Office of Public Affairs | Deputy Assistant Attorney General Dina Kallay Delivers Remarks at the Hudson Institute Forum for Intellectual Property

Remarks as Prepared for Delivery, “The Innovation Dance: Navigating the Balance of Intellectual Property and Antitrust in a Global World”

Good afternoon and thank you for inviting me to speak at the Hudson Institute Forum for Intellectual Property. I am very pleased to be here. The Hudson Institute’s mission is, in part, to “challenge conventional thinking . . . through interdisciplinary studies in defense, international relations, economics, energy, technology, culture, and law.”[1] Successful management of the intersection of law, technology, and economics is key for achieving prosperity, and is something I wish to speak more about today.

In today’s economy, we have no choice but to approach problems from an interdisciplinary perspective to ensure that the law is working to foster innovation. For example, this Administration has addressed the issue in its “National Policy Framework for Artificial Intelligence,” proclaiming that “American creators, publishers, and innovators should be protected from AI-generated outputs that infringe their protected content, without undermining lawful innovation and free expression.”[2] The balance between protecting creators and inventors in a way that incentivizes further innovation while still encouraging lawful non-infringing uses and follow-on advances is a delicate dance.

A robust intellectual property regime plays this key role of promoting innovation and competition. And this dynamic competition is essential to providing American consumers with lower prices, higher quality products, and greater product choice.  This is why the Department of Justice (DOJ) Antitrust Division, in collaboration with our expert colleagues from the U.S. Patent and Trademark Office (USPTO), have given considerable thought to this policy area.

Today I would like to share some examples of how the Division has advocated for such innovative competition by promoting sound interpretations of intellectual property and antitrust law. It has never been more critical to preserve and continue to develop the intellectual property regime that has played such a crucial role in making our economy the most robust and competitive in the world.

Intellectual Property Laws and Antitrust Laws Both Serve Innovation and Competition

Our founding fathers understood the need for law, technology, and economics to work together to help America become the land of innovation, freedom, and opportunity. One of the enumerated powers of Congress is to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”[3] This so-called “IP clause” describes what we now know as patents and copyrights in terms of “exclusive rights.”

As acknowledged in the DOJ and FTC 2017 Antitrust Guidelines for the Licensing of Intellectual Property, these exclusive rights create incentives for innovation by “establishing enforceable property rights for the creators of new and useful products, more efficient processes, and original works of expression.”[4] These property rights incentivize the creation of original products and works, facilitate their commercialization, encourage public disclosure, and prevent imitation that would reduce incentives to innovate.

While the right to exclude others from using an invention or copying a creative work may not, at first blush, appear to facilitate procompetitive activity – it does. As you know, the Antitrust Division enforces the Sherman Act, which prohibits anticompetitive conduct. Antitrust laws ensure that new innovative products are developed and sold in a competitive marketplace free of collusion. Courts have long recognized that IP laws and antitrust laws are “complementary” and share the common purpose of “encouraging innovation, industry and competition.”[5] Thus, strong IP enforcement and strong Antitrust enforcement work in tandem to protect and promote our innovative, competition-based economy.

However, patent protection and the right to exclude are generally only procompetitive where it is within the scope of the government-granted patent. And I will also be touching on that angle later in my remarks today.

Patents, Whether Standard-Essential or Non-Standard-Essential, Do Not Inherently Establish Market Power

Although courts once conflated holding a patent and possession of market power, modern antitrust enforcers and courts reject such a simplistic view. As early as the initial 1995 Antitrust-IP Guidelines, the antitrust agencies explained that a patent (or copyright or trade secret) does not carry a presumption that such intellectual property confers market power.[6] The U.S. Supreme Court has since endorsed the antitrust agencies’ position on this issue.[7] There is now a consensus that antitrust laws apply to conduct involving patents just as they apply to other types of conduct, and that the existence of market power depends on the assessment of other factors, including whether there are actual or potential close substitutes for that patented product. The existence of such substitutes would constrain the exercise of any market power.

The folly of treating patent rights as synonymous with market power is well-illustrated by the story of the modern intermittent windshield wiper, invented and patented by Robert Kearns. Kearns attempted to license his invention to the major automobile makers but failed after they chose to infringe and hold out. Instead, he was awarded a royalty, after having to engage in decades of litigation, when a jury found that the Ford car company had infringed his intellectual property.[8] Kearns also engaged in protracted litigation against another car company, Chrysler, and won royalites. But was never able to successfully commercialize his invention.[9] Kearns had a patent, but no market power.

