I submitted comments to the US Department of Justice’s call for comments that we previously discussed here. Since they are rather long, I have decided to serialize them over a series of shorter posts. For those interested in reading my comments as a singular unit they are available on the DOJ’s website here.
The revised draft threatens the viability of collaborative open standardization (as opposed to proprietary standards). We have a natural experience at play. In 2015, the IEEE used a corrupt closed door process led by Apple, Intel and Microsoft to adopt a patent policy that effectively prohibits the use of injunctions against SEPs for those who give RAND commitments under its policy.
I have written extensively about the hugely negative anticompetitive results of this exercise in my blog. They included
- Delay and chaos in standard development.Engineers working on IEEE-SA’s flagship Wi-Fi standard have described the effects of new patent policy as “delay and chaos,” “loss of momentum”, and as causing “delay in progress” and a “broken” process” through a policy that “appears to be not enforceable or implementable.”
- Wi-Fi lost its quality approval as an American National Standard. In what seems to be a result of the negative LoA situation (a negative LoAis when the member declines to offer to license relevant SEPs under the relevant IPR policy), in March 2019 the American National Standards Institute has decided not to approve two recent Wi-Fi standard amendments from being accredited as American National Standards. In other words, the quality and reputation of Wi-Fi standards is been impaired.
- Delays in disclosure of licensing intentions. The changes to the IEEE-SA policy and forms have caused significant delays in disclosure of licensing intentions by IEEE-SA participants. For example Huawei, one of the biggest contributors to Wi-Fi, went over 4 years (2015-2019) without submitting any patent assurance forms, a strategy sometimes referred to as “patent ambush”. The delays mean a reduced clarity of the patent landscape surrounding IEEE-SA standards.
- RAND assurances are significantly declining. An unprecedented number of negative Letters of Assurance (LoAs) reflecting patent holders that choose not to give RAND assurances under new IEEE-SA policy. From January 2016 to the end of June 2019, a whopping 77% (!)of Wi-Fi LoAs have been negative (including eight recent negative LoA from Huawei). This means that a majority of new LoAs are for patents whose owners are refusing to assure that they will license the SEPs on reasonable and non-discriminatory (RAND) terms. RAND assurances are viewed as an important safety valve to ensure that implementers of the standard are not prevented from utilizing it.
- The new policy and DOJ BRL have been misrepresented overseas. IEEE-SA has engaged in aggressive advocacy of its failed new policy overseas, especially in Asian jurisdictions, alleging US Government support for the new IEEE-SA policy and encouraging enforcement against U.S. patent holders. A May 2016 pressrelease and picture by China’s National Development and Reform Commission (NDRC), depicts IEEE-SA officials “explaining” U.S. antitrust and DOJ positions to NDRC officials. The visit encouraged NDRC in its line of “investigations” against U.S. and Western essential patent holders such as Qualcomm, InterDigital, Dolby, Vringo, Nokia, Sisvel, HDMI, and Ericsson. These “investigations” are a well known Chinese weapon to obtain Western technology for Chinese companies to use at cheaper or near-free rates.
- IEEE-SA is behaving at odds with statutory language that SDO policy developments be made in a transparent manner by a balanced decision-making. Section 103 ofthe U.S. Standards Development Organization Advancement Act defines ‘standards development activity’ as “including actions relating to the intellectual property policies of the standards development organization.” IEEE-SA has embraced this definition when it filed two notices with the DOJ under the National Cooperative Research and Production Act of 1993 re “disclosing additions or changes to its standards development activities” that include “a  update of the IEEE patent policy for standards development.
In a 2021 follow-up piece I explained how 93%(!) of submitters of letters of assurance chose not to follow this no-injunction policy
More recently, a few weeks ago we learned that IEEE-SA standards have lost their international status as a result of their imbalance policy
In other words, the 2021 Proposal has been proven to break down open standards, in the IEEE experiment that was led by Apple, Microsoft and Google. It is unclear why an administration that understands the Big Tech realities and has seen the IEEE natural experiment would such a policy. This would be a grave mistake fueled by Big Tech astro-turfing lobbying.
(9). The draft revised statement discusses fact patterns intended to indicate when a potential licensee is willing or unwilling to take a F/RAND license. Are there other examples of willingness or unwillingness that should be included in the statement?
There are numerous other example of how licensees can be unwilling, that the 2021 Proposal is missing including: refusal to be bound by a court order or jurisdiction or requiring complete adjudication of every subject SEP prior to agreeing to a pricing discussion; spending billions of dollars on lobbying/astroturfing; creating patent nullification NPEs; attempts at regulatory capture and creating a revolving door with the regulators; engaging in long term plays to eviscerate royalty rates; lying about sales; demanding impossible-to-agree-to royalty rate structures like daily fluctuating royalty rates; claiming SEPs are unenforceable because of late disclosure when the party claiming late disclosure has unclean hands, and willfully ignoring how standardization works and the meaning of umbrella FRAND declarations.
