Biden Administration Should Preserve Strong Patent Protection for Standardized Technology

Biden Administration Should Preserve Strong Patent Protection for Standardized Technology
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A looming review of U.S. policy for patents covering standardized technologies such as cellphone communication shines a spotlight on an arcane but consequential area of law at a time when the technology innovation it fosters is a vital pillar of economic and national security.  

The risks of getting this issue wrong are significant, yet recent hints from the Biden administration suggest a system with a long history of promoting innovation and consumer welfare is in jeopardy, not because it’s causing problems but because these standard-essential patents (SEPs) are the perpetual bogeyman of the intellectual property world.   

President Biden has tasked the Attorney General and Secretary of Commerce with revisiting a 2019 Policy Statement that maintained the rights of SEP owners to the same legal remedies U.S. law provides for the infringement of other patents. This policy statement, from the Department of Justice, the U.S. Patent and Trademark Office, and the National Institute of Standards and Technology, was itself a clarification of a 2013 policy statement. Both documents were intended to make clear that if an SEP is infringed — if someone essentially steals the invention and intellectual property covered by such a patent — the patent owner doesn’t lose the right to ask a court to halt infringement simply because the patented technology is important enough to be included in a standard.  

As directors of the USPTO under Democratic and Republican administrations who played a role in formulating these two policy statements, we want to emphasize that the 2019 Policy Statement is not a Republican policy or Democratic policy; it’s not a policy favoring innovators or the companies that implement such innovations into their products. It’s a balanced approach designed to encourage and support American innovation in standards-based technologies, precisely to increase competition and prevent economic consolidation. To advance the goals of President Biden’s Executive Order on Promoting Competition in the American Economy, the Administration should preserve the 2019 Policy Statement.  

In reference to that executive order, at the end of September antitrust enforcement Director Jeffrey Wilder said the Justice Department is moving ahead with the review of the Policy Statement, which applies to SEPs subject to fair, reasonable and non-discriminatory (F/RAND) terms. F/RAND refers to the commitment patent owners make to some standards-development organizations on how they will license their technologies to users if the technology is included in a standard such as 5G wireless. Wilder noted that F/RAND has worked so well because it encourages patent holders to contribute their inventions to the standard while assuring implementers can access the inventions if they are willing to take a license. But Wilder also said that under this system, difficult licensing disputes or negotiating tactics can delay standardized products and consumers can suffer.  

As policymakers, we, too, heard such theoretical worries but never actual evidence. The scary story goes that SEP owners will inevitably leverage their legal monopolies to harm competitors, and ultimately consumers. To do so, fear mongers claim, SEP owners engage in “patent hold-up” that prevents commercialization of the standardized technology by getting courts to enjoin products that depend on it. These tales always come from parties with an interest in weakening IP protection for SEPs.  

The fallacy that strong IP enforcement encourages innovation-stifling litigation is nothing new. Every generation for more than two centuries has foretold innovation’s death by patent thicket, from telegraphs and sewing machines to airplanes and smartphones. And yet the United States has been uniquely innovative, fueled precisely by strong patent protection. One reason innovation and competition particularly thrive in SEP-heavy industries is that balanced rules incentivize SEP owners to set reasonable royalties, while the market is incentivized to adopt broadly the new technologies.    

It’s fine to revisit policies, but we must be careful about tinkering with the most powerful engine for our nation’s innovation economy: the U.S. patent system. Tinker with that engine, and you had better be informed by facts, data and an eye toward good long-term national policy — not baseless theories.  

The 2019 Policy Statement was simple: subject all patents to the same laws with the same available remedies for infringement, including SEPs subject to F/RAND terms. The Policy Statement recognizes SEPs are subject to particular commitments not applicable to other patents and provides a framework courts can use when deciding to grant or deny injunctive relief. But the Policy Statement makes clear that broader patent case law on how to analyze remedies, including injunctive relief, also applies to SEPs.  

Weakening IP laws would only reduce the number of competitors willing to invest to create new technologies, and in the long run will make it more likely that the technology is not developed in the United States at all. The beneficiaries of enfeebled SEP enforcement aren’t American start-ups or consumers; they are nations like China, with centrally controlled economies that funnel enormous resources toward technologies like AI, 5G and quantum computing. China is also the world’s largest consumer of SEP-based technology, so weakening America’s protection of its own patents directly benefits Chinese manufacturers.  

Renewed attention on the 2019 Policy Statement itself is fine. We just shouldn’t change it.

David J. Kappos and Andrei Iancu are former directors of the United States Patent and Trademark Office.

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