The Federal Trade Commission s Assault on IP: Regulatory Patent Reform?

Size: px

Start display at page:

Download "The Federal Trade Commission s Assault on IP: Regulatory Patent Reform?"

Annabelle Lamb
5 years ago
Views:

1 The Federal Trade Commission s Assault on IP: Regulatory Patent Reform? Chris Compton Nov. 5, 2008 High Tech Tuesday Santa Clara University Intellectual Property Association

2 Battlegrounds for FTC Assault on IP Urging legislation to lessen bad patents, scope of patentability and shift balance to those opposing IP Enforcement efforts against patent settlements in pharmaceutical industry having reverse payments Enforcement against standard-setting abuses, now expanding under section 5 of FTC Act Growing hostility to IP rights of Non-Practicing Entities DOC# 1

3 FTC s Concern with IP/Antitrust Imbalance 2003 FTC Report, To Promote Innovation Overbroad or invalid patents can harm competition and innovation 10 recommendations to redress balance, including More funding, better process at PTO Post grant review & opposition to patents Challenges based on preponderance of evidence Tighten obviousness standards Lessen willful infringement exposure Critical of expanding patentability to software, bus. Methods Apr 2007Joint FTC/DOJ Report on Antitrust & IP Months of hearings for all agency studies DOC# 2

Sept. 8, 2008 Unilateral Conduct Report by DOJ FTC refuses to join, issues stinging dissent

price squeeze case FTC s standard setting and reverse payment enforcement cases ignored --FTC

actually implements the policy decisions expressed in its Report. FTC able to use Section 5 vs.

4 Sept. 8, 2008 Unilateral Conduct Report by DOJ FTC refuses to join, issues stinging dissent Previous divergence: Pharma reverse payments cases Leegin resale price maintenance linkline price squeeze case FTC s standard setting and reverse payment enforcement cases ignored --FTC stands ready to fill any Sherman Act enforcement void that might be created if the Department actually implements the policy decisions expressed in its Report. FTC able to use Section 5 vs. Section 2 of the Sherman Act When people agree with me, I always feel I must be wrong. Oscar Wilde DOC# 3

5 FTC s Lonely Battle Against Reverse Payment Patent Settlements Takes position that reverse payments with agreed date for entry by generic competitor harms consumers. DOJ agrees strength of patent should be part of rule of reason assessment of Hatch Waxman settlements FTC reversed (11 th Cir.) in Schering-Plough, 2005 DOJ disagreed re cert, which was denied. Other contra decisions: Geneva v. Valley Drug, 11 th Cir 2003 In re Tamoxifen, 2d Cir In re Ciprofloxacin, Fed. Cir. (Oct. 15, 2008). DOC# 4

6 FTC s History of SSO Enforcement (1996) Alleged intentional failure to disclose patents, violating VESA rules. Consent decree not to enforce patents Dissent re absence of knowledge/intent, market power. (2003) Alleged affirmative misrepresentations to California Air Resources Board ALJ: Noerr-Pennington immunity. Later settled as condition to FTC approval of Chevron merger. (2002-present) Alleged failure to disclose IP to JEDEC ALJ dismissed case: no duty shown. FTC found Section 2 and Section 5 violations; imposed licensing remedy. Rambus appeal to DC Circuit successful, April DOC# 5

7 N-Data Consent Decree (Jan 2008) Predecessor National gave1994 commitment letter to $1000 license; new letter by Vertical in 2002, uncontested by IEEE: intent to seek FRAND terms. N-Data bought IP, sought to enforce at higher rates. FTC: Violation of Section 5. Remedy in consent: $1000 license except for those who refuse. Extends to later improvements, standards. Controversy erupts DOC# 6

8 N-Data Dissent 3-2 majority found liability as both unfair method of competition and unfair act or practice. Commissioner Kovacic dissents, critical of loose analysis, concern about follow-on treble damage litigation in states. Chairman Majoras dissents: Section 5 should rarely go beyond Section 2 No deception within the SSO Other participants had changed commitments No objection in 2002 by IEEE Dubious market power, different bundle of IP IEEE and participants can protect themselves DOC# 7

9 Reactions to N-Data AAI seeks expansion of Section 5 enforcement to FRAND disputes with Rembrandt petition to FTC Majority of Public Comments raise concerns about: Reducing SSO flexibility in conduct, IP policies Expanded antitrust risk for SSO participants Getting SSOs involved with FRAND disputes Oct. 8, 2008: Zoran sues DTS for FRAND violations. Alleged violations of Section 2; patent misuse. Fraudulent promise alleged, supporting unlawful acquisition of Monopoly Power. DOC# 8

10 FTC Remains Adamant Despite defeats in Rambus and Ciprofloxacin, divergence with DOJ, Commissioner Rosch makes his position clear: Expand use of Section 5. His May 2008 paper particularly hostile to trolls, who lie in wait Trolls broadly defined to reach most NPEs Section 5 may even reach lawful, non-sso acquisition of good IP if enforcement is delayed until after lock in. DOC# 9

11 Risks of Expanded FTC Enforcement Encourage treble damage suits in IP scenarios. Discourage participation in SSOs or the settling of pharmaceutical patent suits Widen substantive antitrust policy gap with DOJ With less clear guidance to business Will new administration move DOJ toward FTC? Effective devaluation of IP At a time when the courts and Congress are limiting patents With ongoing private and EC actions vs. Qualcomm, Rambus The business of government is to keep government out of business that is, unless business needs government aid. Will Rogers DOC# 10

12 Thank you Copyright Chris Compton, WSGR 2008 High Tech Tuesday Santa Clara University Intellectual Property Association

Charles T. Compton Charles T. (Chris) Compton plays a leadership role in the firm's antitrust practice, focusing on merger regulatory and intellectual property issues.

