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

Tue Feb 26 21:24:35 EST 2013

Dear Riaz,

This is extremely interesting in terms of impact on Internet Governance.
The developments are relevant due to the conflicts between IETF RFCs and
Patents as was the case last year with a certain patent application.

Not to mention, that the US Department of Commerce oversees both the USPTO
and by extension- ICANN through the IANA.

From face value - compulsory licenses for standards means to my mind at
least the staking of authority and shift in standards regulations. On a
prima facie level, it is also a shift from ITU-T to the USPTO and the ping
pong between forum shoopping between WTO and ITU-T has begun.

Interesting times ahead. Thanks for picking this up and monitoring this
space.

Take care,

On Wed, Feb 27, 2013 at 4:20 AM, 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/<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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