Almost mid-way into President Joe Biden's term, his Administration is unable to take clear and official positions on the antitrust aspects of standard-essential patent (SEP) licensing and enforcement. Two things happened yesterday that involve a total of four agencies--the Antitrust Division of the Department of Justice (DOJ-ATR), the United States Patent and Trademark Office (USPTO), the National Institute of Standards and Technology (NIST), and the Federal Trade Commission (FTC):
At a Concurrences webinar, IP & Antitrust: Hot Issues 2nd Edition (in which I participated as a panelist, which I rarely do), FTC Commissioner Christine Wilson (a Republican) delivered a keynote, the #1 priority of which was to distance herself from a recent submission to the United States International Trade Commission (ITC) by FTC Chair Lina Khan and Commissioner Rebecca Kelly Slaughter (both Democrats) in the investigation of a patent infringement complaint by Philips against Thales and others.
Mrs. Wilson, who publicly dissented in no uncertain terms from her agency's action against Qualcomm in years past, sharply disagrees with the content of the aforementioned recent filing with the ITC and expressed outrage at the absence of an explicit clarification that her colleagues were only speaking for themselves and not for the FTC. According to Mrs. Wilson, it is an FTC tradition that commissioners clearly distinguish their personal views from those of the Commission, and the public-interest statement in question had not been adopted by the FTC as an agency position.
To me it was always clear that two commissioners--even if one of them is the FTC Chair--can't speak for the Commission as a whole: it's not a majority. The ITC itself has a similar decision-making setup as the FTC, so presumably no one there got confused. However, the official headline of the filing was "written submission on the public interest of Federal Trade Commission Chair Lina M. Khan and Commissioner Rebecca Kelly Slaughter" and may have confused some people--even more so when a letter on FTC stationery was sent to the ITC requesting leave to file a corrected statement (signatures were missing from the original document) out of time (which was granted).
There was a timing problem: public-interest statements in that investigation were due on May 16, 2022, and the fifth member of the current FTC, Commissioner Alvaro Bedoya (a Democrat), was sworn in just that day. The Biden White House has not really excelled at getting its appointments confirmed (it also took an unusually long time until Kathi Vidal was finally appointed USPTO Director). There was a 2-2 Democratic-Republican stalemate at the FTC for a long time, only because the Biden White House wasn't effective. It's fairly possible that an earlier confirmation of Mr. Bedoya would have enabled the FTC as an agency to adopt a formal position with a 3-2 vote. But under the circumstances, Chair Khan and Commissioner Slaughter decided to just go ahead in their own names, and they arguably could have made it clearer that the FTC itself was unable to agree on a position on U.S. import bans over SEPs, even if apparently just for timing reasons. Commissioner Wilson may be right to criticize her colleagues, but the FTC can actually cure any formal defect by adopting a formal agency position now that there is a Democratic majority in office.
It is, by the way, far from certain that the question of U.S. import bans over SEPs will ever play a role in that Philips case. If the ITC affirms the final initial determination by an Administrative Law Judge, there is no infringement of a valid patent. The ITC has extended until June 16 (one week from today) the deadline for deciding whether to review the ALJ's decision. Should it decide not to review, then Philips needs to appeal the rejection of its complaint to the Federal Circuit--which on Tuesday heard a related case originating from a district court (MP3 recording; and I provided an overview of the various Philips-Thales cases back in March).
Also yesterday, the DOJ issued a press release together with the USPTO and NIST, announcing the withdrawal of the Trump Administration's 2019 SEP Policy Statement. The official document (PDF) withdrawing the three agencies' prior statement not only declares the 2019 statement (which was very much driven by then-Antitrust Assistant Attorney General Makan Delrahim) withdrawn but also abandons any "potential revisions to that statement" (i.e., the controversial 2021 draft statement) as "the Agencies have concluded that withdrawal best serves the interests of innovation and competition."
Footnote 1 is key:
"In withdrawing the 2019 Policy Statement, the agencies do not reinstate the January 8, 2013, Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments issued by the DOJ and the USPTO.
The 2019 (Trump Administration) statement replaced the 2013 (Obama Admistration) statement. The 2021 Biden Administration draft statement, if adopted in that or any similar form, would have been much closer to the 2013 than the 2019 statement. But now there's a vacuum: there simply is no formal statement. All we have is the aforementioned press release, which makes it a possibility that the three agencies couldn't reach an agreement: while USPTO Director Kathi Vidal and NIST Director Laurie Locascio stress the importance of U.S. companies' contributions to standard-setting (which sounds like those two agencies wouldn't want to weaken SEP enforcement too much, if at all), the DOJ's antitrust chief Jonathan Kanter warns SEP holders against "opportunistic conduct [...] that threatens to stifle competition" particularly through SEP abuse that would "disproportionately affect small and medium sized businesses or highly concentrated markets." In the end, however, Assistant Attorney General Kanter just promises a "case-by-case approach" as opposed to broad and sweeping rules.
I hope Mr. Kanter and his staff have not been misled by deceptive lobbying alleging that there are serious issues harming small and medium-sized companies.
In the end, the consensus is now that it's up to the courts to further develop their SEP case law as the judges see fit. Litigants can still quote the 2019 statement (if they're enforcing their SEPs, particularly if they pursue injunctions) or the 2013 statement (if they're defending against infringement complaints), but both have been withdrawn, so they are just history, not current policy.
So who has won this battle and who has lost? SEP holders like Qualcomm lost the 2019 statement, which favored those seeking SEP injunctions. But companies like Apple, which are trying to devalue SEPs, lost the opportunity to have the U.S. federal government adopt a position in their favor now that Democrats are in power: neither will the Biden Administration adopt a statement along the lines of the 2021 draft policy nor has it reinstated the 2013 statement. Implementers are better off today than they were under the Trump Administration, but net licensors are in a way better position now than they were in the Obama years.
Looking at it from a global perspective, the picture looks even better for net licensors. Apple and its allies were very much hoping to make some headway on SEPs after Donald Trump was voted out of office. They wanted the U.S. to send out a strong signal, to serve as a beacon (from their perspective) for other jurisdictions, and they were looking for something that would help them persuade judges in the U.S. and abroad to take implementer-friendlier positions. What implementers achieved falls far short of what they needed. The glass is, very clearly, more than half-full for net licensors. Even the Biden Administration wasn't going to advance the cause of devaluing SEPs--so why should the EU?
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