13 Charles T. Compton Charles T. (Chris) Compton plays a leadership role in the firm's antitrust practice, focusing on merger regulatory and intellectual property issues. Since joining Wilson Sonsini Goodrich & Rosati in 1980, Chris has overseen the antitrust regulatory work in more than 900 mergers, acquisitions, and joint ventures many of which involved formal investigations by the Federal Trade Commission, the Department of Justice, the European Commission, and other international competition agencies. The firm's record of success, including Hewlett Packard's $18.7 billion acquisition of Compaq Computer in 2002, has been unparalleled: No Wilson Sonsini Goodrich & Rosati transaction since 1980 has ever been blocked or abandoned due to an antitrust challenge by a U.S. or foreign competition agency. Early in his career, Chris served as a litigator on the watershed IBM antitrust cases in the late 1970s at O'Melveny & Myers. CONTACT: 650 Page Mill Road Palo Alto, CA Phone Fax ccompton@wsgr.com In addition to a wide range of intellectual property litigation, including Lotus v. Borland, Chris has handled antitrust suits involving alleged price discrimination, refusals to deal, distributor terminations, group boycotts, monopolies, state law Cartwright Act claims, grand jury investigations, and price fixing. Chris wrote the firm's Antitrust & Trade Regulation Primer for attorneys and clients, and regularly counsels many of its private and public clients on antitrust and intellectual property issues arising in the course of marketing, distribution, pricing, and standard-setting activities. Named a Northern California "Super Lawyer" in by Law & Politics magazine, Chris also was cited in the editions of Chambers USA: America's Leading Lawyers for Business, commended as "a great lawyer" and for his ability to "establish an immediate rapport, trust, and confidence, in a nonadversarial way." He also was listed as one of the "Top-Ranking Competition Lawyers in Europe and Northern America" in the Practical Law Company's Global Competition Handbook ( ), and earned a "highly recommended" listing in the PLC Which Lawyer? Yearbook (2007). Additionally, Chris is listed in the 2006 edition of Best Lawyers in America and Legal Media Group's Euromoney Guide to World's Leading Competition and Antitrust Lawyers. Chris has written extensively over the years for publications such as the Antitrust Law Journal, the Antitrust Report, Corporate Counsel Outlook, and the International Business Lawyer. He teaches an antitrust/intellectual property course for the Santa Clara University School of Law LL.M. program, and has lectured at the University of California, Berkeley, Boalt Hall School of Law. He is a regular speaker at American Bar Association and International Bar Association events, as well as other conferences in the United States and Europe. Chris also served in the Air Force JAG Corps as a military judge. EDUCATION: J.D., New York University School of Law, 1968 Root-Tilden Scholar; Managing Editor, New York University Law Review B.S, United States Air Force Academy, 1965 With Honors ASSOCIATIONS AND MEMBERSHIPS: Member, Advisory Board, Santa Clara University, High Technology Law Institute Board Member and Past President, Law Foundation of Silicon Valley (cont d) DOC# 12

14 (cont d) Charles T. Compton HONORS: SELECT PUBLICATIONS: ADMISSIONS: Selected for inclusion in The International Who's Who of Competition Lawyers & Economists 2008 Named in the 2007 and 2008 editions of Chambers USA: America's Leading Lawyers for Business Selected for inclusion in the 2007 and 2008 editions of Best Lawyers in America and Who's Who Legal: California 2007 AV Peer Review Rating, Martindale-Hubbell "IP Issues in the Antitrust Treatment of Mergers," The Berkeley Conference on Antitrust in the Technology Economy, June 9, 2005 "Lessons from Trinko for a Consolidating Telecom Industry," 16th Annual Communications and Competition Law Conference, Madrid, Spain, May 24-25, 2005 "What United States v. Oracle Says about High-Tech Merger Review in the U.S.," corporatefinancemag.com, May 2005 Please see wsgr.com for a complete list of publications. Bar of the District of Columbia State Bar of California Several U.S. District Courts U.S. Court of Appeals for the Ninth Circuit U.S. Court of Military Appeals U.S. Supreme Court DOC# 13

FTC Approves Nielsen-Arbitron Transaction with Licensing and Divestiture Remedies

WRITTEN BY M. BRINKLEY TAPPAN AND LOGAN M. BREED SEPTEMBER 16-22, 2013 MERGERS & ACQUISITIONS FTC Approves Nielsen-Arbitron Transaction with Licensing and Divestiture Remedies On September 20, the FTC