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.