Volatile US executive policy landscape means uncertainty for injunctions in SEP litigation

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Name of policy / law / regulation

2013 policy statement

2019 policy statement

2021 draft statement

2022 policy statement

Issuing agency

Department of Justice Antitrust Division

United States Patents and Trademarks Office

National Institute of Standards and Technology

Both common law court decisions and executive policies are contributing to the evolution of the legal framework of standard essential patent (SEP) litigation in the United States. In the past, policy and legal decisions related to licensing SEPs on fair, reasonable and non-discriminatory (FRAND) terms were largely left to the discretion of the courts and non-governmental Standards Setting Organisations such as the Institute of Electrical and Electronics Engineers, the European Telecommunications Standards Institute and the many others developing a variety of technical standards.

In the past decade, the executive branch has taken a more proactive role in issuing guidance on specific aspects of SEPs – particularly injunctive relief – and with changing administrations, policies have fluctuated. Ambiguous policies have emerged as a result, which may be susceptible to reasonable arguments made by both SEP owners and putative infringers. 

Policy ambiguity

Generally, it is unclear to litigants whether executive agencies encourage injunctions in SEP litigation, largely due to the fluid landscape of executive policies.

In June 2022, the Department of Justice Antitrust Division, the USPTO and the National Institute of Standards and Technology (collectively referred to as ‘the agencies’) jointly announced their withdrawal from the 2019 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (2019 statement). This 2019 statement, announced on 19 December 2019, effectively reversed the policy on injunctions outlined in the then-existing 2013 Policy Statement (2013 statement). It expressly recognised that the 2013 statement had “no force or effect of law”.

The 2013 statement discouraged injunctions in SEP litigations. According to the agencies, the potential risks of ‘patent hold-up’ would harm interoperability and technological advancement. Patent hold-up refers to a situation in which a patent owner asserts an SEP and an injunction threat against a putative infringer to exclude competition from the market or obtain a higher price than would otherwise be available. The agencies claimed that anticompetitive patent hold-up could add inefficiencies to technology markets because prospective standard implementers could postpone or avoid committing to standardised technology in an attempt to protect themselves from the threat of such an injunction.

It was during the Trump administration that the agencies issued their 2019 statement, which altered the course and expressly withdrew the 2013 statement. The agencies were, at that time, instead more concerned with ‘patent hold-out’ (versus patent ‘hold-up’), during which an implementer refuses to obtain a licence to SEPs or drags out negotiations in an attempt to avoid paying a FRAND royalty.

The 2019 statement explained: “All remedies available under national law, including injunctive relief and adequate damages, should be available for infringement of standards-essential patents subject to a F/RAND commitment.” It also explicitly rejected “a special set of legal rules that limit remedies for infringement of standards-essential patents subject to a F/RAND commitment”.

Proponents, or opponents?

Today, the 2019 statement has been expressly withdrawn. A 2021 draft statement (which was never adopted) appeared to reverse course and instead return to the 2013 statement’s policies, so it remains unclear whether the agencies are proponents of injunctions in SEP litigation, or opponents.

SEP owners and implementers may – and often do – take advantage of this ambiguity to make reasonable arguments before a tribunal, which could cause inconsistent results depending on the particular forum, judge or minor differences in facts. 

An SEP owner’s perspective

An SEP owner may argue that while the 2022 policy statement also expressly withdrew the 2019 statement, the agencies declined to formally issue the 2021 draft statement, which returned to the 2013 statement’s policies against implementers. It could be argued that by refusing to issue the 2021 draft statement, the agencies potentially swayed the pendulum away from implementers.

In other words, SEP owners could take advantage of current policy ambiguity to argue that there was no major policy shift toward implementers, even if the withdrawal of the 2019 statement suggested there might be.

An SEP implementer’s perspective

In contrast, SEP implementers may argue that the most recent guidance in the 2021 draft statement, while never officially issued, indicates that the agencies appeared to suggest a policy change – back to the 2013 statement, which was implementer friendly. Indeed, implementers could argue that the 2021 draft statement, released during Biden’s presidency in response to his executive order, may represent a reversal to the earlier statement issued when Biden was vice president.

The current landscape created by the agencies’ changing policies is uncertain. It is unclear what the present policy is and what may come. It is unknown where the agencies stand with balancing the interests of SEP owners and implementers for injunctions, and further clarity may only arise as courts address SEP injunctions in the future.

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