In 2015, the IEEE made changes to its Patent Policy for standard-essential patents (SEPs). Among other things, that policy strongly disfavored seeking injunctive relief for SEPs because injunctive relief permits using the threat of enjoining an entire product to extract a royalty that covers more than the value contributed by the patent. The policy also set forth three non-limiting factors to be used in determining a reasonable royalty rate—the value contributed by the SEP to the smallest salable compliant implementation (analogous to the smallest saleable patent practicing unit in US law), the value contributed by the SEP to that implementation in light of all other SEPs that also contribute value to that implementation, and comparable licenses. These factors are not mandatory, only encouraged.
IEEE received criticism of this approach, primarily from patent licensing companies who were obtaining high license fees and were concerned that the changes would reduce their profit margin. In contrast, the majority of standards participants were happy with these changes—after the policy change, contributions to IEEE standards reversed a declining trend and began to increase once again.
But, given the vocal criticism from licensors, the IEEE decided to request feedback on whether to reverse course and change the 2015 Patent Policy.
Comments to IEEE on the 2015 Policy
Much like U.S. comment processes, this was not a voting process—the raw numbers don’t control the outcome, but rather the information in the comments is used to educate the relevant IEEE personnel. That said, looking at who took what position on the 2015 Policy is useful to understand what industry’s views on the topic are.
Taking that view, the vast majority of commentators—95 of them—were in favor of maintaining the 2015 Patent Policy. Pro-2015 commentators also came from a wide variety of backgrounds, ranging from the automotive industry to cellular companies to hardware manufacturers to software companies, as well as a number of academics and public interest groups. They also came from all around the world—alongside many American entities, there was representation from companies in the EU, Japan, South Korea, China, and India.
In contrast, only 17 entities supported changes to the 2015 Policy. Those companies were primarily companies who focus on licensing their patents, or lawyers who work with those companies. Huawei also supports changes—perhaps unsurprising, as Huawei has shifted to a patent licensing strategy in jurisdictions such as the United States as a result of national security-related bans on the sale of its hardware. Further, the majority of commenters supporting changes to the IEEE patent policy come from outside of the United States; only 7 commenters out of the 17 represented American entities.
Now that the comments have been submitted, it’s time for IEEE to review them and determine what path forward the organization should take. But based on the content of these comments, and the relative balance, the IEEE should feel very comfortable that much of industry supports their existing patent policy and sees no reason to go back to in terrorem injunctions and completely amorphous valuation procedures.