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A new era has begun in antitrust regulation of patent pools. With the issuance of the 1995 Antitrust Guidelines for the Licensing of Intellectual Property and the 1997 Department of Justice approval of the MPEG LA patent pool, federal antitrust authorities have espoused a more permissive attitude toward patent pools and cross-licensing arrangements than in recent decades. Procompetitive benefits undoubtedly justify the formation of patent pools in certain contexts, but serious anticompetitive risks are also present, particularly in standard-dependent industries. This Note argues that the Department of Justice and the Federal Trade Commission should not adopt a per se rule of legality for the pooling of blocking patents, and that these agencies must carefully delineate the permissible scope of broader pools.
Introduction
Intellectual property law has always existed in tension with the goals of antitrust law, and the courts deference to the policy goals of these two sets of laws has vacillated over the century.1 Courts and regulators have recently begun upholding the goals of intellectual property law to the detriment of antitrust law. One example of this deference, already documented in the case law, is the ability of electronics manufacturers to circumvent tying laws by copyrighting elements of their service tools.2 This Note examines another instance in which intellectual property law is encroaching upon core principles of antitrust law.
Patent pools pose one of the most intractable problems in antitrust law. When rival innovators hold overlapping patent rights, neither may develop the underlying technology without infringing the other's patent. If the patentees adopt a cooperative solution and cross-license or pool their patents, they effectuate a horizontal merger of their assets and can perpetuate monopoly pricing. With the strengthening of intellectual property law, patent rights are increasingly blocking the development of new technologies, and support is growing to loosen legal constraints on patent pools.3 This Note acknowledges that legitimate, even imperative, arguments justify loosening antitrust restraints on patent pools. The thesis of this Note, nonetheless, is that undue deference to patents risks sacrificing core principles of antitrust law.
The Department of Justice (DOJ) and the Federal Trade Commission (FTC) have recognized the difficulties posed by patent licensing agreements. They have jointly promulgated guidelines that point to a need to balance the countervailing goals of...