UNITED STATES OF AMERICA

Federal Trade Commission

WASHINGTON, D.C. 20580

Office of Commissioner

Rebecca Kelly Slaughter

SEPs, Antitrust, and the FTC

Remarks of Commissioner Rebecca Kelly Slaughter 

As Prepared for Delivery1

ANSI World Standards Week: Intellectual Property Rights Policy Advisory Group Meeting 

October 29, 2021

Thank you for that kind introduction and thank you to ANSI and everyone who has 

contributed to the discussion today and throughout World Standards Week. First, I will note that

my remarks today represent my views only and not those of any other commissioner or the 

Federal Trade Commission itself. Second, I want to thank Jennifer for her remarks and to echo 

her point about the close cooperation between the DOJ and FTC and our shared commitment to 

protecting and promoting competition, especially at its intersection with intellectual property. I 

appreciate our alliance and joint work with the Antitrust Division on these issues and look 

forward to continuing our work together. 

Last month marked the 10-year anniversary of the America Invents Act, the first major 

revision of patent law in decades. The legislation’s aim was to strengthen and modernize our 

patent system. And it is important to note that competition benefits from a strong patent system 

that issues high quality patents. High quality patents create the incentive for investment and 

innovation that we want, but, poor quality patents can be abused and used to stifle competition.2

Last month’s anniversary brought back memories of my work on that bill and other 

intellectual property related legislation in the Senate. As I learned quite quickly on the Hill, IP 

issues can get pretty spicy. But standards-essential patents and competition seem to be their own

special form of spicy; ghost pepper spicy. 

1 The views expressed in these remarks are my own and do not necessarily reflect the views of the Federal Trade 

Commission or any other commissioner.

2 U.S. DEP’T OF JUSTICE & FED. TRADE COMM’N, ANTITRUST ENFORCEMENT AND INTELLECTUAL PROPERTY RIGHTS:

PROMOTING INNOVATION AND COMPETITION (Apr. 2007) 

https://www.ftc.gov/sites/default/files/documents/reports/antitrust-enforcement-and-intellectual-property-rightspromoting-innovation-and-competition-report.s.department-justice-and-federal-tradecommission/p040101promotinginnovationandcompetitionrpt0704.pdf; U.S. Dep’t of Justice & Fed. Trade Comm’n,

In the Matter of Request for Comments on Enhancing Patent Quality (May 6, 2015) 

https://www.ftc.gov/system/files/documents/advocacy_documents/comment-united-states-federal-tradecommission-united-states-department-justice-united-states/150507ptocomment.pdf (“... steps to enhance patent 

quality may add costs or delays to patent applicants. The Antitrust Agencies believe, however, that the public 

benefits of certainty and patent quality to innovation and competition outweigh these potential costs to private 

parties.”). 
2

If there’s one thing working on Capitol Hill taught me is that there is value in confronting 

complicated and controversial topics directly, and that is what I want to do today. My topline 

message is that the antitrust laws have an important role to play in the standard-setting context, 

including conduct related to the use or abuse of SEPs. Antitrust law does not merely co-exist

with patent law and standards development; instead, these disciplines work hand-in-hand to 

advance the shared goal of promoting innovation. 

First, I’ll explain why I think safeguards in the standard-setting process, such as 

commitments to license on fair, reasonable, and non-discriminatory terms (“FRAND 

commitments”), are critical to ensuring that the promise of standardization to promote innovation 

is not compromised. The threat of exclusion against a willing licensee casts a shadow over 

licensing negotiations and can allow an SEP holder to leverage that threat into royalties that are 

not in fact FRAND. These issues are even more important now that many of these disputes are 

resolved on a global scale, sometimes through the use of injunctions in a single jurisdiction.

Next, I’ll provide some of my thoughts about how both standards development 

organizations (“SDOs”) and the FTC might respond to the burgeoning disputes over SEP 

licensing and facilitate more efficient and effective licensing. The FTC in particular, must serve 

as a backstop to monitor and enforce against conduct in the standard-setting context that harms 

competition. When patent holders obtain market power by virtue of being included in standards, 

the way they exercise that market power is not immunized from the antitrust laws merely 

because patents are involved. The potential availability of private patent and contract remedies 

does not mean that antitrust leaves the field in the patents and standards setting game, because 

the public’s interest in competition is not necessarily protected by these private remedies.

