ICLE Scholars Join Letter to DOJ Supporting Evidence Based Approach to Antitrust Enforcement of IP

This week, ICLE scholars Justin “Gus” Hurwitz, Joshua Wright and Richard Epstein joined with a distinguished group of academics, lawyers and judges to express support for Assistant Attorney General Makan Delrahim’s recent remarks that the Antitrust Division of the Department of Justice (“DOJ”) will be relying on evidence-based analysis when examining the antitrust implications of patent licensing. This letter was sent in response to one sent last month by CCIA to DOJ over its concerns that “[Standards Essential Patent] hold-up is a competition law problem that harms the economy.”

In contrast, the letter sent this week by ICLE’s scholars notes the insufficiency of the “patent hold-up” theory relied upon by the CCIA letter’s signatories:

Several empirical studies demonstrate that the observed pattern in high-tech industries, especially in the smartphone industry, is one of constant lower quality-adjusted prices, increased
entry and competition, and higher performance standards…

Of even greater concern are the likely negative social welfare consequences of prior antitrust policies implemented based upon nothing more than the purely theoretical concern about opportunistic “patent holdup” behavior by owners of patented innovations incorporated into technological standards. For example, those policies have resulted in demands to set royalty rates for technologies incorporated into standards in the smartphone industry according to particular components in a smartphone. This was a change to the longstanding industry practice of licensing at the end-user device level, which recognized that fundamental technologies incorporated into the cellular standards like 2G, 3G, etc., optimize the entire wireless system and network, and not just the specific chip or component of a chip inside a device.

Read the full letter here.