U.S. government steps up resistance to proposed EU SEP Regulation: USPTO director Vidal voices concerns at Senate hearing, announces 'all-of-government approach ... data-driven by feedback'

There are policy areas in which the European Union cannot vigorously defend the EU economy's interests without some transatlantic antagonism. Subsidies are an example. Standard-essential patents (SEPs) are not. Much to the contrary, a couple of major European SEP holders generate very significant revenues from licensees based in the United States.

But the EU's proposed SEP regulation is so fundamentally flawed that voices of reason from outside the EU are needed. One of them is the UK IPO with its very careful approach. Another example is the Biden Administration, and I just can't see why an initiative that harms European SEP holders is worth a rift between the EU and the United States.

Almost three months ago I reported on U.S. Secretary of Commerce Gina M. Raimondo having said at a Senate hearing that the U.S. government has officially commited "concerns" over the proposal to the European Commission. Yesterday (Wednesday, July 26) the Senate's Subcommittee on Intellectual Property (chairman: Sen. Chris Coons (D-Del.)) held a USPTO oversight hearing, toward the end of which the following was said:

SENATOR COONS: This is my last question. ... I've been following with genuine concern recent proposed regulations by the European Union for what would essentially be an SEP rate court. That regulation, I'm concerned, validates China's practices ... and I had shared those concerns ... and [Secretary Raimondo] agreed the proposal is problematic. What steps has the USPTO taken to communicate concerns to our European colleagues and what steps do you think the Administration can and should take to guard against restrictions on SEP licensing in the EU and globally?

DIRECTOR VIDAL: As I mentioned in my opening remarks, that's one of the things that I'm keenly focused on: it's standards, because I think it's critical to our economy. I will say that when we withdrew the 2019 policy statement around SEPs with NIST and DOJ, it was because we see standards as an international issue that individual countries weighing in in these ways could be extremely problematic. So what we've done when it comes to the EU directorate is I've met with the EUIPO in Geneva [presumably a WTO/WIPO meeting] just a week and a half ago. I've also spoken to other stakeholders in Europe about this. We also are issuing soon an FR notice, a Federal Register notice, to seek feedback from U.S. stakeholders on international SEP policy so that we can inform an all-of-government approach. That's gonna be not just the USPTO. I'm doing that with NIST, our standards and technology group, and ITA, our international group within [the Department of] Commerce, so that we can get an all-of-government approach that's data-driven by feedback.

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USPTO Director Kathi Vidal's reforms of discretionary denial rules are fair and balanced: abuse of all sorts must be curbed, including extortion and circumvention of litigation estoppel

The USPTO under Director Kathi Vidal is on the right track with respect to PTAB IPR reforms, particularly with a view to discretionary denials. Probably many of you will disagree. Many of my esteemed readers are on one side or the other: net licensors (including pure licensing firms) as well as net implementers. I'm sympathetic to either side's legitimate concerns, and I have friends across the whole spectrum. When taking positions, I can't please everyone, nor can policy makers.

I think the USPTO has not had a more balanced Director in quite a while. I have great respect for Andrei Iancu, but his policies very much reflected his firm's predominant--if not exclusive or near-exclusive--client profile, i.e., the interests of the enforcing side. His predecessors in office knew the perspective of actual operating companies, with Michelle Lee coming from a net licensee (Google, which nevertheless considered patents very valuable in its early years) and David Kappos from a net licensor (IBM). Kathi Vidal's most important clients in private practice have been companies like Apple, i.e., PTAB IPR heavy users. But it would not be correct to claim that she was using her current position to just advance her former clients' interests.

I applaud the USPTO for its policy-making efforts, above all for the first section (on petitions filed by certain for-profit entities) of its April 21 advance notice of proposed rulemaking.

In light of the VLSI v. Intel case with the $2.4B verdict, Director Vidal correctly identified discretionary denials as a field in which decisive action was needed. Unfortunately, her predecessor--for the reason discussed above, which is unrelated to his track record as a litigator representing patent holders--had overshot in one way and not taken action against a more blatant form of abuse. That was comparable to pulling some healthy teeth while failing to identify a sore one. The USPTO is now likely to strike a far better balance.

The idea underlying the America Invents Act (AIA) was that patent owners should not get to overleverage their intellectual property rights in litigation. As a litigation watcher with a primary focus on U.S. cases, I can't remember if I've ever seen a case in which a jury held a patent invalid. Juries typically believe that the USPTO got it right. So the PTAB IPR system is important, and I'm in favor of it, but there is abuse from both sides.

