In today’s hyper-charged politics, radical reform is unquestionably en vogue. Antitrust law is no exception, as a once-fringe cadre of commentators and activists have captured, in a few short years, the leadership of government policy and enforcement.
While the debate about the future of antitrust will continue, at least some voices in the current administration recognize that several bipartisan and pro-consumer steps can correct major policy errors made by the last administration.
The relationship between antitrust and intellectual property law is one of the most important and often overlooked areas to promote competition and innovation. This is especially true for the wireless and cellular technologies that have transformed our lives over the past quarter-century and which remain crucial to America’s global leadership.
Collaborating to develop standards that enable interoperability has been vital to the success of these industries. Nevertheless, holders of technologies that become essential to these standards (standard-essential patents, or “SEPs”) can exploit increased market power against licensees who sell products that use the standard—a problem commonly described as hold-up.
For this reason, standards setters require standard-essential patents to be licensed on fair, reasonable, and non-discriminatory (FRAND) terms. And, in 2013, the Department of Justice’s Antitrust Division and the U.S. Patent and Trademark Office issued a joint policy statement that made clear that seeking injunctive relief against a willing licensee for a standard-essential patent was inconsistent with FRAND. America’s highest patent court came to the same conclusion when analyzing the general standards for seeking an injunction—as clarified by the Supreme Court in eBay v. MercExchange—and cited the 2013 policy statement.
Perhaps most importantly, standard-setting bodies were also proactive: in 2015, the Institute of Electrical and Electronics Engineers limited injunctive relief in a way consistent with a DOJ business review letter that rearticulated the principles in its 2013 Policy Statement.
Trump’s DOJ shattered this economic and legal consensus. Then-Assistant Attorney General Makan Delrahim claimed that hold-up was actually a mirage and proceeded to “repeal and replace” the 2013 Policy Statement with a new decree that standard-essential patent holders could obtain injunctive relief without violating FRAND commitments regardless of whether a licensee was acting in good faith. To add insult to injury, the DOJ also issued an unprecedented—and unsolicited—“supplemental” statement to the IEEE claiming that the DOJ’s prior analysis, which reflected decades of consensus, had over the course of the Trump administration become outdated—casting a shroud over a standard-setting ecosystem that had relied on the DOJ’s prior guidance and was focused on the success of key technologies like Wi-Fi and 5G.
The Biden administration’s December draft policy statement, which returns to the bipartisan consensus regarding hold-up and reaffirms the impropriety of excluding willing licensees from FRAND-encumbered standard-essential patents, is a welcome development toward promoting competition and innovation. While the latest statement goes beyond the 2013 statement in notable respects that will benefit from further deliberation and public comment, it nonetheless provides a model not just for correcting the mistakes of the Trump administration when dealing with standard-essential patents and FRAND, but also represents the sort of careful enhancements to antitrust policy that can benefit consumers. One hopes it proves to be a harbinger of similar consensus-based reforms.