In 2018, Assistant Attorney General for Antitrust Makan Delrahim proposed a legal framework that rejects antitrust as a tool to resolve patent licensing disputes between holders of patents that cover standardized technologies (“standard essential patents” or SEPs) and producers that seek to use those technologies. Critics of this “New Madison Approach” assert that SEP holders’ violations of licensing commitments made to standard setting bodies allow them to harm competition by “holding up” and “overcharging” licensees. We reject that critique, which would preclude SEP holders from bargaining for a reasonable share of the future commercialization value their patents will generate. We also demonstrate that the practical unavailability of injunctions for patent infringement inappropriately limits patent holders’ bargaining leverage and undermines welfare-creating innovation. We therefore: (1) recommend fully endorse the New Madison Approach; and (2) call for legislation codifying the presumption that patentees are entitled to an injunction for patent infringement.
By Alden F. Abbott & Andrew Mercado1
I. INTRODUCTION AND OVERVIEW
The New Madison Approach (“NMA”) advanced by former Assistant Attorney General for Antitrust Makan Delrahim is a simple analytical framework for understanding the interplay between patents and antitrust law arising out of standard setting. A key aspect of the NMA is its rejection of the application of antitrust law to...