Tag Archives: antitrust

Authors to DOJ: “Strong patent rights are vital to U.S. economic and security interests”

The United States Supreme Court and the Congress have moved to weaken patents over the past seven years without realizing the inherent danger to national interests.  

“Strong patents rights are vital to the economic and national security interests of this country,” say James Rill and David J. Teece in an article published last week, The DOJ must Exalt Intellectual Property Rights,” in RealClear Markets.

The article states that the U.S. Department of Justice must use its power to move intellectual property rights like patents into mainstream acceptability, and prevent them from being undermined “under the guise of anti-competitive behavior.”

Authors James Rill, Senior Counsel at Baker & Botts, served as Assistant Attorney General for Antitrust at the U.S. Department of Justice; David J. Teece is Professor in Global Business and director of the Tusher Center for the Management of Intellectual Capital at the Walter A. Haas School of Business UC Berkeley and a renowned economist.

“Assistant Attorney General Makan Delrahim’s recent policy statements and enforcement actions have re-asserted the historical value of intellectual property rights,” say Rill and Teece.

“He has suggested that the value of these rights have been inappropriately curtailed by the misapplication of antitrust principles, which could threaten the future of U.S. innovation efforts. As a result, AAG Delrahim has begun to restore the balance between antitrust and intellectual property rights, and has moved this important issue to the forefront of antitrust discourse.”

For the full article, go here.

Better Incentives Needed

Also published last week by Professor Teece in Competition Policy International, is a related in-depth article, “Enabling Technology, Social Returns to Innovation, and Antitrust: The Tragedy Of Depressed Royalties.” 

“Empirical studies show that almost all classes of R&D activity are under-supported,” argues Professor Teece. “Two in particular are grossly under-compensated: (a) basic research and (b) enabling (or general purpose) technologies… consideration needs to be given to amplifying, not diminishing, incentives for upstream investment in R&D. Such investment is perhaps among the most precious that society makes.”

Teece cites Nobel Laureate economist Douglass North on the impact of innovation incentives:

Throughout man’s past he has continually developed new techniques, but the pace has been slow and intermittent. The primary reason has been that the incentives for developing new techniques have occurred sporadically. Typically, innovations could be copied at no cost by others and without any reward to the inventor or innovator.

Recent efforts to enlist antitrust as a lever against patents, says Professor Teece, “have threatened to undermine incentives for R&D in several important areas.”

Subtle, theory-based antitrust arguments around patent “hold up” are a handy disguise for implementers and antitrust agencies to use to under-reward and thereby under-incentivize legitimate innovators.

Image source: cjnotebook.com; wsj.com

 

Antitrust Attorney General suing AT&T supports patent monetization

Yesterday, United States Assistant Attorney General for Antitrust Division, Makan Delrahim, filed suit to stop the $85 billion AT&T-Time Warner merger, which previously had been progressing through regulatory approval. 

Almost at the same time, in a recent carefully crafted speech before a business and law audience, he outlined his preference for reliable patents and consistent, free-market enforcement. Putting a patent attorney in charge of antitrust may be the Trump administration’s best idea yet.

Delrahim’s remarks were delivered recently as part of the USC Gould School of Law’s Center for Transnational Law and Business Conference.

“Fresh thinking about the implications of SSOs [standards setting organizations] and the proper role of antitrust law is long overdue,” said Delrahim, who is the first patent attorney to head the Antitrust Division. “Bargaining over new and innovative technologies is a high stakes game, and each side has an incentive to use every means necessary to improve its end of the bargain.  In this game, the competitive market process should win.”

Well-Crafted

The thoughtful speech was welcome relief to IP holders, especially non-practicing entities whose primary business is patent licensing. However, some people thought the timing and intent of the remarks were more difficult to discern.

“Clearly he [Delrahim] is sending a message that the AG’s office, and perhaps the Trump administration, knows the difference between IP exclusivity, which is conducive to innovation and businesses, and anti-competitive behavior,” a significant patent holder told IP CloseUp.

It’s ironic that his comments were made just days before the DOJ’s decision to sue to stop the AT&T-Time Warner merger, or maybe not.

Yesterday the Department of Justice sued to block the AT&T-Time Warner merger, citing its anticompetitive nature and ability of the combined company “to drive up the cost of channels like HBO, CNN and TBS to rivals and ultimately to consumers.”

Senate Committee on the Judiciary documents submitted in support of Delrahim’s confirmation, show that he has worked in the White House as an advisor and has had a distinguished private legal career, often supporting acquirers in large transactions.

Delrahim emigrated from Iran with his family in the 1970s when he was ten years old to escape the political strife. After law school, he joined Patton Boggs. In 1998, Delrahim became a counsel to the United States Senate Committee on the Judiciary, working under Senator Orrin Hatch (R-UT). Jon Leibowitz, who was then a Democratic Senate aide and worked with Delrahim, remembered him as being a pragmatist.

His video recorded confirmation hearing, worth looking at. Delrahim’s testimony occurs approximately 52 minutes into the recording.

Not a Vigilante

CNN, which may have to be sold to permit the AT&T-TWC merger to go through, reported that “A long time colleague of Delrahim’s who says he is a liberal told CNNMoney that he can’t imagine that Delrahim ‘would engage in any type of vigilante justice to help the president in the deal…That’s just unfathomable to me.'”

Delrahim IP background and more enlightened approach to patents in the marketplace could go a long way to repairing the legislative and judicial hits that the patent system that has taken over the past six years.

“We don’t have the tools to know what the competitive royalty rate is,” concluded Delrahim in his USC speech, “—we’re not price regulators, after all—and if we inject antitrust law where it does not belong. It can actually subvert the competitive process and do serious harm to American consumers and to innovation itself… It’s time to correct this asymmetry to ensure that there are maximum incentives to innovate, and equally proper incentives to implement.”

For the text of Delrahim’s remarks, go here.

Image source: bostonherald.com; fortune.com


%d bloggers like this: