Justice Dept. Antitrust Chief Instructs China on IP

Photographer: Tomohiro Ohsumi/Bloomberg

The Justice Department’s top antitrust official urged his Chinese counterparts to think carefully about using their powers to curb intellectual property licensing, citing potential costs to innovation.

Makan Delrahim used a Feb. 1 speech in Beijing to promote his free-market approach to IP policy, a topic that’s high on his agenda in U.S. enforcement. He echoed many of the same points he laid out in a November speech on IP that was widely regarded as being more friendly to patent holders than antitrust officials have been in the past.

The use of antitrust laws to address IP licensing problems has been a growing trend globally. Qualcomm Inc., in particular, has faced antitrust scrutiny over its licensing practices in China and several other jurisdictions.

The U.S. Federal Trade Commission filed related litigation against Qualcomm in January 2017, during the final days of the Obama administration. The suit accuses the company of violating antitrust laws by refusing to license to competitors and conditioning the supply of devices to cell-phone manufacturers on acceptance of its license terms.

That suit is ongoing, although the FTC’s acting Chairman Maureen Ohlhausen, a Republican, has criticized the action. She says the suit represents regulatory overreach and could send the wrong message to other countries.

Long-Term Focus

Delrahim said antitrust regulators around the world must focus less on short-term prices and more on innovation and growth. In addition, he said regulators must be careful about imposing licensing requirements on innovators to preserve competition.

“I am generally skeptical of behavioral remedies, and even more so when it comes to mandating licensing requirements that could skew incentives away from technological advancement,” Delrahim said, according to prepared remarks.

Delrahim was in China for high-level bilateral meetings with Chinese antitrust enforcement officials. He was joined by Ohlhausen. The meetings covered a range of topics, including the treatment of IP and the role of “sound and effective” procedures in competition enforcement, according to the DOJ.

Later, Delrahim spoke at an event hosted by the China Intellectual Property Law Society and the U.S. Embassy in Beijing.

In July 2011, the U.S. and China signed an antitrust memorandum of understanding designed to promote communication and cooperation on competition enforcement issues.