Proposed policy changes on industry-standard essential patents threaten the standardized technology ecosystem, warn a bipartisan group of patent offices and Justice Department antitrust leaders.
A draft statement the Biden administration released in December is a “solution in search of a problem,” the former officials said in a comment submitted to the Justice Department. Officials argue that the new approach targets theoretical concerns while tipping the balance against owners of standards-essential patents, or SEPs.
Andrei Iancu, the director of the patent office under President Donald Trump, and Michelle Lee and David Kappos, who both led the patent office under President Barack Obama, signed the comment.
“This is a bipartisan view and we express our collective concern over the leadership change,” Iancu said.
Other signatories included Makan Delrahim and Christine Varney, former heads of the DOJ’s antitrust division. Three former directors of the National Institute of Standards and Technology, Patrick Gallagher, Willie May and Walter Copan, also signed the letter.
“Misguided” and “unrealistic”
The draft policy would amend the Trump administration’s 2019 guidelines, which made it clear that SEP holders had the right to seek court injunctions blocking the use of inventions if licensing negotiations failed. Previous Obama-era guidance suggested that injunctions in SEP cases could harm competition.
According to the new draft, developed by the DOJ, patent office and NIST, the money will generally be enough to compensate a SEP holder for infringement. The statement allows that an injunction may be warranted when a company is unwilling to take a fair, reasonable, and non-discriminatory, or FRAND, license.
“Strategies by SEP holders or implementers to gain excessive leverage in licensing negotiations can cause multiple harms, including non-F/RAND patent royalties, increased costs, and delayed introduction of products and services standardized,” says the draft policy statement.
Biden administration officials have raised concerns about the abuse of standard-essential patents and patent holders who seek inflated licensing fees due to the essential nature of the patent, known as a “patent holdup.” “.
Former officials balked at ‘hold-up’ concerns, saying ‘decades of licensing experience’ hasn’t generated meaningful data to support claims that SEP owners unfairly extort performers . This type of data is also missing from the policy statement, they said.
Officials also called the declaration’s framework for good faith negotiations “misguided and unrealistic.”
“These are complex negotiations, very dependent on facts, very dependent on circumstances,” Iancu said, adding that negotiations are often between sophisticated parties and involve global patent portfolios.
“For the government to step in and provide a set of instructions, if you will, on how to negotiate in advance is, in our view, problematic,” Iancu said.
Support for declarations
The draft policy statement comes after President Joe Biden in July encouraged officials to consider revising the 2019 policy statement, framing it as part of an effort to “protect normalization processes from abuses”. The public comment period ends on Friday.
More than two dozen law professors, including Mark Lemley of Stanford, Michael Carrier of Rutgers and Robin Feldman of the University of California, said in a commentary published last month that the statement takes a “reasonable and balanced approach.”
“This will contribute to greater predictability and encourage both new innovation and reasonable implementation of that new innovation,” they wrote.