Learning from History: The Antitrust Division Embraces the “New Madison” Antitrust and Intellectual Property Project

Division Update Spring 2018

Following the successful release of the 2017 joint Federal Trade Commission-Department of Justice “Antitrust Guidelines for the Licensing of Intellectual Property,” the Antitrust Division has continued its advocacy and guidance regarding the sound application of antitrust principles to intellectual property disputes.

In November 2017, Assistant Attorney General Makan Delrahim delivered a speech at the USC Gould School of Law on the role of antitrust law in the context of standard setting organizations (“SSOs”). In particular, AAG Delrahim explained that “the hold-out problem poses a more serious threat to innovation than the hold-up problem,” and that “antitrust law should not police FRAND commitments to SSOs.” He explained further, however, that antitrust enforcers “should scrutinize concerted action within SSOs that causes competitive harm to the dynamic innovation process.”

James Madison in shades

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

In March 2018, at the University of Pennsylvania Law School, AAG Delrahim expanded his analysis of antitrust law and intellectual property, called the “New Madison” approach, based on the original understanding of intellectual property rights held by James Madison, the principal drafter of the Constitution. The four premises of the “New Madison” approach are (i) patent hold-up is not an antitrust problem; (ii) SSOs should increase their focus on implementer hold-out, rather than exclusively focus on patent hold-up, to ensure maximum incentives to innovate; (iii) SSOs and courts should avoid restricting the right to seek or obtain an injunction; and (iv) from the perspective of the antitrust laws, a unilateral and unconditional refusal to license a valid patent should be considered per se legal.

The Division hopes to continue its leadership on these issues in the coming years, both through advocacy and policy efforts in the United States, and through international engagement with other competition authorities.

Updated April 9, 2018

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