Late last year, the Biden administration released a draft policy statement on remedies in standard essential patent (SEP) licensing disputes that attempted to bridge the gap between two prior approaches: a 2013 policy statement that focused more on patent owner hold-up and the 2019 policy statement that replaced it, swinging further in the other direction by arguing that injunctions should be available in SEP disputes. However, the US Department of Justice (DOJ), the National Institute of Standards and Technology (NIST), and the USPTO have now decided to withdraw that 2019 policy statement altogether rather than make revisions—notably, neither adopting the 2021 draft nor reinstating the 2013 one.

As detailed in RPX’s prior coverage, the 2013 joint policy statement, issued by the Antitrust Division of the Justice Department under President Barack Obama alongside the USPTO but not the NIST, essentially formalized the previous US antitrust policy toward SEP licensing. In particular, the statement addressed the anticompetitive effects of injunctive relief as used to gain leverage in SEP licensing disputes. While the statement acknowledged that an exclusion order for infringement may be appropriate in some circumstances, it argued that an injunction would be against the public interest where the accused infringer is “acting within the scope of the patent holder’s [commitment to license its patents on fair, reasonable, and non-discriminatory (FRAND) terms] and is able, and has not refused, to license on [FRAND] terms”.

However, in December 2018, Assistant Attorney General Makan Delrahim—the head of the Antitrust Division under President Donald J. Trump—announced the DOJ’s withdrawal from the 2013 policy statement, stating that the prior policy viewing SEP injunctions as potentially anticompetitive was “wrong as a matter of antitrust law and bad as a matter of innovation policy”. In December 2019, the DOJ then issued a new joint policy statement with the USPTO and the NIST that explained why, in that administration’s view, patent owners should be able to win injunctions in SEP disputes. In particular, the statement asserted that a SEP holder’s FRAND commitment is relevant for determining “appropriate remedies” but “need not act as a bar to any particular remedy”; that both injunctions and damages should be available as remedies for the infringement of SEPs subject to FRAND commitments; and that the framework for determining those remedies should be the same as other cases: “there are no special rules limiting” such remedies.

The most recent policy shift was kicked off in July 2021, when President Joseph R. Biden Jr. signed an executive order on competition law that explicitly ordered the Attorney General and Secretary of Commerce to revisit the December 2019 joint policy statement, in order to “avoid the potential for anticompetitive extension of market power beyond the scope of granted patents, and to protect standard-setting processes from abuse”. DOJ officials signaled at the time that the new policy would be “balanced”, a theme reflected in the draft policy statement that was released by the DOJ, USPTO, and NIST in December 2021. Specifically, the proposed policy emphasized the importance of discouraging improper and “opportunistic” behavior by both implementors and licensors during the negotiation process, notably arguing that implementer holdout incentivizes patent holders to opt for “closed, proprietary standards” rather than contributing to a “consensus-based process”. The statement also set forth a series of recommended best practices for good-faith negotiations.

Perhaps the statement’s most significant change, though, was that it walked back the 2019 policy statement’s endorsement of SEP injunctions, as noted above. Unlike the 2019 policy, which interpreted the Supreme Court’s eBay v. MercExchange decision (giving courts equitable discretion over injunctive relief) as not requiring a blanket prohibition on injunctions in SEP cases, the 2021 proposal reached the opposite conclusion. The agencies argued in the new statement that under the Federal Circuit’s 2014 opinion from Apple v. Motorola, “[a] patentee subject to FRAND commitments may have difficulty establishing irreparable harm” under eBay—and “[a]s a general matter, consistent with judicially articulated considerations, monetary remedies will usually be adequate to fully compensate a SEP holder for infringement”. That said, the agencies also stated that injunctions could still be available “where an implementer is unwilling or unable to enter into a license”.

