The Yale Law Journal

May 2018

How Antitrust Law Can Make FRAND Commitments More Effective

Antitrust Law

abstract. Much attention has been paid in recent years to legal issues arising from standard setting, assertion of standard-essential patents, and the requirements imposed by standard-setting organizations that standard-essential patents be licensed on reasonable terms. This Feature argues that a fundamental aspect of the antitrust laws, heretofore overlooked in this context, can play an important role in ensuring that the rules established by standard-setting organizations are effective in preventing owners of standard-essential patents from engaging in patent holdup. It has long been a basic principle of antitrust law that when firms collaborate to engage in conduct that has efficiency benefits, like standard-setting, they violate the antitrust laws if their collaboration also harms competition more than necessary to obtain the efficiency benefits. Both standard-setting organizations and their members can violate Section 1 of the Sherman Act if the organization’s rules are ineffective in preventing owners of standard-essential patents from exploiting the monopoly power they gain as a result of the standard.

authors. A. Douglas Melamed is Professor of the Practice of Law at Stanford Law School. Carl Shapiro is the Transamerica Professor of Business Strategy at the Haas School of Business at the University of California at Berkeley. No party provided financial support for this Feature to either Melamed or Shapiro. We thank the participants at the “Unlocking the Promise of Antitrust Enforcement” conference at American University, the editors at the Yale Law Journal, and Richard Brunell for valuable input on an earlier draft, and Bella Schapiro for valuable research assistance.