attendant to standard-setting activities.¹⁵

Traditionally, Walker Process and sham litigation have been the most frequently asserted claims. Over the last few years the focus has shifted, with the last year marked by increased attention to patent acquisitions, the use of injunctive remedies in disputes relating to standard essential patents, and patent holders’ efforts to exclude or delay competition through ‘reverse payments’ to alleged infringers.

Patent acquisitions

In recent years, technology markets have been characterised by the sale and purchase of very large patent portfolios. In late 2011 and early 2012, the DoJ investigated three significant portfolio acquisitions relating to wireless devices:

• Google’s acquisition of Motorola Mobility Holdings (MH) patents;
• Apple, Microsoft and Research In Motion’s acquisition of certain Nortel Networks patents; and
• Apple’s acquisition of certain Novell patents.

All of the acquisitions included standard essential patents (SEPs) that were subject to fair, reasonable and non-discriminatory (FRAND) commitments imposed by standard-setting organisations (SSOs).

On 13 February 2012, the DoJ issued a closing letter that it has described as representing the agency’s current view of the competitive effects of patent acquisitions.¹⁶ At the outset, the DoJ recognised that the acquisition of SEPs could enable the acquirer to engage in anti-competitive conduct, such as:

• demanding supra-competitive licensing rates;
• compelling prospective licensees to grant cross-licences;
• charging licensees the entire portfolio royalty rate when licensing only a small subset of the acquirer’s portfolio;
• seeking to prevent or exclude products practising the SEPs from the market; or
• threatening an injunction or exclusion order through litigation as a means to preclude competition.

In its analysis of the likelihood of any of the three acquisitions substantially lessening competition, the agency examined factors important to traditional merger analysis, including market share and concentration. The DoJ also considered the likely impact of cross-licensing agreements related to the portfolios. But the key factor that led the agency to conclude that the acquisitions were unlikely to substantially lessen competition was the existence of the FRAND commitments attendant to the SEPs and Apple’s and Microsoft’s pledges to publicly honour those commitments by licensing on FRAND terms and not seek injunctions in SEP-related disputes.

The agency’s analysis of Google’s acquisition of MMH’s patents and the subsequent investigation was more interesting. Google’s public FRAND commitments were not as direct as Apple’s and Microsoft’s. As part of its initial analysis, the DoJ observed that because MMH had been aggressive in engaging its rivals in intellectual property disputes over its patents, their acquisition by Google was unlikely to further disturb IP markets. The agency cautioned, however, that it was reserving judgement on whether Google’s future use of the patents would be appropriate and warned that it would continue to monitor the use of SEPs in the wireless device industry. As discussed further below, the FTC did in fact investigate Google’s licensing activity, which ultimately resulted in a consent decree requiring that Google license its SEP patents to willing licensees on certain specified terms.

The FTC has not always taken a ‘wait and see’ approach with respect to licensing nor has it merely relied upon the acquiring parties informal promises to license SEPs. In In re Robert Bosch GmbH,¹⁷ Bosch sought to purchase the assets of SPX Service Solutions US LLC. SPX had made FRAND commitments to SSOs and had allegedly sought injunctive relief against willing licensees. As part of the consent decree allowing the acquisition, the FTC required that Bosch agree to generally license the patents on royalty-free terms.

Intellectual Property Exchange International Inc request for a DoJ business review letter

The DoJ considered a novel form of IP acquisition in a request by Intellectual Property Exchange International Inc (IPXI) for a business review letter approving IPXI’s proposed creation of financial exchanges for licensing and trading intellectual property rights. IPXI is a financial exchange designed to facilitate patent licensing that was developed by a number of intellectual property owners, including corporations, universities and laboratories. In November 2012, IPXI requested, under the DoJ’s business review procedure, review of its plan to begin offering a patent licensing exchange process in which IPXI would:

• ‘receive offers of interest from patent holders from various industries to license their patents through IPXI’;
• review the patent rights at issue;
• determine market interest for the patents in question; and
• ‘offer ULRs [unit licence rights], standardized licenses for defined sets of patents under terms and conditions set jointly with patent holders’.

IPXI envisioned both a primary market and a potential secondary trading market for the ULRs.