Note also that in 2013, the ITC has found Apple to be an unwilling licensee by  i.e. engaging in reverse holdup by taking the position that Apple would stand ready to pay FRAND royalties only “[i]f the Commission were to determine that the … patent is valid, infringed and enforceable…. and if that judgement were affirmed on appeal”. The Commission explained that such
“position illustrates the potential problem of so-called reverse hold-up, a concern identified in many of the public comments received by the Commission. In reverse patent hold-up, an implementer utilizes declared-essential technology without compensation to the patent owner under the guise that the patent owner’s offers to license were not fair or reasonable. The patent owner is therefore forced to defend its rights through expensive litigation. In the meantime, the patent owner is deprived of the exclusionary remedy that should normally flow when a party refuses to pay for the use of a patented invention”
The 2021 Proposal fails to account for this type of constructive refusal to deal. DOJ, USPTO and NIST should not be adopting a policy that is inconsistent with the ITC position.
Worse yet, the 2021 Proposal cites Apple’s litigation positions almost verbatim (“valid, infringed and enforceable”), revealing how regrettably Apple is, still (!) controlling administration positions.
(10). Have prior executive branch policy statements on SEPs been used by courts, other authorities, or in licensing negotiations? If so, what effect has the use of those statements had on the licensing process, outcomes, or resolutions?
Prior government pronouncements have been used by foreign regulators as a basis for many of their more questionable activities vis-à-vis US SEP holders as discussed above.
In addition, the 2013 Statement was relied on the USTR to veto an exclusion order issued by the ITC against an infringer it has found to be an unwilling licensee after examining all the evidence (Apple). Regrettably, this demonstrates how such a statement was used (and likely will be used again) to shield unwilling licensees, including the world first 3 trillion dollar company. This is very bad policy. Again, I urge the DOJ not to issue the 2021 Proposal for this reason. If the Division feels strongly, it may withdraw the 2019 statement and not replace it. But, replacing it would be placing the federal governments thumb on the scale in favor of Apple, Google, Amazon, Intel, Cisco etc. – indeed this is why they are eagerly advocating for issuance of the 2021 Proposal. I hope the administration understands this reality.
Perhaps the most important thing that the US government could do is to make it clear that it does not take sides in SEP disputes in all but the most egregious circumstances. The best way to signal that would be to refrain from issuing the 2021 Proposal.
For example, if a legitimate SEP owner pursues its remedies against an unwilling licensee and secures various court orders or injunctions in a parallel US litigation requiring discovery of a foreign defendant, if the antitrust representatives from the unwilling licensee’s home country accompanying their President’s visit to the United States scold their US counterparts during a high-level delegation meeting, it would be extremely helpful if the US counterparts politely say nothing. It is definitely NOT helpful to have the Deputy Undersecretary of Commerce try to allay the foreign delegates by telling them, something to the effect of not to worry, the offending US company is merely a patent troll who will be taken care of in due course.
I would also encourage the administration to study who would benefit from the 2021 Proposal. Aside from Apple – the 9 largest phone makers in the world today are Asian, 8 of whom are from China. They include Samsung, Xiaomi, Oppo, Vivo, Huawei, Lenovo, ZTE and TCL (brand name Alcatel).
 David Cohen, The IEEE 2015 Patent Policy – A Natural Experience in Devaluing Technology (Aug. 12, 2019) https://kidonip.com/news/the-ieee-2015-patent-policy-a-natural-experiment-in-devaluing-technology/
 MINUTES IEEE 802 LMSC EXECUTIVE COMMITTEE MEETING, Revision 0, Friday, January 22, 2016 – 13:00.
 Konstantinos Karachalios, IEEE-SA Managing Director, Patents in Telecom (5 November 2015), available at https://www.ucl.ac.uk/laws/patents-in-telecoms-2015/docs/01_01_0905_karachalios-slides.pdf
 Electrical engineer institute’s new WiFi measures won’t get American national standard designation, MLEX (11 March 2019).
 Richard Lloyd, Huawei joins IEEE patent refuseniks four years since controversial policy change, IAM (17 May 2019)
 Table Generated by author available at https://www.scribd.com/document/421506720/WiFi-LoAs-Submitted-1-1-2016-to-6-30-2019
 Ben Remaly, Huawei rejects IEEE policy for some ethernet patents, GCR (20 May 2019).
 China’s anti-monopoly law as a weapon against foreigners, Kidon IP Blog (Jan 13, 2019).