Finally, I think the FTC has been correct in bringing SEP-related enforcement actions 

against anticompetitive conduct using its stand-alone Section 5 authority, and it should continue 

to do so with an emphasis on our authority to reach conduct beyond that which violates Section 2

of the Sherman Act. This is consistent with the policy statement the Commission issued in July

regarding unfair methods of competition.

3

But before we delve into all of that—why is this topic so important? The importance of 

standardized technology and interoperability is growing. Standards are ubiquitous in our lives, 

from the ordinary electrical socket to every home appliance or personal device that is connected 

to Wi-Fi, cellular technology, or both. Add to that medical devices, manufacturing technology, 

connected cars, and the applications are endless. 

Anticompetitive distortions to the bargaining process over FRAND royalties are 

especially harmful to innovative small businesses and start-ups, the “little engines that could” of 

our economy. In order to deploy standards in ground-breaking technological development, these 

small businesses need FRAND licenses to the intellectual property incorporated into standards.

 3 FTC Statement on the Withdrawal of the Statement of Enforcement Principles Regarding “Unfair Methods of 

Competition” Under Section 5 of the FTC Act (July 9, 2021), 

https://www.ftc.gov/system/files/documents/public_statements/1591706/p210100commnstmtwithdrawalsec5enforce

ment.pdf.
3

Small businesses have serious concerns about unchecked SEP licensing abuses that result in cost 

uncertainty and delays in bringing products and new technology to market. This uncertainty can 

also scare actual and potential investors away. One start-up called the SEP licensing framework 

“anarchy.”4 Small firms, unlike large firms, often lack the resources for technical legal advice to 

counter holdup. They are more likely to cave to supra-FRAND rates out of fear of exclusion,

rather than put themselves in legal peril by challenging the high rates. Ultimately, all of this

uncertainty and risk has a chilling effect that may push firms out of the market or extinguish

good ideas in the cradle.5 Worse, the threat of exclusion might deter innovation investment in

these firms in the first place.6

So this is not an issue that is waning. The standard-setting process and the associated 

licensing of SEPs will only increase in importance to technological advancement. Yet, we 

continue to see a high volume of SEP litigation in the U.S. and around the world. 

Safeguards to Protect Competition

As recognized by the Supreme Court in Allied Tube, the standard-setting process and 

standard-setting organizations by their nature involve discussions among competitors about 

potential competitive issues and, even more importantly, the displacement of consumer choice in 

the selection of standards.

7 Normally, antitrust law frowns on competitors working together to 

set terms for a market that supplant opportunity for consumer choice. The Supreme Court 

accepted this displacement of competition because of the benefits of collaborative private 

standard setting, but only if there were safeguards to protect against anticompetitive harm. 

As we know, the standard-setting process often involves SDO members engaging in 

concerted activity and choosing between substitute technologies. This can raise antitrust 

concerns. When a specific technology is chosen for a standard, this eliminates effective 

substitutes and, after the standard is adopted and implemented, the costs associated with 

switching to an alternative technology may be prohibitive. As a result, the owner of patents on 

the chosen technology may gain market power that can allow it to attempt to stop firms from

implementing the standard unless they agree to higher royalties and less favorable licensing 

terms than it could have obtained before the standard was set and alternative technologies could 

have been selected.

8 This is the conduct we refer to as “holdup.”

SDOs may institute safeguards to mitigate this potential for holdup. Among the 

safeguards are licensing policies that seek commitments from participants to disclose and/or 

license their SEPs on FRAND terms. This is often done as a quid pro quo for the inclusion of the 

 4 Joachim Henkel, How to License SEPs to Promote Innovation and Entrepreneurship in the IoT (Mar. 23, 2021), 

https://ssrn.com/abstract=3808987. 5 Brief of APP Association as Amicus Curiae Supporting Petitioners, TCL Commc’n Tech. Holdings Ltd. v. 

Ericsson, Inc., No. 19-1269 (Fed. Cir. 2019). 6 Id.

