Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Justice Department will not challenge engineering organization’s patent policy update, (Feb 3, 2015)

By Greg Hammond, J.D.

The Department of Justice will not challenge a proposed update to the Institute of Electrical and Electronics Engineers, Inc. (IEEE) Standards Association’s patent policy, the Antitrust Division declared yesterday in a business review letter. In reaching its decision, the Justice Department found that the updated policy would likely benefit competition.

The IEEE is a non-profit professional association that is engaged in the advancement of technology. Its Standards Association is a leading developer of international standards, and its Patent Committee is responsible for overseeing the use of patents in the development of IEEE standards.

The proposed update, according to the business review letter, makes revisions to the patent policy’s provisions concerning commitments from parties holding patent claims that are essential to IEEE standards to make licenses available for these claims on reasonable and non-discriminatory terms. The update is therefore intended to clarify the extent of the commitments regarding: (1) the availability of prohibitive orders; (2) the meaning of “Reasonable Rate”; (3) permissible demands for reciprocal licensing; and (4) the production levels to which IEEE licensing commitments apply.

The Antitrust Division determined that the updated patent policy will offer significant procompetitive benefits by facilitating licensing negotiations, product interoperability, and lower costs; mitigating hold up and royalty stacking; promoting competition among technologies for inclusion in standards; and fostering innovation and efficiency. The Division could not conclude that there would be any likely harm to competition. Further, any potential competitive harm would likely be outweighed by the potential procompetitive benefits, the Division found. Consequently, the Department of Justice concluded that it has no present intention to take antitrust enforcement action against the IEEE’s proposed update. Nevertheless, the Justice Department reserved its right to bring an enforcement action in the future if the actual implementation of the proposed update is anticompetitive.

“The department supports standards setting organizations’ efforts to clarify their patent licensing policies,” stated Acting Assistant Attorney General Hesse. “IEEE’s decision to update its policy, if adopted by the IEEE Board, has the potential to help patent holders and standards implementers to reach mutually beneficial licensing agreements and to facilitate the adoption of pro-competitive standards. Where, as here, the department does not believe that adoption of a policy change is likely to result in harm to competition, IEEE and other standards setting organizations are free to adopt those modifications to their policies that they believe will benefit their standards setting activities. The U.S. government does not dictate patent policy choices to private standards setting organizations.”

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