Unified Patents' business model does raise serious issues, arguably even bigger ones than OpenSky. OpenSky, in case you don't remember, is the entity that essentially collected a ransom from VLSI in exchange for withdrawing a PTAB challenge that posed a serious threat to the aforementioned verdict. Some described this as "extortion" and I can see why, but if one thinks it through, Unified Patents' business model is way more problematic.

The USPTO has correctly identified that in the VLSI case, the party with a legitimate interest in challenging the validity of the patents-in-suit, Intel, was (at least temporarily) unreasonably restricted in its ability to defend itself, while someone with a business model that the AIA was never intended to enable profited from it. The only sound approach to policy making in such a situation is to address issues arising from an abuse of the system without overshooting to the detriment of actual defendants.

An end-justifies-means argument is not going to help, and the USPTO should not give it any weight. Sure, if a patent shouldn't have been granted in the first place, there must be ways of overturning it, and jury trials won't work. At the same time, well-resourced defendants should not be able to just outspend patent holders, and the purpose of the PTAB is not to give every defendant two bites at the apple, so if a PTAB challenge fails, defendants are reasonably estopped from re-raising the same issues in the related infringement litigation. If the end of defeating invalid patents justifies any means, then we must also celebrate OpenSky as heroes, allow multiple challenges in different fora (i.e., no estoppel), abolish or massively increase page limits for petitions, and so forth. That wouldn't result in good policy.

Here's the USPTO's proposal to curb abuse by entities like Unified Patents:

"The changes under consideration would make clear that the Board would discretionarily deny any petition for IPR or PGR filed by an entity that: (1) is a for-profit entity; (2) has not been sued on the challenged patent or has not been threatened with infringement of the challenged patent in a manner sufficient to give rise to declaratory judgment standing; (3) is not otherwise an entity that is practicing, or could be alleged to practice, in the field of the challenged patent with a product or service on the market or with a product or service in which the party has invested to bring to market; and (4) does not have a substantial relationship with an entity that falls outside the scope of elements (1)–(3). The Office contemplates defining 'for-profit entities' as entities that do not qualify for tax-exempt status with the Internal Revenue Service."

That makes a lot of sense to me. We're not talking about unreasonably restricting the ability of the companies that are Unified "members" to defend themselves: they can bring their own challenges in their own name and will then be reasonably subjected to litigation estoppel.

There are (at least) two key concerns over Unified Patents' business model, and either is enough of a reason in its own right to support the USPTO's proposal:

1. Abusive circumvention of litigation estoppel:

   There simply is no need for the USPTO to condone Unified's business model, given that its "members" can bring their own petitions. The USPTO is not even against a pooling of resources: if you have a joint defense group, why not bring one challenge on behalf of everyone? The problem with Unified is that they say their members don't get to decide which patents they challenge. But obviously it's a pay-to-play system. They're not doing that work pro bono. Disallowing such petitions will increase transparency. Could transparency also be increased in other areas, such as patent ownership? Absolutely, but that is not a reason to tolerate a circumvention of litigation estoppel rules. I also don't think the USPTO should give any weight to claims that this is about singling out just one PTAB filer. It's a business model that others could also adopt.

2. Extortionate effects:

   For the avoidance of doubt, I'm not alleging extortion, but I do see extortionate effects of Unified Patents' business model. Nice patents you have there... too bad if anything happened to them.

   • Philips' membership:

     While Philips does have an operating business, it's actually known as a rather aggressive enforcer of patents, including but not limited to standard-essential patents (SEPs). Philips has precisely the profile of the companies whose SEPs routinely challenges. Why is Philips a member? It cannot be ruled out that they primarily joined so that their patents would be left alone.

   • Unified's expansion into patent pool administration:

     While I've repeatedly given credit to MPEG LA with respect to other pools they run, their joint venture with Unified Patents named Alium has left me unconvinced so far. In particular, I find it hypocritical to say that Unified will help ensure "patent quality" in connection with O-RAN when they are not going to challenge Alium's own patents but only those belonging to patent holders who decline to contribute their patents to that pool. Here, again, you have that "racketeering" effect, presenting companies with a choice of being trolled or making Unified money.

   All of those issues are not unique to Unified Patents: others might implement their business model or similar models, even with a purely extortionate agenda.

