restraint under the rule of reason is to inquire whether the restraint is likely to have anticompetitive effects and, if so, whether the restraint is reasonably necessary to achieve procompetitive benefits that outweigh those anticompetitive effects.[1]
In some cases, however, courts have concluded that a restraint’s “nature and necessary effect are so plainly anticompetitive” that it should be treated as unlawful per se, without an elaborate inquiry into the restraint’s likely competitive effect.[2] Among the restraints that have been held per se unlawful are naked price-fixing, output restraints, and market division among horizontal competitors, as well as certain group boycotts.
To determine whether a particular restraint in a licensing arrangement is given per se or rule of reason treatment, the Agencies will assess whether the restraint in question can be expected to contribute to an efficiency-enhancing integration of economic activity.[3] In general, licensing arrangements promote such integration because they facilitate the combination of the licensor’s intellectual property with complementary factors of production owned by the licensee. A restraint in a licensing arrangement may further such integration by, for example, aligning the incentives of the licensor and the licensees to promote the development and marketing of the licensed technology, or by substantially reducing transactions costs. If there is no efficiency-enhancing integration of economic activity and if the type of restraint is one that has been accorded per se treatment, the Agencies will challenge the restraint under the per se rule. Otherwise, the Agencies will apply a rule of reason analysis.
Application of the rule of reason requires an inquiry into the likely competitive effects of the conduct in question.[4] However, as the Supreme Court has noted, “‘[t]here is always something of a sliding scale in appraising reasonableness,’ and as such, ‘the quality of proof required should vary with the circumstances’”;[5] what is required “is an enquiry meet for the case,
- ↑ See, e.g., Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007); FTC v. Ind. Fed’n of Dentists, 476 U.S. 447 (1986); NCAA v. Bd. of Regents of the Univ. of Okla., 468 U.S. 85 (1984); Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1 (1979); 7 Phillip P. Areeda & Herbert Hovenkamp, Antitrust Law § 1502 (3d ed. 2010); see also part 4.
- ↑ FTC v. Super. Ct. Trial Lawyers Ass’n, 493 U.S. 411, 433 (1990); Nat’l Soc. of Prof’l Eng’rs v. United States, 435 U.S. 679, 692 (1978).
- ↑ See Broad. Music, 441 U.S. at 16-24.
- ↑ See sections 4.1-4.3.
- ↑ FTC v. Actavis, Inc., 133 S. Ct. 2223, 2237-38 (2013) (alteration in original) (quoting Cal. Dental Ass’n v. FTC, 526 U.S. 756, 780 (1999)).
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