The SEP Couch, Episode 7: Examining the U.S. Policy Perspective on SEPs

Jamie L. Simpson is the Chief Policy Officer and Counsel for the Council for Innovation Promotion (C4IP) and has previously served as Chief Counsel for the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, and in various roles at the U.S. Patent and Trademark Office (USPTO).

In the latest episode of The SEP Couch, Tim Pohlmann spoke with Simpson about  how IP is dealt with in the United States and, in particular, the topic of standard essential patents (SEPs), and   explained that the situation is certainly more complicated than is appreciated from the outside.

When the executive branch takes a position, there are many different entities in the federal government that are involved. For something like SEPs, especially, the USPTO is involved from the patent perspective, but so are the antitrust agencies. That includes the antitrust division of the Department of Justice, the Federal Trade Commission, and parts of the White House, including: the Office of Science and Technology Policy and the Intellectual Property Enforcement Coordinator (IPEC). The USPTO sits below the Department of Commerce in the U.S. government, so they are also involved. Whenever a policy position is developed, all of these organizations are invited to the table, and need to gain agreement before a public announcement.

Simpson said that discussions about SEPs in U.S. politics are mainly triggered by global litigation. While some disputes over SEPs gain attention, many deals are closed without conflicts. Simpson believes that the EU Commission went too far with its April 2023 draft proposal to regulate SEP licensing. She thinks that regulators should ensure a level playing field for market participants to negotiate SEP licenses, rather than influencing fair, reasonable, and non-discriminatory (FRAND) determinations. Simpson also shared concerns about the European Commission’s intellectual property policy shift, which threatens innovation leadership and economic success and security in Europe and America.

The United States withdrew from the 2019 Standards-Essential Patents policy in June 2023. Simpson believes that the withdrawal occurred because the guidance was very much overinterpreted, although the actual language was moderate. What remains to be seen is how the United States will react to proposals around SEPs in other countries. To date, there hasn’t been any legislation introduced or any other proposals from the administration concerning SEPs.

Simpson also spoke with Pohlmann about a potential bill proposing a federal SEP royalty court with global impact. This proposal has not been made public, likely because the organizations who were behind it appreciated that it needed more work first, which is wise. In the United States, said Simpson, the best shot at getting something done is when, before you go to Congress, you’ve reached some compromise and can approach lawmakers with some consensus. An example of this is in the copyright space with the2018 Music Modernization Act. A centerpiece of that bill was rights holders on the copyright side working with licensees, mostly on the digital internet side, which includes companies like Spotify and Pandora. “They came together and said we have a huge problem under this 100-year old law that was created at the time that we were using piano scrolls,” Simpson said. “Operating under that same law for the internet age wasn’t working for anyone. There was room to come to an agreement, and they did. It still took a while to get it through Congress but starting out on that footing meant that it actually got passed.”

Simpson also told Pohlmann that too much regulation may hinder innovation, leading to silos of technologies that cannot communicate. Policymakers must base decisions on data and move cautiously to avoid harming a functioning system.