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SEP remedy policy ‘reversal’ emboldens US patent owners


Despite having little legal impact, the Department of Justice’s and USPTO’s new joint policy statement on remedies for standard essential patents has encouraged many businesses in their FRAND negotiations

With the USPTO, Department of Justice and National Institute of Standards and Technology launching a new joint policy statement on remedies for standard essential patents last December, in-house counsel say they have been emboldened by what they see as a complete policy reversal

The document, titled Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary FRAND Commitments, sets out that an SEP owner’s commitment to give licences on fair, reasonable and non-discriminatory terms does not stop them from seeking injunctions.

The new policy replaces a previous document introduced by the DoJ Antitrust Division and the USPTO in 2013 that many thought ruled out injunctive relief as a remedy in disputes between SEP licensors and potential licensees.

Lawyers from SEP-focused companies, including InterDigital, WiTricity and Huawei, say that on balance this publication is a good step in the right direction. They add that while the document is not legally binding, it has set a better tone for future and even current negotiations.

“This policy has two effects: it emboldens SEP owners in their negotiations who are now confident that injunctive relief is on the table, and it makes infringers feel that they are no longer immune from repercussions,” says William Merritt, CEO and president of InterDigital in Philadelphia.

“We have been encouraged by the document because we have always been about fairness and are happy to have negotiations worked out by a third party, and this document speaks to that sense of fairness we all care about.”

He adds that the company will leverage this new policy in its ongoing court cases, and that while it is true that the document has no legal standing, it will probably have a meaningful legal impact in those matters.

“The USPTO, DoJ and NIST have sent a very strong signal, and it is now clear that there is a new sheriff in town,” says Merritt.

Scott Witonsky, vice president of IP and licensing at electric car charging firm WiTricity in Boston, agrees that the newly released 2019 policy is much more positive than its 2013 predecessor, but adds that it is not likely to significantly influence his own processes.

“The new policy is not changing anything for us right now. But we want people to use our technologies and take licences for them, so this document is nice to have.

“Hopefully we will see a case ruling in the next few months that is consistent with this policy.”

He adds that in that sense, the new policy could have a significant impact on company licensing strategies.

Witonsky notes that perhaps the more important question to answer regarding this change in policy is: why is it happening now?

Brian Pomper, Akin Gump partner and executive director at the Innovation Alliance, a group of R&D-focused firms including Qualcomm and AbbVie, says the new policy has been well received by the group and SEP owners broadly.

Speaking in his capacity at the Innovation Alliance, he says that the 2013 statement had muddied the waters and that the 2019 policy represents a big change in outlook among those at the USPTO and DoJ.

“When this policy was issued late last year, it was not seen so much as a victory by SEP owners and it was a return to normality. It creates an environment that is conducive to fair negotiation where a mutually acceptable result can be obtained.”

He adds that the document is likely to stifle ‘efficient infringement’ in the US, where companies purposely drag out negotiations and take matters to litigation on the bet that such a strategy will ultimately cost them less or the same amount as taking a licence.

The other side

Not all companies were celebrating the launch of this new policy, of course. Sources say those companies that are primarily SEP implementers are furious about the change.

Morgan Reed, president of the App Association, a representative organisation of firms including Dogtown Media and Stroll Health, says the document does not go far enough in protecting SMEs from abusive SEP licensing.

“We appreciate the reinforcement of the US Supreme Court’s eBay standard, which accounts for the extraordinary impacts of SEP injunctions before awarding them.

“We will continue our advocacy before these agencies on behalf of our thousands of small business members to ensure a competitive environment that supports innovators in developing software and other technologies that rely on open standards.”

Steven Geiszler, US chief IP litigation counsel at Huawei in Dallas, adds that his company is a little more on the fence about the policy than some SEP owners, but thinks that it serves as a good reminder that injunctive remedies do exist in the US and were not killed off by eBay.

“We own a lot of patents around the world and value enforceability, but we are also a large manufacturer and seller of products that incorporate SEP-protected components. Having that large footprint on both sides means we must take a balanced view on the matter, so I couldn’t say that the policy was strictly good or bad.

“The new policy has served to open up the discussion about SEP remedies again, however.”

He adds that this policy is unlikely to affect Huawei’s licensing approach significantly because the company has a global scope and isn’t focused solely on the US.

The patent pendulum continues to swing back towards a pro-patent position in the US. With legislative revisions to Section 101 and Section 112 expected this year, this SEP remedies policy might also be the start of broader change to the licensing landscape.

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