Last October, the Antitrust Division filed a statement of interest in Disney v. InterDigital in Delaware district court, clarifying this principle in the context of standard essential patents. Standard essential patents are patents that have been incorporated into and are essential to the implementation of a collaborative industry standard. The Division explained in its Disney v. InterDigital statement that, as with non-essential patents, there is “no presumption of market power simply because a patent has been incorporated into a standard.”[10]

As the Division’s statement of interest outlines, whether a standard essential patent owner has market power or can exercise it depends on an assessment of various factors. First, it depends on whether there are alternatives to the standard. Just as products compete against each other, different standards also compete against each other. If the standard has substitutes, then incorporation into the standard may not confer market power.[11] Second, what are the contractual obligations and commitments that the patent holder may have voluntarily undertaken pursuant to the policies of the specific standards development organization that created the standard? If the patent holder has pledged that it will license its patents on a reasonable and non-discriminatory (“RAND”) or a fair, reasonable, and non-discriminatory (“FRAND”) basis, then those commitments could protect against any exercise of potential market power that could have been conferred by standard essential patent status.[12]

In Disney v. InterDigital, there were allegations in the complaint that the patent holder, InterDigital, had undertaken numerous commitments, including promising to license the standard essential patents at stake to implementers of the standard on RAND terms. And there were no allegations regarding potential alternative technologies. Under those circumstances, antitrust demands additional analysis. Establishing market power cannot depend merely on incorporation into a standard. To rely on such a presumption would be an incorrect application of the antitrust laws that creates an unwarranted assumption of market power. It may also unduly reduce the incentives for innovators to contribute cutting-edge technology to procompetitive industry standards.

Notably, the Division’s clarification regarding analysis of market power conferred by standard essential patents is consistent with the longtime position of the European Commission, whose horizontal cooperation guidelines explain that “there is no presumption that holding or exercising [intellectual property rights] essential to a standard equates to the possession or exercise of market power. [Rather t]he question of market power can only be assessed on a case-by-case basis.”[13]

Seeking Injunction Generally Protected from Antitrust Liability and Consistent with Public Interest

An additional concern implicated in the Disney v. InterDigital litigation was the plaintiff’s efforts to impose antitrust liability on InterDigital for seeking judicial redress for alleged infringement. However, as the Division’s statement points out, such petitioning activity is not only constitutionally protected by the First Amendment but, also, litigation is typically the only way to enforce intellectual property rights. Therefore, as the Antitrust Division explained, patent holders are generally protected from antitrust liability, let alone the possibility of treble damages, for seeking redress in the courts.[14]

The Antitrust Division has remained vigilant on this front, filing another statement of interest this spring in Samsung v. Netlist, which reiterated these basic points: (1) Standard essential patents should not carry a presumption of market power; (2) market power analysis requires the same fact-specific approach whether in the essential-patent or non-essential-patent context; and (3) a violation of contractual obligations undertaken in the standard essential patent context does not, in and of itself, constitute anticompetitive conduct.[15]

In addition, last November DOJ, together with the U.S. Patent and Trademark Office, filed a joint comment on the public interest in an International Trade Commission (ITC) proceeding involving a complaint filed by Netlist against Samsung regarding Dynamic Random Access Memory Devices (DRAM).  In that complaint, Netlist alleged that Samsung, among other respondents, was importing devices that infringe on Netlist’s patented DRAM devices. In the comment, DOJ and USPTO explain that, even if an infringing company’s technology is generally important, this importance does not, in and of itself, equate to being in the public interest and weighing against issuance of an exclusionary order. This matter illustrates how exclusion orders at the ITC can safeguard American innovation.

The joint comment also emphasized that the public interest is not served by transforming the public interest factors in the statute into barriers to intellectual property enforcement.[16] Rather, a crucial goal must be to honor Congress’ intent in structuring the ITC system of redress, and refrain from encroaching on parties’ First Amendment rights to petition the courts to seek relief from patent infringement.

Notably, DOJ’s guidance regarding injunctions, much of which was issued with the USPTO, seems consistent with European law as reflected in the 2015 European Court of Justice (ECJ) Huawei-ZTE decision.[17] That decision analyzed whether a standard essential patent holder who gave a FRAND assurance may violate EU competition law by seeking an injunction against an infringer who declared itself willing to negotiate towards a license. In it, the ECJ explained that European Law “provides for a range of legal remedies aimed at ensuring a high level of protection for intellectual-property rights” and for “the right of access to a tribunal”[18] – these principles seem to mirror the US patent law and Constitutional right to seek redress in courts for patent infringement. The ECJ further explained that “[T]he proprietor of the essential patent…has the right to bring an action for a prohibitory injunction or for the recall of products”[19] Similarly to the U.S. “sham” litigation and Walker Process exceptions, the ECJ found that this right can only be limited in particular circumstances, noting that an essential patent holder should not be barred from bringing the claim in the first instance. 

