Next StEPs: DoJ, USPTO, and NIST Draft Policy Update

 

Quick Reminder 

Late last year, the United States Department of Justice (DoJ), United States Patent and Trademark Office (USPTO), and the National Institute of Standards and Technology (NIST) jointly released a proposed policy statement that updates and improves guidance on standard-essential patents (SEPs). As long-time proponents of fair, reasonable, and non-discriminatory (FRAND) licensing terms in the SEP space, we’re excited to support these measures. You can learn more about the impact this draft rule could have on innovation, investment, and the future of the app economy in our recent blog here. If reading another blog is a bit too much for the “To Do” list, a TL;DR  might be  more your speed. Before diving into next steps, keep these three points in mind about the current policy:

  1. Some recent changes in policy, driven by a few big SEP holders, have created uncertainty around the standards system. This uncertainty and instability have created an environment that will most certainly deter innovators, especially our small business members who often have the most at risk. Point blank: if small companies are facing uncertainty when innovating on top of standards, they might not enter the app economy at all.
  2. The same uncertainty that could prevent small businesses from innovating the next big idea is just as likely to deter the investor interested in helping this big idea grow. That’s right, instability in the SEP space creates a major risk for potential investors – leaving small business innovators developing the next generation solutions high and dry.
  3. Further inaction by leaders in this space and across governments can create deeper pockets of uncertainty and insecurity that reach and deter the app economy’s future innovators. Swift action is essential to ensure FRAND terms that SEPs are committed to are met for all members of the app economy.

Next StEPs

Originally, public submission for comments related to this draft policy statement were open for 30 days, but a week after the rollout, the comment period was extended to 60 days – prompting more than 160 comments by February 4, 2022. We’re proud to say that our members joined forces to participate in this comment period, and you can find the letter here. These comments (and many others) have pointed out that the new draft policy moves things much closer to a balanced standards and SEP licensing ecosystem, though there are areas that can and should be improved.

Moving forward, we expect the DOJ, USPTO, and NIST will evaluate all the comments that have been submitted and issue a final version of the policy statement. We hope to see this final version move through the remaining steps in this process swiftly, making needed improvements. Once finalized and released, we hope that the DOJ/USPTO/NIST policy will provide lasting certainty that will enable innovators of all sizes to compete across different consumer and enterprise markets.

Small Business Impact

So, what does all this mean for small businesses innovating in this space? If the draft statement is enforced, it would lead to a more balanced system for all players involved with SEPs. SEP holders would receive fair compensation for their patented technology. The policy would simply give innovators, small and large alike, the certainty needed to access standards to produce and sell operational products. Bonus: Leveling the playing field in this way leads to consumers benefiting from more products at a lower price point thanks to a more fair and competitive space for all innovators.

If the draft policy statement on SEPs fails does not move forward, the outcome could be detrimental for small businesses throughout the app economy. Uncertainty around standards and the licensing of SEPs and the way they’re used could lead to our small business members having to take a bad deal with a large SEP holder in the confusing negotiation process, temporarily halt production of their products, or even worse, be slapped with a fee so large it could drain all resources.

While we wait for the agencies to review the public comments and finalize the administration’s policy, keep an eye on our blog. We’ll keep you updated on where things stand with the draft policy statement and SEP policy around the globe. If you are interested in learning more about this issue, or want to get more involved, reach out to Brad or Caitlin on the membership team!