UC Berkeley

Technical standards, such as interface protocols or file formats, are extremely important in the “network industries” that add so much value to the world economy today. Under some circumstances, the assertion of patent rights against established industry standards can seriously disrupt these network industries. We have in mind two particularly disruptive tactics: (1) the “snake in the grass,” whereby a patentee intentionally keeps a patent “quiet” while a standard is being designed or adopted, and then later, after the standard is entrenched, asserts the patent widely in an attempt to capitalize on its popularity; (2) the “bait and switch” ploy where a patentee encourages adoption by offering royaltyfree use of standard-related patents, and then, after the standard has gone into widespread use, begins to enforce its patents against adopters of the standard. We propose to counteract these tactics with a simple solution: over time, adopters of a standard ought to build up a “reliance interest” in the standard. Under our approach—which we call “standards estoppel”—non-assertion of a patent right in the presence of widespread adoption should create immunity from patent infringement. The fundamental idea behind this doctrine is to prevent “strategic” assertions of patents that exploit the logic of network “lock-in.” As we explain, though this is a simple doctrine based on deeply held common law principles, various gaps in the current doctrinal structure make this a necessary addition to the contemporary legal arsenal. In particular, “standards estoppel” plugs some dangerous conceptual holes in current rules relating to laches, waiver, estoppel, implied licensing, and patent misuse/antitrust. With this modest addition to the doctrinal fabric, patent law can more effectively guard against the risk of illegitimate leverage, thus more effectively fostering innovation in network industries.