There still is time to submit formal comments to the USPTO.

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Just before Ericsson v. Apple ITC trial, PTAB institutes IPR of patent-in-suit, and Apple walked back on promise not to rely on same prior art in ITC case

Sooner or later Ericsson and Apple will have to settle their patent dispute, but as long as they are litigating, they will keep playing hardball. This includes they they avail themselves of certain procedural options in different jurisdictions. Apple is unhappy about Ericsson's enforcement of a 5G standard-essential patent injunction in Colombia as well as about the parallel assertion of patents from the same family in Mannheim and Munich (a basis on which the Munich court declined to dismiss an Ericsson case at an early stage). The key difference between the two litigants' conduct is, however, that Apple isn't merely exercising its procedural rights (as Ericsson also did in Colombia, where you simply can request an ex parte preliminary injunction): occasionally Apple comes across as a bit underhanded or, at minimum, disingenuous by opportunistically contradicting itself. Two judges have already reproached Apple for its "puzzling" litigation tactics--including Administrative Law Judge (ALJ) Cameron Elliot, who will preside over the Ericsson-Apple ITC trial that will commence on Friday (November 4).

A new issue has arisen from Apple's shifting-sands positions, and it involves USPTO Director Kathi Vidal's new policy regarding IPR petitions, which makes it a procedurally interesting matter especially for the many patent practitioners among my esteemed readers.

Apple is the #2 PTAB user (in recent years, second only to Samsung), and some criticize that heavy use of the inter partes review process by a single Big Tech company, but that's actually not my concern here. It's only about what happened with respect to one of Apple's IPR petitions:

• The relevant patent is U.S. Patent No. 8,792,454 on "secure and seamless WAN-LAN [wide area network, local area network] roaming." It's one of three patents Ericsson originally asserted in the smallest of its three January 2022 ITC complaints against Apple. What makes it particularly relevant is that, in the aftermath of claim construction, Ericsson dropped one of the other patents in its entirety and several of the asserted claims of the other, while the '454 patent fared really well in claim construction. Against that backdrop, validity is likely going to be the key battlefield.

• On April 1, Apple brought an IPR petition against the '454 patent that relies on the following prior art reference briefly referred to as Luo (the first-named author): Integrating wireless LAN and cellular data for the enterprise, a nine-page article published in a March/April 2003 edition of IEEE Internet Computing.

• At the time, the USPTO's Fintiv rule that Mrs. Vidal's predecessor in office, then-Director Andrei Iancu, had promulgated was still intact. Apple's IPR petition faced a high risk of a discretionary denial because the ITC trial was on the horizon and there was clearly an overlap between issues raised in the petition and in the parallel proceeding. In order to resolve that conflict, Apple stipulated that it wouldn't leverage the same invalidity contentions based on the Luo prior art reference at the ITC hearing if the petition is granted. That's what Apple told the PTAB early on, and Ericsson relied on it.

• The timeline of the PTAB pre-institution proceedings made it clear that a decision on whether or not to institute an IPR would be made no later than by the start of the ITC trial.

• In the meantime, discovery in connection with the ITC case took place (fact discovery cutoff was in late June). Ericsson viewed Luo as a prior art reference that was either going to be irrelevant in the ITC trial (in the event of an IPR being instituted, as Apple promised not to rely--in that scenario--on Luo before the ITC) or not very likely to succeed as a denial of Apple's petition by the PTAB would have shown the USPTO's disbelief in the strength of Apple's Luo-based invalidity contentions.

• On June 21, Director Vidal threw out key parts of her predecessor's Fintiv rule, and particularly made it clear that an impending ITC hearing should not counsel against the institution of an IPR proceeding. If the same had happened only about four months earlier, Apple would never have had a reason to stipulate not to proffer Luo in the ITC case should the PTAB institute an IPR.

• If Apple had decided at that point--June 21--to go back on its earlier stipulation in light of a new USPTO rule, one could have criticized it for doing so only after its petition originally benefited from the stipulation, and that Ericsson would have had only three more days to adjust until fact discovery closed. But at least Apple could not have been accused of letting more time pass in a way that was prejudicial to Ericsson.

• Ericsson highlights in a motion in limine (which now seeks to preclude Apple from relying on Luo in the ITC) that on August 24, Ericsson brought up the Luo stipulation in a deposition of Apple's '454 patent expert Mr. Geier, and four minutes later Apple's counsel emailed the PTAB to rescind the stipulation.