In its letter declining to approve the plan, the DoJ acknowledged several potential pro-competitive effects, including:

• increased licensing efficiency from increased transparency and streamlining regarding the patent licensing process and elimination of ‘costly bilateral negotiations’;
• price transparency; and
• ‘pooled ULRs’, which could ‘reduce the time and expense of acquiring and disseminating all the pooled patents to potential licensees, reduce the amount of stacked royalties, clear blocking positions, and integrate technologies that are necessary to practice’ in particular industries or fields.¹⁸

On the other hand, the DoJ also noted the potential for competitive harm, including ‘pooling of patents from multiple patent holders’ that include substitute (ie, competing) patents may raise royalty fees and reduce competition among the technologies; ‘setting terms for competing ULRs’ would permit IPXI to act as a ‘common agent’ and potentially encourage IPXI and the patent holders to profit jointly by reducing competition among the ULRs; and ‘sharing of competitively sensitive information’ could facilitate price coordination and reduce the incentives to compete in downstream markets.

The agency also pointed to many uncertainties due to the number of industries to be affected by the exchange, emphasising that ‘the scope and importance of any particular restriction on IPXI’s licensed field of use will vary for each ULR and each technology.’ These factors raised doubts about the potentially far-reaching and uncertain effects of a plan involving both centralised and collective IP decision-making.

SEPs and the availability of injunctive relief

As the antitrust agencies’ focus on acquisition matters reflects, the last year has seen significant attention paid to patent holders who have committed to license their patents on a FRAND basis to promote the patents’ incorporation in standards adopted by SSOs. The key question before the courts and competition agencies is whether, if the patent holder and patent user are unable to agree on FRAND terms, the holder may seek injunctive relief in US district court under the Patent Act (35 USC section 283) or, for allegedly infringing products imported from abroad, an exclusion order from the International Trade Commission (ITC) under Section 337 of the Tariff Act of 1930 (19 USC section 1337). The question is unsettled.

Background

Before adopting standards, SSOs typically consider competing technologies, both proprietary and (if available) non-proprietary. Where the organisation decides to adopt a standard that may read on patents held by one or more of its members, it requires those members to:

• disclose patents and patent applications that may be implicated by the proposed standard (SEPs); and
• commit to offer firms who wish to practise those patents licences on FRAND terms.

Because complex standards may implicate hundreds, even thousands, of patents, some SSOs permit patent holders to offer to license on FRAND terms any patent found to be essential to practising a standard. Specific patents need not be identified.

Two points about the SSO process are important. First, SSOs typically do not decide whether a specific disclosed patent is in fact essential to practising a standard. (Indeed, it may be impossible to do so where a patent holder has committed to license any, rather than identified, patents implicated by the standard.)

Second, the precise terms of FRAND licences are rarely defined when the commitment is made. Instead, the terms are developed through later negotiations between the patent holder and individual users, and may be folded into broader IP arrangements, including cross-licences for patents held by the users. However negotiated, SSO-imposed FRAND obligations assume that the licences will reflect the value of the patent holder’s invention compared to available alternative technologies (including non-proprietary ones) at the time the standard was adopted, not following its adoption and incorporation by industry members into standard-compliant products.

The difference in a patent’s economic value before and after a standard is adopted may be huge. Following adoption of a standard, the industry typically invests large resources designing and marketing compliant products. Because of the costs and delays attendant to redesigning products after a standard has been adopted, the industry becomes locked into that standard. Where – for whatever reason – FRAND negotiations with the patent holder fail, industry members may be subject to patent infringement claims in US district courts. Such litigation, in practical effect, requires the court to do what the parties have been unable to do: determine a fair and reasonable royalty rate for use of the patent in the past (in the form of damages) and on a future, continuing basis.

In such cases, a patent holder may also seek injunctive relief in US district courts under section 283 of the Patent Act or, for allegedly infringing foreign products imported from abroad, an exclusion order by the United States International Trade Commission (ITC) under section 337 of the Tariff Act. Here, incentives to settle the FRAND dispute differ markedly. Where the patented feature is a small component of a complex, high-value product, the threat of a judicial or ITC order barring sales of that product may force users to agree to royalties based not on the value of the patent holder’s invention when the standard was adopted but on the costs and delays users now face if they have to switch to a non-infringing technology.