7 Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 500-01 (1988). 8 FED. TRADE COMM’N, THE EVOLVING IP MARKETPLACE: ALIGNING PATENT NOTICE AND REMEDIES WITH 

COMPETITION A REPORT OF THE FEDERAL TRADE COMMISSION (Mar. 2011), 

https://www.ftc.gov/sites/default/files/documents/reports/evolving-ip-marketplace-aligning-patent-notice-andremedies-competition-report-federal-trade/110307patentreport.pdf. 
4

patent(s) in the standard. FRAND commitments reinforce the bargain entered into by the patent 

holder. When a patent holder makes this voluntary commitment, it does so knowing that it has 

the potential to gain enormous benefits from the high volume of licensees it will gain by virtue of 

its technology being included in a widely adopted standard.

Normally, patent holders are absolutely entitled to keep the benefit of their invention to 

themselves and fully exclude any who want to practice the patent; a patent is literally a 

government-granted and time-limited right to exclude others from practicing their inventions. 

We not only allow but value this right to incentivize investment in innovative new products and 

services. But when patent holders’ commitment to voluntarily submit their patents in a standard, 

they make a trade-off. In exchange for widespread adoption of their technology and a broad pool 

of necessary licensees, the patent holder must generally trade the pricing power they are 

normally afforded and the right to exclude willing licensees; it must commit to license the 

technology and to charge FRAND royalties. It is hard to overstate the value that SEP holders can

get from being included in a successful standard versus not. 

It is fair for patent holders to point out that there need to be adequate incentives for them

to engage in the standard-setting process. However, enabling unchecked acquisition of 

potentially significant market power with no safeguards for implementers is not a balanced 

approach. An appropriate framework should not allow an SEP holder to refuse licenses to 

implementers of the standard or threaten exclusionary remedies in order to either extract supraFRAND royalties or entirely thwart a competitor from practicing a standard.

Therefore, it is my strong belief that SEP holders should not be able to seek exclusionary 

remedies against a willing licensee. Negotiating a licensing rate in the shadow of the threat of 

exclusion from the market gives SEP holders the leverage to extract supra-FRAND rates and

encompass the value of standardization, downstream innovation, or other aspects of the end 

product that incorporates the standardized technology.9 Indeed, U.S. Courts have recognized the 

protections that FRAND commitments provide to counter illegal monopoly power and protect 

the public.10

As I noted at the start, competition and innovation from small and medium sized entities 

is most at risk of being inhibited or completely lost when SEP holders anti-competitively 

leverage their market power. Recently, IEEE solicited public comments about certain aspects of 

its FRAND policy. The current policy has fairly robust safeguards that, for example, set out the 

narrow set of circumstances when SEP holders can obtain exclusionary relief against the 

implementer of an IEEE-SA standard. Dozens of small businesses weighed in to support the 

policy and explain how important the IEEE’s clarity about licensing commitments has been to 

their ability to more smoothly implement standards, grow, and innovate.

11 

 9 Id.

10 See Broadcom Corp. v. Qualcomm, Inc., 501 F.3d 297, 311 (3rd Cir. 2007); Microsoft Corp. v. Motorola, Inc., 

795 F.3d 1024, 1031 (9th Cir. 2015). 11 IEEE SA Standards Board Patent Committee, Call for Comments (Aug. 24, 2021), 

https://grouper.ieee.org/groups/pp-dialog/call_for_comments/call_for_comments.pdf.
5

I want to take a brief detour to address the “holdout” problem that is often purported to be 

a parallel problem to holdup. Holdout refers to a licensee unilaterally refusing to take a license or 

unreasonably delaying doing so. While this may well be a problem in the licensing world, it does 

not pose the same concerns from a competition standpoint as holdup, which has the potential to 

exclude firms from implementing a standard. Holdout, as long as it is unilateral and not done 

collusively among licensees, fits squarely into the box of problems that have patent law 

solutions. If a potential licensee has engaged in willful infringement, the patent holder has 

remedies in patent law, including the potential for enhanced damages.

12 Unilateral holdout does 

not involve the abuse of market power to stymie consumer choice that holdup does, and therefore 

does not trigger antitrust concerns in the same way. 

