21-2 University Technology Licensing Program ("UTLP")

U.S. DEPARTMENT OF JUSTICE
Antitrust Division

MICHAEL F. MURRAY
Acting Principal Deputy Assistant Attorney General

Main Justice Building
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530-0001
(202) 514-2401 / (202) 616-2645 (Fax)

January 13, 2021

Garrard R. Beeney
Sullivan & Crom
well
125 Broad Street
New York, NY 1004-2498

Re: University Technology Licensing
Program Business Review Request

Dear Mr. Beeney:
This letter responds to your request, on behalf of your client, the University Technology
Licensing Program (UTLP), for a business review letter from the Department of Justice pursuant
to our Business Review Procedure, 28 C.F.R. § 50.6. You have requested a statement of the
Department’s current antitrust enforcement intentions with regard to UTLP’s proposed joint
patent-licensing program, which seeks to aggregate certain complementary patents of Member
universities and license them in packages exclusively through UTLP. UTLP has the potential to
commercialize university inventions that may not otherwise have been licensed or implemented.
Taking into account this significant benefit to UTLP’s potential licensors, sublicensees, and the
public, and considering the technologies at issue, UTLP’s current scale and scope, the
efficiencies associated with the program, and potential harms, the Department concludes that
UTLP is unlikely to harm competition. Therefore, we have no present intention to challenge the
program.
I. UTLP’s Structure and Licensing Agreements
UTLP is a proposed licensing program through which participating universities (the
Members) intend to license complementary patents in the physical science sector.
1
The
overarching goal of UTLP is to support the development and commercialization of university
research by centralizing the administrative costs associated with commercialization and helping
Members overcome the budget, institutional relationship, and other constraints that make

1
The fifteen Members of UTLP are expected to be Brown University; California Institute of Technology; Columbia
University; Cornell University; Harvard University, Northwestern University; Princeton University; State University
of New York at Binghamton; University of California, Berkeley; University of California, Los Angeles; University
of Illinois; University of Michigan; University of Pennsylvania; University of Southern California; and Yale
University. UTLP has stated that other non-profit organizations whose patents may add value to UTLP’s portfolios
may join UTLP at a later date.

Letter to Garrard R. Beeney 2

individual patent licensing and enforcement challenging for them. We understand that
technology transfer is particularly difficult for universities in the physical science sector because
it requires significant marketing and industry outreach, which may not be successful given that
any one university may not have enough patents in a particular area to be of interest to potential
licensees. UTLP proposes to take on the role of a centralized licensing agent in this area. The
proposed scope of the program relates to technology applications for autonomous vehicles (e.g.,
optical components, sensor hardware and software, cybersecurity), connectivity or “Internet of
Things” or “IoT” (e.g., millimeter-wave communication, power management, signal processing,
location tracking), and “Big Data” (i.e., technology for large-scale data storage, transmission,
and analysis). UTLP has stated that the program may be expanded to other technical areas in the
future.
2

UTLP’s technical advisors have assembled initial patent portfolios related to each of the
categories described above. UTLP intends for each of its portfolios to include complementary
patented technologies that may be licensed by a company developing a product or service in the
portfolio area. UTLP will also present a “menu” that will allow companies to choose among
combinations of individual patents, groups of patents that encompass specific technology areas,
or the entire portfolio. For example, a sub-portfolio of patents may have value to an implementer
based on their application, such as gathering and interpreting data for a Smart City. UTLP
represents that it will pass on to implementers—in the form of a royalty discount for a portfolio
or sub-portfolio license—a portion of the cost savings associated with UTLP’s centralized
licensing administration.
3

UTLP’s licensing activities will be managed by a five-member Board of Managers (the
Board), selected collectively by the Members.
4
The Board will be charged with, among other
things, making decisions related to sublicensing UTLP’s patent portfolios and managing the
program’s budget. The Board will also pre-approve standard licensing terms to which the
program’s representatives can agree without further approval, and is responsible for evaluating
any proposed departures from the standard terms.
5
Once license agreements have been entered
into, Members will be entitled to share royalty distributions from the program on a basis set by a
formula, with factors including the frequency with which patent families containing Members’
individual patents are licensed.
6
UTLP has the authority to enforce a contributed patent. If
litigation is required, however, Members will make individual—not group—determinations

2
Our review, however, is limited to the technical areas covered in the Members’ business review request and UTLP
is free to seek an additional review if other technical areas are added to the program.
3
Letter from Garrard R. Beeney, Partner, Sullivan & Cromwell, to Makan Delrahim, Assistant Att’y Gen., Antitrust
Div., U.S. Dep’t of Justice, at 2 (July 28, 2020) [hereinafter “UTLP Business Review Request Letter”].
3
Id.
4
Columbia University is Standing Manager of the Board. See UTLP Business Review Request Letter, Ex. A,
Limited Liability Company Agreement § 3.2(a)(1) [hereinafter “LLC Agreement”].
5
See LLC Agreement, Ex. A, § 3.1.
6
See LLC Agreement, Ex. A, § 8.1(b).