Federal Court and agency action

Requests for injunctive relief where FRAND negotiations have broken down raise several issues:

• Where a patent holder has offered to license on FRAND terms all (rather than identified) patents essential to practising a standard, is the patent at issue one of them?
• If so, was the patent holder’s offer ‘reasonable’?
• Was the user a ‘willing’ licensee?
• Under what circumstances is injunctive relief available to the patent holder? When confronting an ‘unreasonable’ (and thus ‘unwilling’) licensee? Or only against a licensee who has failed to pay agreed-on or judicially decreed FRAND royalties?
• In addition to or in lieu of injunctive relief, what methodology should courts use in establishing FRAND terms for the license?

The FTC has taken the position that, by seeking injunctive relief against competitors who were willing to license the holder’s SEP technology on FRAND terms, a patent holder has committed an unfair method of competition in violation of FTC Act section 5, 15 USC section 45(a).¹⁹

There is a split in authority, however, among the federal courts and between the courts and the ITC on the availability of injunctive relief in FRAND disputes. The Supreme Court has held that injunctive relief in patent infringement cases is analysed under the traditional four-factor test for awarding such relief, inquiring whether the plaintiff has shown ‘(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.’ eBay Inc v MercExchange, LLC, 547 US 388, 391 (2006).

The United States Court of Appeals for the Federal Circuit, however, has held that in light of the different statutory underpinnings for relief in section 337 cases, the ITC is not required to apply eBay in deciding to whether to issue an exclusion order (Spansion, Inc v ITC, 629 F.3d 1331 (Fed Cir 2010)). Accordingly, the ITC, although aware of the controversy surrounding injunctive relief in FRAND cases, continues to issue exclusion orders where infringement has occurred.²⁰ In testimony before Congress, the FTC has expressed concerns about the adverse competitive effects of such ITC orders, and suggested Congress consider amending section 337 to require the agency to consider alternative remedial measures, including, for example, orders requiring FRAND negotiations prior to orders excluding infringing goods.²¹ The DoJ has expressed similar concerns about exclusion orders.²²

An important opinion on injunctive relief in federal courts was issued by United States Seventh Circuit Court of Appeals Judge Richard Posner (sitting by designation) in Apple, Inc v Motorola, Inc, 869 F Supp 2d 901 (ND Ill 2012). The parties had filed multiple patent infringement cross-claims. One of the patents at issue (Motorola’s ‘898 patent) was subject to FRAND obligations flowing from its inclusion in wireless communications standards adopted by the European Telecommunications Standards Institute. On 22 June 2012, Judge Posner dismissed all the claims, holding that because neither party had established that it was entitled to damages or injunctive relief, there was no longer an article III case or controversy.

About Motorola’s request for injunctive relief for alleged violations of its ‘898’ patent, Judge Posner held that: ‘By committing to license its patents on FRAND terms, Motorola committed to license the ‘898 [patent] to anyone willing to pay a FRAND royalty and thus implicitly acknowledged that a royalty is adequate compensation for a license to use that patent.’²³ Judge Posner’s analysis relied on an FTC policy statement (‘Third-Party United States Federal Trade Commission’s Statement on the Public Interest’) filed on 6 June 2012 before the ITC in In re Certain Wireless Communication Devices, Portable Music & Data Processing Devices, Computers & Components Thereof, Inv. No. 337-TA-745 (available at www.ftc.gov/os/2012/06/1206ftcwirelesscom.pdf). The FTC there argued that to avoid patent holdup, relief in litigation revolving around FRAND terms should be limited to judicially defined fair and reasonable royalties for past and future infringement. (The injunctive relief claims in Inv. No. 745 were ultimately rendered moot.)

Similar reasoning was applied by Judge Robart of the United States District Court for the Western District of Washington in another case involving Motorola: Microsoft Corp v Motorola, Inc, 2:10-cv-01823-JLR (WD Wash, 29 November 2012) (order dismissing Motorola’s claim for injunctive relief based on FRAND obligations).

