final or intermediate goods made using the intellectual property, or it may have effects upstream, in markets for goods that are used as inputs, along with the intellectual property, to the production of other goods. In general, for goods markets affected by a licensing arrangement, the Agencies will approach the delineation of relevant market and the measurement of market share as in sections 4 and 5 of the U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines.[1]
3.2.2 Technology Markets
Technology markets consist of the intellectual property that is licensed (the “licensed technology”) and its close substitutes—that is, the technologies or goods that are close enough substitutes to constrain significantly the exercise of market power with respect to the intellectual property that is licensed.[2] When rights to intellectual property are marketed separately from the products in which they are used,[3] the Agencies may analyze the competitive effects of a licensing arrangement in a technology market.[4]
Example 2
Situation: Firms Alpha and Beta independently develop different patented process technologies to manufacture the same off-patent drug for the treatment of a particular disease. Before the firms use their technologies internally or license them to third parties, they announce plans jointly to manufacture the drug, and to assign their manufacturing processes to the new manufacturing venture. Many firms are capable of using and have the incentive to use the
- ↑ U.S. Dep’t of Justice & Fed. Trade Comm’n, Horizontal Merger Guidelines (2010), https://www.justice.gov/atr/file/810276/download [hereinafter 2010 Horizontal Merger Guidelines]. As stated in section 5.2 of the 2010 Horizontal Merger Guidelines, “in most contexts, the Agencies measure each firm’s market share based on its actual or projected revenues in the relevant market.” However, market shares may also be measured through unit sales, capacity, or reserves when these approaches are more reflective of the competitive significance of suppliers than revenues.
- ↑ For example, the owner of a process for producing a particular good may be constrained in its conduct with respect to that process not only by other processes for making that good, but also by other goods that compete with the downstream good and by the processes used to produce those other goods.
- ↑ Intellectual property is often licensed, sold, or transferred as an integral part of a marketed good. An example is a patented product marketed with an implied license permitting its use. In such circumstances, there is no need for a separate analysis of technology markets to capture relevant competitive effects.
- ↑ Courts have defined technology markets in a number of cases. See, e.g., Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 315 (3d Cir. 2007); Apple Inc. v. Samsung Elecs. Co., No. 11-CV-01846, 2012 U.S. Dist. LEXIS 67102, at *19-23 (N.D. Cal. May 14, 2012); Hynix Semiconductor Inc. v. Rambus Inc., 2008-1 Trade Cas. (CCH) ¶ 76,047, 2008 WL 73689, at *2-8 (N.D. Cal. Jan. 5, 2008); In re Papst Licensing, GmbH Patent Litig., No. Civ.A.99-3118, 2000 WL 1145725, at *6-7 (E.D. La. Aug. 11, 2000).
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