The New U.S. Essential Patents Statement – Safeguarding the Integrity of the Patent System

“While some would have perhaps liked to break the unitarity approach of the patent system so as to weaken remedies against the infringement of essential patents, a legal system that would apply a different standard to standard essential patents as opposed to other patents would violate U.S. trade obligations.”

The New U.S. Essential Patents Statement – Safeguarding the Integrity of the Patent SystemWhen the USPTO and DOJ issued the first Fair/ Reasonable And Non-Discriminatory (F/RAND)-committed essential patents policy statement in January 2013, the two agencies focused on whether the owner of a F/RAND-committed standard-essential patent could obtain injunctive relief against an accused infringer, especially at the International Trade Commission,  or instead would be limited to recovering monetary damages.  Their concentration was on the patent holder powers instead of the on the powers of the potential licensee to use litigation tactics to strategically infringe and avoid paying licensing fees.

During the ensuing seven-year period we saw essential patent holders offering F/RAND licenses, but many potential licensees were holding out from taking a license for years until ordered by a court. This made business sense because the ordered remedy was only ever going to be the same FRAND license offered years earlier.

An exclusion order was much more worrisome for such strategic technology users however, the 2013 statement seemed to limit the grants of exclusion orders.  But not entirely!  The 2013 statement did say  “[a]n exclusion order may still be an appropriate remedy in some circumstances, such as where the putative licensee is unable or refuses to take a F/RAND license and is acting outside the scope of the patent holder’s commitment to license on F/RAND terms or by insisting on terms clearly outside the bounds of what could reasonably be considered to be F/RAND terms in an attempt to evade the putative licensee’s obligation to fairly compensate the patent holder.”  The 2013 guidance was thus determined to limit injunctive relief to the specific situations above by misinterpreting F/RAND commitments to all standards development organizations as acquiescence to damages as adequate compensation in most cases.  Historically as far back as 1883, on final hearing based upon pleadings and proof, if the court found the patent valid and infringed, the court granted a perpetual injunction against the infringer as a matter of course.


Stating the Obvious

In withdrawing the 2013 statement, the new 2019 guidance by the DOJ, NIST and the USPTO states the obvious, i.e. that there is no difference in the law between F/RAND assured standard essential patents and all other patents. Therefore, all remedies available under national law, including injunctive relief and adequate damages, should be available for infringement of standards-essential patents subject to a F/RAND commitment, if the facts of a given case warrant them.  Consistent with the law, the remedies that may apply in a given patent case include injunctive relief, reasonable royalties, lost profits, enhanced damages for willful infringement, and exclusion orders issued by the U.S. International Trade Commission. These remedies are equally available in patent litigation involving standards-essential patents as in cases involving non-essential patents. While the existence of a voluntary F/RAND or similar commitments, and conduct of the parties, are relevant and may inform the determination of appropriate remedies, the general framework for deciding these issues remains the same as in other patent cases.  In line with the Court of Appeals for the Federal Circuit’s 2014 Apple v. Motorola decision, in the 2019 statement the U.S. Executive Branch makes it clear that eBay equally governs the court’s grant of injunctive relief in F/RAND patent cases as it does in non-F/RAND cases

Injunctions are a remedy for patent holder for the infringement of patent rights.  Even after the U.S. Supreme Court’s 2006 eBay Inc. v. MercExchange LLC decision U.S. courts continued to grant injunctions in those cases where the courts found that the facts warranted the injunction.  The court found four factors in the eBay case to evaluate. The court looks to: whether the owner suffered an irreparable injury; remedies available at law, such as monetary damages are adequate compensation; the balance of hardships to the parties;  and, public interest.

A Unitary Patent System

The 2019 policy statement clarifies that injunctions are available for all patents, including, of course, patents subject to a voluntary F/RAND commitment.  Courts are charged with the need to evaluate the facts surrounding the four eBay factors in SEP cases, just like they would in any other patent case.  This not only makes good sense but is important to our global approach to patents and all other forms of intellectual property.  It has been a long-term goal of the United States to treat patents in all areas in a similar way.  We have one term for all utility patents with very limited exceptions.  This is true even though patents in some disciplines can become outdated quicker than others.  We have the same filing requirements across technologies and we also treat filers from different countries in a similar manner.  We live in a global environment and it is critical to our domestic companies that the patents they seek in foreign countries are on a level playing field with the domestic filers in those foreign countries.  We lead the world in computer-implemented processes, diagnostic methods and personalized medicine.  We are also tough competitors in the development of cutting-edge communication technologies like 5G.  We don’t want to arm foreign countries to treat our leading industries different by treating some patents, like standards essential patents, differently in the U.S.

