[governance] The US Department of Justice and USPTO call for compulsory licenses on thousands of "standards-essential" patents

[Suresh Ramasubramanian]

It is an interesting development in a different and unrelated feld, and appears to be for the public good. which does happen, laissez faire is a thing of the past, even in open markets.

Again, how relevant is this to Internet governance?  

--srs (iPad)

On 26-Feb-2013, at 21:50, Riaz K Tayob <riaz.tayob at gmail.com> wrote:

> Should the government intervene in this market?
> 
> http://keionline.org/node/1663
> 
> The US Department of Justice and USPTO call for compulsory licenses on
> thousands of "standards-essential" patents
> 
> 26. February 2013
> 
> On January 8, 2013, the US Department of Justice (DOJ) and the U.S.
> Patent and Trademark Office (PTO) issued a joint statement on
> "remedies for standards-essential patents subject to voluntary F/RAND
> commitments. (Copy of statement here). The statement was directed to
> the United States International Trade Commission (ITC) which
> administers Section 337 of the Tariff Act of 1930 (19 USC 1337. Unfair
> practices in import trade, see:
> http://www.usitc.gov/intellectual_property/), and it has the practical
> effect of introducing a policy of compulsory licenses for thousands of
> standards relevant patents.
> 
> DOJ and PTO are responding to growing criticism of the patent system
> as it relates to mobile computing devices and other technologies where
> product developers find it difficult if not impossible to obtain
> voluntary licenses on reasonable terms to the large number of patents
> covering various aspects of the product. The decision is important for
> four reasons.
> 
> (1) A very large number of patents are impacted by the policy,
> arguable making it the largest compulsory license decision in history.
> 
> (2) DOJ and PTO invoked the sections of U.S. law that allow
> infringement of a patent when the ITC considers the "effect of such
> exclusion upon the public health and welfare, competitive conditions
> in the United States economy, the production of like or directly
> competitive articles in the United States, and United States
> consumers."
> 
> (3) High patent royalties are seen has a potential harm to consumers.
> 
> (4) The policy operates outside of Article 31 of the TRIPS, instead
> relying upon the considerable flexibility under Article 44 of the
> TRIPS Agreement, which allows WTO members to limit the availability of
> injunctions when royalty payments or other compensation or
> remuneration is available to patent holders.
> 
> The policy now being implemented at the ITC is to make it very
> difficult for patent owners to obtain injunctions to stop infringement
> of valid patents in cases where the patent is subject to a policy of
> licensing on reasonable and non-discriminatory terms. And, when
> parties cannot reach an agreement on license terms, the ITC or the
> courts may step in and set royalties. By making it much more difficult
> for a patent holder to obtain an injunction, the bargaining power of
> the patent holder is significantly diminished, which is one objective
> of the new policy.
> The new DOJ/PTO statement is a welcome reform of a patent system that
> has increasingly created a drag on innovation. It may also make it
> more difficult for the US government to block compulsory licensing
> activity in other countries.
> 
> The DOJ/PTO statement is attached below. A few quotes from the text follow:
> 
> --------begin quote
> . . . when a standard incorporates patented technology owned by a
> participant in the standards-setting process, and the standard becomes
> established, it may be prohibitively difficult and expensive to switch
> to a different technology within the established standard or to a
> different standard entirely. As a result, the owner of that patented
> technology may gain market power and potentially take advantage of it
> by engaging in patent hold-up, which entails asserting the patent to
> exclude a competitor from a market or obtain a higher price for its
> use than would have been possible before the standard was set, when
> alternative technologies could have been chosen. This type of patent
> hold-up can cause other problems as well. For example, it may induce
> prospective implementers to postpone or avoid making commitments to a
> standardized technology or to make inefficient investments in
> developing and implementing a standard in an effort to protect
> themselves. Consumers of products implementing the standard could also
> be harmed to the extent that the hold-up generates unwarranted higher
> royalties and those royalties are passed on to consumers in the form
> of higher prices. . .
> 
> The USITC has a mandate to consider the “effect of such exclusion upon
> the public health and welfare, competitive conditions in the United
> States economy, the production of like or directly competitive
> articles in the United States, and United States consumers.” [19] As
> the USITC has observed, these public interest factors ‘“are not meant
> to be given mere lip service,” but rather “‘public health and welfare
> and the assurance of competitive conditions in the United States
> economy must be the overriding considerations in the administration of
> this statute.’” . . .
> 
> The USITC may conclude, after applying its public interest factors,
> that exclusion orders are inappropriate in the circumstances described
> in more detail above. Alternatively, it may be appropriate for the
> USITC, as it has done for other reasons in the past, to delay the
> effective date of an exclusion order for a limited period of time to
> provide parties the opportunity to conclude a F/RAND license. Finally,
> determinations on the appropriate remedy in cases involving
> F/RANDencumbered, standards-essential patents should be made against
> the backdrop of promoting both appropriate compensation to patent
> holders and strong incentives for innovators to participate in
> standards-setting activities.
> -------end quote
> 
> 
> The full text of the policy statement
> 
> UNITED STATES DEPARTMENT OF JUSTICE AND UNITED STATES PATENT & TRADEMARK OFFICE
> POLICY STATEMENT ON REMEDIES FOR STANDARDS-ESSENTIAL PATENTS SUBJECT
> TO VOLUNTARY F/RAND COMMITMENTS
> January 8, 2013
> 
>   [snip]
> 
> 
> 
> 
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