The new proposal sparked a heated debate among stakeholders during the official public comment period, with the government receiving over 1,000 comments in total by the early February deadline—including 167 comments published online. Those included bipartisan feedback on both sides from members of Congress—with opponents including Senators Thom Tillis (R-NC), Chris Coons (D-DE), and Mazie Hirono (D-HI), who argued in a joint submission that the statement was overly “unbalanced” in favor of implementers, that it would “embolden strategic infringers”, and that it would “disincentivize U.S. research and development in . . . critical technologies”. In contrast, four House members from California—Representatives Anna Eshoo (D), Zoe Lofgren (D), Eric Swalwell (D), and Darrell Issa (R)—Issa, notably, an inventor named on several patents—asserted that the statement strikes the right balance, “respect[ing] the rights and interests of SEP owners while restoring vigilance against backsliding on F/RAND commitments”. Those House members also argued that the statement was right that SEP injunctions are “generally not appropriate”. A host of tech companies additionally filed statements largely in support, including Apple, Amazon, Canon, Cisco, Continental, Juniper Networks, HP, Sony, and Thales as well as industry associations including the Computer and Communications Industry Association and the High Tech Inventors Alliance.

The commenters further included two patent pool operators. Marconi, the parent company of licensing pool Avanci, filed a statement that expressed some support for the proposed policy, but argued that its negotiation guidelines do not adequately take into account the dynamics of licensing platforms like Avanci. Pool operator Access Advance also detailed several criticisms, calling out the policy’s implicit assumption of “bilateral licensing between two single entities” and advocating for a different approach for patent pools, under which pool licenses would be presumptively FRAND and under which implementers would be required to identify and negotiate with relevant pools as early as possible to be considered willing licensees.

Various patent licensors, in contrast, detailed their opposition to the policy in various forms, including Dolby Laboratories, Fraunhofer-Gesellschaft, and InterDigital, Inc., as well as Acacia Research Corporation and Harfang IP Investment Corp (which cofiled a comment), Sisvel International S.A. (Sisvel US, Inc.), and Fractus SA. Also lodging shorter statements in opposition were patent monetization firm Empire IP LLC and Wi-LAN Inc. CTO Kenneth Stanwood, with other companies that expressed concerns regarding the policy including Ericsson, Nokia, Panasonic, and Qualcomm.

On June 8, 2022, the DOJ, USPTO, and NIST announced that after considering this feedback, they had decided to withdraw the 2019 policy statement rather than make revisions, stating that this would be “the best course of action for promoting both competition and innovation in the standards ecosystem”. In their withdrawal, the agencies “recognize[d]” that standards-development organizations and  “widespread and efficient licensing” between SEP holders and implementers on FRAND terms “help[] to promote technological innovation, further consumer choice, and enable industry competitiveness including in emerging technologies and market entry of new and small-to medium-sized entities”. However, they asserted that these goals can be accomplished through the courts’ administration of US law under the Constitution, regulations, and statutes, as also enforced by the DOJ and other agencies—with the DOJ to “review conduct by SEP holders or standards implementers on a case-by-case basis to determine if either party is engaging in practices that result in the anticompetitive use of market power or other abusive processes that harm competition”. Since the agencies neither reinstated the 2013 policy nor adopted the 2021 proposal, this case-by-case enforcement will ostensibly proceed without any formally stated set of guidelines.

The agencies’ announcement included statements from their respective heads—including Assistant Attorney General Jonathan Kanter, who leads the DOJ’s Antitrust Division and stated that its case-by-case approach would place a “particular focus on abusive practices that disproportionately affect small and medium sized businesses or highly concentrated markets”. Additionally, USPTO Director Kathi Vidal underscored the need to incentivize innovation, “especially in underserved communities and in key technology areas”. Moreover, NIST Director Laurie E. Locascio emphasized the promotion of US companies as they seek to engage and influence national standards, citing stakeholder feedback that supported continued commitment to “America’s industry-led, voluntary, consensus-based approach to standards development”.

For more on the just-withdrawn 2019 policy statement and its 2013 predecessor, see here and here.