DOJ Withdraws Proposed Threat to National Security

In a welcome move, a proposal that posed a threat to U.S. national security has been withdrawn. America’s valuable, cutting-edge inventions would have been more vulnerable to Chinese and other competitors’ theft — along with an antitrust sledgehammer wielded against U.S. innovators. 

That proposal, released this past December by the U.S. Department of Justice, the Patent and Trademark Office and the National Institute of Standards and Technology withdrew a pro-innovation 2019 joint policy statement by those agencies. Their new draft would have replaced the 2019 statement with new guidance that would undermine the protection of patents that are part a technological standard (such as those used in cutting edge technologies like 5G, AI and mobile).

Stacking the antitrust deck against SEPs, or standards-essential patents, and tilting antitrust enforcement against inventors with standard-related patents faced broad, bipartisan opposition. A big reason was the dangerous implications for national security. 

Rep. Bill Posey (R-Fla.) and Rep. Scott Peters (D-Calif.) point where the policy draft headed: “Everyday Americans, as well as our military and intelligence systems, increasingly rely on critical technologies, and allowing our adversaries to develop and contribute standards for the next generation of technologies creates an unacceptable [national security] vulnerability.” 

The December 2021 policy draft proposed treating defense of one’s SEPs under patent or contract law as an antitrust violation. It would have micromanaged SEP licensing negotiations and advantaged implementers over innovators.

Sens. Thom Tillis (R-N.C.), Mazie Hirono (D-Hawaii) and Chris Coons (D-Del.) warned: “The unbalanced posture struck by the revision will embolden strategic infringers and disincentivize U.S. research and development in these critical technologies. In turn, that risks disadvantaging the ability of U.S. industry to compete with domestic and global rivals, and weakening our national ability to compete with countries like China that are actively seeking to dominate the next generation of technological standards.” 

Standards development involves the innovators and implementers engaged in a technology. Consensus drives adoption of superior new technology. Standards-related inventions enable different brands’ devices to interoperate. 

Implementers invest nothing up front in R&D. Sometimes implementers use a standardized invention without licensing a patent. Sometimes implementers collude or stretch out SEP licensing negotiations. 

The proposed policy statement would have enabled such implementer holdout without fear of injunction. An injunction blocks the unauthorized use of a SEP invention. Injunctions level the playing field and promote fair, timely negotiations. 

Posey and Peters noted: “The availability of remedies like injunctive relief assures American innovators that they will be able to recoup their investments, and allows the private sector to continue advancing the virtuous innovation cycle through reinvestments in R&D. Weakening or removing remedies like injunctive relief sends a strong signal to foreign infringers that they can steal critical American intellectual property with impunity.” 

Former heads of the Obama and Trump DOJ Antitrust Division, PTO and NIST jointly commented on the proposal. 

These bipartisan former officials voiced security concerns: “As currently drafted, it would severely tip the scales against SEP holders who contribute technology to standards development organizations (SDOs). In turn, this would reduce the likelihood of private sector investments in the United States in the research and development that leads to standards-implemented technologies. As a result, fewer standardized technologies would be created in the United States, further strengthening the hand of our international competitors.” 

Sens. Marco Rubio (R-Fla.), Tom Cotton (R-Ark.) and Tillis wrote, “any R&D investment, public or private, will be wasted absent strong guardrails to protect innovation, such as remedies for patent infringement—including standards-essential patents (SEP) subject to fair, reasonable, and nondiscriminatory licensing commitments. Redress for SEP infringement should be aligned with remedies otherwise available under U.S. law, including injunctive relief . . . 

Further challenges to American innovation will jeopardize national security by disadvantaging and ceding U.S. technological leadership to China and other foreign competitors actively looking to displace the United States as the world leader in critical technologies.” 

Sen. John Kennedy (R-La.) raised related concerns at PTO nominee Kathi Vidal’s hearing. A coalition appealed the 2019 policy statement’s withdrawal on national security grounds. 

The recent withdrawal acknowledges that “standards-developing organizations (SDOs) and the widespread and efficient licensing [of SEPs] . . . promote technological innovation, further consumer choice, and enable industry competitiveness including in emerging technologies and market entry of new and small-to medium-sized entities, whose participation in the standards ecosystem is important to promoting innovation and job creation . . .” 

The agencies pulled their draft, the 2019 and the 2013 joint policy statements, leaving antitrust questions to case-by-case consideration. Importantly, they acknowledged that “specific RAND or FRAND obligations are contractual obligations that vary by SDO.” 

This even-handed move respects SEPs as intellectual property. Appropriately, courts will decide remedies on the facts of each case. And this avoids jeopardizing national security. 

James Edwards, Ph.D., is executive director of Conservatives for Property Rights (@4PropertyRights) and patent policy advisor to Eagle Forum Education and Legal Defense Fund.  The views expressed are his own.