Analysis of the EU and US Legal Frameworks of Anti-Competitive Practices in Merger and Acquisitions Where Patents Remain Unutilized

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The legal fields of Mergers and Acquisitions, Competition Law, and Intellectual Property are all well-researched areas with a long history of case law as well. However, at the intersection of these legal fields, there are some important areas that are studied less extensively, although they impose a significant practical effect on the economical and scientific progress of society. One such area lies at an intersection of Mergers and Acquisitions, Antitrust Laws on anti-competitive practices, and Patents, specifically the case when important patents remain unutilized by the companies after the merger or acquisition happens. This scenario may occur for many reasons, from negligence or inability to thoroughly consider the potential of each item in the patent portfolio of all companies involved in the merger and acquisition, all the way to deliberate action taken to acquire companies solely for their patent portfolios, because they are perceived to pose a future risk to the acquiring company’s current business lines. In this dissertation, I will attempt to prove that even though the scenarios where patents remain unutilized after the merger or acquisition happens are not desirable for the economy and society, as many national and international legal frameworks on anti-competitive behavior clearly state, the current national and international organizations do not currently have effective operative measures in place to prevent such scenarios, identify the companies involved and hold them accountable. I will first examine the three different legal fields, their definitions, the objectives of the legislator, some of their most important practical implications in the fields where they intersect from the perspective of our study: Mergers and Acquisitions, Antitrust Laws and Patents. I will pay attention that I describe not only the theory but the practice of these legal fields as well, by investigating the current laws, treaties and case law. Understanding that these legal fields each present a wide topic, I will focus my investigation on the European Union and United States laws and practices, with occasionally some other international examples as well. In the following chapters, I will investigate the practical implications of the scenario where patents remain unutilized after certain mergers and acquisitions, to be able to show the magnitude of the issue by interpolating the relatively scarce economic data available on this subject. The scarcity of data is understandable if we think about the fact that it will not be in the interest of the companies involved to publish such data, and since the problem has not yet been recognized as a major study subject, there are not enough secondary sources where this data could be gathered either. However, for the purposes of my argument, it is enough to prove the existence of the problem, prove that it is not covered by effective measures of the EU and US institutions to prevent these scenarios, identify the companies involved and hold them accountable. This will already show that the objectives of the legislator are not met in the scenarios when patents remain unutilized after certain mergers and acquisitions. My attempts to illustrate the magnitude of the problem will only serve as an emphasizing factor that it needs urgent and operative action from national and international policymakers. In order to make my dissertation as practical as possible, I have decided to include a detailed case study from the European merger control case law where a patent with great importance was left unutilized after a merger. The patent in question was about Gallium Nitride RF Power Transistors, and - as we will discuss - it was fundamental in the development of today’s 4G and 5G telecom network infrastructure. In fact, in this case, the competition authority’s sole focus on market concentration may have been the cause of the acquiring company’s decision to leave the patent unutilized. The fact that development in this area hasn’t stalled was entirely due to other companies taking over and developing their own patents, own technology, and own production facilities. I will also establish an operational framework for a new office of national or international competition authorities, which I am calling the Innovation Protection Office. The proposed operational framework is intended to establish some practical solutions to protect customer access to the officially recognized innovative advantage of patents and ensuring their utilization. I will review the current legal framework for applicable laws and procedures by which this goal can be achieved. There could be many other operational guidelines, processes, or organizational structures that would achieve the same result. Therefore, my main goal in establishing and describing this operational framework is to offer future legislators interested in the problem and the solution some useful tools to govern public policy.

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