Posts Tagged: "standard essential patents"

While 2022 was somewhat less eventful than 2021 in terms of significant developments in fair/reasonable and non-discriminatory (FRAND/RAND) licensing occurring in the United States, the past year still did not disappoint and underscores the continued and growing interest from government in the standards related patents space. In 2022, the most progress was made on matters and issues we wrote about last year: i.e. government policy developments, Continental v. Avanci, the IEEE’s standards-related Patent Policy, and Ericsson v. Apple / Apple v. Ericsson  (see here and here)

Wi-Fi has been universally recognized as a term for non-cellular, wireless connectivity to the Internet for at least two decades, and reliance on Wi-Fi has been increasing as more devices become “connected,” such as smart outlets, TVs, audio systems, and the like, in a connected household. Similarly, consumers have become more dependent on the bandwidth of Wi-Fi for bandwidth-intensive activities, such as streaming video, video conferencing during the COVID-19 pandemic, and the emerging “metaverse.”

The latest mainstream version of the ubiquitous Wi-Fi standard, known as IEEE 802.11ax or “Wi-Fi 6,” offers substantial technological improvements over traditional Wi-Fi, including Wi-Fi 6’s immediate predecessor—Wi-Fi 5 (IEEE 802.11ac). In particular, Wi-Fi 6 offers faster performance, lower power consumption, and better battery life, all while enabling reduced network congestion and latency. These substantial improvements made over even the immediate predecessor in Wi-Fi technology are made possible by several key technological advances. Wi-Fi 6 has enjoyed good timing as well—its benefits are valuable and necessary improvements as consumers and enterprises increasingly look for high-speed connectivity across a wide and ever broadening array of devices and uses, including the Internet of Things (IoT), augmented/virtual reality (AR/VR), and autonomous vehicles.

On June 8, the Biden Administration announced a detente on the issue of standard essential patents (SEPs) through coordinated statements made by the United States Patent and Trademark Office (USPTO), Department of Justice Antitrust Division, and National Institute of Standards and Technology (NIST). The casual reader, or reader who only quickly glanced at the headlines, might be mistaken into believing the Biden Administration had declared war on SEP owners due to the Administration rescinding the 2019 Joint Policy Statement between the USPTO, DOJ and NIST that was biased in favor of the possibility of SEPs being like any other patent, with remedies for infringement possibly including injunctive relief. Those familiar with Administration’s efforts on SEPs will recall that a 2021 draft policy statement had been published, which swung heavily against patent owners and resurrected the debunked myth that patent owners engage in hold-up activities.

The U.S. Department of Justice (DOJ), the U.S. Patent and Trademark Office (USPTO) and the National Institute of Standards and Technology (NIST) have announced that they are officially withdrawing the 2019 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments. However, the withdrawal does not reinstate the 2013 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments, which had been harshly criticized by many in the IP community. It also seems to scrap the Draft 2021 Statement, which also drew the ire of the IP world. The DOJ – Antitrust Division issued a request for public comment on a new iteration of the Policy Statement in December 2021. The announcement came in response to 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.

On May 17, 2022, the Federal Trade Commission (FTC) submitted to Lisa Barton, Secretary of the International Trade Commission (ITC), a statement they believed was relevant to the public interest considerations before the Commission in a matter involving certain UMTS and LTE cellular communication modules (337-TA-1240). The ITC in many cases will invite statements on the Public Interest, and the FTC is often invited to make a submission. It should be noted, however,  “Public Interest” in the ITC is a matter of statute, and there are four public interest factors which are statutory. Any statement in the Public Interest must address one or more of those factors. Other matters not within the statute are not public interest factors.

As we have previously explained, many implementers wish to require patent owners to establish (1) the need for licenses, and (2) that any terms offered are in fact fair, reasonable and non-discriminatory (FRAND), but without having to make any commitment to accepting FRAND licenses, and without ever losing entitlement to the same. With respect to the latter, recall, for example, Apple’s position it its case with PanOptis, namely that PanOptis had “no legal right under U.S. law to impose on Apple an obligation to negotiate a license to Plaintiffs’ portfolios of declared-essential patents or forfeit any defenses for failing to do so” (Apple Inc.’s Motion to Dismiss Count VIII for Lack of Subject Matter Jurisdiction, Optis Wireless Technology, LLC, Optis Cellular Technology, LLC, Unwired Planet, LLC, Unwired Planet International Limited, and PanOptis Patent Management, LLC v. Apple Inc., Civil Action No. 2:19-cv-00066-JRG (E.D. Texas, June 22, 2020)) [hereinafter Optis v. Apple]. Basically, such implementers want the option of capping their exposure at FRAND rates if ever found to infringe. We refer to this as an implementer wanting to have its FRAND cake and eat it too.

“For 200 years, the world was getting along just fine without a policy statement on SEPs [standard essential patents],” said Andrei Iancu earlier this week at Patent Litigation Masters™ 2022, discussing Biden Administration attempts to revisit the 2019 SEP policy agreement among the U.S. Patent and Trademark Office (USPTO), National Institute of Standards and Technology (NIST) and Department of Justice (DOJ). “Standard essential patents are patents too… the regular rule of law should apply.” Iancu, former USPTO Director, and current partner at Irell & Manella, went on to say that the real goal of those constantly chipping away at patent rights is simple: “Weaken patents so that the big entities can have freer reign to get bigger, to infringe patents in a less encumbered way.”

On May 9, a comment signed by a coalition of 25 law professors, economists and former U.S. government officials, and co-written by Adam Mossoff, Law Professor at George Mason University’s Antonin Scalia Law School, and Jonathan Barnett, the Torrey H. Webb Professor of Law at the University of Southern California’s Gould School of Law, was submitted to the European Commission as a response to the EU governing body’s call for evidence on standard-essential patents. Like another recent response to the EU Commission by a group of scholars with the International Center for Law & Economics (ICLE), the Mossoff-Barnett comment attempts to dispel several misconceptions about the impact that SEPs have on the commercialization of new technologies, especially major communications technologies like 4G/LTE and WiFi that have been widely commercialized to the benefit of the vast majority of global consumers, thanks in large part to the patent rights that help to structure commercialization efforts.

Four scholars with the International Center for Law & Economics (ICLE) have sent comments to the European Commission urging against any changes to the EU’s legal framework for licensing of standard-essential patents (SEPs) that would limit SEP holders’ ability to seek injunctions against alleged infringers. The ICLE scholars write: “It is simply not helpful for a regulatory body to impose a particular vision of licensing negotiations if the goal is more innovation and greater ultimate returns to consumers.” The comments come in response to the Commission’s February 2022 Call for evidence, which explained that “some users have found that the system for licensing SEPs is not transparent, predictable or efficient. This initiative seeks to create a fair and balanced licensing framework and may combine legislative and non-legislative action.” The feedback period ended May 9 and asked stakeholders to submit their views on: “(i) transparency; (ii) the concept of licensing on FRAND terms and conditions, including the level of licensing; and (iii) effective enforcement.”

Friday, 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.”

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.

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.