Antitrust Issues in the Licensing of Intellectual Property: The Nine No-No's Meet the Nineties (original) (raw)
1997, Brookings papers on economic activity
"KNOWLEDGE ASSETS"-research and development know-how and intellectual property protected by patent, copyright, and trade secrethave become increasingly important as a determinant of U.S. industrial progress.' In 1995 seven knowledge-intensive industries (aerospace, computers, communications equipment, electrical machinery, electronic components, instruments, and drugs) accounted for 27 percent of total manufacturing output in the United States, up from 21 percent in 1982.2 Royalties and fees collected by U.S. firms from international trade in intellectual properties exceeded $20 billion in 1993, nearly double the amount collected just five years earlier.3 Licensing royalties and fees, although considerable, greatly understate the value of intellectual property to the U.S. economy. Technology licensing and related Both authors are professors at the University of California at Berkeley and have served recently as Deputy Assistant Attorney General for Economics in the Antitrust Division, U.S. Department of Justice. Gilbert led a task force that drafted the Antitrust Guidelines for the Licensing of Intellectual Property, which were issued by the Department of Justice and the Federal Trade Commission in April 1995. The views expressed here, both generally and with respect to specific matters reviewed by the Antitrust Division, are those of the authors alone, and do not reflect official positions of the Justice Department. The authors give special thanks to Robert Gertner, Louis Kaplow, and Ilya Segal for valuable comments on an earlier draft. 1. For convenience, in what follows we will often use the term ''patent" to denote intellectual property more generally, including copyright and trade secrets. Of course, there are important differences in the statutory protection that is afforded to each regime. 2. U.S. Bureau of the Census (1996, table 1). 3. National Science Board (1996, table 6-2). 283 10. Of course, in a trivial sense, all licenses are vertical, inasmuch as one firm is selling technology to another, so the two are in a supplier-buyer relationship.