In a December 7 speech before the Berkeley-Stanford Advanced Patent Law Institute, the US Department of Justice Antitrust Division (DOJ) Assistant Attorney General Makan Delrahim (AAG Delrahim) announced that the DOJ will withdraw its assent to the 2013 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary FRAND Commitments (the Policy Statement) and elaborated upon the DOJ’s enforcement approach to standard setting organizations (SSOs).

WHAT HAPPENED:

  • AAG Delrahim voiced support for the right of patent holders to seek injunctions against misuses of their technologies. According to AAG Delrahim, the appropriate test for injunctive relief in patent cases is the one articulated by the US Supreme Court in eBay v. MercExchange. Under the eBay standard, to obtain an injunction, a patent holder must demonstrate that:
    • It has suffered an irreparable injury;
    • Remedies available at law, such as monetary damages, are inadequate to compensate for that injury;
    • Considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
    • The public interest would not be disserved by a permanent injunction.
  • AAG Delrahim expressed concern that the Policy Statement, which in his view suggests that injunctions may not serve the public interest, may bias courts applying the eBay test against issuing injunctions. Because AAG Delrahim’s stance is that injunctions frequently do serve the public interest, he is worried that the Policy Statement will cause confusion. Based on this worry and AAG Delrahim’s disagreement with the Policy Statement’s position, the DOJ will withdraw its assent to the Policy Statement.
  • AAG Delrahim also elaborated upon his concerns with SSOs. He explained that an SSO can act anti-competitively in carrying out two tasks. First, an SSO can act anti-competitively while carrying out the standard setting process (g., by refusing to license a new and innovative technology by a maverick firm that the members of the SSO view as threatening). Second, an SSO can act anti-competitively in adopting and implementing patent policies (e.g., by adopting licensing terms that favor implementers over patent holders).

WHAT THIS MEANS:

  • Though the DOJ is withdrawing its assent to the Policy Statement, it will attempt to replace it with a new one. AAG Delrahim said that the DOJ will engage the Patent Office to initiate this process. The DOJ is likely to push for language more favorable to standard essential patent holders seeking injunctions.
  • The withdrawal of the Policy Statement may affect patent cases not only before federal district courts, but also before the International Trade Commission (ITC). The Policy Statement was designed to inform the ITC, as well as federal courts, on the appropriateness of issuing an exclusion order in patent cases.
  • Delrahim announced two policies the DOJ will adopt with respect to SSOs. First, the DOJ will investigate and bring enforcement actions against standard setting practices that are anticompetitive. Second, the DOJ will embrace a policy of encouraging competition between SSOs. As part of the policy, the DOJ may, for example, scrutinize competitors for coordinating a group boycott of an SSO with a patent policy that is unfavorable to their interests.
  • The speech was consistent with AAG Delrahim’s previously voiced support of standard essential patent holders and concerns about SSOs. While under AAG Delrahim’s leadership, the DOJ’s enforcement posture will likely align with his views.

On March 17, 2014, a class action lawsuit was filed against the National Collegiate Athletics Association (NCAA), alleging that capping compensation to college athletes violates Sherman Act Section 1.

The lawsuit was filed on behalf of all Division I college football and men’s basketball players, and named five major conferences within the NCAA as co-defendants:  the Atlantic Coast (ACC), Big Ten, Big 12, Pacific-12, and Southeastern (SEC).  The suit alleges that “Defendants have entered into what amounts to cartel agreements with the avowed purpose and effect of placing a ceiling on the compensation that may be paid to these athletes for their services.”  Currently under NCAA rules, colleges may only compensate student athletes with a “full grant-in-aid” (the amount of tuition, room and board, and textbooks).

The complaint goes on to state that the NCAA “rules constitute horizontal agreements” among the defendants who drafted and agreed upon the rules, yet “compete with each other for the services of top-tier college football and men’s basketball players.”  In addition to monetary damages, the plaintiffs are seeking injunctive relief that would allow colleges to freely negotiate with and compensate student athletes.  The case is filed in the U.S. District Court of New Jersey.