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 United States of America

FEDERAL TRADE COMMISSION

 WASHINGTON, DC 20580

Closing Remarks of Commissioner Rebecca Kelly Slaughter

FTC Hearing #4: Innovation and Intellectual Property

October 24, 2018 

I am so pleased to be here to close two productive days of hearings about innovation and 

intellectual property. Before I begin, I want to note the usual disclaimer that I will be expressing 

my own views only and not those of the Commission or any other commissioner. 

I want to commend all of the FTC staff who worked very hard to put together these 

thoughtful panels. And thank you to the many panelists and presenters for contributing to the 

Commission’s reexamination of the state of antitrust and consumer protection law. 

I am particularly pleased that Drew Hirshfeld, the Commissioner of Patents, and the 

Honorable Scott Boalick, the acting chief PTAB judge, joined us earlier today. The FTC and 

PTO have had a long-standing and invaluable working relationship. We have much to learn 

from each other so that we can both improve how we use our tools to foster innovation. 

The conversations at these hearings over the past two days were extremely animated. As 

I learned working on IP issues on the Hill for many years, IP can get pretty spicy. 

I used to find the depth of emotion and passion around IP perplexing; at first glance, 

these issues seemed like they should be much less emotionally and politically fraught than the 

policy areas that more directly implicate life or liberty, and yet I found them to be equally if not 

more charged. 

But intellectual property is fundamentally about the right and incentive to create, and the 

potential to foreclose others from the fruits of that creative process. It is hard to imagine 

anything that is more personal than the ability to have an ownership right in the work of one’s 

own mind. Whether you believe IP needs to be strengthened to promote creativity or that IP 

rights are abused to stifle it, you are likely to care very much about the policy being applied 

properly to allow human intellectual potential to thrive. 

All of that is to say, I get the passion and I appreciate the energy we have seen displayed 

here today. One of the many reasons why I am so excited to be here—both at the Commission 

generally and today at these hearings specifically—is because the FTC has long been at the 

forefront of tackling difficult questions of how intellectual property rights intersect with 

competition and consumer protection. 
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At the heart of these questions is something of a paradox. IP law and antitrust law share a 

common goal: the promotion of innovation. But at the same time, IP can seem in conflict with 

competition policy because intellectual property is fundamentally about the opportunity to 

exclude competitors, a concept that generally invites scrutiny under antitrust law. 

Let me start by saying a word about the common goal of IP and antitrust: innovation.

Each type of IP protection grants an exclusive ownership interest to the rights-holder, 

with the level of exclusivity tailored to the specific nature of each type of IP in order to 

encourage innovation without stifling competition. The balance is not the same for researchintensive patent inventions as it is for the creative arts in copyright, for example. 

Whatever the nature of the specific right, each type of intellectual property promotes

innovation and benefits consumers – and competition law is designed to do the same. 

Our competition laws promote innovation by ensuring that firms do not exercise their 

market power – whether it is supported by intellectual property or otherwise – to thwart 

competition through anticompetitive conduct or consolidation. 

Often this work does not involve IP specifically, such as in many merger reviews. The 

FTC and DOJ first recognized that a merger could harm innovation when they included a section 

on innovation effects in the 2010 Horizontal Merger Guidelines.1 Since then the FTC has 

brought several cases that include allegations of harm to innovation.2

A good example of these efforts is the Commission’s challenge to the merger of CDK 

Global and Auto/Mate – two firms that provide business software for car dealerships. CDK 

Global was attempting to acquire Auto/Mate, a competitor that, while smaller in terms of market 

share, was a particularly innovative and disruptive challenger to the two market leaders. 

In this case, harm in the form of reduced innovation was a prominent feature of the 

FTC’s inquiry, alongside allegations that the merger would result in increased prices and 

diminished quality of services. In the face of this court challenge from the FTC, the parties 

abandoned the deal.

The FTC should continue its careful scrutiny of deals with the potential to reduce 

innovation and be ready and willing to challenge a merger even when the facts show that the 

prevailing – and perhaps only – harm is to innovation. 

 1 U.S DEP’T OF JUSTICE & FED. TRADE COMM’N, HORIZONTAL MERGER GUIDELINES §6.4 (2010). 2 In the Matter of Verisk Analytics, Inc., Insurance Service Office, Inc., and EagleView Technology Corporation, 

Docket No. 9363, (Dec. 16, 2014), Federal Trade Commission v. Steris Corporation, et al., No. 15-cv-1080, (N.D.

Ohio Sept. 24, 2015), In the Matter of CDK Global, Inc., a corporation; CDK Global, LLP, a limited liability 

company; Auto/Mate, Inc., a corporation; Robert Eustace, an individual; Elsa Eustace, an individual; G. Larry 

Colson, Jr., an individual; Michael Esposito, an individual; and Glen Eustace, a representative, Docket No. 9382 

(Mar. 20, 2018).
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In many cases, competition law and IP law run peacefully in tandem and are even 

complementary in promoting innovation and competition. However, we wouldn’t be here today 

discussing innovation and IP if that was the end of the story. 

The most interesting and difficult questions to me arise when there is an overlap or a 

conflict between the application of intellectual property rights and the healthy operation of a 

competitive marketplace. 

In examining restraints of competition, the FTC considers not only the IP matter at hand 

– whether that be patent, copyright, trademark, or trade secret related – but it focuses on the 

impact the exercise of that property right will have on competition and consumers. 

As the Supreme Court held in Actavis, a patent does not provide a free pass from antitrust 

scrutiny.3

Patents aren’t the only area of challenge. Yesterday, we had a terrific panel about 

copyright law – the Commission’s first of this kind – with discussions about how copyright law 

intersects with competition and consumer issues in various forms of media and online platforms. 

As content is increasingly and often exclusively digital, there are many new challenges that I am 

glad to see these hearings addressing head on.

How properly to identify the line between where the right to exclude promotes innovation 

and where it inhibits competition (and therefore innovation) is extremely challenging, and 

extremely important.

Those questions have become only more difficult with 21st century innovations in data 

sharing, online platforms, and the ubiquity of software. And I’m not the only one who thinks it’s 

hard – we’ve seen case after case out of the Supreme Court on IP that raise more questions than 

they answer. 

That is why I am so glad these hearings devoted two days to difficult IP questions, and so 

grateful our panelists have donated their time and intellect to helping us think through these 

issues. 

While the Commission has been very engaged in some very specific areas of IP study, 

advocacy, and enforcement, this week’s sessions have been an opportunity to take a step back 

and reconsider the fundamental questions of competition, innovation, and intellectual property. 

Participants throughout both days have shared their views on major trends in the IP

landscape – including how businesses make IP decisions, copyright challenges, patent quality,

and patent litigation. Some of the debates sounded very familiar from my days working on these 

issues in the Senate, but there are of course new developments, new law, and new empirical 

studies that are continuing to inform the conversation. 

 3 F.T.C. v. Actavis, 570 U.S. 136 (2013). 
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This week’s hearings reaffirm the critical role the FTC plays in bringing its consumer 

protection and competition expertise to help tackle key innovation and intellectual property

questions. As I said when I opened the second day of hearings, it is simply not plausible that we 

conclude this effort with a pat on the back, telling ourselves we have gotten everything right. 

Surely, we will be able to distill key lessons that will inform our enforcement and policy 

priorities, and certainly, there will be more to consider as IP markets and competition evolve. 

Thank you for having me and again thank you to all who provided us with two days of 

thought provoking and spirited discussions.