On June 8, 2022, the DOJ, USPTO, and the National Institute of Standards and Technology (NIST) (collectively, the Agencies) issued a new statement on FRAND licensing (2022 Statement) providing no set policy regarding Standards Essential Patents (SEPs), which should inure to the benefit of patent owners. By issuing this statement and declining to adopt their 2021 Draft Policy (2021 Draft Policy), the Agencies effectively neutralized their policy on SEP licensing and provide no guidance to parties in SEP licensing discussions. Even with no guidance, however, the Agencies are reserving the right to police negotiations and prosecute opportunistic behavior by either side in a case-by-case basis, creating a circumstance where negotiators may not know if they are raising the Agencies’ ire. Though knowledge of the evolving multinational case law related to SEP license negotiation provides reasonable understanding of the necessary procedure.

One of the primary takeaways of the 2022 Statement is that the Agencies seem to want to appear above the fray and remain neutral on what has become a controversial and divisive area of intellectual property licensing. The Biden administration was widely expected to adopt the 2021 Draft Policy which would have favored SEP implementers over SEP innovators. But ditching the 2019 Policy Statement on Remedies for SEPs Subject to Voluntary F/RAND Commitments (2019 Statement) with no replacement shows that the Agencies recognized that adopting a policy would anger and frustrate whichever side of the debate viewed the policy disfavorably. Now the outcome of this debate will likely land where it always should have: determined by the court system after interested parties provide their best legal arguments to courts of competent jurisdiction without a thumb on the scale from the ever changing presidential administration. An obvious draw back of the Agencies’ approach is the lingering threat to bring actions against parties in SEP licensing discussions merely because the Agencies’ dislike their behavior. We will have to wait and see how that plays out and if the Agencies exercise their discretion at all or remain on the sidelines (where they should stay).

The Agencies Decline to Opine on Availability of SEP Injunctions

In 2013, The DOJ and USPTO issued their first policy (2013 Policy) in a trilogy directed to SEP-licensing negotiations. The first policy contained a statement that led some to believe that the remedy of injunctive relief, including an exclusion order, was not available to SEP-holders because it: “may be inconsistent with the public interest.” (2013 Policy at p. 6). In 2019, in response to the chilling effect this had, those agencies withdrew the first policy and issued a new one (along with NIST) that opined that injunctive relief to SEP-holders against unwilling licensees should be available. In 2021, however, the Agencies published their 2021 Draft Policy, which again discouraged injunctive relief and created an uncertain future for SEP negotiations and related litigation. Many industry experts, from both sides of the licensing-aisle, maligned the 2021 Draft Policy.

According to the 2022 Statement, the withdrawal of the 2019 Policy without replacement is “the best course of action for promoting both competition and innovation in the standards ecosystem.” (2022 Statement at p. 1). This signals a clear shift by the agencies to allow sophisticated parties to negotiate their own SEP licenses and pursue all forms of remedy when those negotiations go awry. It further implies recognition of the potential for a constant see-sawing of guidance on SEP licensing as administrations change.

The DOJ May Still Enter the Discussion on a Case-by-Case Basis

Despite the removal of any formal policy by the agencies, the DOJ has stated that it will still review and prosecute anticompetitive behavior by parties involved in FRAND negotiations on a case-by-case basis.

According to the Assistant Attorney General of the DOJ’s Antitrust Division: “[t]he Antitrust Division will carefully scrutinize opportunistic conduct by any market player that threatens to stifle competition in violation of the law, with a particular focus on abusive practices that disproportionately affect small and medium sized businesses or highly concentrated markets.” (2022 Statement). The 2022 Statement also notes that, “in accord with President Biden’s Executive Order, the Agencies plan to continue to cooperate as appropriate on matters that affect the intersection of competition, standards development and intellectual property rights,” which may suggest that the conversation is not over on agency SEP policy. We will have to see how the DOJ applies this new direction.

Conclusion

The vacuum created by the Agencies’ departure will likely be filled by a body of case-law involving SEP-negotiations that have gone awry. In filling this void, courts around the country may look at their own jurisdiction’s contract law, federal antitrust laws, and/or the now abandoned policies as a guide to determine the appropriate course for good faith negotiations. U.S. courts may also be persuaded by opinions issued by foreign courts involving similar disputes.

In addition, Standards-developing organizations (SDOs) or Standards-setting organizations (SSOs) may promulgate policies to govern negotiations involving commitments made to their relevant standards.

Until then, private parties are left to determine what constitutes good-faith, pro-competitive conduct at their specific negotiation table.