Posts in Licensing

On January 19, consumer tech giant Apple filed a complaint with the U.S. International Trade Commission (USITC) asking the agency to institute a Section 337 investigation against Swedish telecom firm Ericsson, asserting a trio of patents related to millimeter wave technology used by electronic devices communicating on mobile 5G networks. The Section 337 complaint is the latest salvo in a legal battle that highlights the mounting tension surrounding standard-essential patents (SEPs) and where infringement litigation fits into the fair, reasonable and non-discriminatory (FRAND) obligations that standards-setting organizations (SSOs) impose upon SEP owners.

Senator Thom Tillis (R-NC) today sent a second letter to U.S. Attorney General Merrick Garland and Assistant Attorney General – Antitrust Division at the U.S. Department of Justice (DOJ) Jonathan Kanter expressing concern over the process for releasing, and the substance of, a revised version of the Joint 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. Tillis sent an initial letter on December 10, 2021, four days after the DOJ published the latest iteration of the Policy Statement for public comment.

Some say the definition of insanity is doing the same thing over and over while expecting a different outcome. That would appear to be the case with the recent refiling of a petition by Knowledge Ecology International (KEI) to the National Institutes of Health (NIH) asking it to march in under the Bayh-Dole Act to force licensing to additional parties of the prostate cancer drug Xtandi, because of its cost. The law allows academic institutions, companies and federal laboratories to own and license inventions made with government support. Similar petitions were rejected by NIH and the Department of Defense (which funded the research on the underlying invention) in the Obama/Biden Administration for a simple reason: the law is for the commercialization of federally funded inventions; it does not allow the government to set prices for successful products.

In Part II of this series, we considered the language of a specific licensing commitment made to European Telecommunications Standards Institute (ETSI) and the prevailing law relating thereto. In this Part III, we consider the 2021 Draft Policy Statement with a particular view to highlighting its inconsistencies with the ETSI framework and the inapplicability of the hold-up narrative to the situation involving an individual United States patent. Despite its purported purpose of providing the agencies’ views on “remedies for the infringement of standards-essential patents (or SEPs) that are subject to a RAND and/or F/RAND licensing commitment”, the 2021 Draft Policy Statement does not take a clear position on this issue, instead merely stating the following (some might say “the obvious”):

On January 12, a coalition of 28 property rights groups signed a letter addressed to U.S. Attorney General Merrick Garland and Assistant Attorney General for Antitrust Jonathan Kanter asking those officials to reconsider and withdraw a draft policy statement issued in early December regarding licensing negotiations and remedies for standard-essential patents (SEPs) subject to voluntary fair, reasonable and non-discriminatory (FRAND) commitments. According to the coalition, the U.S. Department of Justice’s (DOJ) statement will only serve to bolster the fortunes of China, the major economic rival to the United States, by allowing Chinese tech implementers to infringe SEPs without respect to the rights of U.S. innovators.

This article, originally published on 12/27/2021, was updated on 1/12/2022 and republished on 1/13/2022 to include information that was omitted in error, beginning after “Conclusions and Outlook”.

In Part I of this post, we provided an update on three lead pioneers in the mRNA IP space, Moderna, BioNTech and CureVac. In this post we profile Sanofi, Arcturus, eTheRNA and other mRNA companies and offer conclusions. Sanofi (NASDAQ: SNY), headquartered in Paris, FR, acquired mRNA pioneer Translate Bio in September 2021 for approximately $3.2 billion and mRNA startup Tidal Therapeutics in April 2021 for approximately $470 million. With its acquisition of Translate alone, Sanofi obtained an mRNA pipeline of nine candidates (two in the clinic), hundreds of patents, and undoubtedly valuable mRNA-based technical and regulatory know-how.

A webinar hosted on Tuesday, January 12, by The Federalist Society’s Regulatory Transparency Project featured former U.S. Patent and Trademark Office (USPTO) Directors Andrei Iancu and David Kappos, as well as Duke University Professor of Law and former USPTO Administrator of the Office of External Affairs Arti Rai, discussing the proposal to the World Trade Organization (WTO) to waive IP rights under the Trade-Related aspects of Intellectual Property Rights (TRIPS) Agreement for certain COVID-19 technologies. While all three panelists agreed that the IP waiver discussion has become a distraction that will not solve the fundamental problems, Iancu and Kappos were especially passionate that the precedent set by the U.S. government’s decision to back the proposal could do very real harm, rather than good.

