How the Agencies Should Assist
SDOs In Protecting Their
Processes From Exclusionary
Patent Holdup Conduct
Robert A. Skitol
Counsel for VITA Standards Organization
Presentation to FTC/DOJ Hearings on Exclusionary Conduct
January 30, 2007
Exclusionary Patent Holdup Conduct Defined:
- Patent owner's inducement of an SDO's adoption of a standard that
implicates the owner's patent claims without other participants' awareness
of the implications, enabling the owner to acquire and exercise monopoly
power that it would not otherwise have obtained.
- The FTC's Dell, UNOCAL, and Rambus cases delineate
a framework for treating such conduct as a Section 2 violation in
circumstances involving deliberate deception regarding the existence
of patent claims.
Exclusionary Patent Holdup Conduct Defined
- Same or similar exclusionary outcome can occur in a variety of other
- Inducing reliance on misleading or meaningless RAND commitments
as alleged in Broadcom v. Qualcomm.
- Inducing reliance on any RAND commitment followed by seeking
injunctive relief to enforce patent claims.
- Transferring ownership of implicated patents without binding
the new owner to the original owner's commitment.
- This is today's version of monopolization through "highjacking"
a standards development process for exclusionary purposes within the
spirit of the Supreme Court's Allied Tube and Hydrolevel
- Disagreements over extent of these kinds of holdup situations; but
SDOs' inattention to the problems that surface in an environment of
proliferating patent grants invites proliferation of these holdup
outcomes in the years ahead.
VITA's Interest and Recent Actions:
- VITA develops open architecture standards for real-time modular
embedded computing systems employed in a wide range of products (medical
imaging equipment, aviation and navigation devices, military/defense
and space exploration systems, etc.)
- VITA has encountered four episodes of patent holdup conduct in the
past six years, each one causing major delay in implementation of
the affected standard and imposing major legal expenses on the organization;
major concerns over more such problems in light of impending technology
VITA's Interest and Recent Actions (Continued):
- VITA has developed a new patent policy designed to prevent further
holdup episodes: required early disclosures of potentially essential
patent claims; required early disclosures of key license terms; enforceability
of disclosed information; arbitration procedure for compliance disputes.
- On October 30, 2006, DOJ issued a favorable Business Review Letter
on the new policy; on January 17, 2007, the VITA Standards Organization
membership overwhelmingly approved and adopted the new policy; now
undergoing ANSI review.
Why Agencies Should Affirmatively Encourage
Other SDOs to Follow VITA's Lead by Experimenting
With New Patent Policies:
- DOJ's VITA letter and recent speeches by officials of both agencies
recognize that SDO policies of this kind are not only "o.k." from
an antitrust standpoint but can be "procompetitive" in their protection
against exclusionary holdup outcomes.
- The FTC's Rambus decision suggests that the viability
of any Section 2 case against holdup conduct in this context may depend
on a showing that the patent owner's actions were contrary to SDO
participants' reasonable expectations in light of SDO policies in
Why Agencies Should Affirmatively Encourage
Other SDOs to Follow VITA's Lead by Experimenting With
New Patent Policies (Continued):
- Effective SDO "self-regulation" through such policies
will reduce the need for agency enforcement actions as well as all
participants' exposure to disruptive private suits; and self-regulation
is a far more efficient solution to this problem than reliance on
- No reason to think VITA's new policy is the "perfect" solution or
one suitable for SDOs generally; lessons learned from other SDOs'
experimentation with variations upon it will be to the benefit of
all SDOs and participants in them.
- Affirmatively encourage more requests for DOJ letters or FTC advisory
opinions on patent policy proposals of various kinds, thereby providing
more guidance for the standards development community generally.
- Example would be guidance on extent to which and manner in which
a policy might go beyond license terms disclosure requirements to
allow discussion or even negotiation of license terms during SDO meetings.
- Industry-wide study of SDOs' experience with various kinds of holdup
situations and how their existing policies addressed the problems
encountered, resolving disagreement over the "prevalence" question
and then (if warranted) suggesting solutions.
Suggested Actions (Continued):
- Address concerns over private antitrust claims by filing amicus
briefs in cases that generate harmful decisions, e.g., the per se
illegality holding in Golden Bridge v. Nokia and the ruling
that breach of an SDO rule that results in monopoly power cannot state
an antitrust claim as set forth in Broadcom v. Qualcomm.
- Support the enactment of legislation enabling SDOs to implement
desirable patent policies without fear of private antitrust claims.