So I want to make clear that I am not on anyone’s “side”—not patent holders or patent 

licensees. I am on team competition and consumers. And competition and consumers are harmed 

when market power is exploited to engage in holdup. 

So what can SDOs do to help?

Above all, what I want is widespread and efficient licensing that minimizes wasteful and 

expensive litigation, and to achieve actual FRAND rates. I think we can all agree that those 

dollars would be better be spent on research, development, and innovative new technology. 

Broad and accessible licensing at fair, reasonable, and non-discriminatory rates benefit the entire 

standards ecosystem, and especially small businesses. To be clear, everyone who wants to 

practice a standard should be taking a license, but it should not be because of the threat of 

exclusion that enables the patent holder to obtain supra-FRAND rates. 

One way to accomplish this goal is with clearer FRAND policies that facilitate licensing. 

A recent study shows that some widely-implemented standards are subject to significantly more 

litigation than others.13 Commenters have suggested that SDO FRAND policies play a role in 

this trend.14 I encourage SDOs to be creative and explore crafting policies that reduce the 

ambiguities that fuel litigation, including clarifying the appropriate role of injunctive relief and 

how a reasonable rate should be determined.

Backstop of Antitrust Laws, Including Stand-Alone Section 5

 12 See Apple v. Motorola, 757 F.3d 1286, 1342 (Prost, J., concurring in part). See also Final Judgment, Core 

Wireless Licensing S.A.R.L. v. LG Electronics, Inc., No. 2:14-cv-912, Dkt. No. 47 (E.D. Tex. Nov. 1, 2016)

(awarding enhanced damages for the willful infringement of a SEP); Core Wireless Licensing S.A.R.L. v. LG 

Electronics, Inc., 2016 WL 4596118, *2-*3 (E.D. Tex. 2016) (rejecting the argument that summary judgment was 

appropriate because enhanced damages cannot be awarded for infringing an SEP); Optis Wireless Tech., LLC v. 

Huawei Device USA, Inc., 421 F. Supp. 3d 410, 412 (E.D. Tex. 2019) (“in light of the verdict of willfulness, the 

Court awarded enhanced the damages by 25 percent” for infringement of SEPs), vacated, No. 2:17-CV-00123-JRG, 

2020 WL 5034154 (E.D. Tex. Apr. 3, 2020) (vacated by settlement). 13 IPLytics, SEP Litigation Trends: What Does the Data Say? (2021), https://www.iplytics.com/wpcontent/uploads/2021/05/SEP-litigation-trends-_What-does-the-data-say_IPlytics_April-2021.pdf. 14 Michael Carrier and Brian Scarpelli, How Standard-Setting Orgs Can Curb Patent Litigation, LAW360 (June 15, 

2021, 6:17PM), https://www.law360.com/articles/1392222/how-standard-setting-orgs-can-curb-patent-litigation.
6

In a perfect world, SDOs could work with their members to implement FRAND policies

that provide clear guidance to reduce licensing frictions and eliminate the threat of exclusion 

against willing licensees. But until we reach that aspirational world, the antitrust agencies serve 

an important backstop to protect and promote competition. The FTC has long been at the 

forefront of tackling anticompetitive conduct by participants in the standard-setting process. It 

has brought cases challenging deceptive conduct and failure to abide by FRAND licensing 

obligations.15 It has also included remedies to prevent anticompetitive abuse of SEPs.16

SDO policies themselves may have anticompetitive effects. For example, in its first 

standard setting action, the FTC brought a case against the American Society of Sanitary 

Engineering (“ASSE”), a group of plumbing equipment manufacturers. In that case, ASSE 

refused to modify an existing standard to encompass competitive products, citing its own policy 

as its justification. The FTC resolved the case through a consent order that required ASSE to stop 

issuing blanket refusals to develop standards based on its policy language. 

The narrowing of Section 2 case law over the years should not stop the FTC from 

bringing tough cases and attempting to make better law. But we also have Section 5 in our 

toolbox. In addition to encompassing conduct that would be illegal under the Sherman Act, 

Section 5’s prohibition on unfair methods of competition extends beyond the Sherman Act. 

