DOJ’s Response to RFID Consortium LLC’s Request for Business Review Letter
On 21 October 2008 the Department of Justice issued a business review letter in which the DOJ announced will not challenge the proposed joint licensing of patents essential to UHF RFID standards by RFID Consortium LLC that is formed by a group of companies holding at least one such essential patent.
In its analysis the DOJ considered the proposed arrangement as reasonably likely to yield pro-competitive benefits, including, by lowering overall royalty rates by limiting the threat of hold-up and royalty stacking, and by lowering transaction costs of both licensors and licensees. The DOJ also indentified safeguards in the proposed arrangement that reduce concerns about harm to competition, including the removal of patents found invalid from the pool and limiting the pool to essential patents by using an independent expert. Further, the DOJ considered it unlikely that the arrangement results in the foreclosure of downstream rivals or collusion among pool licensors, or harm to follow-on innovation.