DECEMBER 2001
ALERT
Federal Trade Commission and Antitrust Division to Hold
Hearings on the Relationship between Intellectual Property
and Competition Policies
On November 15, 2001, the Federal Trade
Commission and the Antitrust Division of the
United States Department of Justice announced
that, beginning in January, 2002, they will co-host
hearings on the relationship between intellectual
property rights and the policies of the antitrust
laws, which are intended to foster competition.
While the Federal Trade Commission has
frequently held similar hearings to gather facts and
opinions on economic issues such as the impact of
global competition, the role is an unusual one for
the Antitrust Division.
■
Are patented inventions defined too broadly in
delineating the area within which the holder will
enjoy a monopoly?
■
Considering such factors as the costs of
research, the extent of the marginal financial
returns that result from the patent’s period of
exclusivity and the impact of patent litigation
on the useful economic life of the patent, is the
duration of patent rights either too long or too
short?
■
What is the impact on competition of the
holdings by the United States Court of Appeals
for the Federal Circuit i) that its exclusive
appellate jurisdiction over “any civil action
arising under any Act of Congress relating to
patents” extends to antitrust issues in those
cases and ii) that it will apply its own
interpretation of the federal antitrust laws
rather than the interpretations of the regional
circuits? In essence, is this court, which
specializes in intellectual property, less
sympathetic to competition issues than other
federal appellate courts?
■
Is the Federal Circuit’s ruling in Independent
Service Organizations Antitrust Litigation1 that
a patent holder is not required by the antitrust
laws to grant a license or sell patented products
While the specific topics and dates of the hearings
are to be published shortly in the Federal Register,
statements from Timothy J. Muris, Chairman of
the Federal Trade Commission, and Charles A.
James, Assistant Attorney General in charge of the
Antitrust Division, have made clear that the
hearings will examine a number of issues which
are critical both to owners of patents and to those
who compete with or purchase from them.
Topics to be evaluated include:
■
■
1
Are too many patents being issued? Are stricter
standards of novelty required?
Are cross-licensing and patent pools a means of
facilitating innovation or an instrument to
foreclose competition?
203 F.3d. 1322 (Fed. Cir. 2000), cert. denied sub nom. CSU L.L.C. v. Xerox Corp., ___ U.S. ___, 121 S. Ct. 1077 (2001).
Kirkpatrick & Lockhart LLP
to a competitor “in the absence of any
indication of illegal tying, fraud on the Patent
and Trademark Office or sham litigation”
inconsistent with antitrust holdings that
monopolists may be compelled to share with
their competitors the benefits of other types of
property belonging to the monopolist?
■
What is the impact on competition of the
FTC’s position in recent and pending cases that
agreements between pharmaceutical patent
holders and generic competitors are per se
unlawful if the patent holder pays a
manufacturer of generic drugs to honor the
patent and not produce? Do such settlements
extend the prohibition on competition beyond
the competitive limitations already imposed by
patent law and the Hatch-Waxman Act?
■
Is it anticompetitive for standard-setting
organizations to adopt standards that mandate
the use of patented technology?
The hearings may be expected not only to
influence FTC and Antitrust Division policy
positions in enforcement litigation and judicial
interpretations of antitrust and intellectual property
law, but also to stimulate efforts for legislative
action.
Public participation in the hearings by businesses
as well as academics is invited. Readers having
questions regarding the hearings or interested in
participants should contact the author, or any
other attorney at Kirkpatrick & Lockhart LLP.
THOMAS A. DONOVAN
tdonovan@kl.com
412.355.6466
SM
Kirkpatrick & Lockhart LLP
Challenge us.
SM
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should not be used or relied upon in regard to any particular facts or circumstances without first consulting with a lawyer.
© 2001 KIRKPATRICK & LOCKHART LLP. ALL RIGHTS RESERVED.