The Troubling Use of Antitrust to Regulate FRAND Licensing

ABSTRACT:

In the last year, we have seen a growing—and troubling—trend as courts and competition agencies around the globe propose and impose antitrust sanctions on holders of standard-essential patents (“SEPs”) for seeking injunctive relief against alleged infringers and for reneging on their commitment to license their patents on fair, reasonable, and non-discriminatory (“FRAND”) terms. These new rules, recently adopted in the European Union and in Korea, proposed in Canada and Japan, and favored by some government officials in the United States, are premised upon the erroneous beliefs that (1) patent “holdup” is a widespread problem that results in significantly adverse consequences for competition and innovation and (2) whatever the magnitude of the problem, it requires an antitrust remedy.  In this article, we discuss the lack of empirical evidence to substantiate the claim that patent holdup is a systemic problem for competition and consumers, and the likely harm to both competition and consumers from imposing antitrust liability for patent holdup.