Letter to Garrard R. Beeney 3

about initiating litigation.
7
In the event of successful litigation, a Member may be entitled to an
increased revenue distribution.
8

UTLP requires that Members license the patents they choose to contribute to UTLP on an
exclusive basis but UTLP can use the contributed patents “solely for the purpose of granting
sublicenses of the UTLP License pursuant to the University Technology Licensing Program.”
9

UTLP will then sublicense the patents to implementers on a non-exclusive basis in UTLP’s
licensed fields of use in order to reach “a broad array of implementers.”
10
UTLP intends for each
of its portfolios to consist of non-standard essential complementary patents.
11
UTLP’s LLC
Agreement stipulates, however, that in the event that a UTLP patent is deemed a standards-
essential patent (SEP) subject to a standards development organization’s licensing commitment,
the Board will approve a sublicense to the SEP on the same terms as required by the licensing
commitment (e.g., FRAND or RAND terms).
12
The Agreement also stipulates that the Board
cannot approve a sublicense agreement that would discriminate among similarly situated willing
sublicensees, or have the effect of putting one willing sublicensee at a competitive disadvantage
in the relevant market to any other willing sublicensee.
13

UTLP also has adopted certain safeguards to prevent substitute patents from entering its
portfolios (which otherwise could raise antitrust concerns). First, UTLP’s administrators have
committed to screen for potentially substitutable technologies in the process of admitting patents
to the program. Second, in the event that a technology included in the program is later deemed
to be substitutable for another patented technology in a portfolio, Members retain the right to
grant a separate, non-exclusive license for that technology, provided UTLP “does not separately
make [the patents] available for sublicensing . . . under terms determined independently by [the
Member]” and an independent expert agrees they are substitute patents.
14
This “safety valve”
can be triggered by any potential licensee asserting that a patent is a competitive substitute under
applicable law for another patent also in the UTLP program.
15
Alternatively, a sublicensee can
license both patents through UTLP but only pay for one when the sublicensee provides evidence
“which in UTLP’s reasonable discretion establishes a reasonable probability” that the patent is
substitutable.
16
Finally, the sublicensee has the flexibility to curate its own subset of patents
within a portfolio; thus, it is able to decline to license any patents it deems substitutable in the
sublicensee’s specific implementation.
17

7
Id., § 3.7(d).
8
See LLC Agreement, Ex. A, § 8.1(b)(5).
9
See UTLP Business Review Request Letter, Contribution Agreement, Ex. B, § 2.01 [hereinafter “Contribution
Agreement”].
10
See UTLP Business Review Request Letter, Form of Sublicense Agreement, Ex. C, § 2.01 [hereinafter
“Sublicense Agreement”]; UTLP Business Review Request Letter at 6.
11
UTLP Business Review Request Letter at 2.
12
LLC Agreement, Ex. A, § 3.13.
13
See LLC Agreement, Ex. A, § 3.1.
14
See Contribution Agreement, Ex. B, § 2.02(b).
15
UTLP Business Review Request Letter at 8.
16
See Sublicense Agreement, Ex. C, § 3.01(a).
17
Id. §§ 1.01, 2.01, 3.01(b).

Letter to Garrard R. Beeney 4

II. Analysis

Patent pools can create licensing efficiencies by “integrating complementary
technologies, reducing transaction costs, clearing blocking positions, and avoiding costly
infringement litigation.”
18
The Department has recognized that pooling can benefit industry
stakeholders “by aggregating the patent rights necessary to commercialize a product that are held
by multiple rights holders.”
19
Indeed, patent pool members can offer “one-stop shopping” to
firms seeking to manufacture products using [complementary] patents.”
20
Pools can also
advance innovation. For example, a pool’s “simplified approach to licensing can enable more
rapid development and adoption of new technologies than could be achieved with cross licensing
alone.”
21
Accounting for these efficiencies, the Department analyzes most patent pooling
arrangements pursuant to the rule of reason, where it will consider whether a pool’s potential
efficiencies are likely to outweigh its potential for anticompetitive effects.
22

To be sure, patent poo
ls can have anticompetitive effects.
23
“[T]he joint marketing of
pooled intellectual property rights with collective price setting or coordinated output restrictions,
may be deemed unlawful if they do not contribute to an efficiency-enhancing integration of
economic activity among the participants.”
24
For example, the pooling of substitute patents may
lead to price fixing of these technologies and “result in higher royalties and higher goods prices
than would result if the owners licensed or used their technologies independently.”
25

Certain antitrust safeguards can mitigate competitive harm and ensure that a pooling
mechanism is an “efficiency-enhancing integration of economic activity.”
26
These safeguards
include “excluding substitute patents from the pool; permitting independent licensing outside the
pool; making the license agreement available to all interested licensees; providing clear notice of
the contents of the license; and limiting access to competitively sensitive information, such as
pricing, marketing, or R&D information through the pool.”
27
Notably, however, while the
Antitrust Division has highlighted the importance of these safeguards, it also has made clear that

18
U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidelines for the Licensing of Intellectual Property § 5.5
(Jan. 12, 2017), https://www.justice.gov/atr/IPguidelines/download [hereinafter “A
NTITRUST-IP GUIDELINES”].
19
See, e.g., Letter from Makan Delrahim, Assistant Att’y Gen., Antitrust Div., U.S. Dep’t of Justice, to Mark H.
Hamer, Esq., Baker & McKenzie, at 8 (July 28, 2020), https://www.justice.gov/atr/page/file/1298626/download
[hereinafter, “Avanci Business Review Letter”].
20
U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement and Intellectual Property Rights: Promoting
Innovation and Competition, Ch. 3, § I, at 65 (Apr. 2007),
https://www.justice.gov/sites/default/files/atr/legacy/2007/07/11/222655.pdf [hereinafter “A
NTITRUST-IP REPORT”].
21
Id.
22
ANTITRUST-IP GUIDELINES § 5.5. Sham pooling arrangements designed to accomplish a naked price fixing or
market allocation agreement are subject to the per se rule. Id.
23
Id.
24
Id.
25
Id. §5.1, Example 8.
26
See id. §§ 3.4., 5.5.
27
Avanci Business Review Letter, supra note 19, at 12.

