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Brief for Amicus Curiae Intel Supporting Microsoft

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Brief for Amicus Curiae Intel Supporting Microsoft

This cross-appeal raises an issue of exceptional importance to the U.S. economy. Computing, networking, and communications products incorporate numerous interoperability standards promulgated by SSOs—technical specifications that ensure a common format for communicating between devices. These standards are often vital to further innovation and consumer choice, facilitating the rapid adoption of new products and services.

The expanding role of standards may exacerbate an already significant obstacle to innovation in the high-technology sector: the “holdup” problem, which arises when a patentee uses the threat of an injunction as leverage. This problem is particularly acute when compliance with a standard requires the use of standard essential patents (“SEPs”). Because it is commercially necessary for manufacturers to comply with key interoperability standards that achieve broad acceptance, manufacturers of standard-compliant products are required to practice SEPs, which in turn confers enhanced holdup power upon SEP holders who fail to honor their commitments to license all entities that employ the standard on “reasonable and non-discriminatory” (“RAND”) or “fair, reasonable, and nondiscriminatory” (“FRAND”) terms.

Before a standard’s adoption, the royalties that the patentee could demand from licensees reflect only the value of its patent relative to other methods of achieving the same technological objective. Once an SSO adopts an interoperability standard that incorporates a particular patent, however, substitutes for the technology typically lose commercial viability, which—absent FRAND commitments—enables SEP holders to extract supra-competitive royalties from firms that must implement the standard.

Read the full Brief for Amicus Curiae Intel Supporting Microsoft.