USPTO, NIST and DOJ Antitrust Division Retract SEP Injunction Policy Statement | Blogs | Innovative technological perspectives
On June 8, 2022, the United States Department of Justice, the Antitrust Division (DOJ), the United States Patent and Trademark Office (USPTO), and the National Institute of Standards and Technology (NIST) removed — not replaced — a Trump of the era policy statement published in 2019 (Policy Statement 2019) regarding the scope of remedies available for infringement of Standard Essential Patents (SEPs) subject to Fair, Reasonable and Non-Discriminatory (FRAND) undertakings.1 This leaves participants in the standards process without any formal guidance regarding available remedies for SEP licensing practices or enforcement priorities in this area.
Retired 2019 Policy Statement and MS Policy History
The withdrawn 2019 policy statement offered the three the agencies’ view that courts should apply traditional patent law to infringement matters of SEPs subject to FRAND commitments rather than applying special rules to SEPs (e.g., limiting a SEP holder’s right to seek an injunction). Specifically, the 2019 policy statement provided that a patent holder’s FRAND commitment was a relevant factor for a court or tribunal considering infringement claims, but that the commitment was not necessarily a bar. absolute to an injunction. The 2019 policy statement grew out of an administration that considered the problem of “hold-up” in the standards-setting process – where SEP holders refuse to grant licenses unless their applications (such as higher royalties) are met – as basically not an antitrust issue. At the time, the Trump administration’s DOJ considered the most pressing antitrust concern to be the ability of standards bodies to force SEP holders to license on FRAND terms, which the Trump DOJ considered to favor too much. SEP users (i.e. implementers) thereby reducing incentives to innovate.
The withdrawal did not restore the position of the Obama administration Policy Statement 2013 on this same problem. The 2013 Policy Statement recognized the rights of an SEP owner to prevent others from practicing the patented invention, but expressed the view that certain limits on injunctions should apply where the SEP owner had voluntarily agreed to license the SEP on FRAND terms.
Notably, the agencies have also chosen not to adopt a draft policy (Draft Policy Statement) that they had proposed in December 2021, which generated hundreds of public comments from both sides of these issues. In some ways, the draft policy statement had sought to return to the Obama-era anti-MS injunction policy. For example, the draft policy statement set out Supreme Court precedent in eBay Inc. v MercExchange, LLC, 547 US 388 (2006) have generally weighed against SEP injunctions where the SEP holder has made a FRAND commitment. The draft policy statement also stated that monetary remedies would generally be sufficient to fully compensate the SEP holder for any violations. However, in what could be characterized as an attempt to take a more balanced approach, the draft policy statement had further noted that injunctions might still be appropriate where a SEP implementer is unwilling or unable to enter into a license under FRAND terms. The draft policy statement had also provided guidance on what demonstrates “good faith” negotiations on SEPs subject to FRAND commitments.
The impact of withdrawing any SEP injunction policy
While many expected a version of the draft policy statement to be adopted in place of the 2019 policy statement, the draft was released before the confirmation of Laurie Locascio as director of NIST and Kathi Vidal as Director of the USPTO.2 Thus, the agencies may not have been able to reach consensus on the wording of a replacement policy. It is also possible that the decision not to issue any revised policies is the agencies’ attempt to halt the back and forth that has occurred over the past decade in terms of each administration’s approach to Screw SEP licensing issues and let the agency actions speak for themselves.
Whatever the reasoning behind this development, by removing the 2019 policy statement without publishing a replacement, the agencies are leaving SEP holders and SEP performers with less clarity about how these agencies will handle licensing issues. SEPs, including when the government may intervene or seek to hold SEP holders/makers accountable under antitrust laws for conduct related to standardization activities.
But the absence of a policy statement does not necessarily mean that there is no policy. For example, in the DOJ Press release during the takedown, Assistant Attorney General Jonathan Kanter reportedly said the DOJ would take a “case-by-case” approach to SEP licensing in an effort to encourage good faith licensing practices and create more consistency in antitrust enforcement policy. Kanter also said the DOJ will “carefully review the opportunistic conduct of any market participant” with an emphasis on “abusive practices that disproportionately affect small and medium-sized businesses or highly concentrated markets” or where the competitiveness of “emerging technologies” is involved. These comments suggest that the DOJ may well decide to apply antitrust laws to SEP litigation under the right circumstances, especially when tech startups or other smaller market players are involved. This would mark a break with Trump-era SEP politics.
The absence of a policy statement on PES remedies also means that courts will have to decide on a case-by-case basis (without any policy statement to rely on for guidance) whether an injunction is appropriate in a PES litigation under the framework for injunctions in patent litigation eBay. SEP holders and implementers may also see an increase in litigation as both types of stakeholders test the limits of the new regime.
Since the full implications of this development could take months or even years to manifest, participants in norm-setting processes may want to closely monitor agency actions and related developments in this space.
1 A FRAND commitment is when a patent holder voluntarily agrees to make a license for a patent available to all licensees on fair, reasonable and non-discriminatory (FRAND) terms.
2 The Senate confirmed DOJ Assistant Attorney General Jonathan Kanter a month before the draft policy statement was released.