IP-Antitrust Fundamentals
This panel began with a quick primer on IP fundamentals - covering a general overview of IP rights and their interactions with antitrust principles in promoting or hindering competition, as well as a summary of patents, copyrights, trademarks, and trade secrets. The panelists included Andy Tuck, a partner at Alston & Bird; Dr. Su Sun, a Managing Director at Secretariat Advisors; David Emanuelso, a partner at Arnold & Porter; and Dr. Kirti Gupta, an economist at Cornerstone Research. Meiran Yin, an associate at Latham & Watkins, was the moderator.
The discussion began with an overview of the Economics of IP and the “delicate balance” between incentivizing innovation and promoting competition. Dr. Gupta noted that “there is ongoing debate among economists regarding the optimal level of protection for intellectual property. On one hand stronger protection of intellectual property rights provides for greater incentives for innovation, as it creates a greater potential for the holder to profit from their creations. On the other hand, excessive protection of IP rights can lead to reduced competition, higher prices for consumers, and reduced incentives for follow-on innovation.”
The panel then delved into different types of IP Licensing and how to approach these transactions. They discussed both pure IP licenses, where antitrust issues often arise during negotiation and infringement litigation; and business transactions involving IP, such as supply contracts, which also include IP components. The DOJ & FTC's 2017 Antitrust Guidelines for IP licensing were discussed, which contain helpful language to understand the agencies’ enforcement approach with respect to IP Licensing. The DOJ's Business Review Letters were also mentioned as an option for businesses concerned about possible antitrust issues arising from IP-related agreements, such as licensing arrangements.
With respect to standard setting, Standard Essential Patents (“SEPs”) and Fair, Reasonable, and Non-Discriminatory (“FRAND”) licensing were discussed in the context of antitrust. Specifically, the panelists expanded on the competitive risks associated with SEPs, such as patentees engaging in “hold-up” behavior, which is when a patent owner sues a company when it is most vulnerable after it has implemented a technology. This led into a quick overview of FRAND Licensing and its role in balancing the interest of patent holders with the need for access and adoption of standard technology.
The panel continued with a quick overview of IP-Antitrust issues in the pharmaceutical industry, including a brief discussion of reverse payments and product hopping, both of which raise significant antitrust issues. The final topic of the panel revolved around non-patent IP, which underscored the complexities surrounding licensing issues in the music industry and content created by generative AI.
The Machinery of Making Modern Music
The panel, “The Machinery of Making Modern Music,”,delved into the current landscape of the music industry and the legal and economic issues involved in licensing and streaming competition. The panel was moderated by Dr. Eric Emch, a partner at Bates White. The panelists included Brittany Amadi, a partner at Wilmer Hale; Jacob Ebin, a partner at Mayer Brown; Christian von Köckritz, a partner at Gleiss Lutz; and Ben Semel, the co-chair of Pryor Cashman’s Music Group and Media and Entertainment Litigation Practice.
The panel began by setting up the current state of the music industry, which has shifted away from a physical “ownership model” to an “access model” through digital channels. This shift has been controversial among those in the music industry, with some noting that the current streaming model saved the industry from online piracy sites, and some artists complaining that they are not paid enough by the streaming service companies.
The current streaming model has led to a complicated system of licensing frameworks, with every piece of music requiring at least two rights (musical works and sound recording rights) which are further subdivided into more rights and are often held by different entities. This framework has created a situation in which publishers and labels, who have the catalogs and material that streaming services need, must negotiate with big tech companies while keeping their relationships with artists. Panel members had differing opinions as to which side had the advantage in these negotiations, and whether either side needs regulatory or antitrust protection from the other.
Panelists discussed concerns with the current licensing framework and explored a possible “ideal” system of music licensing involving an unregulated, “free market” approach. The panel concluded with a conversation on the overall health of the music streaming marketplace and the distribution of streaming revenues - amidst this dialogue, the question emerged on whether the existing complex licensing framework inadvertently created a well-functioning marketplace or one still in need of reform.
