DOJ and USPTO Revise 2013 Policy Statement on Remedies for Standard Essential Patents

In December 2019, the U.S. Patent and Trademark Office (USPTO), the National Institute of Standards and Technology (NIST), and the U.S. Department of Justice, Antitrust Division (DOJ) issued a policy statement offering their views on the appropriateness of an injunction remedy for infringement of standard essential patents¹ subject to RAND or FRAND² licensing commitments. In doing so, the USPTO and DOJ withdrew their joint 2013 policy statement. The new policy provides that a patent owner’s FRAND commitment is a relevant factor for a court or tribunal considering the infringement remedies but is not a bar to an injunction remedy. The 2019 policy statement rejects any special rules that limit remedies available upon patent infringement due to the infringed patents being a standard essential patent subject to a FRAND commitment.³

The now rescinded 2013 policy statement focused on exclusionary orders in investigations under Section 337 of the Tariff Act of 1930 but suggested that similar principles should apply to the requests for injunctive relief in federal court. In 2013, the DOJ and USPTO recognized the rights of a patent holder to exclude others from practicing the patented invention, but they expressed the view that some limits on injunctions should apply when the standard essential patent owner had voluntarily committed to license the patent on FRAND or RAND terms. In particular, the DOJ and USPTO thought an injunction or exclusionary order might be inconsistent with the public interest if the owner of the essential patent attempted to extract more than a FRAND royalty. The DOJ and USPTO thus proposed to limit injunctive relief to unusual circumstances, such as when the putative licensee refused to pay the established FRAND royalty or refused to engage in a negotiation to determine such a royalty.

The 2019 policy statement reversed any presumption against injunctive relief and made clear that DOJ and USPTO do not endorse a unique set of remedy rules for disputes involving standard essential patents subject to a FRAND commitment. The DOJ and USPTO, joined by NIST, opined that the U.S. International Trade Commission, courts, and other decision makers should consider all relevant factors, including any FRAND commitments made by the patent holder, when determining the remedies for infringement of a standard essential patent. The agencies suggested that the court or decision maker should apply a flexible injunction standard applying equitable standards as espoused by the Supreme Court in eBay v. MercExchange.⁴

This new policy is consistent with prior speeches by Assistant Attorney General (AAG) Makan Delrahim and with the Federal Circuit’s 2014 decision in Apple, Inc. v. Motorola, Inc.⁵ In his description of a “New Madison” approach to antitrust and intellectual property law, AAG Delrahim criticized the position that a standard essential patent holder faces significant difficulty in establishing a right to an injunction rather than to damages.⁶ In Apple, the district court applied a per se rule holding injunctions unavailable for a standard essential patent. The Federal Circuit reversed, holding that a patentee’s FRAND commitments are relevant to the trial court’s injunction analysis but that no specific rule exists for FRAND committed patents with respect to injunctive relief.⁷ Interestingly, the Federal Circuit cited to the 2013 USPTO/DOJ policy statement for the proposition that an injunction could be appropriate if the owner of the standard essential patent refused to license the patent on FRAND terms.

Although the DOJ and USPTO policy statement has changed, it is not clear as a practical matter that the outcome in federal litigation would change. As the Federal Circuit noted in its Apple decision, the framework described by the Supreme Court in eBay provides a flexible injunction standard for addressing the unique aspects of standard essential patents that are subject to a FRAND commitment. First, the patentee’s agreement to FRAND in the standard-setting process can affect that patentee’s ability to satisfy the irreparable harm standard needed for an injunction. It is also relevant whether a patentee has licensed other third parties. Further, applying the standard Georgia-Pacific⁸ factors for patent damages, the FRAND rate on those other licenses is likely to carry weight when the court sets the appropriate royalty for the ongoing infringement. If the owner of a standard essential patent reneges on its FRAND commitment, the standard-setting organization may have direct contractual claims and the potential licensee may be able to bring a third-party beneficiary claim. But neither outcome necessarily requires an antitrust remedy based on a Sherman Act claim. At bottom, one policy question is whether a would-be licensee can use (infringe) a standard essential patent with confidence that no injunction will issue to stop future use/infringement. Whether under the Federal Circuit holding in Apple or the 2019 policy statement of DOJ, USPTO and NIST, the answer is no; an injunction remains possible, but whether it will be issued is dependent on the particular facts.

¹ As a result of the need for technology to function properly and various components to interact, standards-developing organizations adopt certain technological standards that permit interoperability of products made by different manufacturers. Patents for technology that are necessary to meet a standard are known as standard essential patents.

² A patent holder participating in standard setting activities at a standards-developing organization may agree to license the patent on reasonable and non-discriminatory terms (RAND) or fair, reasonable, and non-discriminatory terms (FRAND).

³ The full text of the 2019 policy statement is available at https://www.uspto.gov/sites/default/files/documents/SEP%20policy%20statement%20signed.pdf.

⁴ 547 U.S. 388, 390-93 (2006).

⁵ 757 F.3d 1286, 1332 (Fed. Cir. 2014), overruled on other grounds by Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015).

⁶ M. Delrahim, “The ‘New Madison’ Approach to Antitrust and Intellectual Property Law,” 13 (March 16, 2018), available at https://www.justice.gov/opa/speech/file/1044316/download.

⁷ 757 F.3d at 1331-32.

⁸ The factors commonly considered in assessing the amount of a reasonable royalty in patent infringement suits are derived from Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970).