Letter to Garrard R. Beeney 5

the absence of one or more of these provisions would not automatically render a pool
anticompetitive.
28

In our current review, we have considered both the sim
ilarities and differences between
UTLP and the prior patent pools that the Antitrust Division has reviewed, which all involved the
aggregation of standards
-essential patents.
29
UTLP’s structure differs from these prior pools in
that it is not formed around an industry standard, but is aimed at aggregating technologically
important, but non-essential complementary patents.
30
Unlike prior pools, UTLP also requires
Members to commit to exclusively licensing UTLP the patents they choose to contribute.
31
To
mitigate competitive harm, however, UTLP proposes certain safeguards aimed at alleviating
price fixing, tying, and foreclosure. Consequently, much of our prior considerations of potential
efficiencies and harms are applicable to our analysis of UTLP.

A. UTLP’s Efficiencies
UTLP has the potential to generate numerous licensing efficiencies and expand output.
UTLP will add expertise and centralize the licensing of many of its Members’ physical science
patents that may otherwise go unlicensed due to marketing and enforcement challenges.
32
Using
technical experts, UTLP has harnessed the value of Members’ inventions by combining their
complementary patents in three areas: (i) autonomous vehicles, (ii) connectivity or “Internet of
Things”; and (iii) “Big Data.”
33
As mentioned above, these categories will be further divided
into subcategories of technologies that implementers may find useful (such as optical
components in autonomous vehicles). Combining complementary factors of production through
licensing creates efficiencies and is often procompetitive.
34
UTLP also has committed to

28
ANTITRUST-IP REPORT, Ch. 3, § I(C)(1)(d), at 72-73; Avanci Business Review Letter, supra note 19, at 12.
29
The Division has a long history of analyzing patent pools, having issued several business review letters involving
pools since 1997, as well as conducting investigations, holding workshops, and issuing reports and guidance that
analyze the competitive implications that may arise from pooling arrangements. See generally A
NTITRUST-IP
REPORT, Ch. 3; see also infra note 30.
30
Cf., Avanci Business Review Letter, supra note 19, at 12; with Letter from Thomas O. Barnett, Assistant Att’y
Gen., Antitrust Div., U.S. Dep’t of Justice, to William F. Dolan, Partner, Jones Day (Oct. 21, 2008),
https://www.justice.gov/sites/default/files/atr/legacy/2008/10/21/238429.pdf [hereinafter “RFID Consortium
Letter”]; Letter from Joel I. Klein, Assistant Att’y Gen., Antitrust Div., U.S. Dep’t of Justice, to Carey R. Ramos,
Partner, Paul, Weiss, Rifkind, Wharton & Garrison (June 10, 1999),
http://www.justice.gov/atr/public/busreview/2485.pdf ; Letter from Joel I. Klein, Assistant Att’y Gen., Antitrust
Div., U.S. Dep’t of Justice, to Garrard R. Beeney, Partner, Sullivan & Cromwell (Dec. 16, 1998),
https://www.justice.gov/sites/default/files/atr/legacy/2006/04/27/2121.pdf; Letter from Joel I. Klein, Assistant Att’y
Gen., Antitrust Div., U.S. Dep’t of Justice, to Garrard R. Beeney, Partner, Sullivan & Cromwell (June 26, 1997),
http://www.justice.gov/atr/public/busreview/215742.pdf [hereinafter MPEG-2 Business Review Letter]; see also
Letter from Charles A. James, Assistant Att’y Gen., Antitrust Div., U.S. Dep’t of Justice, to Ky P. Ewing, Partner,
Vinson & Elkins L.L.P. (Nov. 12, 2002),
https://www.justice.gov/sites/default/files/atr/legacy/2006/04/27/200455.pdf.
31
Contribution Agreement, Ex. B, § 2.01.
32
See generally UTLP Business Review Request Letter.
32
UTLP Business Review Request Letter at 2.
33
Id.
34
ANTITRUST-IP GUIDELINES § 2.0.

Letter to Garrard R. Beeney 6

licensing on standard terms that “do not discriminate among similarly situated implementers.”
35

