An Introduction to the World of Intellectual Property and Antitrust

• Posted by Geoffrey G. Gussis on July 21st, 2005


• Filed in Intellectual Property

Most companies deal with intellectual property issues on a daily basis - but few inhouse counsel are up to speed on how IP intersects with antitrust law.  Craig  Waldman and Francis M. Fryscak of Cooley Godward LLP have provided the first in a series of articles on the topic:

"In navigating the tricky ground between intellectual property and antitrust, it is clear that complications are not just a result of their different core goals. Even when the two doctrines attempt to effectively coexist, they sometimes do so in ways that can place the doctrines at odds. In the upcoming series, we’ll explore this arena and focus on intellectual property/antitrust topics as diverse as patent accumulation, exclusive license arrangements, Walker Process claims and patent misuse. Although the ultimate analysis for each differs, some common issues provide a useful analytical starting point for all:

* Efficiency Rationale:
Why is your company undertaking the particular transaction or licensing
program? Do you have compelling justifications that will enable your
company to compete more effectively? Are the justifications supported
by the evidentiary record?  Assuming the conduct does not fall within
one of the categories of conduct that is per se unlawful (e.g., price
fixing, market allocation), it will be critical to explain and support
the procompetitive rationale for the transaction.

* The Relationship of the Contracting Parties:  Does your
company compete with the other party in the technology that is the
subject of the transaction (not merely generally)? As will be discussed
further in subsequent articles, transactions between competing entities
typically raise more concerns than transactions between vertically
related entities. In most industries, companies that interact with one
another alternatively wear the hats of customer and competitor, so
understanding the precise relationship in the circumstances at hand is
critical to performing an accurate risk assessment.

* Market Power:  What is the relative power and importance of
the patents, products and technologies involved? Do viable competitive
alternatives exist? If the product or technology is already on the
market, what is its market share? If the product or technology is not
on the market, are you aware of competitive R&D programs? How
closely competitive are they, and how far along are they versus your
program?

Absent a per se violation, low market shares typically mean lower
risk. However, what at first blush might seem like an easy exercise
frequently ends up being more complicated, with tough questions
regarding market definition and the intensity of competition often
emerging. Given the factual disputes common to this leg of the
analysis, it is often hazardous to base an antitrust risk assessment
solely on market definition and market share.

* Practical Considerations:  What do the key businesspeople’s
documents indicate regarding the above issues? Have the antitrust
agencies previously investigated the industry? What is the likely
reaction of licensees, customers and competitors? Are they likely to
sue over it? What are the policies and practices of the potential
plaintiffs?"

Link: An Introduction to the World of
Intellectual Property and Antitrust from Mondaq (free registration required).