The U.S. government has stepped back from standard-essential patent (SEP) enforcements due to geopolitical tensions and supply chain havoc, stated CCS Insights CEO Geoff Blaber in a recent blog post. Instead, U.S. courts are being left to determine a precedent for SEP licensing — a privilege that sets the foundation and outcomes for future legal proceedings, affecting business regulations in the tech industry.

Blaber explains that the U.S. government sits at a fork in the road when it comes to regulating businesses — on one hand, regulations pave fair, reasonable guidelines that hold businesses accountable on everything from the environment to the workforce. On the other hand, business innovation and creativity free from strict regulation accelerates the tech industry’s edge against Europe and China. 

There has been “a big shift in ethos” in U.S. policy toward licensing of standard-essential patents, Blaber wrote, simply meaning that a patent of innovation must follow a set of technical standards. With changes happening, he states it's time for the tech industry to pay attention.

The blog notes that on June 8, the U.S. Department of Justice (DoJ), the U.S. Patent and Trademark Office, and the National Institute of Standards and Technology (NIST) revealed they would withdraw a 2019 policy statement as well as a 2021 draft statement on “remedies for SEPs that are subject to fair, reasonable and non-discriminatory licensing commitments."

The withdrawal of prior U.S. policy leaves no guidance for SEP licensing discussions and will open the tech industry’s door to determine what good-faith negotiation under the banner of “fair, reasonable, and non-discriminatory” would exactly encompass, Blaber states.

“Neutrality has been defined as the best approach,” he writes.

The 2021 draft statement highlighted a prioritization to parties using SEPs over businesses driving innovation. The U.S. policy draft, now revoked, is opposite to what is currently practiced in China, which “awards tax credits and incentives for investments in priority industries." 

Blaber states that the policy changes are telling of the Biden Administration's admittance that the U.S. needs to foster innovation in order to compete with other countries —  whether that be sped up by providing tools or incentives for artificial intelligence (AI), 5G, or semiconductor design and manufacturing. 

Blaber goes on to write that the DoJ admitted withdrawal of the 2019 policy statement and abandonment of the 2021 draft statement “best serves the interests of innovation and competition,” and companies “spearheading innovation in the Western tech industry” should take advantage. 

Blaber offers up that the American Innovation and Choice Online Act was a by-product of the late 2021 draft statement and an example to policy leaders that tighter regulations repel Big Tech from investment and innovation. However, there is now a question over whether the withdrawal of policy will foster any new innovation in the tech industry at all — or if external factors will keep colliding with one another. 

He adds that a “healthy balance” is needed for businesses to compete on par with other countries if the U.S. hopes to compete on a policy level. “Knowing that innovation will be nurtured and protected through a system that respects the process of developing and profiting from intellectual property,” Blaber writes.