IEEE policy arbitrarily reduces protection given to Wi-Fi-related patents

department-of-justice-doj

United States Department of Justice.

The Department of Justice’s decision to raise no antitrust objections to the radical patent policy changes approved this weekend at the IEEE could permanently damage technology development at one of the world’s most influential standards organizations and undermine the United States’ global leadership in intellectual property policy. These policy changes at the IEEE were developed and advanced not in response to any documented problems with the current policies, but rather to artificially depress the market value of patent-protected technologies.  They represent an anti-competitive shift favoring the buyers of inventions at the core of Wi-Fi and other IEEE technologies, at the expense of those who invented them.

The DOJ’s Antitrust Division had the job of considering whether the IEEE’s new policy is legal under U.S. competition laws.  But the DOJ’s “Business Review Letter,” issued on February 2, provides shockingly little analysis of the anti-competitive effects of the IEEE’s policy changes, of which there are many.

The IEEE’s new policy will arbitrarily reduce the level of protection given to Wi-Fi-related patents, impose unconstitutional limits on patent rights, and end the traditional market-based negotiation process for these patents by imposing what amounts to de facto compulsory licensing.  Companies that spent many years and billions of dollars in R&D to develop Wi-Fi and other technologies could find themselves unable to recoup their investments.  If core research turns out to be an unprofitable business, fewer companies will undertake such R&D, slowing the technology’s advancement and concentrating market power in the hands of fewer companies.  The DOJ is supposed to work toward greater competition and choice, not less.

The DOJ said the IEEE policy would address the alleged problem of technology “hold up” by owners of standard-essential patents. But neither the DOJ nor proponents of the policy changes have offered any evidence that this problem exists. To the contrary, the enormous variety of wireless-enabled products and services on the market today belie any assertion that IEEE’s existing patent policies are holding up innovation and growth.

It is hard to understand why the DOJ and IEEE are advancing this new policy over the objections of the IEEE-USA, the subordinate organization representing the hundreds of thousands of American IEEE members, and in total disregard of the concerns raised by U.S. senators, legal experts, and the European Commission’s digital policy office.  Indeed, the primary effect of this change will be to encourage companies to refocus research to other wireless standards bodies, which will harm the IEEE’s ability to compete with other standards organizations in the development of technologies beyond Wi-Fi.

Members of the Innovation Alliance, who are some of the most innovative companies in the world, will be adding their efforts to those of the many other research-focused companies who disagree with this policy change, and will be working through all channels and considering all options to reverse this misguided policy.

The Author

The Innovation Alliance

The Innovation Alliance The Innovation Alliance represents innovators, patent owners and stakeholders from a diverse range of industries that believe in the critical importance of maintaining a strong patent system that supports innovative enterprises of all sizes. Innovation Alliance members can be found in large and small communities across the country, helping to fuel the innovation pipeline and drive the 21st century economy.

Learn more at www.innovationalliance.net.

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Discuss this

There are currently 8 Comments comments.

  1. Oliver February 10, 2015 3:56 am

    This article is lacking a single argument, why the alleged impacts on innovative companies will turn out in response to the IEEE policy change.

  2. Paul F. Morgan February 10, 2015 10:54 am

    It seems to be a current trend by anyone unhappy with any developments in patent law these days to make public allegations that they are “unconstitutional.” That is not a term that respectable, responsible, attorneys should be throwing around lightly, like some kind of political fringe group. It discredits any realistic arguments they may be making.

  3. John A February 10, 2015 11:49 am

    The Innovation Alliance (the author of this) is a bunch of companies directly affected by this. From their website: Aware, Inc., Fallbrook Technologies, Inc., Cantor Fitzgerald, LP, InterDigital, Cummins Allison Corp., QUALCOMM, Inc.,
    Digimarc Corporation, Tessera, Dolby Laboratories, Inc.

    I’d be curious as to a point by point description about what is unconstitutional in whatever IEEE did to gore their bull. They may be correct but this editorial has more outrage than legal argument. I look forward to a follow-up.

  4. Gene Quinn February 10, 2015 12:56 pm

    Oliver-

    Are you serious? The entire article is an argument. Allowing an industry group to arbitrarily seize patent rights from innovators will necessarily make innovating less attractive because it will be difficult, if not impossible, to recoup the investment spent on R&D.

    -Gene

  5. Paul F. Morgan February 10, 2015 1:05 pm

    Agreed. Egregiously baseless since this is a non-discriminatory licensing agreement between members of a voluntary membership organization, not some unconstitutional act of some governmental agency. Don’t these major companies have competent counsel reviewing their public political allegations?
    As to this agreement for members not to sue for an injunction [vs getting a reasonable royalty], such attempts have not been successful for FRAND subject patents anyway.]

  6. Treavor February 10, 2015 2:31 pm

    Gene,
    I think Oliver wants a substantive argument, and there is no real substance to this. It’s pretty much speculation and whining. The claims of being unconstitutional are unfounded and nonsensical (how could a private, voluntary organization break the constitution?)

    It also seems to present a sense of jingoism, in that IEEE-USA must somehow know better than the rest of IEEE.

    There’s also gross misrepresentation here of the facts. What happened is that standards essential patents have been used unsuccessfully in petty lawsuits, and that has made IEEE and patent holders in general look bad. IEEE is clarifying their process to prevent a backlash against them, and possibly against patents in general. They are effectively cleaning up a mess made by their members, and the “Innovation Alliance” is complaining that the DOJ doesn’t seek antitrust judgment for a process that ensures an open and fair market for those that intend to become part of the standards process.

    Also, to argue that the IEEE policy is basically ‘compulsory licensing’ indicates either complete ignorance or willful dishonesty regarding the standard setting process. Yes, if you want your patents to be part of the standard, you have to license your patent on RAND terms. That’s the point of having open standards. So, it is compulsory licensing if you agree to be part of a process that requires compulsory licensing. If you want to develop your own standard and license it on your own terms, nothing is preventing you from doing so. If you want to start a not-open standards body with other companies that have similar perspectives, you are able to do so. That, however, may be subject to antitrust actions, as it should, if you can even get anyone to adopt your standard.

    The ONLY legitimate complaint would be that of those currently holding patents in IEEE, and in such a case, that’s a matter of the contracts they have with these organizations. If changing the terms is a breach of contract, then maybe they can sue, but that’s the only recourse they could and should have.

  7. Anon February 11, 2015 6:48 am

    Paul @ 2,

    The veiled “hush” that you appear to advocate falls flat.

    Any legal argument that is poorly made – be it one of constitutional nature or merely one of legislative (or judicial) – should ascribe to being made respectably and responsibly, lest the same result innurs.

    I’ve seen it noted that you are a fierce advocate for the AIA. I’ve also seen it noted that the AIA rejected a savings clause regarding unconstitutional infirmity. If even one small part of the AIA is found unconstitutional, then the entire Act is gone.

    Here, you appear to be sticking your thumb, not in a dyke per the fairy tale, but in the below waterline hole caused by a large frozen mass striking “the good ship AIA.”

    It is not “hush” that we need in response, but rather, more discussion and refinement of the alleged constitutional infirmity.

  8. Paul F. Morgan February 11, 2015 12:21 pm

    Your last paragraph is precisely what these comments are about – the zero basis or refinement of an alleged constitutional issue here.
    This has nothing whatsoever to do with your and Ned’s constant attacks on the constitutionality of the AIA statute, which Ned has now taken to the Fed. Cir. in a losing IPR appeal. I am looking forward to both the oral argument and the Fed. Cir. decision in the latter.