At the same time, potential sublicensees may pick which patents within a bundle they actually
need and want to license, which permits flexibility. A centralized platform and standard terms
for licensing these customized “buckets” of complementary patents is likely to reduce transaction
costs for both Members and the companies wishing to incorporate these technologies into their
products.
Moreover, UTLP is likely to encourage licensing and increase output. UTLP has
invested in technical licensing experts that have identified “complementary, and often disparate”
patents that industry might not otherwise be aware of and its packages or buckets of
complementary patents are aimed at providing value by identifying and combining these
patents.
36
UTLP also represents that it will “maintain a website providing information about,
among other things, its structure, process, license terms and the contents of the licensed
portfolio.”
37
Thus, UTLP could facilitate licensing that may not have occurred. In addition,
UTLP may expand to include other non-profit entities if Members agree they hold patents that
will add value to the existing portfolios
38
; therefore, UTLP will not seek to exclude other rival
universities from the opportunity to license though UTLP.
We understand that UTLP’s Members routinely innovate in the physical science area;
however, technology transfer has its challenges. Based on the Request Letter and our review,
there are hurdles to marketing efficiently these university inventions. Finding industry partners
in the life science area is much more common, in large part because a single patent by itself can
be very valuable. In contrast, it may take hundreds of patents in the physical sciences to create a
useful application. While universities invest in the marketing of their physical science patents,
including through searchable databases, and cultivating relationships with potential licensees,
these efforts are resource intensive and not always successful. Indeed, a single university may
not have enough patents to move a company to agree to a license. UTLP represents that some
potential licensees are “unwilling to pay for university-patented technology even if they are
using it.”
39
We also understand from Members that potential licensees might forego paying for
university technology and use their own alternatives, even if a university’s technology is better.
Furthermore, Members may not market or enforce their individual patents due to resource
constraints or other institutional reasons.
40
By pooling resources through UTLP, with expertise
in the portfolios, the marketing cost per patent will decrease and the licensing and enforcement
of contributed patents will become more efficient. Consequently, UTLP’s licensing program,
which offers potentially valuable complementary portfolios, may incentivize potential licensees

35
UTLP Business Review Request Letter at 3, 6,7.
36
See id. at 2.
37
UTLP Business Review Request Letter at 7, n.7.
38
LLC Agreement, Ex. A, §§ 1.1., 3.7(b)(1).
39
UTLP Business Review Request Letter at 2.
40
UTLP Business Review Request Letter at 12 (indicating that by using UTLP as an exclusive licensing agent
“implementers of the technology will be unable to rely on influential contacts, relationships and the like, or
otherwise ‘hold out’ by taking advantage of an individual university as a licensor, which has happened from time to
time historically”) (footnote omitted).

Letter to Garrard R. Beeney 7

and create a more efficient mechanism for universities to realize a return on their innovation in
physical sciences.
UTLP also is likely to be welfare enhancing because it may increase access to university
inventions, including inventions funded in part by the U.S. Government, and spur further
research and innovation. We understand from our review that some of the patents to be included
in UTLP are a result of government-sponsored research. UTLP may help universities to
commercialize and promote access to government-funded inventions, consistent with the Bayh-
Dole Act, which encourages “the utilization of inventions arising from federally supported
research or development.”
41
In addition, to the extent that Members increase the number of
patents licensed, this income could fuel further research and development.
42
Thus, UTLP is
likely to increase output with respect to licensing and innovation and improve consumer welfare.
Finally, because patents will be more widely known and accessible, Universities will be
better able to monetize their research, providing more funds for future research.
43
As explained
above, UTLP also may enforce Members’ contributed patents if necessary.
44

B. Potential Harms

1. Exclusive licensing

Members license the patents they choose to contribute to UTLP exclusively, and
therefore, they are unable to license these patents independently outside the program, except in
certain circumstances, i.e., for non-commercial research purposes or to license patents deemed
substitutable for other patents in a portfolio.
45
Importantly, Members retain the right to conduct
academic research using the contributed patents and to grant licenses to other research
institutions to do the same.
46
In contrast, in other pools the Department has reviewed, the
licensors committed to license the pools non-exclusively. The Department has viewed non-
exclusive licensing that allows licensors to offer a bilateral license outside the pool as
procompetitive because it allows licensors to compete with the pool license.
47
For example, in a
recent review of a large pool containing only standards-essential patents, we found that
independent licensing would be beneficial because the pool had a limited field of use and non-
exclusive licensing preserved the licensors’ ability to offer bilateral licenses in other fields of
use.
48

41
35 U.S.C. §§ 200-212 (2006). The Bayh-Dole Act permits universities to own and exclusively license their
government-funded inventions. Id.
42
UTLP Business Review Request Letter at 3.
43
See UTLP Business Review Request Letter at 3.
44
Id. at 7; Contribution Agreement, Ex. B, § 3.02.
45
Contribution Agreement, Ex. B, §§ 2.01, 2.02(a)&(b).
46
Id. § 2.02(a).
47
ANTITRUST-IP REPORT, Ch. 3, at 79-80.
48
Avanci Business Review Letter, supra note 19, at 16.

Letter to Garrard R. Beeney 8

At the same time, however, we have recognized that exclusively licensing a pool can be
procompetitive when the arrangement is necessary to prevent free riding on innovation.
49

“Exclusive licenses may be desirable . . . if they are necessary to provide a significant incentive
for the licensees to invest in complementary assets (e.g., when complementary assets would be
subject to free-riding absent the exclusive license).”
50
A free-riding concern is relevant here.
Unlike other patent pools the Department has reviewed involving standards-essential patents,
UTLP, as an exclusive licensor, has invested substantially in curating the portfolios it proposes to
sublicense. Among other efforts, UTLP employed technical experts to identify the portfolio
areas and Members’ unencumbered physical science patents that might work together and be
valuable collectively to industry participants. UTLP’s endeavor involved analyzing the relevant
research of proposed Members, vetting the patents, and creating the buckets of complementary
patents that UTLP proposes to offer.
51
As explained, these patents are not standards essential
and might not otherwise have been known or combined.
52
UTLP also will provide centralized
administration and expertise about the technologies available through the program.
53
The
Department has acknowledged “the fact that intellectual property may in some cases be
misappropriated more easily than other forms of property may justify the use of some restrictions
that might be anticompetitive in other contexts.”
54
Here exclusive licensing may address free
riding and allow UTLP to more fully capture the demand it generates for its curated portfolios
and the large number of complementary patents they contain, thus encouraging UTLP to make
the continued investment necessary to maintain the portfolios and administer and market them
successfully, as well as potentially expand to additional technical areas.
55

