The U.S. Department of Justice (DOJ) recently issues a business review letter (BRL) and press release concerning a proposed patent pool of patents owned by universities called the University Technology Licensing Program (UTLP) in response to UTLP’s BRL request of August 14, 2020. The UTLP pool is not intended to have standard essential patents (SEPs), but has provisions in the event that a patent in the pool is found to be an SEP. This business review letter provides incremental insight into DOJ’s competition law distinctions between SEP patent pools and non-SEP patent pools.
We do a quick summary of it below, but (as always) recommend that you read the BRL itself if you need to make decisions based on it. Some incremental insights from this BRL with the distinction between SEP and non-SEP patent pools from a competition law point of view include:
- Competition law is particularly concerned with pooling together substitute patents (e.g., pooling together patents covering mutually exclusive, competing technologies), but a pool of standard essential patents do not raise that concern because such patent pools would have only complementary patents (e.g., patents on technologies that may be used together, which generally is the case for patents essential to the same standard).
- A licensee can pick-and-chose patents to license from a pool of non-SEPs, but cannot for a pool of SEPs because a license is required for all the SEPs (else patents in the pool are not essential to the standard after all).
- Price flexibility based on the number of patents in a non-SEP patent pool that one licenses is helpful because–unlike with a pool of SEPs–not all implementers will require access to every patent in that pool so discounts for licensing more patents provides incentives to use the technology and has transaction efficiencies.
- Competition concerns might be raised when sharing royalty distribution among all members of a pool of non-SEPs in which not all patents may be licensed (because not all licensees may use all the patented technology), but those concerns do not arise with SEP patent pools in which the entire SEP pool must be licensed (because licensees need a license to all patents that are essential to the standard).
- Making the patent pool of non-SEPs the exclusive entity to obtain a license to any patents in that pool was not a concern here given other circumstances, but it may be a concern for an SEP patent pool, which is why such SEP pools typically allow the patent owners to independently license there SEPs if not licensed through the SEP pool.
As we stated with other DOJ business review letters, this letter is limited to whether DOJ currently perceives any competition law issues with the proposed business plan and does not represent an endorsement that a business plan is substantively better than other approaches. Thus, this business review letter’s conclusion is limited to finding that the “UTLP is unlikely to harm competition” so DOJ has “no present intention to challenge the program.” DOJ also stressed that this letter is limited to the particular type patent pools of universities that have unique issues in enforcing their patents in this particular technological area of physical sciences.
Continue Reading DOJ Business Review Letter of University Tech. Licensing Program for Non-SEPs