New Policy Affirms Property Rights

Trump administration innovation agency officials have issued a new joint policy statement affirming the right of certain crucial patents to meaningful enforcement remedies. On December 19, the Patent & Trademark Office, the Justice Department and the National institute of Standards and Technology released the joint statement on appropriate remedies available to standard-essential patent owners. This policy document replaces one from 2013, which was withdrawn earlier in 2019.

At the crux of patents lies the right to exclude others from using, making or selling one’s invention, the private property rights of which a patent is supposed to secure. Exclusivity characterizes patent rights. In the context of asserting one’s patent, a patent owner must be able to say “no” to a patent infringer or unreasonable potential licensee, and to hold patent infringers and bad-faith actors accountable.

These joint policy statements involve standard-essential patents. SEPs relate to superior technologies that voluntary collaborative bodies determine should be the industry standard. These technological standards enable multiple firms’ devices and products to interoperate smoothly. For instance, standards allow your iPhone to connect you by voice, text and data to a friend’s Samsung smartphone. SEPs typically face certain licensing rules — innovators agree to license their SEPs to implementers on fair, reasonable and nondiscriminatory (FRAND) terms. That assumes the good faith of the implementers. But you can’t assume good faith today because of the all-too-common practice of “efficient infringement.”

Things have gotten messy. Courts, administrative agencies, including competition agencies (e.g., DOJ Antitrust Division, Federal Trade Commission), and some standard-setting organizations have turned FRAND commitments into a blanket duty to grant patent licenses to any interested implementer — regardless of whether a party is dealing in good faith. As correspondence Conservatives for Property Rights cosigned put it, “the 2013 Joint Policy Statement was at best confused on how to maintain the incentive to innovate in a standard-development context.”

Why? Because, “The inability to effectively enforce a patent diminishes the value of the exclusive right the patent bestows and discourages innovation and the investments required to commercialize new inventions. That is true in the technology standards context if standard development organizations refuse patent holders the right to exclude others who reject a license offered on reasonable terms from using their inventions, effectively creating, in the words of the AAG [Assistant Attorney General Makan Delrahim], a compulsory license.” A compulsory license is all that’s left if you can’t exercise patent rights or get an injunction. Thus, CPR and others applauded withdrawal from the imbalanced 2013 policy statement.

The new joint statement affirms that SEP owners' FRAND commitments “need not act as a bar to any particular remedy.” Rather, “[a]ll the remedies that may apply in a given patent case include injunctive relief, reasonable royalties, lost profits, enhanced damages for willful infringement, and exclusion orders issued by the U.S. International Trade Commission. These remedies are equally available in patent litigation involving standards-essential patents.”

The new joint policy statement rests firmly upon sound property rights principles and legal understanding. It reflects wise leadership at the USPTO, the Antitrust Division and NIST. It represents a cornerstone in the foundation of good policy so necessary to foster innovation.

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