Exclusive licensing add
resses free-riding concerns that arise specifically in the context of
licensing universities’ patents in the physical sciences. UTLP and its Members repeatedly have
represented that institutional relationships and other factors historically have made licensing in
the physical science area difficult.
56
UTLP represents that exclusively licensing UTLP may help
to overcome these obstacles, by directing licensing through a centralized agent that has invested
in combining selected unencumbered university patents into curated portfolios, making them
potentially more valuable to industry. UTLP has the expertise and the resources to negotiate
licenses in UTLP’s technical areas and enforce UTLP’s patents when necessary. The exclusive
license can incentivize UTLP to undertake these efforts, as it alleviates possible free riding by
licensees who might wish to use or license the curated bundles without UTLP’s involvement.
57

49
ANTITRUST-IP REPORT, Ch. 3, at 79-80. See generally Howard P. Marvel, Exclusive Dealing, 25 J.L. & ECON. 1,
10 (1982); Ilya R. Segal & Michael D. Whinston, Exclusive Contracts and Protection of Investments, 31 RAND J.
ECON. 603 (2000).
50
ANTITRUST-IP REPORT, Ch. 3, at 79-80.
51
UTLP Business Review Request Letter at 3-4.
52
UTLP Business Review Request Letter at 4. Moreover, UTLP’s technical experts also sought to exclude
technologies that might be considered competitive substitutes. Id. See also infra Part II.B.2. If a standards-essential
patent is included in a UTLP portfolio, however, the Board will approve a sublicense on the same terms as the
Members’ pre-existing licensing commitment (e.g., on FRAND or RAND terms). LLC Agreement, Ex. A, § 3.13.
53
See UTLP Business Review Request Letter at 12.
54
ANTITRUST-IP GUIDELINES § 4.1.2.
55
See UTLP Business Review Request Letter at 3, 10, 12.
56
UTLP Business Review Request Letter at 2, 12.
57
Id. at 12-13. An exclusive license may enable UTLP to enforce the sublicensed patents in accord with the
Contribution Agreement. Cf. Lone Star Silicon Innovations LLC v. Nanya Tech. Corp., 925 F.3d 1225, 1229-30

Letter to Garrard R. Beeney 9

The likely absence of licensing activity for Members’ individual patents without UTLP’s
administration also mitigates competition concerns about exclusive licensing and the foreclosure
of licensing outside of the program.
We note that the exclusive license to UTLP is not limited to the fields of use currently
offered by the program, and therefore, Members cannot use or license these patents to others (in
other fields) except for non-commercial research purposes.
58
Although the efficiencies
associated with the scope of the exclusivity are less straightforward, again, we understand from
our review, that the scope of exclusivity has the potential to generate additional licensing
revenue for Members if UTLP expands and Members’ patents add value to the new portfolios.
UTLP represents that its marketing of the curated bundles will be the primary driver of demand
for these patents for any use and so the scope of the exclusive license to UTLP will allow it to
address free riding on UTLP’s efforts and provide the flexibility to negotiate with licensees for
more technology fields or offer unrestricted non-exclusive sublicenses, subject to UTLP’s
agreements, to licensees that desire one. Again, UTLP has the resources and expertise to
negotiate such licenses in consultation with Members and enforce the patents as necessary.
Another factor mitigating antitrust concerns is that the sublicense to implementers of
these patents is non-exclusive and available to all willing licensees, none of which are expected
to compete with Members in any downstream markets. An exclusive license is more likely to
raise antitrust concerns “if there is a horizontal relationship among licensors, or among licensees,
or between the licensor and its licensee(s),” for example, where there is “[exclusive] cross-
licensing by competitors that collectively possess market power.”
59
Here, where Members do
not appear to compete in downstream markets, the scope of the exclusive license is more likely
to increase licensing and expand utilization of these patents rather than limit output or foreclose
competition downstream.
Finally, we address UTLP’s argument that a non-exclusive license to a pool of
complementary patents is not necessary when sublicensees can choose which patents to license
within a UTLP portfolio. Unlike standards-essential patent pools, where the license offer is only
for the entire portfolio, the curated patents are not all necessary for an implementer to make its
product, and thus it can pick its patents.
60
Although there are other benefits to non-exclusive
licensing,
61
we agree that the ability to license independently outside the pool is less critical
when sublicensees have such flexibility.
62

Thus, in light of the investments UTLP has made in the pool, the efficiencies it creates
for Members as well as industry participants, the potential for free riding or compromised
efficiency absent the arrangement, and the likely absence of licensing without UTLP, we find

(Fed. Cir. 2019) (stating a licensee cannot bring a patent infringement suit without joining the licensor unless it
possesses all substantial rights in a patent).
58
Contribution Agreement, Ex. B, § 2.01.
59
ANTITRUST-IP GUIDELINES § 4.1.2.
60
UTLP Business Review Request Letter at 11 (“UTLP will not and cannot force licensees to accept a portfolio-
wide license on ‘take-or-leave’ terms in the way that many SEP pools conduct business.”).
61
See ANTITRUST-IP REPORT, Ch. 3, at 78-80.
62
See infra Part II.B.3.