• Last Friday--October 28--the PTAB granted the petition to institute an inter partes review. I've uploaded the decision (PDF) to DocumentCloud.

• Had Apple stuck to the stipulation, Luo would now be a non-issue before ALJ Elliot. There would be a potential "injunction gap" as an ITC import ban might be ordered and enforced before a potential PTAB decision invalidating the patent, but only because of Apple's own decision to bet on other prior art in the ITC case while pursuing a Luo-centric PTAB strategy in parallel.

Ericsson's related motion in limine accuses Apple of gamesmanship:

ITC inv. no. 337-TA-1301: Ericsson's Motion in Limine No. 6 to Preclude Evidence, Testimony, and Argument about Luo If Apple's Petition for Inter Partes Review is Granted

The motion in limine had to be filed on the 21st--a week before the PTAB actually decided and two weeks before a hard deadline. When Ericsson brought the motion, it assumed that--should the motion be granted--Luo would be a total non-issue or Ericsson could focus its trial depositions on the reasons for which the PTAB would have deemed Apple's Luo-based theories unconvincing.

Ericsson's position that Apple tactically delayed the rescission of the stipulation--and that this constitutes gamesmanship that no court or, as in this case, quasi-judicial body should reward--is understandable. At the same time, Apple's position will presumably be that the USPTO's new rules are better than the old ones, and that Apple should not face the risk of a U.S. import ban over a patent that in the PTAB's preliminary opinion may very well be invalidated at the end of the IPR proceeding. The institution decision doesn't prejudge the outcome and the ITC might or might not deem the '454 patent invalid over Luo, but Apple's chances would be well over 50% if it could rely on Luo. At the abstract level, Ericsson has a procedural good-faith argument, and Apple a substantive one.

So far, ALJ Elliot has been extremely strict and detail-minded in procedural terms--so much so that if he now deemed Apple's about-face acceptable, he would arguably no longer be consistent with how he has been conducting this investigation so far. And he would set a precedent that would impair the ITC's ability to conduct fair proceedings on famously tight schedules. It would look like Apple can get away with inequitable conduct that would normally not succeed. From an institutional point of view, it would be desirable to tell Apple that it made its bed (without anyone forcing it to do so) and has to lie in it, especially since the chronology of events shows that Apple was indeed playing a tactical game instead of putting all the cards on the table at the appropriate juncture.

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USPTO-WIPO agreement on resolution of SEP disputes won't truly 'enhance the efficiency of licensing of standard[-]essential patents'--institutional self-importance meets Big Tech's SEP devaluation agenda

Normally, neither the World Intellectual Property Organization (WIPO) nor the United States Patent & Trademark Office (USPTO) should advance a patent devaluation agenda. It's plainly inconsistent with those institutions' mandates. But yesterday the USPTO and WIPO issued a press release on an agreement "to partner on dispute resolution efforts related to standard[-]essential patents" that I don't view favorably at this stage.

When President Biden appointed Kathi Vidal, a patent litigator known for her Big Tech ties, to head the USPTO, there was widespread concern in the IP community that she might take initiatives that benefit infringers rather than innovators. With respect to PTAB inter partes reviews, it's too early to tell. With the stroke of a pen she undid some of her predecessor's PTAB rules favoring discretionary denials. We'll see what comes out of the current decision-making process, and it's important that stakeholders on both sides of the debate accept her invitation to submit amicus briefs.

With respect to standard-essential patents (SEPs), three of the Biden Administration's agencies (DOJ, USPTO, NIST) refrained from adopting a policy statement that was heavily criticized by SEP holders (or reinstating an older policy position of that kind). The question is now what the USPTO's partnership with WIPO means.

It could be that in the end it's just bureaucratic activism: governmental agencies like to draw attention to their work on a hot-button issue regardless of whether such work will actually have much of an effect. But there is also the possibility that Director Vidal is indeed pursuing a SEP devaluation agenda, while WIPO just has a "business development" objective with respect to its alternative dispute resolution (ADR) services. As I'll discuss in a moment, it looks like WIPO's SEP ADR initiative isn't going too well.

The press release quotes Director Vidal as saying that "SEP policy is an international issue of international importance." That is correct: SEP licenses are typically global portfolio licenses.

