Disclose Patents and Published Applications to Standards-Setting Organizations in
Which Your Company Participates

by William F. Heinze*   Bio    Website 

According to media sources, the Federal Trade Commission (“FTC”) is currently investigating whether several companies may have violated antitrustlaw by encouraging various standards-setting organizations to adopt patented technologies without disclosing their patent rights to those organizations.  Comments by FTC officials have suggested that the applicable enforcement standard from In re Dell Computer Corp., 121 FTC 616 (1996), does not create a general obligation to search for, or disclose, pertinent intellectual property rights to organizations without a policy on such matters.  However, according to former Chairman Robert Pitofsky, the decision in Dell was aimed at merely protecting the integrity of the private standard setting process, rather than the rights of accused infringers.  Thus, patent owners may still have a general duty of disclosure under the defensive Doctrine of Equitable Estoppel.  Here are some guidelines for meeting these obligations without incurring significant commercial risk.           

For issued patents, the commercial risks associated with disclosure are minimal when compared to the legal risk of an undisclosed patent being unenforceable.  Therefore, if a standards-setting organization in which your company participates has a patent disclosure policy, then you should follow it (or withdraw from the organization and start your own). If the organization’s patent disclosure policy is unclear or nonexistent, then it is best to err on the side of caution by disclosing as much as possible about potentially relevant patents, as early in the standards-settings process as possible.  In fact, many companies will assign an individual to periodically search for, and properly disclose, relevant patents from the company’s portfolio.  Obviously, such a conservative approach might discourage an organization from adopting your company’s technology as the next industry-wide standard.  However, if the adopted standard does not become widely-accepted, then your company will be in a much better position to profit from its intellectual property investment.     

For patent applications, the uncertain state of the law and vagueness of some standards-setting organization’s intellectual property disclosure policies make it more difficult to establish clear guidelines.  There are also certain risks associated with disclosing a patent application to a competitor that will depend upon whether the application has been formally published by the Patent Office.  For example, while the risk of incurring a public protest now disappears once the application is published, an interference or public use proceeding can still be sought by your competitors at any time before an application is granted (or up to one year thereafter for an interference).  On the other hand, the risk that such proceedings could significantly delay, or prevent, the issuance of a patent are at least somewhat mitigated by the availability of provisional remedies and term adjustments after issuance.  

More importantly, any patent that covers a widely-accepted industry standard is likely to be closely scrutinized by competitors with respect to prior art and inventorship before any licenses are negotiated.  Consequently, providing actual notice of published applications to competitors may help to identify any weaknesses that can then be addressed early in the prosecution history, when the remedial costs are likely to be at their lowest.  While these same principles would also apply to the disclosure of unpublished applications, the loss of eighteen months of trade secret protection will, in many instances, tip the analysis in favor of nondisclosure and/or withdrawal from participation in the standards-setting organization.

To discuss this topic further, please contact the author, Bill Heinze, at Thomas, Kayden, Horstemeyer & Risley. The information contained in this e-mail is provided for informational purposes only and does not represent legal advice.

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