unilaterally and the presence of contract terms (e.g., unpaid balances on minimum purchase commitments) that encourage the licensee to renew a license arrangement. Consistent with their approach to less restrictive alternative analysis generally, the Agencies will not attempt to draw fine distinctions regarding duration; rather, their focus will be on situations in which the duration clearly exceeds the period needed to achieve the procompetitive efficiency.
The evaluation of procompetitive efficiencies, of the reasonable necessity of a restraint to achieve them, and of the duration of the restraint, may depend on the market context. A restraint that may be justified by the needs of a new entrant, for example, may not have a procompetitive efficiency justification in different market circumstances.[1]
4.3 Antitrust “Safety Zone”
Because licensing arrangements often promote innovation and enhance competition, the Agencies believe that an antitrust “safety zone” is useful in order to provide some degree of certainty and thus to encourage such activity.[2] Absent extraordinary circumstances, the Agencies will not challenge a restraint in an intellectual property licensing arrangement if (1) the restraint is not facially anticompetitive[3] and (2) the licensor and its licensees collectively account for no more than twenty percent of each relevant market significantly affected by the restraint. This “safety zone” does not apply to those transfers of intellectual property rights to which a merger analysis is applied.[4]
Whether a restraint falls within the safety zone will be determined by reference only to goods markets unless the analysis of goods markets alone would inadequately address the effects of the licensing arrangement on competition among technologies or in research and development.
If an examination of the effects on competition among technologies or in research and development is required, and if market share data are unavailable or do not accurately represent competitive significance, the following safety zone criteria will apply. Absent extraordinary circumstances, the Agencies will not challenge a restraint in an intellectual property licensing arrangement that may affect competition in a technology market if (1) the
- ↑ Cf. United States v. Jerrold Elecs. Corp., 187 F. Supp. 545 (E.D. Pa. 1960), aff’d per curiam, 365 U.S. 567 (1961).
- ↑ The antitrust “safety zone” does not apply to restraints that are not in a licensing arrangement, or to restraints that are in a licensing arrangement but are unrelated to the use of the licensed intellectual property.
- ↑ “Facially anticompetitive” refers to restraints that normally warrant per se treatment, as well as other restraints of a kind that would always or almost always tend to reduce output or increase prices. See section 3.4.
- ↑ See section 5.7.
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