The U.S. patent system is anchored in Article I Section 8 of the U.S. Constitution, which recognized the importance of “promot[ing] the Progress of Science….by securing for limited times to… inventors the exclusive right to their respective…discoveries.”  Our patent system is a unitary patent system, i.e., the same patent standards, scope, duration, and other features generally apply across technologies and industries, and regardless of the identity of the patent holder.[1]  Such a unified structure allows for the flexibility required for protecting new and evolving technologies and industries in a world in which the pace of innovation is of ever-increasing, and is broadly supported.[2]  This unitarity patent system is also crucial to U.S. interests overseas, where the trade interests of companies in other jurisdictions often prefer weaker patent protection in certain cases, e.g. with respect to pharmaceuticals, medical devices or any technology their local industry prefers to copy or receive for cheap at a given time.

Differential Treatment Violates TRIPS

For that reason, the U.S. was one of the biggest promoters of a World Trade Organizations multilateral treaty on trade-related aspects of intellectual property (“WTO TRIPS”). This agreement, to which all jurisdictions worldwide, including China, have signed onto, secures a uniform patent protection system, under which signatories must agree that the enforcement procedures under their law permit effective action against any act of infringement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements.

While some would have perhaps liked to break the unitarity approach of the patent system so as to weaken remedies against the infringement of essential patents, a legal system that would apply a different standard to standard essential patents as opposed to other patents would violate U.S. trade obligations.[3] It would also undermine U.S. trade interests in general, because it would open the door for other jurisdictions to lower their patent protection for specific U.S. technologies they wish to copy or devalue.  Unlike the 2013 Policy Statement, the new U.S. Policy Statement is therefore aligned with the U.S. trade interests and obligations.

We need to continue to evaluate our policies to assure that they don’t unnecessarily expose the US to claims of differential treatment so our companies don’t find their leading technologies undervalued in foreign countries.


[1] See e.g. eBay, which applied the same standard in a case where the patentholder was a patent assertion entity.

[2] See e.g. A Patent System for The 21st Century (Stephen A. Merrill, Richard C. Levin, and Mark B. Myers, Eds.). Committee on Intellectual Property Rights in The Knowledge-Based Economy, Board on Science, Technology, and Economic Policy, Policy And Global Affairs Division, National Research Council of The National Academies, at 42 (2004) (noting that “[t]he flexibility of the patent system is a function of…three features [including the fact that] it is a unitary system with few a priori exclusions”).

[3] See Hearing Before the Subcommittee on Intellectual Property, Competition, and The Internet, or The Committee On The Judiciary House Of Representatives (112th congress, March 10, 2011) (“Finally, it is possible that such Balkanization of the Patent Act violates our international obligations under various treaties or protocols such as TRIPS, the intellectual property component of the General Agreement on Tariffs and Trade”)


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Join the Discussion

2 comments so far.

  • [Avatar for PTO-Indentured]
    March 31, 2020 01:59 pm

    “We lead the world in computer-implemented processes, diagnostic methods and personalized medicine.” err…not quite a complete statement (continued):

    … in the biggest U.S. innovation and IP giveaway (at any time) by judicial and legislative branches of a government (anywhere) who decided a decade ago this product of an American brain trust shall henceforth be shipped off to, with all rights pertaining to any of such, for countries other than the US — free of charge (well…except for the considerable expense US inventors bore for the prosecution of their issued patents, under a once-upon-a-time ‘promise’ that their invention could be their right and could be upheld).

    Game over. Mission accomplished. Result: ‘Anti-Inventive America’ (AIA)

    A decade’s worth, and counting, of anti-patent, intended ambiguity, and dubious constitutionality ‘stewarding’ of U.S innovation.

  • [Avatar for Pro Say]
    Pro Say
    March 30, 2020 05:40 pm

    “We lead the world in computer-implemented processes, diagnostic methods and personalized medicine.”

    Sadly, however, we no longer lead the world in PATENT-PROTECTED computer-implemented processes, diagnostic methods and personalized medicine.

    A key foundational difference indeed.