Letter to Garrard R. Beeney 10

that requiring Members to exclusively license UTLP the patents that they choose to contribute is
unlikely to harm competition on net.

2. Substitute Patents
UTLP represents that it seeks to avoid including substitute patents in UTLP’s patent
packages or portfolio buckets.
63
This goal is for good reason. Combining only complementary
patents within UTLP’s portfolios has the potential to provide value and lower licensing costs for
implementers, while the inclusion of substitutes may increase the potential for competitive
harms, such as price fixing.
64
Indeed, “a pool that includes patents for substitute technologies
could lead to increased prices in the final goods market due to the absence of competition among
those substitute technologies.”
65
UTLP’s agreements appear to include adequate safeguards
designed to prevent substitutes from entering the portfolios and to eliminate them if later
discovered.
UTLP’s LLC Agreement expressly excludes substitute patents.
66
The identification of
patents and review by UTLP’s technical experts helps to exclude substitute patents from the
program.
67
The LLC Agreement provides that UTLP, through its counsel and technical experts,
will use “commercially reasonable efforts” to select patents for contribution that are not
“Substitute Patents.”
68
Substitute Patents are defined as “any Patent that under applicable Law
provides a different technical way of a licensee accomplishing the same task as another Patent
contributed to the Company by any Member pursuant to such Member’s Contribution
Agreement.”
69
This definition is consistent with how the Department has defined substitute
patents related to cellular technologies, which similarly are combined to produce an end product
or perform a commercial function.
70
We believe UTLP’s narrow “task” definition is appropriate
here as well under the circumstances for several reasons.

63
Substitute patents are “patents covering technologies that compete with each other and that licensees can choose
among.” Complementary patents are “patents covering separate aspects of a given technology that do not compete
with each other.” See A
NTITRUST-IP REPORT, Ch. 3, III(D)(1)(b)(i), at 77.
64
For example, beginning with one of its earliest pooling reviews, MPEG-2, the Department noted that limiting the
pool to only complementary patents helped to ensure that patents in the pool are not competing with one another,
and thus, bundling them into a single package could not foreclose competition outside the pool. MPEG-2 Business
Review Letter, supra note 30, at 11.
65
ANTITRUST-IP REPORT, Ch. 3, at 67; Complaint, In the Matter of Summit Tech., Inc. and VISX, Inc., No. 9286,
1998 WL 129323 (F.T.C. Mar. 24, 1998) (challenging a combining only competing patents for laser eye surgery);
see also Summit Tech., Inc., No. 9286, 1999 WL 33912985 (1999) (consent agreement dissolved the pool).
66
See LLC Agreement, Ex. A, § 3.14.
67
See id. (indicating that UTLP’s technical advisors will select for contribution patents that “will likely be useful to
prospective sublicensees in carrying out anticipated activities . . . and . . . are not Substitute Patents.”). We
acknowledge that UTLP’s technical advisors are not “independent” experts because they will be employed by the
program or UTLP’s counsel. The Department has found the use of independent experts in a SEP licensing pool to
be procompetitive because the expert can objectively identify essential patents that comply with a standard and keep
substitutes out of the pool. We do not find this distinction as important here because UTLP is not licensing
standards-essential patents and UTLP’s experts are tasked with selecting complementary patents for its curated
bundles of non-essential patents that will add value to the packages and make them attractive to implementers.
68
LLC Agreement, Ex. A, § 3.14.
69
Id. at § 1.1.
70
See supra note 63. See also ANTITRUST-IP REPORT, Ch. 3 III(B), at 66; see also Avanci Business Review Letter,
supra note 19, at 13, n.88; and RFID Consortium Letter, supra note 30, at 9, n.38.

Letter to Garrard R. Beeney 11

As explained, the LLC Agreement defines “Substitute Patents” as substitutes for a task,
rather than defining patents as substitutes that can be used for the same commercial purpose
(patents on two different types of sensors when either or both of which can be used on a vehicle).
Although UTLP’s technology fields typically require a large number of complementary patents
to implement an identified commercial function,
71
UTLP is likely to license only a small fraction
of patents available in these areas. Thus, there are likely to be a number of other competing
commercial substitutes available outside the program even if patents within the program are
deemed commercial but not “task” substitutes. Second, since potential licensees are likely to
have different uses for the patents, it would be difficult to conduct an ex-ante analysis of whether
two patents will be commercial substitutes. Finally, to the extent that UTLP’s work identifies
multiple new potential combinations of patents for commercial purposes which would not have
otherwise been identified, no competition can be lost; UTLP may be creating the opportunity for
competition in new technology markets. We make no assessment, however, of whether UTLP’s
definition would be adequate if UTLP licensed patents outside of Members’ physical science
portfolios or UTLP’s specific technology areas.

