The Global Antitrust Attack On Intellectual Property Rights And What The US Should Do About It

Posted by Forbes

The Global Antitrust Attack On Intellectual Property Rights And What The US Should Do About It

By Koren Wong-Ervin

There is a disturbing trend among international antitrust authorities: using antitrust laws to devalue intellectual property rights, to intervene in favor of one side or another in licensing disputes, and to impose unwarranted extra-jurisdictional remedies on patent licensing (i.e., foreign governments telling US companies how to price US and other foreign patents). This trend is a serious problem for innovation, economic growth, and consumers.

For example, several countries, including China, India, Korea, and even some government officials in the United States, have proposed or imposed antitrust rules that would diminish the value of patents essential to interoperability standards such as the 3G and 4G standards critical to innovation in wireless markets.

The new antitrust rules seek to regulate price by, among other things, creating an antitrust sanction (with the threat of treble damages or other high fines) for charging a royalty based on a percentage of the end-user device (such as a mobile phone) as opposed to on the smallest component part (such as a chipset). Such rules ignore the economic evidence finding that the existing industry practice of end-user device licensing tends to result in lower overall prices for consumers and to spur innovation. They also overlook that wireless cellular technologies often read on the system or device level, rather than the component level. These rules interfere with private arms-length negotiations in patent licensing and ignore the number of considerations that may dictate the parties’ selection of a royalty base. Industry practice and the reduction of transaction and administrative costs (easy monitoring or verification of the number of units sold) are a few such considerations.

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