DOJ and USPTO Policy on Standard-Essential Patents

Standard-essential patents are becoming a hot topic in intellectual property law.  Google recently agreed to a consent order with the Federal Trade Commission over its pursuit of injunctions against companies needing to use its standard-essential patents.

The U.S. Patent and Trademark Office and Department of Justice issued a joint policy statement. It calls on the U.S. International Trade Commission (ITC) to exercise restraint when asked to impose injunctions in patent infringement actions involving key technologies.

A standard-essential patent is a patent for an invention that must be used to comply with a technical standard. Standards organizations often require members to disclose and grant licenses to their patents and pending patent applications that cover a standard that the organization is developing.

If a standards organization fails to get licenses to all patents that are essential to complying with a standard, owners of the unlicensed patents may demand or sue for royalties from companies that adopt the standard. This happened with DDR Memory (Rambus),  GIF and JPEG standards, for example.

Determining which patents are essential to a particular standard is very complex and may not be known at the time the standard is set.

Standard-essential patents have become integral to the tablet and smartphone industry because they form the backbone of the basic technology they need to operate. While most owners of these patents have voluntarily pledged to grant licenses to other companies on reasonable and nondiscriminatory terms (RAND), they are also prone to abuse. As the DOJ and USPTO note, “The owner of that patented technology may gain market power and potentially take advantage of it by engaging in patent holdup.”

As a result, the agencies caution the ITC against handing out injunctions too freely. “Companies that own a key patent, such as those that ensure mobile and other electronic devices work together, should be allowed to win sales bans as a punishment for infringement only in rare, very specific cases,” the policy statement argues. Instead, the USPTO and DOJ are calling for monetary damages in the majority of cases.

The recommendations of the DOJ and USPTO are not binding on judges. However, courts have already demonstrated a growing reluctance to issue injunctions in cases involving standard-essential patents. Given the latest policy statement, the trend is likely to continue.

How Can I Help?

If you, or someone you know, need help with any Intellectual Property issue, from filing a patent, trademark or copyright, or just advice regarding how best to protect your ideas and your brand, contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney in Pasadena, California and I am a Rising Star as rated by Super Lawyers Magazine.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman

Department of Justice is Monitoring Antitrust Implications of Patent Transfers.

The U.S. Department of Justice continues to monitor the potential antitrust implications of patent portfolio transfers, particularly in high-tech industries like wireless. In recent remarks at the Fordham Competition Law Institute’s 39th annual conference on International Antitrust Law and Policy, former Acting Assistant Attorney General Joseph Wayland discussed how the DOJ is working to “balance patent rights, competition and innovation in the information age.”

“It is increasingly important… in highly dynamic sectors – such as in the wireless device industry – that antitrust authorities play an active role monitoring the intersection of patent rights and standard setting with competition,” Wayland stated.

He then outlined three major ways in which the DOJ’s Antitrust Division is taking an active role in this process. They include ensuring that the market power that can be created by standard setting is not used anticompetitively; carefully reviewing the acquisition of patent portfolios; and encouraging standard setting organizations to clearly define the scope of licensing commitments required for standards essential patents.

After closing investigations into the acquisition of significant patent portfolios owned by Nortel and Motorola Mobility, Wayland indicated that the DOJ would continue to closely to monitor patents in the wireless device industry, particularly as they relate to smartphones and computer tablets, to ensure that they do not stifle competition and innovation. He specifically warned that even if patent holders are not enforcing standard-essential patents, attempts to force licensees to accept certain kinds of anti-competitive contract terms could run afoul of antitrust regulations.

As the DOJ’s antitrust chief made clear, antitrust issues can often impact patent portfolio transfers and other licensing agreements. Therefore, it is imperative to understand the legal implications and take steps to avoid triggering an investigation. For additional information about anticompetitive legal concerns, contact us today by phone or email to schedule your free 30-minute consultation.

How Can I Help?

If you need help patent portfolio transfers, mergers and acquisitions of intellectual property, or know someone that can use my help, please contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney. As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman