If placed on a stage and asked for their views on the mission and authority of the Federal Trade Commission, former FTC Chair Lina Khan and current Chair Andrew Ferguson would vehemently disagree on fundamental issues.
The scope of the Commission’s authority under Section 5 of the FTC Act, which is where it gets the power to combat unfair methods of competition and unfair or deceptive practices, is one of those issues. Using Section 5, the FTC can challenge conduct that harms competitive conditions even if the conduct doesn’t violate the Sherman Act or Clayton Act. Can the FTC bring cases based solely on Section 5? To that question they both agree the answer is yes. But how far beyond traditional antitrust laws can a commissioner travel? Can they tackle non-compete agreements? Or competition and control of patent licenses? What about freedom of speech on social media platforms? These are questions to which their answers do not align.
Non-Compete Agreements
One illustration of their differences is the FTC’s authority over an employer’s right to compel employees to sign agreements not to go to work for competitors. Khan announced a nationwide ban on these restrictions a year ago in April 2024. She said restricting employees’ movements is bad for jobs, innovation, and business startups. But Ferguson and much of the business world said she lacked the authority under Section 5 to impose the ban. A federal judge in Texas agreed and put the ban on hold. The Khan FTC appealed to the Fifth Circuit, but said it would continue to exercise its authority to address the validity of non-competes on a case-by-case basis. The appeal attracted nearly 80 amicus briefs from trade groups, consumer groups, policy organizations, states’ attorneys general, and many others.
The question today is whether the Ferguson FTC will drop the appeal. Essentially, for now, it has. In March, the business plaintiffs moved to put the appeal on hold, which the FTC did not oppose. In their motion, the appellants noted Ferguson’s public statements that the FTC should reconsider its defense of the ban. He said during a recent conference that he would present his views whether to drop the appeal “at some point.”
If his prior comments on the ban are any indication, it will not survive as Khan intended, if at all. Ferguson acknowledged the “historical suspicion” of non-compete agreements in “Anglo-American law,” noting they can undermine competition and innovation. However, he said the Khan FTC’s approach was flawed because it prioritized policy over legal authority. He said FTC is an administrative agency, not a legislature, and should only exercise powers lawfully conferred upon it by Congress. The Commission lacked statutory authority and failed to consider broader implications, he concluded.
Standard Essential Patents
FTC watchers and patent holders are monitoring and speculating about how Ferguson will address Section 5 of the FTC Act in the context of standard essential patents (SEPs).
SEPs are developed through Standard Development Organizations (SDOs) where industry competitors collaborate to set technology standards. While SDOs promote innovation, they can also raise antitrust issues, such as patent hold-up, where a patent owner demands high royalties after a standard is adopted. To prevent hold-up, SDOs require participants to disclose patents and commit to licensing them on Fair, Reasonable, and Non-Discriminatory (FRAND) terms.
Patent law and antitrust law are both designed to promote innovation but do so in different ways. Patent law grants inventors exclusive rights, while antitrust law ensures competition so new inventions can be brought to market. Despite their complementary nature, there is tension between the two, especially when it comes to SEPs.
Chair Ferguson has emphasized the importance of using Section 5 to address violations of the spirit of antitrust laws but has said he will address violations that more closely resemble those described in the Sherman and Clayton acts. Khan took a broader view of Section 5, using it to protect workers, as the non-compete ban illustrates, as well as improper patent activity.
Historically the FTC used Section 5 to challenge SEP holders who sought injunctions or exclusion orders against licensees. It would argue these restrictions ran counter to the SEP process at the expense of competition.
The Biden-Khan administration aimed to balance the interests of SEP holders and firms that implemented the patents under license, seeking to mitigate hold-ups and ensure fair licensing arrangements. The first Trump administration prioritized the rights of SEP holders who wished to enjoy the power that comes with owning an invention dubbed “the standard” across an entire industry.
Patent Policy Pendulum
Companies, inventors, and the patent bar have watched federal policy on remedies for SEPs swing as political parties take turns running the show, reversing old policies and implementing new ones. From Obama to Trump 1.0 to Biden to Trump 2.0, policies relating to SEPs resemble a short but consequential ping-pong match.
Obama Administration (2009-2017)
2013 Policy Statement (Jan. 8, 2013) — This statement, issued by the DOJ and USPTO, emphasized that injunctions and exclusion orders should generally not be granted for SEPs subject to FRAND commitments. It highlighted the importance of balancing patent rights with stopping anticompetitive practices. It aimed to promote fair and reasonable licensing terms by ensuring SEP holders could not use the threat of injunctions to demand excessive royalties.
