Comment of Scholars of Law, Economics, and Business on Draft Policy Statement on the Licensing and Remedies for Standard Essential Patents

26 Pages Posted: 10 Feb 2022

See all articles by Geoffrey A. Manne

Geoffrey A. Manne

International Center for Law & Economics (ICLE)

Date Written: February 4, 2022

Abstract

This comment was submitted by 19 scholars of law, economics, and business who work in areas related to intellectual property, antitrust, strategy, and innovation in response to the December 6, 2021, USPTO, NIST, and DOJ draft policy statement on remedies for the infringement of standard-essential patents.

While the draft policy statement may seem even-handed at first sight, its implementation would have far-reaching consequences that would significantly tilt the balance of power in SEP-reliant industries, in favor of implementers and to the detriment of inventors. In turn, this imbalance is liable to harm consumers through reduced innovation, resulting from higher contract-enforcement costs and lower returns to groundbreaking innovations. And by making it harder for U.S. tech firms to enforce their intellectual property rights against foreign companies, the draft policy statement threatens to erode America’s tech-sector leadership.

Crucially, there is no empirical evidence of structural and systematic problems of holdup and royalty stacking affecting SEPs licensing. Yet, without a sound basis, the anti-injunctions approach espoused by the draft policy statement unnecessarily adds a layer of additional legal complexity and alters bargaining processes, unduly favoring implementers.

Licensing negotiations involving complex technologies are legally intricate. It is simply not helpful for a regulatory body to impose a particular vision of licensing negotiations if the goal is more innovation and greater ultimate returns to consumers. Instead, where possible, policy should prefer allowing parties to negotiate at arm’s length and to resolve disputes through courts. In addition to maintaining the sometimes-necessary remedy of injunctive relief against bad-faith implementers, this approach allows courts to explore when injunctive relief is appropriate on a case-by-case basis. Indeed, the very exercise of designing a policy statement to guide F/RAND licensing is antagonistic to optimal policymaking, as judges are far better situated and equipped to make the necessary marginal adjustments to the system.

Keywords: SEP, standard essential patents, holdup, holdout, royalty stacking, injunctions, eBay, transaction costs, patent remedies

JEL Classification: K00, K21, K41

Suggested Citation

Manne, Geoffrey, Comment of Scholars of Law, Economics, and Business on Draft Policy Statement on the Licensing and Remedies for Standard Essential Patents (February 4, 2022). Available at SSRN: https://ssrn.com/abstract=4027598 or http://dx.doi.org/10.2139/ssrn.4027598

Geoffrey Manne (Contact Author)

International Center for Law & Economics (ICLE) ( email )

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