Given that WIPO and the USPTO agree on the international dimension of SEP policy, antisuit injunctions and antisuit damages motions should actually be the number one item on their list. Instead, they leave the heavy lifting to the courts. Case in point, later today (Thursday) Judge Rodney Gilstrap of the United States District Court for the Eastern District of Texas will hold an Ericsson v. Apple motion hearing on Apple's request for an antisuit damages order as the iPhone maker is currently unable to sell 5G devices in Colombia due to a SEP injunction obtained by Ericsson.

There is nothing in the USPTO-WIPO announcement to specificially suggest that WIPO and the USPTO seek to "enhance the efficiency of licensing of standard essential patents" (a quote from Director Vidal's statement) in a balanced fashion. To increase the efficiency of SEP licensing, one needs to tackle the problem of hold-out, which is widespread, and of outlier cases of hold-up. But this is all that the announcement says about the scope of the five-year agreement:

• Cooperate on activities that will lend efficiency and effectiveness to the resolution of disputed standard essential patent matters by leveraging existing WIPO Arbitration and Mediation Center and USPTO resources, and

• Engage in stakeholder outreach to raise awareness of the services provided by the WIPO Arbitration and Mediation Center through joint USPTO-WIPO programs.

The second bullet point is laughable: the stakeholders on both sides of the SEP licensing negotiation table are sufficiently sophisticated to know that WIPO offers arbitration and mediation services. This is not like teaching traffic rules to children.

Toward the end of the press release, WIPO Director General Daren Tang promotes WIPO's ADR services. On WIPO's website I found the following information:

"In recent years, the WIPO Arbitration and Mediation Center (the 'WIPO Center') has administered some 55 WIPO mediation cases relating to FRAND licensing negotiations."

Interestingly, they're not saying anything about SEP arbitration proceedings. The key difference is that arbitration will result in a decision, while mediation is just an attempt to bring parties together. The "Summary of WIPO FRAND ADR case examples" is also just about mediation, and WIPO can't even claim that its mediation efforts actually resolved a single dispute. The first example just "prompted renewed licensing negotiations" between a patent pool and implementers, half of which were Asian companies. The second one is that "IP courts in China have referred ten ICT patent infringement cases to WIPO Mediation. Seven of those cases involved claimants from Europe." And then "a large Asian manufacturer submitted a unilateral request to WIPO Mediation concerning its SEP infringement litigation against a large European SEP holder"

If this was the track record of a private mediator, he or she would find it hard to be hired again.

There are reasons to suspect here that it's not really SEP holders who expect WIPO's ADR services to be of any help to them. It's more like some players on the implementer side hope to be deemed willing licensees based on their requests for WIPO ADR.

Hopefully I'm just being too skeptical and this is more than a scheme to facilitate hold-out and devalue SEPs. In the short term, I actually think an initiative like LIFT--which was announced this week-- is more likely to enhance the efficiency of SEP licensing. Gustav Brismark and Bowman Heiden discussed it in an IAM article, Building incentives to overcome the SEP licensing prisoner’s dilemma (paywalled).

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PTAB IPR abuse is a reality: patent holders should draw Director Vidal's attention to 'ransom' and 'racketeering' business models involving attacks on patents

On July 7, United States Patent & Trademark Office Director Kathi Vidal encouraged stakeholders to submit amicus briefs with a view to the Director review of the PTAB decisions in two cases involving challenges to patents asserted by VLSI Technology against Intel. The deadline is August 4.

This is really important stuff. Now, I don't want to take a position on the specific cases other than saying that the parties are entitled to a correct adjudication of their dispute (where the Federal Circuit plays a key role), and VLSI is additionally entitled to protection from abuse by third parties driven by questionable motives.

The Under Secretary of Commerce for Intellectual Property--that's her long-form title--raised transcendental questions involving

• abuse of process or

• conduct that otherwise thwarts, as opposed to advances, the goals of the [USPTO] and/or the America Invents Act (AIA).

That's a big topic, and I just want to bring up a couple of issues here, which I would encourage stakeholders to raise in their replies. This blog has repeatedly been referenced in court filings, even in an Acer v. Volkswagen patent infringement complaint in the Eastern District of Virginia. Of course, it would be even better if others could raise these points in a more elaborate form themselves.

While I've been a big believer in balanced patent enforcement rules and patent quality assurance for a long time, I disagree with those who essentially suggest that the end of invalidating patents justifies any means. Whether or not one believes that former Director Andrei Iancu (now, again, a top-notch patent litigator) went too far with the Fintiv rule, there is indeed rampant abuse, and I fear that various abusers of the system could be emboldened as they see the pendulum swinging back.

