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Justice Department and Patent Office Issue “Policy Statement” Regarding Remedies for Standards-Essential Patents

1/10/2013 Articles

In a statement likely to be influential with courts, the U.S. Department of Justice (DOJ) and the Patent and Trademark Office (PTO) on January 9 issued a joint Policy Statement urging limitations on remedies for infringement of standards-essential patents.  The Policy Statement builds on the recent interest of government antitrust regulators in standards-essential patents, and it recognizes the “important role in our economy” of standards-development organizations.  Policy Stmt. at 2.  The Statement addresses the impact that licensing agreements between patentees and standards-development organizations might have on the patentee’s ability to seek injunctions or exclusion orders from the International Trade Commission (ITC).  Id.

Injunctions and Exclusion Orders May Be Inappropriate In Some Cases

The DOJ and PTO acknowledge that many standards-development organizations require members to agree in advance to license some or all of their intellectual property rights that are or become relevant to a standard on fair, reasonable, and non-discriminatory (FRAND) terms, which “may also contribute to increased follow-on innovation by allowing non-discriminatory access to networks.”  Id. at 5.

In light of these benefits of standards-development organizations and FRAND licensing commitments, the DOJ and PTO note in their Statement that “[i]n some circumstances, the remedy of an injunction or exclusion order may be inconsistent with the public interest” for a standards-essential, FRAND-encumbered patent.  Id. at 6.  By way of example, the Statement indicates that if a patentee refused to negotiate or to make a good-faith FRAND license offer, it may be inappropriate to issue an injunction or exclusion order.  Id. at 6–7.

Recommendation of DOJ USPOT Guidelines

The Policy Statement urges the following:

“. . . we believe that depending on the facts of individual cases, the public interest may preclude the issuance of an exclusion order in cases where the infringer is acting within the scope of the patent holder’s F/RAND commitment and is able, and has not refused to license on F/RAND terms.

. . .

the DOJ and USPTO urge the USITC to consider whether a patent holder has acknowledged voluntarily through a commitment to license its patents on F/RAND terms that money damages, rather than injunction or exclusionary relief, is the appropriate remedy for injunction.” 


Policy Stmt. at 9.

The Statement comes at a time of great scrutiny over whether the owners of standards-essential patents should be able to obtain injunctions or exclusion orders from the ITC.  For example, last year, six U.S. Senators signed a letter to the ITC arguing that it should not issue exclusion orders based on the infringement of FRAND-encumbered patents because “[s]uch an outcome would severely undermine broad participation in the standards-setting process.”  Letter from U.S. Sen. Kohl et al to ITC (June 19, 2012).  Just a day later, the Director of the PTO, David Kappos, testified before Congress that exclusion orders based on standards-essential patents could have “tremendously negative side effects.”  Oversight of the U.S. PTO: Hearing on the Implementation of the Leahy-Smith America Invents Act and International Harmonization Efforts Before the U.S. Senate Committee on the Judiciary, 112th Cong. (2012).

Courts have also been looking closely at the importance of standards-essential patents.  Last June, Judge Posner wrote that “the purpose of the FRAND requirements . . . is to confine the patentee’s royalty demand to the value conferred by the patent itself as distinct from the additional value—the hold-up value—conferred by the patent’s being designated as standard-essential.”  Apple, Inc. v. Motorola, Inc., Case No. 1:11-cv-08540, slip op. (N.D. Ill. June 22, 2012) (citations omitted).

The Policy Statement adds weight to the increasing demands from litigation defendants and participants in standards-setting bodies for appropriate limitations on remedies in standards-essential patent disputes.