Senators Voice Concern Over Efforts to Get Exclusion at ITC for Standard-Essential Patents
Senate Judiciary Committee members voiced concern Wednesday over attempts to prevent the use of “standard-essential patents” they said have contributed significantly to competition, innovation and consumer choice in the high-tech industry. At a hearing on the implementation of the America Invents Act (AIA), Chairman Patrick Leahy, D-Vt., said he had written to the Obama administration that such efforts at the International Trade Commission to forestall use of patents “after promising to license them on reasonable terms could have anti-competitive effects.” The FTC has voiced concerns as well, he said.
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Sen. Mike Lee, R-Utah, said he and committee colleagues had written to the ITC “expressing concerns about the implications of granting” exclusion orders for standard essential patents, which have “contributed significantly to competition … innovation and consumer choice,” especially in the tech industry. The ranking member of the Antitrust Subcommittee wanted to know from U.S. Patent and Trademark Office Director David Kappos, the sole witness, whether such exclusions would have negative consequences.
Kappos said it would be “very dangerous” if standards-based patents that are “pledged” for “fair, reasonable, non-discriminatory” licensing are “later enforced for exclusion orders or injunctions.” But he also cautioned that such patents “never stood for licensing under any terms and conditions.” Finding a “balance” is key for the system to work, he said: “Folks engaged in standards-setting would otherwise” say why take a “license at all when the worst thing that can happen is that we can get sued and after litigation we will just pay whatever we were going to pay for the license.” A standard-essential patent holder commits to license technology on reasonable and non-discriminatory terms.
Saying that statistics show that the “patent system drains resources from high-tech industries,” Sen. Dianne Feinstein, D-Calif., said software and Internet patents are “litigated eight times more” than others by “patent trolls.” Kappos said his office is doing “several things” to address the issue. Section 18 of the AIA, which deals with “business methods that are claimed as being implemented by software,” will go into effect in September, he said. “That provision and our implementing rules will enable us to provide a venue to take a second look at many of these business method patents that have software concepts in them.” The so-called inter partes review and post-grant opposition processes provide a “fast, clear [and] inexpensive route” to review patents his office has granted, he said. He expects them to be “extremely helpful in the software area,” he said.
The USPTO already has issued guidelines directed at the “software field” that would have “our examiners spend more effort and be more precise” in looking at patent applications “for the clarity of their disclosures,” which Kappos said was a “key problem in the software area.” Examiners have been putting out “increasing objections and rejections” in the software area, he said. Kappos said he is “extremely attuned” to the need for “rapid processing” of patents from the tech sector, after Feinstein complained that the average time to get a patent was about three years. This is the “number one concern” of Silicon Valley CEOs, she said. The USPTO has a target to get the patent process completed in 18-20 months on average by 2015, and “we are well on our way to getting there,” he said.