Justice Department Issues Business Review Letter to Intellectual Property Exchange International
Department Declines to State Enforcement Intentions Due to Business Model’s Uncertainties and Potential Competitive Concerns
WASHINGTON – The Department of Justice today declined to state its enforcement intentions regarding the implementation of a proposal submitted by IPXI Holdings LLC and its wholly-owned subsidiary Intellectual Property Exchange International Inc. (IPXI) to develop an exchange for the trading of unit license rights (ULRs) to sets of patents. The department said that although IPXI’s proposed exchange potentially could benefit the intellectual property (IP) marketplace and encourage innovation through increased licensing efficiency, sublicense transferability and greater transparency, it also potentially raises competitive concerns. Due to the inherent uncertainties and potential competitive concerns associated with IPXI’s novel business model, the department declined to state its enforcement intentions.
The department’s position was stated in a business review letter to counsel for IPXI from Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
IPXI proposes to create a proprietary market for patent licenses. To do so, the company intends to obtain exclusive patent licenses that it will then sublicense through the sale of tradable instruments called ULRs, which are standardized licenses for defined sets of patents and uses under terms and conditions set jointly with patent holders. As part of the process, IPXI will review the patent rights at issue by examining validity, current infringement and other issues, and determine market interest to license those patents.
IPXI may become the exclusive licensor of patents or patent bundles that might otherwise compete. IPXI has proposed certain procedures that might mitigate the likelihood that anticompetitive effects will materialize. However, because IPXI cannot predict in advance the patents or markets that might be at issue, the department is unable to engage in the fact-intensive analysis necessary to assess the likely competitive effects of the proposal. In addition, given the novelty of IPXI’s proposal, it is possible that other potential competitive concerns may later emerge once IPXI’s platform is operational.
Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves the right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.
A file containing the business review request and the department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the business review procedure.