Technology Licensing: Evolving Antitrust Standards in the Smartphone and Other Sectors?

Paul Lugard, Apr 30, 2012

Antitrust review of business transactions involving intellectual property has never been entirely undisputed. On the one hand, there is a general belief that antitrust intervention in R&D-, intellectual property-, and innovation-intense industries should be centered on the preservation of innovation incentives. On the other hand, day-to-day practice demonstrates that even in sectors where the intellectual property landscape is relatively easily accessible, but where innovation is nonetheless important, the proper application of antitrust law is highly fact-specific and complex.

For instance, intuition tells us that grant-back clauses in technology licensing agreements may decrease licensees’ incentives to innovate unless they are properly compensated for their innovative efforts. But it also obvious that appropriate compensation schemes for future innovations may be impossible to set up, and that some licensors may not be willing to license their technology, without grant-back clauses, as a result of which the positive welfare effects associated with technology licensing may not materialize to start with. How does one distinguish the good and the bad cases?

And, to add a particularly topical example, how should one ensure that-given evidence of the ability and incentive to foreclose rivals-the acquisition of a portfolio of hundreds of Standard Essential Patents (“SEPs”) relevant to wireless devices by Apple, Microsoft, or Google will not resu…

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