3 June 2013Patents

Standard-setting bodies urged to introduce patent policies

The American Antitrust Institute (AAI) has urged the US government agencies overseeing competition laws to create joint patent guidelines enforced by standard-setting organisations (SSOs).

The AAI, a non-profit group that promotes competition, has asked the Department of Justice and the Federal Trade Commission to provide an antitrust safe harbour to SSOs adopting seven guidelines.

Recommended policies include forcing parties to license standards essential patents (SEPs) – those deemed to cover agreed technical specifications within a particular industry – on reasonable and non-discriminatory (RAND) terms.

“Guidelines are urgently needed to spur SSOs to adopt sound patent policies that reduce the likelihood of anticompetitive patent holdup behaviour and ultimately protect consumer interests,” said AAI president Bert Foer.

In a petition dated May 23, the AAI said standards are at the heart of the communications and information industries, and promote competition and innovation.

But collaboration between actual and potential competitors, the AAI said, carries the risk of anti-competitive behaviour, with SSO participants using the cover of collaboration to engage in “collusive, exclusionary and monopolistic behaviour”.

A serious and recurring problem, the AAI noted, is “patent holdup”, the practice of intentionally making false promises about licensing patents on RAND terms. The AAI said the practice has led some patent holders to persuade SSOs to incorporate their technologies into the adopted standard.

“After manufacturers have spent millions of dollars and significant time to produce standard-compliant products, owners of SEPs have demanded monopolistic royalties and threatened to seek injunctions and exclusion orders against companies that fail to comply, leaving manufacturers the option to either agree to the patent holder’s extortionate terms or see their products kept off the market,” Foer said.

He added: “With the potential loss of a large revenue stream from injunctions and exclusion orders, manufacturers typically comply with the patent holder’s royalty demands. This type of holdup behaviour can result in higher prices, reduced product quality, and diminished innovation.”

To mitigate this problem, the AAI wants standards bodies to adopt the following guidelines:

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