Standard Essential Patents and Antitrust Law: Balancing Innovation and Competition
Antitrust and patent law have always been uneasy allies. Although both seek to encourage innovation and competition in the long run, patent law does so primarily by granting creators exclusive fiefdoms over their intellectual property, and antitrust law does so primarily by proscribing firms from anticompetitive conduct. Yet today’s world is flush with patent-rich products and industries that depend on the fruitful, simultaneous application of both of these bodies of law. Industries reliant on flourishing networks, such as those in the information and communication technology sector, are particularly influenced by the intersection of antitrust and patent law.1 Because of the central importance of well-functioning networks to these industries, many have developed standard setting organizations (“SSOs”) to designate technical standards that ensure product compatibility and interoperability between offerings from different firms. These standards incorporate many specific patents, known as standard essential patents (“SEPs”). Further, standards promulgated by SSOs oblige SEP holders to license their SEPs to implementers of the standard in a fair, reasonable, and non-discriminatory (“FRAND”) fashion.2 As a result, SEP holders and their counterparties stand, precariously, where antitrust and patent law meet.
This Note will argue that an SEP holder who violates their FRAND commitments by unilaterally refusing to deal with a prospective implementer of the relevant standard should be presumed to have antitrust liability under Section 2 of the Sherman Act. In other words, such a firm should be presumed to have market power and to have participated in exclusionary conduct with anticompetitive effects. Part I will describe the landscape of standard setting, its effect on competition, and the place of antitrust and patent law in the standards landscape. Part II will explore the antitrust case law concerning refusals to deal in greater depth, paying particular attention to cases involving intellectual property and patents. Finally, Part III will build off of the previous two Parts to make and justify the argument that SEP holders should face a presumption that they have violated Section 2 of the Sherman Act when they violate their FRAND commitments by refusing to deal.
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- August 5, 2020