New Heights for the “New Madison” Approach

Division Update Spring 2020

Over the past three years, the Antitrust Division has embarked on a multi-pronged effort to help educate and modernize the approach to antitrust and intellectual property law. Under this “New Madison” approach, the Division has cautioned against the misapplication of antitrust theories to IP disputes where a patent-holder unilaterally attempts to exercise the “exclusive Right” conferred by the U.S. Constitution. The Division has sought to foster balance in the debate between so-called patent “hold up” and “hold out.” At the same time, the Division has brought greater attention to the risk of anticompetitive coordination among members of standards development organizations.

James Madison in shades

Image credits: Volodymyr/iStock  /Thinkstock; Fmgt  /iStock  /Thinkstock

This past year, the “New Madison” approach reached new heights as it expanded its advocacy on matters involving the application of antitrust law to intellectual property disputes.

Late last year, the Division joined the U.S. Patent & Trademark Office and the National Institute of Standards and Technology in releasing an updated Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments, which replaced a previous statement on the same topic that was issued in 2013. That effort was the culmination of close work between staff and leadership at those three agencies. So far, the statement has been very well received as an important step toward restoring balance to the debate over the availability of injunctions for infringement of SEPs.

The Division further expanded its advocacy in federal district courts, filing statements of interest advocating for the sound application of antitrust law to intellectual property disputes. Earlier this year, in Continental v. Avanci, the Division argued that alleged breaches of FRAND obligations do not give rise to monopolization claims, and in Intel v. Fortress, the Division argued against an assertion that antitrust law barred the defendant’s efforts to aggregate and to monetize patent rights. Consistent with its words of warning against anticompetitive conduct in standards development organizations, the Division’s statement of interest in NSS Labs v. Crowdstrike emphasized that illegal group boycotts among standards participants may be subject to the per se rule.

The Division also was active in significant cases pending in federal courts of appeals. In October 2019, the Division filed a joint amicus brief with the U.S. Patent and Trademark Office in HTC v. Ericsson, now pending in the Fifth Circuit, advocating against a rigid understanding of what FRAND requires patent-holders to offer licensees. Specifically, the agencies argued the court should not adopt a rule that would unnecessarily limit the use of prior licensing evidence in FRAND disputes, or that would require FRAND licenses to take a particular form.

Moreover, after careful consideration, the Division filed an amicus brief in late 2019 in FTC v. Qualcomm, now pending in the Ninth Circuit, arguing that the district court’s ruling improperly applied Section 2 of the Sherman Act to condemn unilateral licensing activity in a manner that threatens competition and innovation With the success of the “New Madison” project, the Antitrust Division expects to continue its public advocacy in the coming year. Our goal is to promote dynamic competition and incentives for innovation, consistent with the ingenious framework for the patent system that the Founders created.

Updated June 23, 2020

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