The opposite view prevailed, however, in Apple, Inc v Motorola Mobility, Inc, No. 11-cv-178-bbc, 2012 WL 5416941 (W.D. Wis. 29 October 2012), a case arising from counterclaims filed by Apple in the ITC, then remanded to US district court. Judge Crabb dismissed Apple’s claim that Motorola had violated its FRAND obligations by seeking injunctive relief, observing that no provision of the SSO contracts suggested Motorola had waived its right to seek injunctive relief, and ‘any contract purportedly depriving a patent owner of that right should clearly do so.’ 2012 WL 5416941, at 16. The case is now on appeal. Apple, Inc v Motorola Mobility, Inc, No. 13-1150 (Fed. Cir., filed 4 January 2013).

Further confusing matters surrounding Motorola’s FRAND obligations, on 3 January 2013, the FTC entered into a consent decree with Google in which, the agency alleged, after acquiring Motorola Mobility, the company had continued Motorola’s unlawful practice of reneging on its FRAND obligations to SSOs by seeking injunctions against willing licensees of those patents. The patents at issue related to smartphones, tablet computers and video games.²⁴

Judge Posner’s decision in Apple Inc has been appealed to the Federal Circuit (Apple Inc v Motorola, Nos. 2012-1548, 2012-1549). The FTC and five other amici have filed briefs supporting to varying degrees and for different reasons Judge Posner’s decision.²⁵

Most recently, on 23 May 2013, the American Antitrust Institute (AAI), a Washington, DC-based non-profit organisation, petitioned the DoJ and FTC to issue guidelines.²⁶ The guidelines are intended to qualify the antitrust safe harbour offered SSOs by the Standards Development Organization Advancement Act of 2004, 15 USC sections 4301-4305, which grants automatic rule of reason treatment to SSOs (but not their individual members) and de-trebles damages if the SSO pre-notifies the DoJ and the FTC.

The AAI argues that, in exchange for safe harbour immunity from antitrust liability for the actions of its members, SSOs should be required to adopt and enforce the following set of policies:

• mandatory disclosure of relevant patents as well as anticipated and pending patent applications, supported by good-faith reasonable inquiry;
• royalty-free licensing of patents that are not disclosed in violation of disclosure obligations and consequently incorporated into a standard;
• a commitment to license SEPs on FRAND terms;
• prohibition on SEP owners seeking injunctions and exclusion orders against any willing licensees;
• the stipulation that licensing commitments run with the SEP to subsequent purchasers;
• a cash-only licence option for individual SEPs (to protect users without patents to cross-license); and
• an efficient, cost-effective process to resolve disputes over FRAND royalty and non-royalty terms.

The agencies have yet to act on the AAI’s petition.

Reverse payment or ‘pay for delay’ settlements

Reverse payment or ‘pay for delay’ settlements continue to attract the attention of the antitrust agencies and plaintiff’s bar. These cases arise when a patent holder (typically, a brand-name pharmaceutical company) settles patent litigation by paying the defendant (a generic pharmaceutical competitor) to delay or abandon its plan to launch a competing drug. On average, the price of generic drugs is 85 per cent less than that of their brand-name counterparts, and the FTC has estimated that such settlements cost American consumers $3.5 billion a year. As a result, the antitrust agencies have repeatedly attacked ‘pay for delay’ settlements in court,²⁷ participated as amici in private actions,²⁸ and supported legislative efforts to curb such agreements.

The standard to be applied to such cases has been the focus of a significant circuit split, and this last year the Supreme Court granted certiorari and in June 2013 issued its decision in FTC v Actavis, Inc.²⁹

In 2003, Actavis, Inc (then Watson Pharmaceuticals) filed an Abbreviated New Drug Application seeking approval to market a generic drug modelled on a patented synthetic testosterone, AndroGel. The owner of the patent, Solvay Pharmaceuticals, filed suit against Actavis and others for patent infringement. The cases then settled with Solvay (the patent owner) agreeing to pay Actavis (the alleged infringer) $19 million to $30 million a year for nine years. Actavis agreed to delay entry into the market until 31 August 2015, about five years before expiration of the patent. The district court dismissed the complaint, and the Eleventh Circuit affirmed. In its decision, the Eleventh Circuit held that, ‘absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anti-competitive effects fall within the scope of the exclusionary potential of the patent.’³⁰ The Eleventh Circuits ruling followed precedent in its own circuit as well as precedent from the Federal Circuit, the Second Circuit and others.³¹

