Over the last 20 years, there has been a multi-billion dollar war fought between the companies that develop technical standards and own patents on those standards, and the companies that later implement those technical standards in their products. Contributors to the standard generally sign contracts agreeing to license their ‘standard essential patents’ (SEPs), that is, patents that are necessarily infringed by using a standard, on ‘fair, reasonable and non-discriminatory’ (FRAND) terms. This has led to worldwide litigations over what a FRAND royalty is for these technologies.  

The parties on either side of this debate, the SEP holders and the implementers, have diametrically opposed views of the world. In general, implementers think patent royalties are too high and patent holders think they are too low. The patent holders range from small inventors with just one SEP to the biggest investors in the standards who have thousands of SEPs. The implementers include small and medium-size businesses, but their loudest voices come from big tech, including Amazon, Apple and Google.  

Director Vidal was immediately thrown into the middle of this debate in April 2022 when she was confirmed as the new director of the US Patent and Trademark Office. Five months earlier, in December 2021, the USPTO, Department of Justice and National Institute of Standards published a draft policy statement on SEPs and FRAND, which was viewed by the industry as very pro-implementer and was widely criticised by patent holders. The statement waded into the most fiercely debated aspects of SEP law, including if and when injunctions should be available for infringement of SEPs. The December 2021 draft statement appeared to be a reversal from the 2019 position statement issued by the same agencies. After receiving many comments and a lot of criticism, the USPTO, NIST and DOJ decided to step out of the debate. They withdrew the prior 2019 statement and the 2021 draft statement, and have since taken no position on many of the most hotly disputed issues in the SEP debate.

Since then, Director Vidal appears to be trying to build international cooperation to address the issues facing the SEP world, but to what end is unclear. She has been careful not to take any substantive positions on SEP issues, which keeps her out of controversy, but does nothing to advance the debate.

In July 2022, just one month after Director Vidal withdrew the 2019 and 2021 statements on SEPs, the USPTO announced an agreement with the World Intellectual Property Organization (WIPO) “to undertake joint efforts to facilitate the resolution of disputes related to standard essential patents”. The agreement focused on WIPO’s alternative dispute resolution programmes, including mediation and arbitration. In the USPTO’s press release, Director Vidal stated that “our work with WIPO underscores the USPTO’s view that SEP policy is an international issue of international importance”.

Director Vidal’s next notable statement on SEPs came in March 2024, regarding proposed regulation on SEPs in Europe. The European Parliament recently approved a controversial proposal for SEP licensing that places restrictions on SEP holders, including precluding them from enforcing their patents in the EU until an unspecified panel of experts offers a non-binding opinion on whether a patent is essential and what the FRAND rate should be for the patent holder’s portfolio. Director Vidal recently appeared to criticise the proposal, stating that “regulators must be mindful of the additional costs that extra steps impose on rights holders” and that the regulation is “likely to exacerbate opposing viewpoints”. But Director Vidal did not address or criticise any particular aspect of the proposal.  

Then in June, Director Vidal signed a memorandum of understanding (MOU) with the UK Intellectual Property Office regarding SEPs. Though the MOU itself is not public, the press release suggests that it takes no substantive position on any SEP issue of note. According to the press release, the USPTO and UKIPO will exchange information on SEPs (what information is unclear), educate small and medium-sized businesses on SEPs, “engage in outreach to stakeholders”, and try to involve additional patent offices from other countries.

The only statement of interest to SEP professionals is the statement that the USPTO and UKIPO will “examine ways of improving transparency” in FRAND licensing. The term ‘transparency’ is a buzzword in the SEP world used by implementers to refer to their desire to receive more information from SEP holders for licensing negotiations. That said, given the vague nature of the term ‘transparency’, the lack of any specifics in Director Vidal’s press release, and the fact that the USPTO has indicated that it will not make the MOU public, we cannot read much into what the USPTO and UKIPO have in mind for this aspect of the agreement.  

Director Vidal is certainly remaining active in the SEP world, but what she is trying to accomplish is unclear. Given Director Vidal’s hesitancy to take a substantive position in this debate, it seems unlikely that the USPTO will do anything to change policy aggressively in favour of SEP holders or implementers in the near term.

Warren Lipschitz is a Principal at McKool Smith, where he is a lead trial lawyer focused on high-stakes intellectual property and competition cases. He can be reached at [email protected].