Standard essential patents (SEPs) are in the news today in a couple ways.
First, the EU antitrust authorities fined Qualcomm $1.2 billion over conduct that involved locking Apple into an exclusive supplier arrangement in order to harm competing baseband chipset makers. The EU investigation isn’t the only place Qualcomm’s anti-competitive conduct is being challenged; they’ve also been fined by the Korean FTC and the US FTC is currently pursuing a case against Qualcomm. Apple has also filed a lawsuit against Qualcomm. As Patent Progress has previously discussed, Qualcomm’s conduct harms competition and thereby harms consumers. Qualcomm, rather than changing course, has filed additional lawsuits aimed at using their SEP portfolio to harm companies that challenge their anti-competitive conduct.
Second, 58 companies, trade associations, and academics, including CCIA, joined in sending a letter to the Department of Justice Assistant Attorney General Makan Delrahim. The letter describes the impacts of SEPs on industry and how SEP policy can both help and harm innovation. As the letter notes, “interoperability standards create enormous value for consumers and fuel follow-on innovation.”
At the same time, patents on aspects of these interoperability standards create risks of hold-up (where a patent owner waits until their patent is incorporated into the standard and then can extract a greater-than-market value for the patent as it is impossible to obtain any of the benefit of the standard without it.) And the choice by standard setting organizations to implement any of a variety of patent licensing policies (ranging from FRAND to royalty-free to unrestricted licensing) shouldn’t be considered an antitrust issue, but rather a voluntary commitment by participants in a standard. Our letter addresses these issues, and others, which we hope to see DOJ continue to consider as they develop policy around standard essential patents.