Not only can patent holders employ trollish litigation tactics in their assertion campaigns but it is equally possible to troll patent holders, for financial gain, through PTAB IPR petitions.

I don't even want to talk about the problem of short-selling stocks around attacks on business-critical patents (mostly in the pharmaceutical sector), but focus on Unified Patents.

Unified Patents is one of the most active filers of PTAB petitions. Its business model is that of a "club": companies who frequently defend against patent infringement assertions pay their fees and then Unified will keep them happy by attacking certain patents, but the members of the club don't formally make the decision. In its most recent petition, like in numerous others before that one, "Unified Patents, LLC [...] certifies that Unified is the real party-in-interest and further certifies that no other party exercised control or could exercise control over Unified's participation in this proceeding, the filing of this Petition, or the conduct of any ensuing trial."

I have a simple policy question here: is Unified really necessary?

The companies paying Unified are the likes of Adobe, Cisco, Daimler, Dell, Salesforce, Spotify, Tesla, and Uber. There's no doubt that those organizations would be well-equipped to bring their PTAB petitions themselves. That would be more transparent.

Unified always makes a lot of noise when it achieves a partial or complete invalidation of a patent, and there's deafening silence when it loses--which ends up hardening certain patents with a view to litigation. That's as counterproductive as it gets.

It's another question whether some of the companies who support Unified primarily just want to avoid that their own patents get challenged. Without access to the terms of the relevant agreements, I can't form an opinion on that one.

Even if one did not take issue with Unified's primary business model, Unified's latest strategy for leveraging its PTAB IPR machinery deserves a closer--and rather skeptical--look:

In at least one case (Alium), Unified has co-founded a patent pool that vows to challenge patents outside the pool. The euphemism here is "patent quality." But were this about quality, wouldn't it then make sense to start with the patents that are actually in that pool? No, the idea is for Unified to use some of the pool's licensing income to go out and attack patents in the same field of technology that belong to companies who may have perfectly valid reasons for declining to put their own IP in that pool.

Unified's partner, MPEG LA, is a very well-respected patent pool administrator. I have no idea why they partnered with Unified in the first place--it's certainly not because Unified knows more about the pool business than MPEG LA. But if even MPEG LA teamed up with Unified, who will be next? Is this going to become a scalable business model?

It raises serious policy issues when a patent pool puts pressure on patent holders to join. "Join us or we'll challenge your patents" should not be a message with which a patent pool tries to "convince" patent holders to join: patent pools should be all about finding a workable compromise between licensors and licensees (and that's what MPEG LA--when not working with Unified--is all about) and about maximizing transactional efficiencies.

The USPTO should deny any PTAB IPR petitions that might be part of a scheme to bully patentees into joining a pool. At least there should be a strong presumption against such petitions serving to advance the AIA's goals.

I agree with MPEG LA's amicus brief (PDF) in Continental v. Avanci et al. that antitrust law must not be used against patent pools to the extent that they "become inefficient and unreliable, licensors will cease to participate in them, the interoperability of the standards they enable will be lost, and the competitive market benefits including convenience for licensees and savings to consumers that they provide will disappear. As MPEG LA also notes, "[i]ndividual licensees should not be permitted to interfere with [...] competitive market forces and a business’ freedom to make [...] decisions."

But patent pools don't enjoy antitrust immunity either. And it's not just about potential implementer concerns such as whether a pool has the right to grant licenses at a certain level of a supply chain, or whether the terms (including duplicative-royalty policies) are fair to implementers. It can also be a serious problem if a pool is designed to contribute to the devaluation of patents.

That's why I applaud the European Commission's Directorate-General for Competition (DG COMP) for investigating on a preliminary basis (which will hopefully lead to full-blown investigations) concerns over the Alliance for Open Media (AOM) abusing the market power of its members like Google to force patent holders to give up their rights.

The USPTO, too, should be concerned about whether patent pools, or companies that co-found or otherwise profit from them, bring IPR petitions for reasons that run counter to the spirit of the AIA.

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Confusion over U.S. government agencies' positions on antitrust aspects of standard-essential patents: 2019, 2021 DOJ-USPTO-NIST statements tossed; Commissioner Wilson distances herself from Chair Khan's submission to ITC

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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