Tianchu Gao is an IPilogue Writer and a 2L JD Candidate at Osgoode Hall Law School.
On June 8, 2022, the Department of Justice of the United States announced the official withdrawal of the 2019 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (2019 Statement). As a result, there is now no official written government policy setting out infringement remedies for Standards-Essential Patents. Instead, courts are now responsible for case-by-case regulatory scrutiny.
Significance of this Withdrawal
Standards-Essential Patents, or SEPs, are patents that serve to ensure compliance with technical standards. Holders of SEPs are often required to grant licenses to their patents on fair, reasonable, and non-discriminatory (FRAND) terms. When disputes arise, SEP holders would need to do more work to demonstrate good faith and to move the negotiations forward. According to the official announcement, the withdrawal of the policy is intended to “create incentives to generate more innovation” and “strengthen the ability of U.S. companies to engage and influence international standards.”
The Policy Statement on Remedies for SEPs was initially launched by USPTO in 2013. It was harshly criticized by many in the IP community and thus was replaced with a more SEP-holder-friendly version in 2019. The policy statement faced another transition in July 2021 when President Biden issued an Executive Order to promote a “fair, open, and competitive marketplace.” In response to it, the USPTO and National Institute of Standards and Technology proposed a draft statement and solicited public comments.
The new draft statement strengthened restrictions on SEP remedies again. Supporters of the draft argued that it provides a more reasonable and balanced handling of the rights of patent holders and implementers. The global corporation, Canon, commented that the draft would improve the predictability of SEP enforcement and facilitate the participation of potential SEP holders and implementers.
Yet, overall, criticism of the draft outnumbered the applause among the public. Many businesses and innovators found the policies unfair and disfavored the dictating role of the government. Senator Thom Tillis argues that it “diminishes patent holders’ statutory rights and undermines the judicial process by substituting the courts’ judgement for its own.” Another comment mentions that the 2019 policy gave US companies an edge in 5G, artificial intelligence, biopharmaceuticals, and robotics sectors. The draft statement would subject American tech-companies to a less advantageous position in patent disputes. Apparently, these comments persuaded the US government that “withdrawal best serves the interests of innovation and competition.”
Looking into the future, the law regarding SEP injunctions inevitably becomes murky in the US. IP attorneys will have to watch more closely on how the courts rule cases involving requests for injunctions based on SEPs. It will also have ripple effects on smaller businesses and institutions, in the US and across the world, whose operations relies on SEPs implementation.