In adopting the ‘scope of the patent’ rule, the Eleventh Circuit rejected the FTC’s argument that ‘an exclusion payment is unlawful if, viewing the situation objectively as of the time of the settlement, it is more likely than not that the patent would not have blocked generic entry earlier than the agreed-upon entry date’.³² This ruling conflicted with that of the Third Circuit in In re K-Dur Antitrust Litigation, where the court rejected the scope of the patent test, holding that such agreements should be analysed under a quick-look rule of reason and that reverse payments to generic competitors should be deemed presumptively anti-competitive and unlawful.³³

In the face of this clear circuit split, the Supreme Court accepted certiorari and issued its opinion on 17 June 2013. While rejecting the FTC’s request that such settlements be deemed presumptively anti-competitive, the Supreme Court expressly rejected the Eleventh Circuit’s holding that reverse-payment agreements are immune from antitrust scrutiny where the agreement’s ‘anti-competitive effects fall within the scope of the exclusionary potential of the patent.’ ‘For one thing’, reasoned the majority, ‘to refer, as the Circuit referred, simply to what the holder of a valid patent could do does not by itself answer the antitrust question. The patent here may or may not be valid, and may or may not be infringed.’³⁴ The Court further noted that settlements of this type tend to have significant adverse effects, and it is inappropriate to measure the settlement’s anti-competitive effects solely against patent law policy: ‘Patent and antitrust policies are both relevant in determining the “scope of the patent monopoly” – and consequently antitrust law immunity – that is conferred by a patent.’³⁵ Thus, the Court held, ‘Whether a particular restraint lies “beyond the limits of the patent monopoly” is a conclusion that flows from that analysis and not... its starting point.’³⁶

The dissent, drafted by Chief Justice Roberts, characterised the majority opinion as ‘novel’ and argued that, so long as a patent holder’s actions are ‘within the scope of the patent, they are not subject to antitrust scrutiny, with two exceptions... (1) when the parties settle sham litigation; and (2) when the litigation involves a patent obtained through fraud on the Patent and Trademark Office.’³⁷ In rejecting the dissent’s characterisation, the majority countered: ‘What does appear novel are the dissent’s suggestions that a patent holder may simply ‘pay a competitor to respect its patent’ and quit its patent invalidity or noninfringement claim without any antitrust scrutiny whatever and that "such settlements... are a well-known feature of intellectual property litigation."’³⁸

The Supreme Court’s decision was specific to reverse payment settlements, and the Court expressly declined to apply its ruling to more ordinary patent settlements. However, in reestablishing antitrust policy as an equal factor in assessing patent antitrust issues, the Supreme Court’s ruling may have much broader implications.

Notes

1. In re Indep Serv Orgs Antitrust Litig, 203 F.3d 1322 (Fed. Cir. 2000) (upholding patent holders’ refusal to deal and refusing to consider subjective motivation). But see Image Technical Servs, Inc v Eastman Kodak Co, 125 F.3d 1195 (9th Cir. 1997) (articulating a rebuttable presumption in refusal to deal cases).
2. Gen. Talking Pictures Corp v W Elec Co, 304 US 175 (upholding field of use restrictions), aff’d on reh’g, 305 US 124 (1938); Brulotte v Thys Co, 379 US 29, 33 (1964) (‘A patent empowers the owner to exact royalties as high as he can negotiate with the leverage of that monopoly’).
3. Intergraph Corp v Intel Corp, 195 F.3d 1346, 1362 (Fed. Cir. 1999).
4. See, eg, The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition (March 2011), available at www.ftc.gov/os/2011/03/110307patentreport.pdf.
5. Press Release, Dep’t of Justice (13 February 2012), available at www.justice.gov/atr/public/press_releases/2012/280190.htm.
6. The agencies have indicated that they will apply the same antitrust principals to patents, copyrights and trade secrets. DoJ & FTC, Antitrust Guidelines for the Licensing of Intellectual Property section 1 (1995). However, the courts have been less uniform in their treatment of different forms of intellectual property. See, eg, Data Gen Corp v Grumman Sys Support Corp, 36 F.3d 1147, 1184-87 (1st Cir. 1994) (adopting different standards for copyright and patent claims).
7. Princo Corp v ITC, 616 F.3d 1318, 1334 (Fed. Cir. 2010). The court further held that a party asserting misuse must establish an anti-competitive effect.
8. 35 USC section 271(d) (prohibiting a patent misuse claim based on tying unless ‘the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned’). In 2006, the Supreme Court abandoned the presumption that intellectual property confers market or monopoly power. Ill Tool Works Inc v Independent Ink, Inc, 547 US 28 (2006).
9. Princo, 616 F.3d at 1331, 1334.
10. Depending on the jurisdiction, some claims may be lost if not asserted in the original patent case. Compare Critical-Vac Filtration Corp v Minuteman Int’l, Inc, 233 F.3d 697, 703-04 (2d Cir. 2000) (predatory patent filing claim compulsory) with Hydranautics v Filmtec Corp, 70 F.3d 533, 536 (9th Cir. 1995) (predatory patent claim not compulsory).
11. Walker Process Equip, Inc v Food Mach & Chem Corp, 382 US 172 (1965). See also Ritz Camera & Image, LLC v SanDisk Corp, 700 F.3d 503 (Fed Cir. 2012) (direct purchasers of patented products may bring Walker Process claim).
12. Atari Games Corp v Nintendo of Am, Inc, 897 F.2d 1572 (Fed Cir. 1990); SCM Corp v Xerox Corp, 645 F.2d 1195 (2d Cir. 1981); Kobe, Inc v Dempsey Pump Co, 198 F.2d 416 (10th Cir. 1952). See also DoJ & FTC, Antitrust Guidelines for the Licensing of Intellectual Property section 1 (1995). The acquisition of IP (including the grant of an exclusive licence) may trigger the obligation to file a pre-merger notification and report form with the FTC and wait the statutory waiting period prior to consummation of the transaction. 15 USC section 18a.
13. Prof’l Real Estate Investors v Columbia Pictures Indus, Inc, 508 US 49, 50 (1993) (hereinafter PRE). The Noerr-Pennington doctrine immunises legitimate efforts to petition the government and in this context relates to efforts to enforce a patent holder’s rights through the judiciary. Noerr and the sham exception set forth in PRE have also been applied to demand letters. Globetrotter Software, Inc v Elan Computer Group, Inc, 362 F.3d 1367 (Fed. Cir. 2004). Other market communications may not be so protected. Id. See also Experience Hendrix, LLC v HendrixLicensing.com, LTD, 766 F. Supp. 2d 1122, 1146 (W.D. Wash. 2011); Soilworks, LLC v Midwest Indus Supply, Inc, 575 F. Supp. 2d 1118, 1126 (D. Ariz. 2008).