 David Cohen, The IEEE Ill-Advised 2015 IP Policy Continues to Fail (May 6, 2021) https://kidonip.com/standard-essential-patents/the-ieee-ill-advised-2015-ip-policy-continues-to-fail/
 Khushita Vasant, IEEE’s bid to get wireless standards adopted internationally faces headwinds (MLEX, Dec. 27, 2021) (describing unprecedented failed ballots to fast-track IEEE W-Fi standards at ISO, with IEEE describing upcoming standards as being “blocked at the starting gate!”)
 See, e.g., Vringo’s second response to ZTE’s submissions to DGComp at https://www.scribd.com/document/549649446/1-Response-to-ZTE-s-Submissions-of-7-August-2014
 David L. Cohen, Tech’s Frightful Five and Their Allies Come to Brussels, Kidon IP Blog (Feb 25, 2019) https://kidonip.com/frightful-five/techs-frightful-five-come-to-brussels/ (for examples of lobbying); The ACT| Apple Association Charade, Kidon IP Blog (Aug 17, 2020) https://kidonip.com/frightful-five/the-act-apple-association-charade/ (for astroturfing).
 See, e.g., David L Cohen, Unified Patent’s UnFRANDly Jihad or Trolling at the PTAB, Kidon IP Blog (Mar 21, 2019) https://kidonip.com/standard-essential-patents/unified-patents-unfrandly-jihad-or-trolling-at-the-ptab/ ; The Real Empty Suit? Unified Patent’s Reverse Trolling Take 2, Kidon IP Blog (July 29, 2020) https://kidonip.com/standard-essential-patents/the-real-empty-suit-unified-patents-reverse-trolling-take-2/ .
 David L Cohen, The DOJ Antitrust Division: Regulatory Capture at the Expense of U.S. Interests, IP Watchdog (June 10, 2021) available at https://www.ipwatchdog.com/2021/06/10/doj-antitrust-division-regulatory-capture-expense-u-s-interests/id=134441/
 See, e.g., David L Cohen, Apple’s CORE Hypocrisy – Setting a Record in Late Disclosure, Kidon IP Blog (June 23, 2020) https://kidonip.com/frightful-five/apple-throws-an-ally-under-the-bus-again-the-case-of-the-ieee/ (citing Qualcomm’s opening statement in its FRAND trial with Apple, available at https://www.scribd.com/document/457922809/407463620-Qualcomm-Opening-Statement).
 David L Cohen, Apple’s CORE Hypocrisy – Setting a Record in Late Disclosure, Kidon IP Blog (June 23, 2020) https://kidonip.com/frightful-five/apple-throws-an-ally-under-the-bus-again-the-case-of-the-ieee/ (illustrating Apples late disclosures)
 David L. Cohen, Disclosures and Enforceability of Standard Essential Patents: An Overview, The Licensing Journal (2022) forthcoming.
 See ITC July 5 2013 decision at pages 62-63 https://www.itcblog.com/5979-itc-issues-public-version-of-opinion-in-certain-electronic-devices-including-wireless-communication-devices-portable-music-and-data-processing-devices-and-tablet-computers-337-ta-794
 USITC, In re Certain Electronic Devices, including Wireless Communication Devices, Portable Music and Data Processing Devices and Tablet Computers (Jul. 5 2013) at 62 https://www.itcblog.com/5979-itc-issues-public-version-of-opinion-in-certain-electronic-devices-including-wireless-communication-devices-portable-music-and-data-processing-devices-and-tablet-computers-337-ta-794.
 Id. at 63.
 See for example, Don Wright’s uses of the 2015 Statement in China, discussed at Apple Throws an Ally under the Bus Again – The Case of the IEEE, Kidon IP Blog (Sept 30, 2020) available at https://kidonip.com/frightful-five/apple-throws-an-ally-under-the-bus-again-the-case-of-the-ieee/ and The DOJ Antitrust Division: Regulatory Capture at the Expense of U.S. Interests, Kidon IP Blog (June 11, 2021) available at https://kidonip.com/frightful-five/the-doj-antitrust-division-regulatory-capture-at-the-expense-of-u-s-interests-2/
 Vringo Germany GmbH v. ZTE Deutschland GmbH, Docket No. 2 O 41/13, (Mannheim, Germany 17 December 2013) available at https://www.scribd.com/document/548666126/2013-12-17-Judgment-English
 See, e.g., Vringo, Inc. v. ZTE Corp, 14-cv-4988, doc 118 (June 3, 2015).
 See e.g., 2015 Report to Congress on China’s WTO Compliance at 33 available at https://ustr.gov/sites/default/files/2015-Report-to-Congress-China-WTO-Compliance.pdf
 See, e.g., https://en.wikipedia.org/wiki/State_visit_by_Xi_Jinping_to_the_United_States; https://obamawhitehouse.archives.gov/the-press-office/2015/09/25/fact-sheet-president-xi-jinpings-state-visit-united-states