TAKEAWAY: With a recent expansion in remedies for owners of Standard Essential Patents (SEPs), companies should consider how these changes may impact their licensing strategies and participation in technology standards.
In late 2018, the U.S. Department of Justice (DOJ) indicated its intent to withdraw from a 2013 joint policy statement with the USPTO on Standard Essential Patents (SEPs). SEPs are patents with claims that read on a particular industry or technology standard, such as Bluetooth or the emerging 5G wireless technology.
As technology standards become adopted, for example, through standard setting organizations, industry participants may need to license key SEPs. Standard setting organizations typically encourage fair, reasonable, and non-discriminatory (FRAND) licensing structures for patented technologies. The 2013 joint policy statement affirmed a preference for FRAND licensing structures and discouraged exclusionary licensing remedies, including injunctive relief.
Fast forward to today. As the DOJ withdraws from the 2013 joint policy statement, the potential licensing value for SEPs may increase due to the increased viability of injunctive relief for patent holders. This change in policy may lead to higher valuations for SEPs as more enforcement remedies become accessible for patent owners. This is impactful, of course, not only for SEP owners, but also technology standard participants and standard setting organizations.
For owners and entities seeking ownership of SEPs, it is increasingly prudent to invest and dedicate resources during patent prosecution to ensure that allowed patent claims are mapped to established or emerging industry/technology standards.
For licensees, as SEPs may move away from commoditized FRAND royalty rates, it is important to evaluate both the claim scope and categorization of patents being alleged as SEPs.
And for standard setting organizations, it is important to negotiate balanced licensing terms during technology adoption that both reflect potentially increased fair market license valuations and also mitigate risks associated with enhanced enforcement remedies.
Though the DOJ has departed from the 2013 joint statement, the USPTO has not yet updated its position. Director Iancu has indicated that the Office is looking at the issue.
The 2013 joint policy statement may be found here.