1 Hot Topics at the Interface of Intellectual Property and Competition Law Possible Antitrust Concerns Arising from Patent Pools ABA International Law Section Fall Meeting September 26, 2008 Frances Marshall* Special Counsel for Intellectual Property Antitrust Division U.S. Department of Justice *Views expressed are not necessarily those of the Department of Justice

2 Procompetitive Benefits of Pools Integrate complementary technologies Integrate complementary technologies Reduce transaction costs Reduce transaction costs Clear patent blocking positions Clear patent blocking positions Avoid costly infringement litigation Avoid costly infringement litigation Promote dissemination of technology Promote dissemination of technology

3 Potential Anticompetitive Harms of Pools Reduction of horizontal price competition between licensors Reduction of horizontal price competition between licensors  Leads to rise in prices of products and services that utilize the pooled patents Foreclosure of innovation by discouraging research and development Foreclosure of innovation by discouraging research and development

4 Limiting the Risk of Horizontal Price Competition in a Pool Limit pools to complementary patents Limit pools to complementary patents  Exclude substitute patents  “Essentiality” test Use independent review process to select pool patents Use independent review process to select pool patents Limit access to CBI Limit access to CBI

5 Limiting the Risk of Harming Innovation Incentives in a Pool Keep invalid patents out of the pool Keep invalid patents out of the pool Licensors grant non-exclusive licenses to pool Licensors grant non-exclusive licenses to pool  Retain right to license individually Limit scope of grantbacks Limit scope of grantbacks Provide clear understanding of pool contents Provide clear understanding of pool contents  Non-exclusive  Essential patents License available to all interested licensees License available to all interested licensees

6 Antitrust Guidance on Patent Pools United States United States  1995 Antitrust-IP Licensing Guidelines  Patent pool business review letters  MPEG-2 (1997); 3C DVD (1998); 6C DVD (1999); RIFD (2008) (?)  IP2 Report, ch. 3 EC EC  2005 Technology Guidelines ¶¶ Japan Japan  2005 Standards and Pooling Guidelines

7 Hot Topics at the Interface of Intellectual Property and Competition Law Possible Antitrust Concerns Arising from Patent Pools ABA International Law Section Fall Meeting September 26, 2008 Frances Marshall* Special Counsel for Intellectual Property Antitrust Division U.S. Department of Justice *Views expressed are not necessarily those of the Department of Justice