Today, the Unites States Patent & Trademark Office (“USPTO”), the U.S. Department of Justice, Antitrust Division (“DOJ”) and the National Institute of Standards and Technology (“NIST”) issued a joint “Policy Statement on Remedies For Standards-Essential Patents Subject To Voluntary F/RAND Commitments.”  This policy statement supplants  the prior 2013 joint policy statement on remedies of USPTO and DOJ that had been interpreted as being hostile to standard essential patents (“SEPs”), which DOJ already had withdrawn from some time ago.  This new joint policy statement represents a significant change from that 2013 statement and has a more balanced approach to SEPs.

The general theme of this new joint policy statement, as informed by developments since 2013, is that there are no special rules for SEPs or different treatment of them from any other type of patent.  Rather, decisions related to SEPs should follow traditional frameworks as informed by any specific standard-setting commitment made for the particular SEP at issue–e.g., a commitment to a standards body to license essential patents on fair, reasonable and non-discriminatory terms (“FRAND”).

Notably absent from this new joint policy statement is the Federal Trade Commission (“FTC”).  Recall that the FTC currently has an internally divided Commission on applying competition law to SEPs.  For example, the FTC case against Qualcomm was filed by a split Commission (2 to 1 vote) just days before the new administration was sworn-in and the FTC has been equally divided since then such that the FTC Staff has proceeded in that case without any policy guidance from the appointed Commissioners.  Indeed, after FTC prevailed in that case at the district court level, one FTC Commissioner published views that the decision was wrong and bad for the United States and another FTC Commissioner took an opposing view.  For its part, DOJ filed briefing that opposes the outcome of that case and was instrumental in convincing the Ninth Circuit in its appellate review of the decision to stay the district court’s decision because there is a likelihood that the decision and the FTC Staff’s positions were wrong.

In sum, there currently is joint consensus among all of the relevant U.S. federal agencies with expertise on SEP issues–DOJ, USPTO, NIST and FTC–except for a couple of individual FTC Commissioners.

Below is a summary of the new joint policy statement, which is relatively short (8 pages double-spaced)  and we highly recommend that you read it for yourself.

Joint Statement

The statement is appropriately caveated in the very first footnote to state that the “statement offers the views of the agencies only and has no force or effect of law.”  The statement summarizes the relevant expertise of each of the three agencies as follows:

  • The USPTO is the executive-branch agency charged with examining patent and trademark applications, issuing patents and registering trademarks, and–through the Secretary of Commerce–advising the President on domestic and certain international issues of intellectual property policy.
  • NIST is the executive-branch agency charged with facilitating standards-related information sharing and cooperation among federal agencies and with coordinating federal agency participation in, and use of, private secdtor standards, emphasizing where possible the use of standards developed by private, consensus organizations, and–through the Secretary of Commerce–advising the President on standards policy pertaining to the nation’s technological competitiveness and innovation ability.
  • The DOJ is the executive-branch agency charged with promoting and protecting competition for the benefit of American consumers.

The statement is  “the joint view of the Agencies on the appropriate scope of remedies to advance those goals” of appropriate remedies “to preserve competition, and incentives for innovation and for continued participation in voluntary, consensus-based, standards-setting activities.”  On this latter point, the statement has a clear warning in footnote 3 that anti-competitive activity by implementors to drive-down the cost of SEPs could lead to investigative efforts by DOJ, stating:

Regardless of a patent holder’s F/RAND commitments, under some circumstances, such as coordinated delay in agreeing to a license to drive down its cost, the DOJ could find such joinder conduct to cause competitive harm, for example, through the collective exertion of monopsony power over a patent holder.

The foregoing represents a concern repeatedly raised by the new DOJ administration that patent holdout by implementers who require an SEP license may be a bigger concern than patent holdup by the SEP patent owners.

The joint statement raises concerns that the prior 2013 Joint Statement by DOJ and USPTO was “misinterpreted to suggest that a unique set of legal rules should be applied in disputes concerning patents subject to F/RAND commitment that are essential to standards (as distinct from patents that are not essential).”  The Agencies viewed that “[s]uch an approach would be detrimental to a carefully balanced patent system, ultimately resulting in harm to innovation and dynamic competition.”  The statement again has informative substantive footnotes on the point.  Footnote 9 explains that the 2013 Joint Statement may have been “misinterpreted to suggest that antitrust law is applicable to F/RAND disputes” and clarified that the U.S. International Trade Commission (“ITC”) considering “competitive conditions” as part of its statutorily required public interest analysis “does not signify that F/RAND licensing disputes raise antitrust concerns.”  Footnote 10 further emphasizes that there are not special rules limiting remedies for SEPs, stating:

[T]here are no special rules limiting the remedies available for the infringement of any standards-essential patent, whether subject to a F/RAND commitment or not.  Remedies for infringement of all standards-essential patents are determined pursuant to the prevailing judicial precedent and statutes on patent remedies according to the facts of each case, including the terms of the particular F/RAND commitment.

Given past misinterpretation of the 2013 Policy Statement, that prior statement is withdrawn and this new Policy Statement is provided for clarity:

[T]he USPTO and DOJ withdraw the 2013 policy statement, and together with NIST issue the present statement to clarify that, in their view, a patent owner’s F/RAND commitment is a relevant factor in determining appropriate remedies, but need not act as a bar to any particular remedy.

The joint statement encourages good faith bilateral negotiations to enter F/RAND license terms.  Such negotiations should be conducted with the understanding that all remedies available to patents generally may be available for SEPs as informed by the particular circumstances presented on a case-by-case basis:

All remedies available under national law, including injunctive relief and adequate damages, should be available for infringement of standards-essential patents subject to a F/RAND commitment, if the facts of a given case warrant them.  Consistent with the prevailing law and depending on the facts and forum, the remedies that may apply in a given patent case include injunctive relief, reasonable royalties, lost profits, enhanced damages for willful infringement, and exclusion orders issued by the U.S. International Trade Commission.  These remedies are equally available in patent litigation involving standards-essential patents.  While the existence of F/RAND or similar commitments, and conduct of the parties, are relevant and may inform the determination of appropriate remedies, the general framework for deciding these issues remains the same as in other patent cases.

The statement then summarizes U.S. court decisions to date which are consistent with “[t]he rejection of a special set of legal rules that limit remedies for infringement of standards-essential patents subject to a F/RAND commitment.”  Rather, “general laws” still apply equally to SEPs and other patents that–importantly–is informed by all relevant facts, including any F/RAND commitment, conduct of the parties, etc.

The statement then concludes with a summary that applying general patent laws applicable to all patents to SEPs–rather than carving out special rules for SEPs–as informed by the particular circumstances of a specific case will “preserve competition and incentives for innovation,” stating:

In the Agencies’ view, courts–and other relevant neutral decision makers–should continue to determine remedies for infringement of standards-essential patents subject to F/RAND licensing commitments pursuant to general laws.  A balanced, fact-based analysis, taking into account all available remedies, will facilitate, and help to preserve competition and incentives for innovation and for continued participation in voluntary, consensus-based, standards-setting activity.