In addition, as noted above, UTLP incorporates a “safety valve” if “Substitute Patents”
are inadvertently included in UTLP’s portfolios. If a technology is later deem
ed to be
substitutable for another patented technology in a bucket (e.g., if the technologies become
substitutable for an “unforeseen purpose”), the sublicensee may license both patents but it will
only pay for one at a price determined by UTLP’s royalty formula, which is meant to address the
unintentional inclusion of competitive substitutes.
72
We note that in order to employ this
safeguard a sublicensee must provide to UTLP “evidence which in UTLP’s reasonable discretion
establishes a reasonable probability that such Sublicensed Patents may be deemed substitutes.”
73

Thus, the benefit of this safeguard depends on UTLP’s good faith assessment of the
sublicensees’ claims. The Department would be concerned if such claims were not evaluated in
a fair, objective manner.

Alternatively, to remedy the inadvertent inclusion of substitutes, UTLP may negotiate a
license for one of the substitutes pursuant to “terms determined independently by [the]
University.”
74
Members also retain the right to negotiate and grant a separate, non-exclusive
license for a substitute technology if UTLP does not negotiate the terms.
75

Other aspe
cts of UTLP’s structure also disincentivize the inclusion of substitutes.
Because UTLP represents that it will price according to a set formula that does not allow for
independent price negotiation of single patents, this structure lessens the chance of fixing the
price of competing technologies. For example, UTLP will not be able to charge a high rate for
substitute patents individually while charging a rate for the pair that is higher by only a

71
See UTLP Business Review Request Letter, at 5 (discussing an example of two different patents that if combined
could reduce the size, cost and efficiency of phased array devices that may be incorporated into an automotive
collision avoidance radar system).
72
See UTLP Business Review Request at 10-11; Sublicense Agreement, Ex. C, § 3.01(a) & (b).
73
Sublicense Agreement, Ex. C, § 3.01(a).
74
Contribution Agreement, Ex. B, § 2.02(b).
75
Contribution Agreement, Ex. B, § 2.02(b). An independent expert must agree that the patents are substitutable in
order for the Member to license independently outside the program. Id.

Letter to Garrard R. Beeney 12

negligible amount.
76
Moreover, a sublicensee is not required to license an entire portfolio and
may decline up front to license patents that it deems substitutable for a particular
implementation.
77

In sum, we find that the safeguards that UTLP has created to keep substitute patents out
of the portfolios, in light of the other features and benefits of the program, the specific technical
areas in which UTLP proposes to operate, and that Members do not appear to compete
downstream and therefore do not have the incentive to use UTLP to raise input prices to rivals,
are sufficient. For these reasons, UTLP is also unlikely to harm competition because the
program includes substitutable technologies that foreclose competition outside the pool.

3. Bundled Patent Packages and Royalty Discounts
As explained, UTLP allows a potential sublicensee to choose from a “menu” of patents
within a curated technology bucket that it would like to license, a group of patents, or UTLP’s
entire portfolio.
78
Permitting this choice mitigates the tying concerns that can arise from package
licensing
79
because a potential sublicensee does not have to commit to licensing “more
technology than they need.”
80
UTLP also provides a royalty discount based on the number of
patents a licensee commits to license according to a set formula.
81
Such bundled discounts can
be procompetitive, or at least competitively neutral.
82
Significantly, the discounts allow UTLP to
price flexibly in a way that considers sublicensees’ needs, which may be very different
depending on the implementer.
83
Pricing flexibility is important because not all implementers
will require access to every patent as they would in a pool comprised of standards-essential
patents. In addition, as UTLP points out, the royalty discount is consistent with the notion that
“the combined price of [] individual licenses may be more than the price of the pooled patents
which benefits from lower transaction costs.”
84
Thus, the discount is intended to reflect the
transaction cost savings that Members enjoy from pooling that are passed on to sublicensees.
85

In addition, the discount may result in more Members’ patents being licensed, increasing the
value of the pool to Members.

76
See Sublicense Agreement, Ex. C, § 3.02.
77
See Sublicense Agreement, Ex. C, §§ 1.01, 2.01.
78
See UTLP Business Review Request at 2. See also UTLP Business Review Request Letter at 5 (providing an
example that the autonomous vehicle bucket can be subdivided into “five complementary categories: (i) optical
components; (ii) security and communication; (iii) control and navigation; (iv) ‘vision’ (i.e., giving the system the
ability to interpret what it ‘sees’); and (v) millimeter-wave communication hardware.”).
79
See ANTITRUST-IP GUIDELINES § 5.3.
80
ANTITRUST-IP REPORT, Ch. 3, at 84.
81
See Sublicense Agreement, Ex. C, § 3.01(b).
82
See Hovenkamp, Janis, Lemley, Leslie & Carrier, IP and Antitrust: An Analysis of Antitrust Principles Applied to
Intellectual Property Law § 22.06 (3d ed., 2020 Supp.) [hereinafter, See Hovenkamp et. al., IP and Antitrust].
83
See Hovenkamp et. al., IP and Antitrust § 22.06.
84
Antitrust-IP Report, Ch. 3, III(D)(6)(b), at 84; UTLP Business Review Request Letter at 13. See also Carl
Shapiro, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting, in Innovation Policy
and the Economy 119 (2000).
85
UTLP Business Review Request Letter at 8.