In Part I of this series of articles, we provided an overview of the 2013 and 2019 policy statements that preceded the 2021 Draft Policy Statement. In this Part II, we consider the language of a specific licensing commitment made to European Telecommunications Standards Institute (ETSI), and various legal pronouncements that have been made in relation thereto.

Patent licensing and technology transfer are cornerstones of modern economies, where the efficiencies of collaboration and division of labor do not require firms to be vertically integrated. The Wright brothers did not build commercial aviation, and yet commercial aviation was born thanks to the Wright brothers’ invention. Similarly, a car manufacturer can simply rely on communication technologies developed by telecom experts outside the automotive ecosystem to guarantee connectivity to its fleet and the corresponding massive economic benefits. This short article focuses on how risk – in the economic and legal sense – changes over time, and what this implies for patent licensing dynamics. Licensing negotiations are not static snapshots in time, they often evolve and change according to developing circumstances, case law, parties’ conduct, and many other factors.

In mid-November, consumer tech giant Apple filed a petition for writ of certiorari asking the U.S. Supreme Court to review the Federal Circuit’s decision to dismiss Apple’s appeal of unsuccessful inter partes review (IPR) challenges to the validity of several patents owned by Qualcomm. In that ruling, the Federal Circuit found that Apple’s choice to enter a patent licensing agreement with Qualcomm covering the patents-at-issue extinguished Article III standing as to Apple’s appeals from the Patent Trial and Appeal Board (PTAB). The question presented by Apple’s petition is: “Whether a licensee has Article III standing to challenge the validity of a patent covered by a license agreement that covers multiple patents.”

Much like a biological ecosystem, the development, commercialization, and licensing of standardized technologies involves a delicate balance among many diverse and competing participants. The 2021 Draft Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (hereinafter “the 2021 Draft Policy Statement”), however, appears to be primarily concerned with an issue faced exclusively by implementers when dealing with owners of larger patent portfolios, but without explicitly saying so. This observation is based on the 2021 Draft Policy Statement’s reference to the vague and ill-defined notion of patent “hold-up”.

The Justice Department’s December 6, 2021 Draft Policy Statement on Licensing Negotiations and Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (“2021 DPS”) badly misses the mark and merits a failing grade. By contrast, the 2019 PS (issued by the Justice Department, NIST, and the U.S. PTO) is eminently sound, and merits being reaffirmed. The DPS should be viewed in the context of the benefits conferred on society by patents that read on standards, commonly referred to as standard essential patents (SEPs). Given the economic importance of SEPs, public policy should encourage investment in them and ensure that they receive adequate legal protection. Such sound policies inform the New Madison Approach (NMA), publicly described by Assistant Attorney General for Antitrust Makan Delrahim in 2018.

Even as Europe and the rest of the world continued to face the unprecedented challenges of the COVID-19 pandemic in 2021, the development of 5G and other Standard Essential Patent (SEP)-enabled technology standards has continued at an unabated pace. While the year has not yet ended, more than 100,000 technical contributions have already been submitted at 3GPP meetings for 2G, 3G, 4G and 5G in 2021 – a near-record yearly contribution count. The invention and standardization of massive, complex communication technologies continues to generate significant numbers of SEPs. According to IPlytics data, the cumulative number of self-declared SEP families has surpassed 72,000 in 2021, indicating a five-fold increase in just 10 years.

This is Part II of a two-part article discussing FRAND (fair, reasonable, and non-discriminatory) licensing developments taking place in the United States in 2021. Read Part I here. After a slow summer on the FRAND licensing front, the Court of Appeals for the Fifth Circuit’s ruling in the matter of HTC v. Ericsson came in the dog days of August. As we wrote about here, the August 31 ruling dealt with, amongst other things, an appeal challenging the district court’s instructions to the jury regarding whether or not the license terms offered by Ericsson were FRAND and, more specifically, with respect to the issue of apportionment. Beyond finding that the failure to give instructions on an undisputed issue did not impair HTC’s ability to present its claims, the majority found that HTC’s proposed instructions “were not ‘substantially correct’ statements of law”.