PTO & DOJ Letter to ITC Urges Caution on Limited Exclusion Orders for Some Standard Essential Patents
The International Trade Commission should exercise caution when issuing exclusion orders related to standard-essential patents when the holder has entered into certain types of licensing agreements, said the Patent and Trademark Office and Department of Justice in a joint letter to the ITC. When the patent holder has agreed to license a standard essential patent on reasonable and non-discriminatory (RAND) terms or fair, reasonable, and non-discriminatory (FRAND) terms, the patent case could be an attempt at asserting market power by forcing the respondent to accept stricter terms than those available to other licensees, they said.
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Standard-essential patents are patented technologies adopted by standard setting organizations. The adoption of patented technologies in product standards creates the risk that holders of the patents use their privileged position to exert market power of competitors, the letter said. To combat this issue, some standard setting organizations have relied on RAND and FRAND voluntary licensing agreements to ensure that the technologies are available and facilitate widespread adoption of their standards.
In cases where standard-essential patent holders have agreed to RAND and FRAND voluntary licensing arrangements, companies that want the ITC to issue exclusion orders may be trying to reassert their market power, the letter said. In particular, the patent holders may be trying to pressure investigation respondents into harsher license terms than those otherwise on the RAND or FRAND terms.
Just because a company wants an exclusion order covering a standard-essential patent subject to RAND and FRAND agreements doesn’t mean the case is an abuse of market power, however. For example, the company alleged to have infringed the patent may be holding out for license terms better than those of other RAND and FRAND agreements, the letter said. But the ITC should take these issues into account when considering public interest factors related to exclusion orders in Section 337 patent cases, the letter said.