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Patent examiners have an extremely hard job.  They’re given a patent application—which could be anywhere from a page long up to hundreds of pages, with patent claims ranging from a…

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Delrahim Pulls DoJ Out Of FRAND-SEP Policy Guidance

Photo of AAG Antitrust Makan DelrahimIn a speech today at the Berkeley Advanced Patent Law Institute, United States Assistant Attorney General for the Antitrust Division Makan Delrahim announced that the Department of Justice was withdrawing from its 2013 guidance on remedies for standard-essential patents subject to FRAND commitments.

Stating that “[t]here is no special set of rules for exclusion when patents are part of standards,” Delrahim encourages courts to grant injunctions on standard-essential patents.  This alone threatens the thousands of U.S. companies who participate in and made considerable investments in the creation of standards and products based on standards. If DOJ proceeds, it would renew the risk that a patent owner can “hold up” the product maker for far more than the value of the patent.  Using the threat of an injunction and the club of taking a product off the market entirely, a patent owner can extract the value of the standardized technology—far more than the value of their contribution.

This alone threatens to reduce U.S. competitiveness in standardized technologies.  But Delrahim goes further, claiming that competitors will be subjected to new antitrust scrutiny for making reasonable commercial decisions about which standard-setting organizations (SSOs) to participate in.

For example, Delrahim threatens to sue companies that choose to avoid SSOs that are too favorable to patent holders.  Participation in a standard-setting organization is voluntary.1  Stating that “competitors would come under scrutiny if they orchestrated a group boycott of an SSO with a patent policy that is unfavorable to their commercial interests,” Delrahim appears to suggest that DoJ will use its authority to investigate companies who don’t want to participate in standards that have unfavorable commercial terms and organize competing standards with better terms.

Other aspects of Delrahim’s speech are also questionable, such as investigating SSOs who choose not to incorporate a technology into the standard.  Again, SSO participation is voluntary—if a given SSO doesn’t incorporate a technology, the patent owner is free to form their own SSO, a pro-competitive outcome, and one that has occurred regularly.

Far from promoting competition, the new position Delrahim describes represents a serious threat to U.S. competitiveness in standardized technology.

  1. Delrahim repeatedly cites to one case about standards in his speech, Allied Tube.  Unfortunately, Allied Tube is completely inapposite because the standards in question in Allied Tube had been incorporated into legal requirements for fire safety and were mandatory, not voluntary, to comply with.

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