Letter to Garrard R. Beeney 13

There is a potential that discounting could foreclose the use of competing technologies
outside the pool. UTLP represents, however, that it has priced its portfolio so a sublicensee’s
decision to license individual patents outside the program will remain economically viable, as
reflected in the formula it uses to calculate a potential sublicensee’s royalties.
86
Moreover, and
even more compelling, we understand from our review that Members do not ordinarily compete
with industry, universities, or other entities in licensing their physical science patents, making
foreclosure even less likely.
87
Tailoring licenses and pricing to the demands of sublicensees
enables flexibility, preserves choice, and allows UTLP to pass cost savings on to sublicensees
that license UTLP’s entire portfolio. In light of these efficiencies, we conclude UTLP’s royalty
discounts are on balance unlikely to harm competition.
4. Royalty Distribution
The LLC Agreement sets forth UTLP’s royalty distribution method to Members.
88

UTLP’s distribution method provides 15 percent of UTLP’s “Available Cash” will be “allocated
and distributed evenly among the Members”; twenty percent of UTLP’s Available Cash will be
allocated evenly among each Patent Family licensed by the Members and will be distributed to
Members based on the number of patent families contributed.
89
Other amounts will be
distributed based on the patent families actually sublicensed and patents enforced, and some
income will be reserved.
90
The Department considered whether this royalty sharing method
could harm incentives for innovation because all Members will share in the distribution even if
only some of the Members’ patents generate income in a particular case. This issue was not
present in other pools the Department has reviewed because implementers licensed the whole
portfolio and had no option to take a partial pool license.
We find that UTLP’s royalty distribution method is unlikely to harm competition or
innovation. UTLP represents that the royalty distribution will compensate Members for their
significant investment in UTLP. Moreover, UTLP has the potential to increase licensing activity
and overall royalty income for all contributors, thus encouraging even small universities with
complementary and valuable patents to participate. While Members’ innovation may not be
driven by the potential for royalties, Members may have more income than they otherwise would

86
See UTLP Business Review Request at 9; Cf. Second Amended Final Judgment at 11, United States v. Am. Soc’y
of Composers, Authors & Publishers, 323 F.Supp.2d 588 (June 11, 2001), https://www.justice.gov/atr/case-
document/file/485966/download (“ASCAP shall use its best efforts to avoid any discrimination among the various
types of licenses offered to any group of similarly situated music users that would deprive those music users of a
genuine choice among the various types of licenses offered, or of the benefits of any of those types of licenses.”);
Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 11 (1979) (noting that under the terms of
consent decree ASCAP must offer the applicant a “genuine economic choice between the per-program license and
the more common blanket license”).
87
UTLP Business Review Request at 8. See also Hovenkamp et. al., IP and Antitrust § 22.06 (“Packaging in order
to take advantage of differential demand does not require or even suggest foreclosure, although foreclosure might
incidentally occur.”).
88
LLC Agreement, Ex. A, § 8.1.
89
Id. at § 8.1(b).
90
Id.

Letter to Garrard R. Beeney 14

to invest in additional research and development in the physical sciences. These efficiencies
outweigh any potential for harm.
5. Litigation/Enforcement
UTLP has the sole right to enforce Members’ contributed patents.
91
Although
enforcement of Members’ patents may increase as a result of this arrangement, such enforcement
alone is not anticompetitive
92
and it is unlikely to harm competition. We understand that due to
resource constraints universities may forego enforcing their patents or negotiating licenses.
Therefore, UTLP may allow Members to be appropriately compensated for their innovation if
implementers infringe a patent. Moreover, UTLP represents that litigation will be resorted to
only when necessary and will be brought in good faith.
93
Members also choose whether to
designate a patent as a “Litigation Patent” and commence proceedings.
94
Such decisions are
made individually and not collectively by UTLP.
95
We therefore conclude that the litigation
provisions are likely to assist Members’ good faith patent enforcement and are unlikely to harm
competition.

III. Conclusion
For these reasons, the Department finds that UTLP is likely to create licensing
efficiencies and increase output by expanding access to university inventions that may be
unlicensed and under-utilized. It also may be a source of funding for additional university
research and development. In addition, the potential for competitive harm is low. Therefore, we
are not presently inclined to initiate an antitrust enforcement action against UTLP. We note,
however, that UTLP is a mechanism that addresses licensing inefficiencies and institutional
challenges unique to its Members in the physical science context. This review makes no
assessment about whether this mechanism if set up in another context, or if in practice it diverges
from UTLP’s stated intentions, would have similar procompetitive benefits or low potential for
harm.

This letter expresses the Department’s current enforcement intention. In accordance with
our normal practices, the Department reserves the right to bring an enforcement action in the
future if the actual operation of the proposed conduct proves to be anticompetitive in purpose or
effect.

This statement is made in accordance with the Department's Business Review Procedure,
28 C.F.R. §50.6. Pursuant to its terms, your business review request and this letter will be made
public immediately, and any supporting data will be made publicly available within 30 days of

91
Contribution Agreement, Ex. B, § 3.02(a).
92
Cf. ANTITRUST-IP GUIDELINES § 6 (discussing sham enforcement).
93
UTLP Business Review Request Letter at 7.
94
Contribution Agreement, Ex. B, § 3.02(b); LLC Agreement, Ex. A, § 8.1(b)(4).
95
Contribution Agreement, Ex. B, § 3.02(b).

Letter to Garrard R. Beeney 15

the date of this letter, unless you request that part of the material be withheld in accordance with
Paragraph 10(c) of the Business Review Procedure.

Sincerely,

s/Michael F. Murray