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Regulatory Comments Abstract This comment by 25 law professors, economists and former United States government officials was submitted to the European Union Commission in response to a . . .
This comment by 25 law professors, economists and former United States government officials was submitted to the European Union Commission in response to a “call for evidence” on the licensing, litigation, and remedies of standard-essential patents (SEPs). It details the principal concepts and substantial evidence relating to the constructive role of SEPs in efficiently promoting innovation and structuring commercialization activities in high-tech devices generally and the mobile revolution specifically. It also addresses widespread misunderstandings and misstatements about the commercialization and litigation of SEPs. It broadly makes three points.
First, in contrast to the evidence of the positive role of SEPs in promoting innovation and commercialization in wireless technologies, no published empirical study has found evidence of the predicted marketplace effects of “holdup” or “royalty stacking” theories, such as higher prices, less innovation, and less market competition in smartphones. Second, contrary to claims by some commentators that courts do not issue injunctions for the infringement of SEPs, the comment reviews some representative decisions from the substantial case law in Europe in which SEP owners have requested or obtained injunctions against implementers engaging in holdout tactics. Third, it explains how courts have consistently held that the fair, reasonable, and non-discriminatory (FRAND) commitment by SEP owners does not mandate a “license to all” rule nor that reasonable royalties be calculated according to the “smallest salable, patent practicing unit” (SSPPU) standard. These court decisions are consistent with the economic function and evidence of SEP licensing on FRAND terms.
The mobile revolution has created unparalleled economic and technological growth over the past three decades. So long as courts provide robust enforcement of intellectual property rights, and do not impede the licensing and other contracts predicated on those rights, there is every reason to believe that the mobile market will continue to thrive. The comment concludes with an Appendix listing the substantial, published literature addressing both the success of the SEP-based sector of the global innovation economy and the numerous substantive and methodological flaws in “holdup” and “royalty stacking” theories.
Regulatory Comments Comments of Scholars of Law, Economics, and Business Draft USPTO, NIST, & DOJ Policy Statement on Licensing Negotiations and Remedies for Standard-Essential Patents Subject to . . .
We are scholars of law, economics, and business who work in areas related to intellectual property, antitrust, strategy, and innovation. We write to express our concerns with the December 6, 2021, U.S. Patent & Trademark Office (USPTO), National Institute of Standards and Technology (NIST), and U.S. Department of Justice, Antitrust Division (DOJ) draft statement on remedies for the infringement of standard-essential patents (SEPs) (“Draft Policy Statement”).[1] This statement would effectively repudiate guidance published by these same agencies in 2019.[2]
While the Draft Policy Statement may seem even-handed at first sight, its implementation would have far-reaching consequences that would significantly tilt the balance of power in SEP-reliant industries, in favor of implementers and to the detriment of inventors. In turn, this imbalance is liable to harm consumers through reduced innovation, resulting from higher contract-enforcement costs and lower returns to groundbreaking innovations. And by making it harder for U.S. tech firms to enforce their intellectual property (IP) rights against foreign companies, the Draft Policy Statement threatens to erode America’s tech-sector leadership.
Read the full comments here.
[1] U.S. Patent & Trademark Office, the National Institute of Standards and Technology, and the U.S. Department of Justice, Antitrust Division, Draft Policy Statement on Licensing Negotiations and Remedies for Standard-Essential Patents Subject to Voluntary F/RAND Commitments (Dec. 6, 2021), available at https://www.justice.gov/atr/page/file/1453471/download [hereinafter “Draft Policy Statement”].
[2] U.S. Patent & Trademark Office, the National Institute of Standards and Technology, and the U.S. Department of Justice, Antitrust Division, Policy Statement on Licensing Remedies for Standard-Essential Patents Subject to Voluntary F/RAND Commitments (Dec. 19, 2019), available at https://www.uspto.gov/sites/default/files/documents/SEP%20policy%20statement%20signed.pdf.
Regulatory Comments Abstract This comment by 27 law professors, economists and former government officials was submitted to the Department of Justice in response to a call for . . .
