Patents foster innovation and promote competition

Furthermore, patents promote competition to the benefit of American consumers. Prior to the 1980s, U.S. antitrust enforcers deemed patent-licensing restrictions anticompetitive. But economic research came to recognize that such restrictions actually facilitated the adoption of new and rival technologies that would enhance competition for the consumer’s dollar. This new learning caused enforcers to adopt a generally permissive, bipartisan stance toward patent licensing beginning in the early 1980s. This was reflected in enforcement guidelines released jointly by the Department of Justice and the Federal Trade Commission in 1995 and updated in 2017. The Guidelines’ discussion of the beneficial aspects of licensing restraints is instructive: “Field-of-use, territorial, and other limitations on intellectual property [patent] licenses may serve procompetitive ends by allowing the licensor to exploit its property as efficiently and effectively as possible. These various forms of exclusivity can be used to give a licensee an incentive to invest in the commercialization and distribution of products embodying the licensed intellectual property and to develop additional applications for the licensed property. . . . They may also increase the licensor’s incentive to license, for example, by protecting the licensor from competition in the licensor’s own technology in amarket niche that it prefers to keep to itself.” Obama-era FTC Chair Edith Ramirez stated in 2017, “A strong and competitive IP licensing system benefits consumers and fosters innovation.” Similarly, under President Trump, Assistant Attorney General for Antitrust Makan Delrahim emphasized in 2018 “that the increase in innovation spurred on by the patent laws leads to expanded consumer choice and enhanced competition in the long run.”