14. United States v Krasnov, 143 F. Supp. 184 (E.D. Pa. 1956) (horizontal refusal to deal per se illegal where dominant market participants settled patent infringement lawsuit by executing a cross-licence that prevented each of them from granting a licence to a third party absent the consent of the other), aff’d per curiam, 355 US 5 (1957); United States v Microsoft Corp, 253 F.3d 34 (D.C. Cir. 2001) (affirming tying allegation and rejecting allegation that restrictions were justified by copyrights).
15. Broadcom Corp v Qualcomm Inc, 501 F.3d 297, 314 (3d Cir. 2007).
16. www.justice.gov/atr/public/press_releases/2012/280190.htm.
17. In re Robert Bosch GmbH, FTC Docket No. C-4377 (28 November 2012) (Decision and Order), available at www.ftc.gov/os/caselist/1210081/130424robertboschdo.pdf.
18. Letter from William J. Baer, Assistant Att’y Gen., to Garrard R. Beeney, Sullivan & Cromwell LLP (26 March 2013), available at www.justice.gov/atr/public/busreview/295151.htm.
19. In re Robert Bosch GmbH, FTC Docket No. C-4377 (26 November 2012) (Decision and Order), available at www.ftc.gov/os/caselist/1210081/130424robertboschdo.pdf.
20. See, eg, In re Certain Electronic Devices, Including Wireless Communication Devices, Portable Music and Data Processing Devices, and Tablet Computers, Inv. No. 337-TA-794 (4 June 2013) (Notice of Final Determination), available at www.usitc.gov/secretary/fed_reg_notices/337/337-794_notice06042013sgl.pdf (banning imports of older-model Apple iPhones and iPads).
21. See FTC, Prepared Statement Concerning ‘Oversight of the Impact on Competition of Exclusion Orders to Enforce Standard-Essential Patents,’ 11 July 2012, available at www.ftc.gov/os/testimony/120711standardpatents.pdf.
22. See Statement of Joseph Wayland, Acting Assistant Attorney General, Antitrust Division, before the Committee on the Judiciary, Washington, DC, 11 July 2012, available at www.justice.gov/atr/public/testimony/284982.pdf-10k-2012-07-11- Text Version.
23. II. at 914.
24. In re Motorola Mobility LLC and Google Inc, FTC File No. 121-0120 (1 January 2013) (Decision and Order), available at www.ftc.gov/os/caselist/1210120/130103googlemotorolado.pdf.
25. FTC brief available at www.ftc.gov/os/2012/06/1206ftcgamingconsole.pdf.
26. AAI, Request for Joint Enforcement Guidelines on the Patent Policies of Standard-Setting Organizations, available at www.antitrustinstitute.org/~antitrust/sites/default/files/ Request%20for%20Joint%20Enforcement%20Guidelines%20on%20the%20Patent%20Policies%20of%20Standard%20Setting%20Organizations.pdf.
27. See, eg, FTC v Cephalon, Civil Action No. 08-cv-2141-RBS; FTC v Watson Pharm, Inc, 677 F.3d 1298 (11th Cir. 2012).
28. See, eg, DoJ Amicus Brief, In Re: K-Dur Antitrust Litig, Nos. 10-2077, 10-2078, 10-2079 (3d Cir. 2011), available at www.justice.gov/atr/cases/f271300/271395.pdf; FTC Amicus Brief, In re K-Dur Antitrust Litig, Nos. 10-2077, 10-2078, 10-2079 (3d Cir. 2011), available at www.ftc.gov/os/2011/05/110518amicusbrief.pdf. See also FTC Amicus Brief, In re Lamictal Direct Purchaser Antitrust Litig, available at www.ftc.gov/os/2012/10/121005lamictalamicusbrief.pdf (exclusive license and non-compete can trigger rebuttable presumption under K-Dur) (position rejected in In re Lamictal Direct Purchaser Antitrust Litig, Civ. No. 12-995 (WHW), 2012 WL 6725580 (DNJ, 6 December 2012)).
29. FTC v Actavis, Inc, No. 12-416, 2013 WL 2922122 (17 June 2013).
30. Watson Pharm, 677 F.3d at 1312.
31. Arkansas Carpenters Health & Welfare Fund v Bayer AG, 604 F.3d 98 (2d Cir. 2010) (following In re Tamoxifen Citrate Antitrust Litig , 466 F.3d 187 (2d Cir. 2006)), cert. denied, 131 S. Ct. 1606 (2011); In re Ciprofloxacin Hydrochloride Antitrust Litig, 544 F.3d 1323, 1336 (Fed Cir. 2008); Schering-Plough Corp v FTC, 402 F.3d 1056 (11th Cir. 2005) (following Valley Drug Co v Geneva Pharm, Inc, 344 F.3d 1294 (11th Cir. 2003), cert. denied, 543 US 939 (2004); In re Cipro Cases I & II, 269 P.3d 653 (Cal. 2012).
32. Watson Pharm, 677 F.3d at 1312.
33. 686 F.3d 197, 217 (3d Cir. 2012).
34. Actavis, 2013 WL 2922122, at *7.
35. Id.
36. Id.
37. Id. at *15 (Roberts, J, dissenting) (citation omitted).
38. Id. at *9 (citations omitted)