This comment by 27 law professors, economists and former government officials was submitted to the Department of Justice in response to a call for comments on a draft policy statement on standard essential patents (SEPs). Although the draft policy statement is right to seek a “balanced, fact-based analysis [that] will facilitate and help to preserve competition and incentives for innovation and continued participation in voluntary, consensus-based standard-setting activity,” the comment identifies how its proposals fail to accomplish this goal. First, the draft policy statement fails to account for the extensive scholarly research and rigorous empirical studies identifying numerous substantive and methodological flaws in the “patent holdup” theory, including its failed predictions of high prices, less innovation, and less market competition; instead, a growing mobile communications marketplace has existed for several decades. Second, the draft policy statement micro-manages the negotiation and litigation process for SEPs, which would make injunctions and exclusion orders at the International Trade Commission a de facto nullity for SEPs. This special rule effectively prohibiting injunctions contradicts repeated court decisions in both the U.S. and Europe concerning the general availability of all patent remedies for SEPs. Ultimately, the draft policy statement incentivizes strategic holdout by implementers and de facto prohibits injunctive relief for ongoing infringement of an SEP by an unwilling licensee. This would harm U.S. innovators facing increasing economic and strategic competition from China. It also threatens U.S. economic leadership and its national security, which contradicts the expressly stated goal of President Joseph Biden’s Executive Order, the progenitor of this draft policy statement, of “preserving America’s role as the world’s leading economy.” Thus, the 27 legal academics, economists, and former government officials urge the agencies to reconsider its draft policy statement on SEPs. The comment includes an Appendix of the literature on the licensing and enforcement of SEPs.
Scholarship Abstract In its recent report entitled “The Evolving IP Marketplace,” the Federal Trade Commission (FTC) advances a far-reaching regulatory approach (Proposal) whose likely effect would . . .
In its recent report entitled “The Evolving IP Marketplace,” the Federal Trade Commission (FTC) advances a far-reaching regulatory approach (Proposal) whose likely effect would be to distort the operation of the intellectual property (IP) marketplace in ways that will hamper the innovation and commercialization of new technologies. The gist of the FTC Proposal is to rely on highly non-standard and misguided definitions of economic terms of art such as “ex ante” and “hold-up,” while urging new inefficient rules for calculating damages for patent infringement. Stripped of the technicalities, the FTC Proposal would so reduce the costs of infringement by downstream users that the rate of infringement would unduly increase, as potential infringers find it in their interest to abandon the voluntary market in favor of a more attractive system of judicial pricing. As the number of nonmarket transactions increases, the courts will play an ever larger role in deciding the terms on which the patents of one party may be used by another party. The adverse effects of this new trend will do more than reduce the incentives for innovation; it will upset the current set of well-functioning private coordination activities in the IP marketplace that are needed to accomplish the commercialization of new technologies. Such a trend would seriously undermine capital formation, job growth, competition, and the consumer welfare the FTC seeks to promote.
In this paper, we examine how these consequences play out in the context of standard-setting organizations (SSOs), whose activities are key to bringing standardized technologies to market. If the FTC’s proposed definitions of “reasonable royalties” and “incremental damages” become the rules for calculating damages in patent infringement cases, the stage will be set to allow the FTC and private actors to attack, after the fact, all standard pricing methods through some combination of antitrust litigation or direct regulation on the ground that such time-honored royalty arrangements involve the use of monopoly power by patent licensors. In consequence, the FTC’s Proposal, if adopted, could well encourage potential licensees to adopt the very holdout strategies the FTC purports to address and that well-organized SSOs routinely counteract today. Simply put, the FTC’s proposal for regulating IP by limiting the freedom of SSOs to set their own terms would replace private coordination with government hold-up. The FTC should instead abandon its preliminary recommendations and support the current set of licensing tools that have fueled effective innovation and dissemination in the IP marketplace. FTC forbearance from its unwise Proposal will improve bargaining incentives, reduce administrative costs, and remove unnecessary elements of legal uncertainty in the IP system, thereby allowing effective marketplace transactions to advance consumer welfare.
Amicus Brief "The choice between contempt proceedings and new infringement proceedings for a newly accused device should satisfy several important objectives..."
“The choice between contempt proceedings and new infringement proceedings for a newly accused device should satisfy several important objectives: (1) maintaining consistency with legal precedent, (2) fostering efficiency and due process, and (3) preserving incentives to invent, incentives to invest in and commercialize new technologies, and third-party incentives to avoid infringement and to design around. On the particular issue in this case, these different objectives all point in the same direction.
To address these objectives, this brief argues that the court should apply a test based on the doctrine of equivalents (“DOE”). If the initial infringing device and the newly accused device are “substantially the same” in the sense of the DOE, the court should evaluate the newly accused device through contempt proceedings. Conversely, if the initial infringing device and the newly accused device are not “substantially the same” in the sense of the DOE, the court should evaluate the newly accused device through infringement proceedings. Whichever threshold is used, there are burdens on the patentee, the defendant, and the legal system. Thus it makes sense to look at keeping costs low for a given level of accuracy. We argue in this brief that application of the DOE is the appropriate mechanism for determining the appropriateness of a contempt proceeding to enforce an injunction against a newly- accused device, and that application of the doctrine here counsels in favor of affirming the District Court’s decision.”
