Today, we attended a hearing held on Capitol Hill by the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights regarding standard-essential patents. The hearing, titled “Standard Essential Patent Disputes and Antitrust Law,” featured testimony from four witnesses from diverse SEP-related backgrounds.
- A. Douglas Melamed, Senior Vice President & General Counsel, Intel Corp.
- Donald J. Rosenberg, Executive Vice President & General Counsel, Qualcomm
- Suzanne Munck, Chief Counsel for Intellectual Property & Deputy Director of the Office of Policy Planning, Federal Trade Commission
- John D. Kulick, Ph.D., Chair of the Standards Association Board, The Institute of Electrical & Electronics Engineers (IEEE)
You can click on the respective witnesses’s names above to read their prepared testimony, and if you’d like to check out the webcast of the full hearing (which featured some lively Q&A), you can do so here.
Many of the Senators who attended asked some very interesting and pointed questions of the witnesses, delving into issues such as the use of standard-essential patents at the International Trade Commission, the role that Congress and regulatory agencies can play in the SEP arena, the effect that FRAND violations and related disputes may have on consumers, whether the ownership of SEPs by non-practicing, non-innovating patent assertion entities (PAEs) upsets the usual standard-setting paradigm, and even whether FRAND abuses are a substantial problem at all.
On this latter point in particular, the back and forth between Messrs. Rosenberg (of Qualcomm) and Melamed (of Intel) was especially interesting. The GC of Qualcomm told the Senators that FRAND abuse and the problem of “patent hold-up” is largely theoretical, (and anecdotal at most), with a very small few bad apples attracting all of the attention. He urged the lawmakers to proceed with caution, because in his view, the FRAND framework is working great — for example, he pointed to the widespread availability of standards-based products such as smartphones at relatively low cost.
Mr. Melamed, the Intel GC, disputed that all is well on the FRAND front, discussing some recent litigations over SEPs involving both Intel and other standards implementers. He argued that injunctive relief should not be available against “willing licensees” (of course, the issue of who is a “willing licensee” is often itself in dispute), claiming that treble damages for willful infringement as well as the potential for fee shifting would be enough to deter unscrupulous implementers from “holding out” and refusing to take an SEP license.
Suzanne Munck from the FTC had an extended colloquy with Chairman Amy Klobuchar (D-MN), discussing the FTC’s role in various SEP-related cases and Ms. Munck’s views on standard-essential patent disputes. Ms. Munck stated that she believed FRAND abuses were not just theoretical, citing the recent FTC investigations involving Google/Motorola Mobility and Robert Bosch. She also asserted that SEP disputes did have the potential to result in higher prices for consumers, and that a good way to keep an SEP holder’s “hold-up” leverage in check is to require a third party to make an independent determination of FRAND terms before the threat of injunctive relief can come into effect (a position highly consistent — not surprisingly — with the FTC-Google consent decree).
And Dr. Kulick, testifying in his capacity as the head of the IEEE-SA Standards Board (although he is also a Siemens employee), told the Senators that the IEEE and other SSOs are working with various patent offices to help create more robust prior art searching and improve patent quality. In one interesting exchange, Dr. Kulick was asked directly by Sen. Chris Coons (D-DE) about whether the IEEE planned to include a “no injunctions” clause in its IPR policy. Dr. Kulick responded by noting that the IEEE hasn’t adopted a policy or position on the availability of injunctive relief, but that potential revisions to the IPR policy are being considered. He also explained that the IPR policy revision process would be transparent and open to all stakeholders, so this is certainly something to look for in the future.
Chairman Klobuchar closed the hearing by stating that she believed there are clear issues in the SEP arena, and that she hoped SSOs would act to address these issues — but also that if the SSOs would not or could not do so, the FTC, DOJ, and/or Congress may step in. She also hinted at potential future legislation that would clarify the standard to get exclusion orders at the International Trade Commission (perhaps unifying it with the eBay standard using for injunctions in district court — a recent Obama administration proposal).
That’s just a brief, high-level look at some of the exchanges todays — the full hearing lasted for about 90 minutes, so check out the webcast if you’re interested (and you have time). The record for the hearing will be kept open for two weeks, so there’s the potential for additional statements and written Q&A to be filed. Sen. Patrick Leahy (D-VT), who did not attend the hearing, already submitted a statement. We’ll try to keep you posted on any others that may come filtering in.