Patent Pools May Create Anticompetitive Effects, New Report Finds

Former FTC Policy Director calls for increased vigilance and enforcement by antitrust agencies

WASHINGTON--()--The following was issued by The Law Offices of David A. Balto PLLC:

David Balto, former FTC Policy Director for the Bureau of Competition, released a study that finds patent pools may cause anticompetitive consequences earlier today. The new report, Barriers to Competition on the Innovation Superhighway: How the Lack of Antitrust Scrutiny of Patent Pools Deters Competition, reveals that patent pools, which were formed to foster innovation and reduce litigation costs, can actually have the adverse effect, creating price-fixing and homogenous markets.

“While patent pools may generate some efficiencies and benefits, they may also cause anticompetitive effects like price fixing, collusion, and thwarting innovation,” Balto said.

Barriers to Competition on the Innovation Superhighway builds on a 2011 investigation into the patent licensing group MPEG LA, as well as various Department of Justice and Federal Trade Commission enforcement actions and guidelines, to analyze the evolving landscape for present-day patent pools.

The paper highlights MPEG LA’s MPEG 2 pool, which has received criticism for levying outdated licensing fees for digital video patents that are near or past expiration. The MPEG 2 standard can be found in a variety of consumer technologies that stream video and audio content such as cameras, smart phones, receivers, DVD players, and televisions.

“Patent pools have served as the information superhighways that led to the products millions of consumers enjoy every day while fostering tremendous innovation and creativity. They have also allowed for the integration of complementary technologies, lowered transaction costs, and reduced the risks of holdup and royalty stacking. But, because of a lack of antitrust enforcement some pools are becoming the tollbooth on the high-tech superhighway, causing consumers to pay more for less innovation,” said Balto.

As a result of the findings, Balto recommends steps the Department of Justice, Federal Trade Commission and other antitrust groups should take to ensure the integrity of patent pools. These recommendations entail more rigorous follow-up on existing pools to make certain that they properly fulfill their procompetitive purposes for the benefit of licensors, licensees and consumers alike.

About David Balto

David Balto has more than 15 years of government antitrust experience as a trial attorney in the Antitrust Division of the Department of Justice and in several senior level positions at the Federal Trade Commission. He was the Policy Director of the Bureau of Competition of the Federal Trade Commission (1998-2001) and attorney advisor to Chairman Robert Pitofsky (1995-1997). In these positions, he was a senior advisor in all aspects of the FTC's merger and non- merger enforcement program. While at the FTC he helped bring enforcement actions against patent pools and contributed to the DOJ/FTC Intellectual Property Guidelines. Information about his practice can be found at www.dcantitrustlaw.com.

Contacts

The Law Offices of David A. Balto PLLC
David Balto, 202-577-5424

Release Summary

Antitrust lawyer David Balto releases new study examining anticompetitive nature of patent pools.

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Contacts

The Law Offices of David A. Balto PLLC
David Balto, 202-577-5424