Scrutinize Tech Standards-Setting Groups, DOJ Antitrust Head Says

Access practice tools, as well as industry leading news, customizable alerts, dockets, and primary content, including a comprehensive collection of case law, dockets, and regulations. Leverage...

By Peter Leung

The organizations that set widely-used technology standards may be colluding illegally to disadvantage patent owners, the Department of Justice’s top antitrust lawyer said.

Concerns about patent owners abusing their monopoly power to block competitors are overstated, Assistant Attorney General Makan Delrahim said. Instead, the problem of would-be licensors refusing to pay to use patented technologies is the more serious issue that should invite antitrust scrutiny, he said at the University of Southern California in Los Angeles Nov. 10.

Delrahim’s comments signal the Trump administration’s skepticism about arguments that antitrust laws should be used to limit patent rights in situations involving industry-wide technology standards, such as those for mobile data transmission. A shift in policy could benefit companies with big patent licensing businesses such as Qualcomm, which is facing both government scrutiny and a patent licensing dispute with Apple Inc. over the issue.

Look at Licensors

Industry-wide technology standards are supposed to encourage widespread usage and interoperability between different vendors, and they regularly incorporate technologies covered by patents. To prevent companies from using their patents to block competitors or to extract higher licensing fees, standards setting organizations (SSOs) typically require companies that submit their patented technology for a standard to agree to license out the patents under fair, reasonable, and not discriminatory, or FRAND, terms.

But according to Delrahim, the problem doesn’t rest with standards-essential patent owners trying to exclude competitors but with companies that use the technology but refuse to get licenses. The SSO in a particular negotiation can run into antitrust problems if, for example, its definition of FRAND is unfairly skewed toward licensees, Delrahim said. SSOs are formed by companies, and their collective actions, such as placing onerous restrictions on patent owners, could draw antitrust scrutiny, he said.

Contract, Not Antitrust

Delrahim also argued that FRAND commitments don’t implicate antitrust concerns. Under antitrust law, a patent owner’s unilateral refusal to offer a license, even if the patent is essential to a standard, is “ per se legal,” he said.

Similarly, owners of standards-essential patents aren’t violating antitrust law if they seek an injunction, he said, disagreeing with several appeals courts that say a FRAND commitment severely limits a patent owner’s right to enjoin infringers.

Instead of antitrust, other areas of law may offer an appropriate remedy, Delrahim said. For example, if a patent owner made a FRAND commitment when it submitted its patent to a standard, that commitment is presumably a contract with the SSO. A jury in a contract dispute is better equipped to decide what is fair and reasonable than an antitrust enforcement lawyer, he said.

To contact the reporter on this story: Peter Leung in Washington at pleung@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

For More Information

Text available at http://src.bna.com/ud4

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Intellectual Property on Bloomberg Law