This Administration Should Listen to America’s True Innovators
The recent public comment period for feedback on the Department of Justice’s draft policy statement on licensing negotiations and remedies in standard essential patent (“SEP”) FRAND licensing attracted plenty of interest from innovators and device manufacturers, current members of the U.S. Senate and a bi-partisan group of former government officials, and even a Chinese public policy group. This level of feedback clearly points to what’s at stake here.
SEPs lie at the heart of so much of the innovation that we increasingly take for granted such as 4G and 5G mobile networks, the WiFi in our homes and offices, and the video codec technology that allows people everywhere to stream their favorite shows.
Over these last few years this technology has only become more valuable as we have adjusted to a world of remote work and video calls with loved ones we couldn’t see in person.
But while we may take it for granted, innovation in standardized technologies such as 5G and WiFi is painstaking work. It takes billions of dollars of investment, countless hours of engineering time in the lab, a deep knowledge and understanding of the underlying technologies typically built up through years if not decades of work, and pan-industry collaboration.
It is the very essence of this iterative process that defines these astounding inventions. And it only occurs because of the strong and consistent intellectual property policies that help protect these inventions and provides inventors, and the companies that employ them, with a way of generating a return on their considerable R&D investments.
The Biden Administration now faces a choice – should it actively support the inventions behind such valuable technology as 4G LTE, 5G and WiFi, or should it opt to undermine the innovation life cycle? If the DOJ’s draft policy statement were to come into force as it is currently written, the Administration would weaken IP rights in favor of the device manufacturers, whose sole contribution to the innovation life cycle is to implement the standardized technologies, invented by others, into their products. That would come at the expense of those that develop the foundational technology on which those products depend.
That’s because, for one thing, the policy says that SEP owners should not be awarded an injunction following a finding of patent infringement by a U.S. district court, something available to any other patent holder in a similar circumstance. But because the Administration fails to recognize the value that SEPs have in this technologically driven economy, they are willing to deny U.S. inventors of this right and continue to provide aid and economic prosperity to Chinese OEMs and others who refuse to pay for the technology they steal on a regular and ongoing basis. Unfortunately, this is just one part of a policy document that seems to be far more interested in the rights of those that use patented technology rather than the rights of inventors themselves.
But there’s another, arguably more serious aspect to this, and that’s the message it sends to IP authorities around the world. In the early 2010s, the Obama Administration adopted a decidedly anti-inventor and anti-SEP owner posture with its own policy statement on SEPs.
That, in turn, prompted a number of antitrust regulators in Asia to scrutinize the licensing practices of several U.S. SEP owners and impose fines and other onerous provisions on those companies. At a time when the U.S. is engaged in a technological arms race with China, it would be alarming if the Biden Administration would now promote a policy that plays directly into Beijing’s hands.
Given China’s interest in this area, it’s not surprising that one organization that is calling for the White House to weaken the rights of SEP owners is the Patent Protection Association of China (PPAC), a Chinese non-profit which has more than 400 corporate members. In its submission on the draft statement, PPAC claimed that the proposed policy would reach “a more reasonable balance between patent holders and implementers” than the 2019 policy statement.
This White House should give short shrift to PPAC’s comments as many Chinese technology companies have a clear motivation to weaken U.S. IP rights and drive down the price of the foundational technology that those companies use in their products.
And PPAC is not alone in trying to weaken those IP rights. Also lining up on the anti-inventor side of the debate is a host of the largest U.S. Big Tech companies.
One of the groups making the case for Big Tech is ACT | The App Association, which submitted its own comment on the draft policy. Although it claims to represent the Davids of the tech world, the reality is very different. As The New York Times explained last year, the App Association is “an organization that claims to give a voice to small technology companies but is funded by big technology companies, including Apple.”
Let me be clear; the App Association has no role to play in debates over standardized technologies. App developers play, at best, a marginal role in the standards ecosystem. They profit directly from the technology developed by the inventors that have enabled a revolution in connectivity. In reality, the App Association’s advocacy in this area is a Silicon Valley-backed attempt to drive down the price of foundational technology in 5G, WiFi, and video.
For an Administration that has vowed to take a tougher approach on Big Tech and is fully aware of the technological threat posed by our closest geopolitical rival, it would seem strange if it were to now do the bidding of Silicon Valley and China.