Adequacy of the 1995 Antitrust Guidelines for the Licensing of Intellectual Property in Complex High-Tech Markets

In 1995, the Department of Justice and the Federal Trade Commission adopted new guidelines for those wishing to license intellectual property rights without violating antitrust laws. Designed to provide clarity, these guidelines instead breed confusion because they misunderstand the nature of intellectual property markets and provide insufficient guidance in the most difficult areas. Section I of this article will discuss the basic provisions of the guidelines, especially their treatment of "innovation markets". It argues that government enforcers should focus primarily on activity that creates entry barriers. Understanding the use and misuse of licensing is the key to analyzing barriers in the IP field. The remainder of the article therefore examines three common types of license misuse. Section II considers patent holders' potential liability for refusing to grant licenses to competitors. Section III looks at the effect of setting industry standards and at patent holders' misconduct during industry standard setting. Section IV analyzes patent accumulation through devices such as pooling and cross-licensing. The article concludes that the government should further amend the Guidelines to provide clearer rules for use of IP licenses