I’m thinking about the USDOJ’s “Nine No-Nos” of Patent Licensing. These were the subject of an important set of remarks in 1970 by then Bruce Wilson (USDOJ) on antitrust considerations for patent and know-how license agreements. At the time, the DOJ considered these all per-se antitrust violations. US Antitrust Law has really relaxed since then, and for the most part these are no longer per-se violations. That said, they still represent cautionary signs of potential antitrust trouble — especially if coupled with actual market power.
The nine no-nos:
- Tying: Don’t require the purchase of unpatented materials as a condition of a patent license;
- Assign-Back: Don’t require the licensee to assign-back subsequently developed patents;
- Resale Restrictions; Don’t restrict the right of a product purchaser to re-sell the product;
- Using Non-Patented Products: Don’t restrict the licensee’s ability to deal in products outside the scope of the patent;
- Exclusive Licenses: Take care with exclusive licenses — especially if in a horizontal market relationship.
- Package Deals: Don’t require mandatory package licenses;
- Relationship with Payments: Royalty provisions should be reasonably related to the licensee’s sales;
- Licensee’s Use of Product: Don’t restrict a licensee’s use of a product made by a patented process; and
- Minimum Resale Price: Don’t include minimum resale price provisions for the licensed products.
Bill Coston (Venable) has a nice review of the nine and explains how they are relevant today (as of 2013) (The Patent-Antitrust Interface: Are There Any No-No’s Today?). Coston also presents his “Four Frowned Upons”:
But the antitrust laws still do have considerable relevance to current patent law practices. There are at least “Four Frowned-Upons”:
- Generic and branded pharmaceutical patent settlements where the branded pays the generic a “reverse payment” to stay off the market for some period of time.
- Dedication of standard essential patents (“SEPs”) to a standard-setting organization and then failing to honor a commitment to offer fair, reasonable and non-discriminatory (“FRAND”) licensing terms and, instead, seeking injunctive relief.
- Creation of a patent pool by horizontal competitors that includes some patents which are not essential to a standard, accompanied by an agreement not to license the non-essential and competitive alternative product patents outside of the pool license.
- Resale price maintenance agreements in patent licensing.
Upcoming: What are the antitrust Frowned-Upons for Patent Prosecution:?