Response to the US Department of Justice call for Public Comments on SEPs Part 2 of 6

I submitted comments to the US Department of Justice’s call for comments that we previously discussed?here.?Since they are rather long, I have decided to serialize them over a series of shorter posts.?For those interested in reading my comments as a singular unit they are available on the DOJ’s website?here.

I. Background for The Withdrawal from the 2013 Policy Statement

In December 2018, former Assistant Attorney General for Antitrust Makan Delrahim announced DOJ’s withdrawal from the 2013 Statement.[1]?Explaining the reasons behind the withdrawal, he noted that “patent law already strikes a careful balance that optimizes the incentive to innovate, for the benefit of the public.?The test was articulated by the Supreme Court in?eBay v. MercExchange.”

Furthermore, his withdrawal noted that the 2013 Statement created “confusion” as it “should not [have] be[en] read as a limitation on the careful balance that patent law strikes to optimize the incentive to innovate.”

In a September 2019 speech, then Under Secretary of Commerce for Intellectual Property and Director of the USPTO, Andrei Iancu, revealed that “the USPTO [was then] carefully studying the issue and discussing it” nothing that “[u]ltimately, if we are to state a new policy, it should be balanced and structured to incentivize technological development and growth of the standards-based industries. …. [A]ny policy statement should incentivize good faith negotiations and dis-incentivize threats of either patent hold-up or patent hold-out.”[2]

Former Director Iancu further explained at the time that “[g]overnment policy must ensure balance between patent owners and potential licensees, so that patented innovations can continue to contribute to voluntary consensus standards organizations thereby continuing to maximize benefits to consumers. To that end, per se rules, or tipped scales, regarding remedies can lead to perverse incentives.”[3]

In issuing the December 2019 policy Statement, (the “2019 Statement”) the USPTO formally withdrew from the 2013 Statement;[4]?NIST was never a signatory to the 2013 Statement.[5]

II.?Key Elements of The 2019 Statement – Correcting Misunderstanding of the 2013 Policy ?

The 2019 statement[6]?and accompanying press releases delivered a number of key messages, including the following:

1. No Special SEP Rules:?No “special set of legal rules” apply to [standard essential patents] and the courts, the U.S. International Trade Commission, and other decision-makers are able to assess appropriate remedies based on current law and relevant facts;”[7] ?
2. All Remedies Available:?All remedies available under national law, including injunctive relief and adequate damages, should be available for infringement of standard-essential patents subject to a F/RAND commitment;”[8] ?
3. Georgia-Pacific Applies.?The Statement cites case law holding that the same set of?Georgia-Pacific?damages factors apply to essential patents and non-essential patents.[9] ?
4. Good Faith Negotiations, by Both Licensees and Licensors, Are Encouraged. “…to help reduce the costs and other burdens associated with litigation, we encourage both standards-essential patent owners and potential licensees of standards-essential patents to engage in good-faith negotiations to reach F/RAND license terms.”[10] ?
5. When Applicable, All Remedies Available.?“When licensing negotiations fail, however, appropriate remedies should be available to preserve competition, and incentives for innovation and for continued participation in voluntary, consensus-based, standards-setting activities.”[11] ?
6. Voluntary, Alternative Dispute Resolution Available.?“Further, individual parties may voluntarily contract for or agree to specific dispute resolution mechanisms?[12] ?
7. The U.S. Government was Taking Its Thumb Off the Scale. The USPTO press release explained: “The new joint statement effectively takes the government’s thumb off the scale”; “The statement is balanced and structured to incentivize technological development and growth of standards-based industries.”[13] ?

While the current administration may see things differently, the U.S. Department of Justice should accurately depict U.S. law and should not be putting its thumb on the scale in commercial negotiations, let alone putting its thumb in favor of technology users most of whom are big tech giants with huge countervailing power. ?

?

David L. Cohen, P.C. – Kidon IP

123 West 93rd Street

New York, NY 10025

[email protected]

(914) 357-5196