Bipartisan Groups of Administration Officials, Senators, Voice Opposition to New Joint Policy Statement on SEPs

“As currently drafted, [the 2021 Statement] would severely tip the scales against SEP holders who contribute technology to standards development organizations (SDOs). In turn, this would reduce the likelihood of private sector investments in the United States in the research and development that leads to standards-implemented technologies.” – Joint Comments of Former Administration Officials

https://depositphotos.com/135630856/stock-photo-breaking-down-walls-together.htmlFriday, February 4, marked the deadline for submission of comments on the latest iteration of the Joint Department of Justice (DOJ)-U.S. Patent and Trademark Office (USPTO)-National Institute of Standards and Technology (NIST) Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary FRAND Commitments. The request for comments came on the heels of President Joe Biden’s July 2021 Executive Order on Promoting Competition in the American Economy, which asked the three agencies to review the 2019 statement.

In perhaps one of the most surprising submissions, a bipartisan group of former presidential administration officials jointly commented that the new version of the Policy Statement is “disconnected from the realities of SEP licensing,” “unbalanced,” and would “disadvantage the United States on the global stage.”

The joint comments were made by an unlikely team: Christine A. Varney, former Assistant Attorney General for DOJ Antitrust under President Barack Obama; Makan Delrahim, former Assistant Attorney General for DOJ Antitrust under President Donald J. Trump; David J. Kappos, former Under Secretary of Commerce for Intellectual Property and Director of the USPTO under President Barack Obama; Michelle K. Lee, former Under Secretary of Commerce for Intellectual Property and Director of the USPTO under President Barack Obama; Andrei Iancu, former Under Secretary of Commerce for Intellectual Property and Director of the USPTO under President Donald J. Trump; Patrick D. Gallagher, Ph.D., former Under Secretary of Commerce for Standards and Technology and Director of NIST under President Barack Obama; Willie E. May, Ph.D., former Under Secretary of Commerce for Standards and Technology and Director of NIST under President Barack Obama; and Walter G. Copan, Ph.D., former Under Secretary of Commerce for Standards and Technology and Director of NIST under President Donald J. Trump.

In their submission, the officials wrote that “SEP policies should not be based on ideology or theory; instead they should be data-driven and should consider the practical impact on industry and relevant geopolitical realities.”

To that end, the authors said the 2021 Statement is off mark and would upset the delicate balance required to ensure enforceable SEP protection, on the one hand, and commitments to fair, reasonable, and non-discriminatory (FRAND) licensing terms, on the other. The comments continued:

As currently drafted, it would severely tip the scales against SEP holders who contribute technology to standards development organizations (SDOs). In turn, this would reduce the likelihood of private sector investments in the United States in the research and development that leads to standards-implemented technologies. As a result, fewer standardized technologies would be created in the United States, further strengthening the hand of our international competitors.

The authors called out the 2021 Statement’s focus on “opportunistic conduct by SEP holders to obtain, through the threat of exclusion, higher compensation” – or “holdup” – and its broad declaration that “monetary remedies will usually be adequate to fully compensate a SEP holder for infringement,” without providing supporting data. On the other hand, there is real world evidence of “holdout” behavior by implementers, according to the authors, who cited German and UK court cases, as well as the U.S. -European consensus from 2017 that “holdout conduct is driving SEP litigation on the ground,13 and that the availability of injunctive relief is often necessary to compel unwilling licensees to negotiate in good faith.”

The comments also critiqued the 2021 Statement’s attempt to define the contours of good faith negotiations on worldwide licensing strategies, which “the government is poorly situated to dictate,” and said that the new approach would put China at an advantage in terms of competitiveness.

“China does not view patent remedies in isolation. Neither should the United States. We need a holistic policy approach to innovation that incentivizes U.S. innovators to participate in the standards development process and protects our innovators from predatory holdout behavior,” said the authors.

Ultimately, the authors urged the administration to wait until NIST and USPTO Directors have been confirmed in order to “fully engage the expertise of the relevant agencies.”

Senators Chime In

Separately, Senators Thom Tillis (R-NC), Mazie Hirono (D-HI) and Chris Coons (D-DE) submitted comments echoing the former administration officials’ concerns about lack of input from Senate-confirmed policymakers and national security, and expressed support for keeping the 2019 Statement in place:

In our view, the existing guidance issued in 2019 properly balances incentivizing SEP research and development with our domestic and global interests. The proposed revision to that guidance, published on December 6, 2021, returns U.S. policy to its harmful prior position of favoring standards implementers over SEP owners in license negotiations. The unbalanced posture struck by the revision will embolden strategic infringers and disincentivize U.S. research and development in these critical technologies. In turn, that risks disadvantaging the ability of U.S. industry to compete with domestic and global rivals, and weakening our national ability to compete with countries like China that are actively seeking to dominate the next generation of technological standards.

The Innovation Alliance also said in a statement on Friday that the new Draft Statement “has generated an outpouring of opposition from national security experts, current and former government leaders of both parties, academics, inventors and entrepreneurs,” and that “those pushing hardest for this change are the Big Tech companies seeking to maintain their market dominance by squashing competition from smaller inventors and entrepreneurial businesses.”

There were 144 comments submitted to regulations.gov as of Friday at 6:00 PM EST. Many were also in favor of a return to the 2013 Statement. Amazon.com, for instance, argued that the 2019 Statement represented a “novel” approach that results in overcompensating patent owners by supporting injunctions in SEP litigation.

The company wrote: “Allowing the SEP owner to enjoin tens of thousands of inventions that have nothing to do with the patent, for the sole purpose of selling the injunction back to the adjudicated infringer, wildly inflates the price of royalties and leads to dead-weight wealth transfers of otherwise useful capital to SEP holders.”

 

 

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2 comments so far.

  • [Avatar for Anon]
    Anon
    February 7, 2022 09:08 am

    But no matter what anyone says, Big Tech’s “answer” may well sound in the politically correct snap of “equity.”

    (please note that I am NOT saying that this would be a correct attribution, as most all may realize, that “politically correct” is all about the “political,” and nothing at all about the “correct”)

  • [Avatar for Pro Say]
    Pro Say
    February 6, 2022 07:40 pm

    Michele Lee supporting the patent rights of others? Bravo. About time and long, long overdue.

    Now, about those patent-stealing-and-denying shenanigans at the PTO and PTAB Death Squad during her rein of terror . . .