USPTO, DoJ, and NIST Issue FRAND/SEP Policy Statement

Last week, the U.S. Patent and Trademark Office, U.S. Department of Justice, and National Institute of Standards and Technology issued a joint statement on standard-essential patents (SEPs).  The statement clarifies the agencies’ position on an earlier 2013 statement made by USPTO and DoJ while completing the process of formally withdrawing from that statement.

In essence, the clarification states that SEPs are not categorically different from other patents and that they should be judged under the same rules as other patents—for example, injunctions are available for SEPs when the eBay test favors an injunction.  Similarly, the damages analysis applies in the same way for an SEP as for any other patent.  This isn’t, on its face, a significant departure from the 2013 statement, which similarly acknowledged that injunctions may be permissible in SEP cases, even if they might not be favored.  But the devil’s in the details—or in this case, in a couple footnotes.

Footnote 9 Doesn’t Trust Footnote 3

Footnote 9 is attached to a statement about whether injunctions and other exclusionary remedies should be available in cases centered on FRAND-licensed patents.  But that’s not what it’s describing. Instead, footnote 9 explicitly takes the position that antitrust law is not applicable to FRAND disputes.

Of course, this is directly contradicting footnote 3, which states that antitrust law is completely applicable to FRAND disputes that involve anti-competitive conduct.  The only difference? In footnote 3, the patent owner is the one being harmed. In footnote 9, when an industry is being held up after committing to a technology based on a promise from the patent owner to license that technology?  Despite the antitrust harm, DoJ says no antitrust foul.

In a statement that focuses so much on “no special rules for FRAND patents”, it’s odd to see a special rule for FRAND patents.  If a patent owner is behaving in a way that creates a competitive harm using FRAND patents, it’s an antitrust issue. FRAND can be relevant because it can create an obligation on the patent owner that generates an antitrust duty to deal, and it can be relevant to market conditions, but that’s not a special rule—it’s just ordinary antitrust law.  Anti-competitive conduct used to maintain market power is antitrust harm, even if the conduct—such as patent licensing—would otherwise be legal.

Hold Up A Second With Footnote 13

Footnote 13 describes the relevance of the conduct of the parties to the determination of appropriate remedies, citing two cases—Apple v. Motorola to discuss holdout and Ericsson v. D-Link to discuss hold-up.  Seems reasonable?

Except that the Apple v. Motorola cite, described as en banc, is actually a citation to ex-Judge Rader’s dissent in that case, not to a holding with any weight of authority.  And that’s the best cite that the authors could find to describe “holdout” as a meaningful problem—probably because the Federal Circuit has never held it to be one.  That’s not exactly surprising. Hold-up is a well-recognized problem specific to SEPs, while holdout doesn’t exploit the lock-in value of standards and is essentially just an example of the ordinary risk of contract non-performance.

Citing to a dissent for a proposition where there’s no authority to support the proposition, without even noting it’s a dissent?  And citing to it first to suggest it’s the more important problem? If the conduct of the parties is relevant to the determination, that determination would weigh against the authors intending to provide neutral clarification.

If It’s Just A Clarification, Why Withdraw?

That’s the real question.  If all of this was just to clarify the 2013 statement and DoJ, the PTO, and NIST see the 2013 statement as fundamentally accurate, why withdraw from it?  Why not just issue a clarification?  

It appears to be because, fundamentally, the agencies involved are trying to suggest that the 2013 statement wasn’t right.  That patentees should have a right to hold-up innovators and product makers with the threat of an injunction. That holdout is a real problem and hold-up is not.

While taking a facially neutral position that FRAND patents don’t get special rules, it’s clear that some policymakers in DoJ and PTO think that the concerns of patent owners are more real than the concerns of companies in the business of actually making products and providing services.  Perhaps unsurprising, coming from a DoJ Antitrust division that defended Qualcomm’s patent licensing strategies despite a mountain of evidence regarding Qualcomm’s anti-competitive conduct.  And perhaps also unsurprising from a PTO director that has called patent trolls a “myth” despite the fact that they constitute a majority of patent litigation.

Joshua Landau



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