Trump Administration 1.0 (2017-2021)
2019 Policy Statement (Dec. 19, 2019) — This statement, issued by the DOJ, USPTO, and NIST, reversed the 2013 Obama-era policy. It allowed SEP holders to seek injunctions against infringing technology implementers and stated that SEP licensing disputes should not implicate antitrust laws. It encouraged SEP holders to pursue injunctive relief, which was seen as a shift towards stronger patent enforcement rights.
Biden Administration (2021-2025)
Draft Policy Statement (Dec. 6, 2021) — This draft statement sought to balance the interests of SEP holders and implementers, promoting good faith licensing negotiations and addressing the scope of remedies available to patent owners under FRAND commitments. It was open for public comment but was not formally adopted.
Withdrawal of 2019 Policy Statement (June 8, 2022) –The DOJ, USPTO, and NIST withdrew the 2019 Policy Statement without replacing it with a new formal policy.The withdrawal aimed to promote competition and innovation by preventing the potential anticompetitive extension of market power beyond the scope of granted patents.
Trump Administration 2.0 (2025-present)
Policy to be determined, but Chair Ferguson’s past dissents and commentary, and the policies of Trump 1.0, offer clues.
Marketplace of Ideas
To predict how Chair Ferguson might move forward, it is reasonable to read the Heritage Foundation’s Project 2025 roadmap in which authors commented on the FTC in one chapter and intellectual property in another chapter on the Department of Commerce.
Michigan State University law professor Adam Candeub wrote the FTC chapter, advocating for a broader view of antitrust law and emphasizing the protection of democratic values and institutions. Candeub served as Acting Assistant Secretary of Commerce for Communications and Information during Trump 1.0.
In his Project 2025 chapter, Candeub argued for using antitrust law to protect democratic values, free speech, and the “marketplace of ideas,” not just economic efficiency. Some conservatives even feel antitrust enforcement doesn’t belong to the FTC, he observed, saying enforcement should fall solely to the Department of Justice due to concerns about the FTC’s independence from presidential control. He also said some conservatives feel the FTC should wield its authority to address political and economic power, not just consumer welfare.
Ferguson echoed the marketplace-of-ideas theme in a recent speech at the Chicago Booth School Stigler Center. The FTC chair quoted a 1919 dissenting opinion written by Justice Oliver Wendall Holmes in a free speech case. The justice wrote that “the ultimate good desired is better reached by free trade in ideas — that the best test of truth is the power of the thought to get itself accepted in the competition of the market.” Justice Holmes used free market competition as a metaphor, but Ferguson suggested a literal connection between free speech and competition law. He pointed to the power of dominant social media platforms as an example of that link.
“It should be obvious to everyone here,” he told his audience, “that if the social media space is highly concentrated, with incumbents facing little to no competition from rivals, it will be easier for platforms to engage in censorship—whether on their own initiative, in collusion with each other, or at the behest of left-wing public officials, regulators, advertisers, or other DNC interest groups. In other words, increased concentration can negatively impact the marketplace of ideas because it facilitates a variety of censorious practices; and censorious practices—whether carried out by state actors, private aggregations of power, or a combination of the two—is inimical to the free expression that makes our marketplace of ideas possible.”
Patents and Standards
Project 2025 addressed intellectual property in several contexts. The document proposed making the U.S. Patent and Trademark Office (USPTO) a performance-based organization under the Office of Management and Budget (OMB). Alternatively, it suggested consolidating the USPTO with the National Institute of Standards and Technology (NIST) into a new U.S. Office of Patents, Trademarks, and Standards.
NIST plays a significant role in the context of SEPs through its involvement in policy development and standards-setting processes. It collaborates with the USPTO and DOJ to develop policies related to SEPs. NIST facilitates standards-related information sharing and cooperation among federal agencies. It coordinates federal agency participation in private sector standards development, emphasizing the use of consensus-based standards.
NIST was involved, for example, in the withdrawal of the 2019 Policy Statement on Remedies for SEPs, which aimed to balance innovation and competition, opting for a case-by-case review of alleged anticompetitive practices.
Conclusion
The evolution of SEP policy, antitrust considerations, and intellectual property frameworks reflects the broader tension between fostering innovation, promoting competition, and protecting democratic values – not to mention the tension between our political parties. The withdrawal and replacement of previous policy statements and the proposals found in Project 2025 demonstrate the yawning ideological chasm in the U.S. on this issue (among many). Chair Ferguson’s emphasis on the interplay between competition and free expression is something new and offers another example of how the Trump administration’s ideology will influence its regulation of business. Of course, Team Trump would say the same was true for the Biden and Obama teams, pointing to, for example, diversity, equity, and inclusion policies.
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