The US Department of Justice and the Federal Trade Commission Propose Updates to the IP Licensing Guidelines

On August 12, 2016, the Antitrust Division of the United States Department of Justice and the Federal Trade Commission (collectively the Agencies) jointly proposed updates to the 1995 Antitrust Guidelines for the Licensing of Intellectual Property (the IP Guidelines), which provides the Agencies enforcement policy for the licensing of intellectual property protected by patent, copyright, trade secret, and know-how agreements.

The revisions proposed by the Agencies modernize the language of the IP Guidelines to reflect changes and developments in statutory and case law, but do not include broad changes to the substance and principles of the IP Guidelines. 

For example, the proposed revisions address statutory changes, including: (1) the enactment of the US Defend Trade Secrets Act of 2016; and (2) the change from a 17-year patent term (from date of grant) to a 20-year patent term (from the date of filing).

The proposed revisions also account for developments in case law, including, for example, the Supreme Court of the United States’ (the Court) decision in Illinois Tool Works, Inc. v. Independent Ink, Inc., in which the Court held that a patent does not necessarily confer market power on the patentee. The proposed revisions also reflect the rule of reason (a case-by-case, fact based standard) treatment of vertical price agreements in light of the Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc.

In addition, the proposed revisions update the Agencies’ approach to the competitive effects analysis of IP licensing arrangements, bringing it closer to the analysis set out in the 2010 Horizontal Merger Guidelines.

The Agencies are accepting comments from the public about the proposed revisions until September 26, 2016.   

Summary By:  Sumaiya Sharmeen