Intellectual property rights are fundamental to the type of economic growth, competition and innovation that our economy requires to thrive and to increase the standard of living for all. Strong IP rights — and patents in particular — are critical to the success of ideas and products. This is true whether they come from the individual inventor in his garage or the largest company competing in the global marketplace.
Yet, the Obama administration’s antitrust agencies are attacking patent rights at a time when the stakes for the American economy are the highest. President Obama’s Federal Trade Commission (FTC) and Department of Justice (DOJ) have been leading a coordinated and sustained effort to devalue patents. This threatens the incentives for innovation and entrepreneurship that drive economic growth.
Today’s anti-patent efforts threaten to unravel a Clinton-era bipartisan and sound economic approach to establishing when antitrust laws should place limits on patents and when they should not. It also undermines the credibility of the United States when it fights other countries, especially those in Asia, for the intellectual property rights of American businesses.
The attack on patent rights is fueled in part by academics. Professors and researchers have begun to argue — without evidence — that strong property rights hinder economic growth. These academics claim that antitrust agencies and courts should place greater limits on patents because of the fear of so-called “patent holdup” — the threat of exercising one’s property right by blocking infringers in court in order to extract higher licensing rates. Because of this, some call for special antitrust rules to apply to business relationships involving patents.
If patent holdup were a widespread issue, then strengthening antitrust laws might be warranted. But the evidence shows it only happens occasionally. And existing contract and patent laws already govern it when it happens. There is no need to put antitrust laws on steroids when existing laws are adequate.
The Obama administration’s FTC and DOJ have continuously assaulted patent rights — even threatening to sue patent holders who try to enforce their property rights in a court of law. These threats discourage innovators and prevent patent holders from protecting their rights. Even worse, by devaluing patent rights, these new antitrust limits will likely weaken the incentive for American firms to innovate, to license and commercialize their ideas, and to bring inventions to consumers.
The stakes are high, not just in the United States but globally. There is a disturbing trend among nations around the world to use antitrust laws to devalue IP rights. This trend includes the increasing use of antitrust measures to defend nationalist goals instead of competition and consumers. For example, last year, China’s antitrust authorities flexed their muscle by imposing a near-billion-dollar antitrust fine against a leading U.S. developer of wireless communications technologies for its patent-licensing practices. Since then, several countries have followed suit, announcing their intentions to adopt or impose antitrust rules that would diminish the value of patents essential to interoperability standards, such as the 3G and 4G standards critical to innovation in wireless markets.
The United States can and should play an important role to curtail this trend. In the 1990s, the U.S. FTC and DOJ took the lead in renouncing anti-innovation policies in favor of a more analytical approach that rejected special antitrust rules and presumptions against intellectual property. That leadership is required once again to undo the Obama administration’s policies devaluing IP rights in the United States. We need to defend IP rights at home if we wish to speak credibly about their importance in China, Korea, Taiwan and around the globe.
If the United States is to once again take its place as the global leader in antitrust policy that protects consumers and innovation — rather than coddles national champions and special interests — it must return to embracing intellectual property rights. We must have the courage to carry that message proudly and without equivocation to antitrust agencies around the world. Now more than ever, they need to hear it.
• Jim Jordan is the Republican U.S. representative for Ohio’s 4th Congressional District. Professor Joshua D. Wright is a former commissioner with the Federal Trade Commission. He is executive director of the Global Antitrust Institute at George Mason University School of Law.
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