Why the Supreme Court Was Correct to Deny Certiorari in FTC v. Rambus

Abstract:     
In November 2008, the Federal Trade Commission petitioned the Supreme Court to review the D.C. Circuit's decision in FTC v. Rambus. That decision reversed the Commission's finding that Rambus knowingly failed to disclose a patent to a standard setting organization and, in so doing, acquired monopoly power in violation of Section 2 of the Sherman Act. In February 2009, the Supreme Court denied the Commission's petition. This article examines some deficiencies in the Commission's arguments, concluding ultimately that the Supreme Court was correct to deny review. Moreover, the article suggests that the patent holdup problem, and ex post opportunism generally, is more effectively handled by contract and patent law. Because parties cannot contract around heavy mandatory antitrust remedies, contract and patent law offer superior substantive doctrine designed to distinguish good faith contractual modifications from bad faith holdup, thereby minimizing the social welfare reducing decision errors.

Keywords: anticompetitive, Broadcom v. Qualcomm, deceptive act, level of causation, memory chip developer, monopolization, NYNEX, RAND commitment

JEL Classifications: K21, L41, L43, L44, O34

Working Paper Series