Mr. Chairman, thank you for holding this hearing on the competition impact of exclusion orders relative to standard-essential patents. Industry standards are crucial to allowing the myriad of electronic and mobile devices consumers use and rely on every day to interface and connect with other consumers and the internet. Recently, there have been questions and increased litigation over the way standard-essential patents are utilized and enforced, so it’s appropriate for the Committee to look into this issue.
When companies agree to contribute their patents to become an industry standard, they usually commit to make them available on fair, reasonable and non-discriminatory licensing terms, also known as RAND or FRAND. By having access to these standards, companies can create new technologies, products and services, and the different electronic devices – like smart phones, computers and tablets – have the ability to seamlessly interface with each other. Other benefits include lower prices, better quality, and more consumer choice. Consumers want to use different products and technologies made by different companies. They want choice and more options in what they buy and use – they don’t want to be limited to using devices or services from just one company. And it isn’t as expensive to exchange different kinds of devices when they can all interoperate with each other. Competition is good for consumer choice and satisfaction, as well as for innovation and technological advances.
Consequently, there is a real question as to whether it is anti-competitive and/or anti-consumer when standard-essential patent holders, that have agreed to license their products under RAND terms, seek injunctive relief against or exclude companies that have implemented their standard. Companies that have relied on standard-setting organization RAND agreements and incorporated standard-essential patents into their products expect to be able to negotiate reasonable royalties with the patent holder. At the same time, when there is patent infringement, we don’t want to restrict the ability of patent holders to protect their patents from infringers. We don’t want to dis-incentivize participation in standard-setting bodies or hamper the ability of companies to generate new products and technologies.
I’m interested in learning more about what are the issues surrounding standard-essential patents and RAND commitments, what are the obligations of standard-setting organization participants, as well as what is happening in the courts and at the International Trade Commission. I’d like to hear about how extensive the hold-up problem is, and how it has and/or will impact innovation and competition. I’m interested in hearing more about how we can best balance the interests of standard-essential patent holders, standard-essential patent implementers, and consumers who use products that incorporate standard-essential patents.
Mr. Chairman, I appreciate your holding this oversight hearing so we can gather information on standard-essential patents. This is an important topic with important ramifications, so we should be careful about how we proceed. Certainly we all want to make sure that competition is protected and promoted, consumers are not harmed, and the standard-setting process is not abused. But we also want to make sure that we don’t take actions that will have unintended consequences, like overly restricting avenues of relief for property rights owners or weakening unfair trade remedies and enforcement tools.
I look forward to today’s testimony.