Assistant Attorney General Makan Delrahim described the DOJ Antitrust Division's "New Madison" approach towards the licensing of Standards Essential Patents ("SEPs").
In remarks during a panel discussion on "Innovation Policy and the Role of Standards, IP and Antitrust," Mr. Delrahim explained that the "New Madison" approach is built on the following:
- an SEP holder reneging on their agreed-upon obligation with a Standard Development Organization ("SDO") to license their patent to implementers on fair, reasonable and non-discriminatory terms ("FRAND") is fundamentally not an antitrust violation, but rather, fraud or a breach of contract;
- an SDO should not be an apparatus for a coordinated effort by market participants to favor implementers over patent holders;
- an essential component of patent rights is the right to exclude, which should encourage courts to avoid limiting that right by disfavoring injunctive remedies; and
- antitrust laws should consider a unilateral decision by a patent holder not to license a patent as "per se legal."
Mr. Delrahim highlighted several recent court filings in which the Antitrust Division has advocated in favor of "balancing" the interests of patent holders and implementers, rejecting antitrust lawsuits that are solely based on FRAND commitment violations. Mr. Delrahim raised concerns about the recently revealed China Standards 2035 initiative, which he stated may lead to market access barriers, as the initiative "aims to promote Chinese interests" at the expense of innovation.
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