Published: 3/31/16
In its revised intellectual property enforcement guidelines, the Canadian Competition Bureau recognizes patent hold up as a competition concern. Specifically, it notes that high switching costs may create market power for the owners of patents that cover a standard due to the inability of firms using the standard to easily substitute other technologies to avoid high royalties. The revised guidelines address certain breaches of FRAND commitments as a potential competition issue, for example the bundling of SEPs and non-SEPs in a license and the seeking of injunctive relief by the SEP holder unless the licensee cannot or is unwilling to pay a reasonable royalty. The Bureau indicates, however, that it is not a price regulator and will leave the determination of royalty rates to negotiations between parties or the courts where there is no clear breach of a licensing commitment (e.g., a demand exceeding an ex ante commitment to cap the royalty). The Bureau also acknowledges that competition enforcement policy in this area is undergoing rapid development, so the Bureau may revisit its guidance later in light of experience, changed circumstances, and court decisions.