IP Law Daily, TOP STORY: Withdrawal of Trump-era SEP policy statement intended to restore balance between holders, implementers, (Jun 9, 2022)
Justice Department, USPTO, and NIST call for a case-by-case approach to negotiating F/RAND licenses and do not formalize 2021 draft policy statement on standards-essential patents.
The Biden Administration on June 8 withdrew a Trump-era policy statement on the appropriate scope of remedies when licensing negotiations between holders of standards-essential patents (SEPs) and those who seek to implement technologies subject to F/RAND commitments fail. A patent is subject to a RAND or FRAND commitment where a patent holder has voluntarily agreed to make available a license for the patent on reasonable and non-discriminatory (RAND) terms or fair, reasonable, and non-discriminatory (FRAND) terms while participating in standards-setting activities at a standards-developing organization or SDO. The withdrawal of the 2019 policy statement was seen by the Department of Justice Antitrust Division, the U.S. Patent and Trademark Office (USPTO), and the National Institute of Standards and Technology (NIST) as the “best course of action for promoting both competition and innovation in the standards ecosystem.”
The 2019 policy statement was generally seen as favoring SEP holders over implementers when an SEP is allegedly infringed. It took the position that “all remedies available under national law, including injunctive relief and adequate damages, should be available for infringement of standards-essential patents subject to a F/RAND commitment.” In withdrawing the 2019 policy statement, the agencies did not adopt a December 2021 draft policy statement, which was criticized by some for disfavoring injunctive relief for SEP holders and instead relying on monetary remedies to compensate them for infringement. The 2021 draft policy statement also was perceived by some as an attempt by the government to dictate terms of negotiations between SEP holders and implementers.
The withdrawal of the 2019 guidance is seen by the Antitrust Division, the USPTO, and the NIST as returning to a more balanced approach to resolving disputes between SEP holders and implementers. The 2019 guidance itself was a departure from 2013 guidance that had apparently been “misinterpreted to suggest that a unique set of legal rules should be applied in disputes concerning patents subject to a F/RAND commitment that are essential to standards (as distinct from patents that are not essential), and that injunctions and other exclusionary remedies should not be available in actions for infringement of [SEPs].” It was the Trump Administration’s view that “a patent owner’s F/RAND commitment is a relevant factor in determining appropriate remedies, but need not act as a bar to any particular remedy.”
In announcing the move to withdraw the 2019 SEP policy statement, Jonathan Kanter, Assistant Attorney General in charge of the Antitrust Division, said: “I am hopeful our case-by-case approach will encourage good-faith efforts to reach F/RAND licenses and create consistency for antitrust enforcement policy so that competition may flourish in this important sector of the U.S. economy.” He added that the Antitrust Division was “focus[ed] on abusive practices that disproportionately affect small and medium sized businesses or highly concentrated markets.”
In support of the new position, USPTO Director Kathi Vidal pointed to a “need for greater U.S. engagement in global standards-setting organizations from our large multi-national companies, as well as from small- to medium-sized businesses and start-ups.”
“The withdrawal of the 2019 Statement will strengthen the ability of U.S. companies to engage and influence international standards that are essential to our nation’s technology leadership and that will enable the global technology markets of today and tomorrow,” added Under Secretary of Commerce for Standards and Technology and NIST Director Laurie E. Locascio.
End of “New Madison” approach. The agencies noted that their actions in this area came in response to a call from the White House to review the 2019 Statement to ensure that it adequately promoted competition. The move is a departure from the “New Madison” approach to antitrust and intellectual property law, advocated by Makan Delrahim, the Assistant Attorney General in charge of the Antitrust Division when the 2019 policy was implemented. That approach cautioned against the misapplication of antitrust theories to licensing disputes that involve a patent holder’s unilateral exercise of its exclusive rights. Specifically, Delrahim advocated for protecting the injunction rights of patent holders that make FRAND commitments. He took the position that “implementer hold-out poses a more serious threat to innovation than innovator hold-up.” Delrahim had warned of the potential for a “de facto compulsory licensing scheme for FRAND-encumbered patents deemed ‘standard essential.’”
EC action plan. The U.S. agencies are not alone in grappling with issues surrounding remedies in disputes between SEP holders and implementers. The European Commission announced in November 2020 an Action Plan on Intellectual Property “to help companies, especially small and medium-sized companies, to make the most of their inventions and creations and ensure they can benefit our economy and society.” Among other things, the Action Plan is intended to propose ways to improve transparency and predictability in the licensing of SEPs. In response to a request for feedback on various proposals, a group of scholars with the International Center for Law & Economics in May advocated for “maintaining the sometimes-necessary remedy of injunctive relief against bad-faith implementers.”
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