The Division Moves the Needle on Injunctions – Collision v. Samsung

As part of the U.S. interest in ensuring that the patent system’s incentives work for a variety of innovators, including those that commercialize their IP through licensing, the DOJ and USPTO recently filed a statement of interest in Collision v. Samsung, which addressed the possibility of injunctive relief for a non-practicing patent holder after it proves infringement.[20] 

After Collision (the patent holder) won a jury verdict that Samsung had infringed four of its patents, it sought to enjoin Samsung from further infringement of one of them.[21] As the Supreme Court held in eBay Inc. v. MercExchange, L.L.C., a patent holder seeking an injunction must satisfy the traditional four-factor test, including demonstrating irreparable injury and the inadequacy of monetary remedies.[22]  

The joint statement of interest explains that patent holders willing to license their patents can, under certain circumstances, establish irreparable injury and the insufficiency of monetary relief.[23] This position follows from the Supreme Court’s decision in eBay, which stated that such patent holders “may be able to satisfy the traditional four-factor test” and should not be “categorically den[ied] . . . the opportunity to do so.”[24]

The district court agreed.  Consistent with the Division’s arguments, it held that Collision had established irreparable harm and that monetary damages would be inadequate.[25]  While it found that Collision had established these factors through alternative arguments, it noted that the statement of interest was “correct” that, under certain circumstances, “irreparable harm can be demonstrated by a non-practicing entity given that (1) patents can be difficult to value and (2) damages can be difficult to calculate.”[26]  And the court rejected Samsung’s argument that “verge[d] on an assertion that a non-practicing entity cannot establish irreparable harm.”[27] 

While the court ultimately denied Collision’s motion for failing to establish adequately the third and fourth eBay factors (the balance of hardships and the public interest),[28] the statement of interest helped establish an important point.  Namely, there are circumstances under which a patent holder that licenses its patents can establish irreparable harm and inadequacy of monetary remedies.

Intellectual Property Enforcement Strengthens Global Competition

Now that we have discussed an example of our domestic IP dance, I want to turn to an international example which demonstrates that strong protection of IP rights benefits robust market competition worldwide.

Each year the Office of the United States Trade Representative (USTR) issues a Special 301 Report, as required by Congress, which is a review of the global state of IP rights protection and enforcement.[29] Internationally, failure to enforce IP laws as required under the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights[30] (“WTO TRIPS Agreement”) creates barriers to trade that negatively impact U.S. companies and consumers. Without robust IP protection and enforcement globally, American innovators cannot “defend their rights when their IP is stolen or infringed” and, consequently, the benefits of that IP cannot flow back to the United States economy.[31] Effectively, failure to enforce IP laws creates a non-tariff barrier to trade, as it can subsidize domestic industry or increase costs on foreign industry.

The recently issued 2026 Special 301 Report, highlighted several “emerging global trends [that] have the potential to improperly and unfairly harm U.S. innovators” related to patents and standards.  The Intellectual Property and Standards section of the report[32] underscores the importance of IP protection to U.S. leadership in developing next-generation technologies, and states unequivocally that “American innovation leadership, economic competitiveness, and national security are threatened by proposals or actions that undermine the effective enforcement of patent rights.” The Report went on to identify three emerging global trends that improperly harms U.S. innovators:

• Court rulings called “anti-suit injunctions” that bar U.S. companies from enforcing their patents anywhere else in the world; 
• Judicial or administrative procedures that compel innovators to grant, without their consent, global licenses to patented technologies on terms set by the court or the government; and
• Judicial or legislative efforts to prohibit the seeking or availability of injunctions against patent infringement, the core remedy that allows patent holders to enforce their rights. 

The Report’s findings dovetail with the antitrust policy principles I highlighted earlier, including the importance of robust intellectual property protection both domestically and globally; an unfettered intellectual property marketplace; and the unhindered availability of injunctions and other remedies against infringement. They are also consistent with globally recognized WTO treaty obligations.[33] So it’s a case where, while arriving from different angles, antitrust and international trade policies converge around the same principles.     

Accurate Patent Disclosure is Key for Promoting Competition

Finally, as I observed at the outset, part of successfully choreographing the dance of incentivizing innovation and protecting competition is ensuring that patent protection is not used to extend the protection beyond the correct scope of the government-granted patent. Such calibration is key to striking the right balance between patent protection and encouraging lawful non-infringing uses and follow-on advances which are procompetitive.

Thus, while the Antitrust Division has been active in advocating for strong IP protections, it also recently filed a statement of interest emphasizing that the borders of patent protection must be carefully policed.[34] In Corteva v. Inari, the Division explained that the essential quid pro quo of the patent system means that “the public must receive meaningful disclosure in exchange for being excluded from practicing the invention for a limited period of time.”[35] As this matter also implicates an international patent regime, it highlights that U.S. companies receive reciprocal benefits and IP protections in foreign jurisdictions when we encourage the proper interpretation of our domestic IP laws.

To conclude, the IP-antitrust dance has long been in full swing. Enforcement of both IP and Antitrust laws enhances competition, innovation and trade domestically and globally, and there seems to be an encouraging level of convergence in the policy and analysis of these issues in the U.S. and across the Atlantic. We are committed to continuing our policy work in this important area, together with the rest of our US government interagency and our international counterparts.