Indeed, in July, the FTC withdrew outdated guidance that took a far too limited approach to 

Section 5’s prohibitions on unfair methods of competition.17 We are now better aligned with 

Congress’s intent for the FTC to use its expertise to reach beyond the Sherman Act and to 

provide an alternative institutional framework for vigorously enforcing the antitrust laws.

When SEP holders undermine the competitive safeguards put into place by SDOs, and 

obtain or enhance monopoly power by voluntarily contributing their technology to standards, the 

FTC should investigate, and when appropriate, bring cases. While any application of the law 

takes into account the specific facts and circumstances, conduct that may violate Section 5 could 

include an SEP holder’s refusal to license a SEP to any willing licensee in violation of a FRAND 

commitment or conditioning a SEP license on taking or giving a cross license to patents that are 

not essential to the standard or are SEPs from unrelated standards. As I said earlier, and as I 

cannot emphasize enough, I think SEP holders attempting to seek exclusionary relief against 

willing licensees is highly problematic. 

 15 See In the Matter of Motorola Mobility LLC, Decision and Order, FTC File No. 121-0120 (July 23, 2013), 

https://www.ftc.gov/sites/default/files/documents/cases/2013/07/130724googlemotorolado.pdf; In the Matter of 

Robert Bosch GmbH, Decision and Order, FTC File No. 121-0081 (Apr. 23, 2013), 

https://www.ftc.gov/sites/default/files/documents/cases/2013/04/130424robertboschdo.pdf; In the Matter of Union 

Oil Company of California, Complaint, FTC File No. 011-0214 (Mar. 4, 2003), 

https://www.ftc.gov/sites/default/files/documents/cases/2003/03/030304unocaladmincmplt.pdf; In the Matter of 

Rambus Inc., Complaint, FTC File No. 011-0017 (June 18, 2002), 

https://www.ftc.gov/sites/default/files/documents/cases/2002/06/020618admincmp.pdf; In the Matter of Dell

Computer Corp., Decision and Order, FTC File No. 931-0097 (May 20, 1996), 

https://www.ftc.gov/enforcement/cases-proceedings/931-0097/dell-computer-corporation. 16 In the Matter of Motorola Mobility LLC, Decision and Order, FTC File No. 121-0120 (July 23, 2013), 

https://www.ftc.gov/sites/default/files/documents/cases/2013/07/130724googlemotorolado.pdf; In the Matter of 

Robert Bosch GmbH, Decision and Order, FTC File No. 121-0081 (Apr. 23, 2013), 

https://www.ftc.gov/sites/default/files/documents/cases/2013/04/130424robertboschdo.pdf. 17 FTC Section 5 Statement, supra note 3.
7

Finally, conduct that I find particularly mind boggling is when SEP holders demand 

licenses for SEPs that they have not even identified, much less provided the information needed 

to allow an implementer to evaluate whether the patents at issue are valid, enforceable, essential 

to the implementation of a standard, and being offered on non-discriminatory terms. Again, this 

is a challenge that is unduly burdensome on small businesses that don’t have patent attorneys on 

staff or legal departments. 

I would also be remiss if I did not acknowledge the fact that not all FRAND policies are 

alike and therefore not all FRAND commitments are alike. To that I will simply say, where a 

FRAND commitment is ambiguous or insufficient to deter anticompetitive conduct, antitrust law 

is available to bolster SDO safeguards in the event that market power is abused to an 

anticompetitive end.

Let me also respond to some of the criticism I’ve heard from those who take issue with 

the concept of holdup and the application of antitrust law to that conduct. First, critics question 

how the FTC could possibly justify antitrust enforcement without robust empirical data that 

holdup is a problem and they claim that such data does not exist. To the first point, the 

quantification and the use of empirics may be useful components of investigations and cases, but 

they are not the only components and they are not required for proving an antitrust violation. The 

FTC need not wait until we have X amount of studies or Y number of data points. Instead, as 

antitrust enforcers, we must examine facts and evidence and then decide whether there is conduct 

resulting in competitive harm that merits bringing an enforcement action.

Regarding the existence of data, a recent working paper developed a framework for 

assessing opportunistic conduct by SEP holders by looking at court dockets and found that such 

conduct is prevalent.

18 In addition, I offer the evidence that in multiple instances, judges have 

either reduced licensing rates subject to FRAND commitments or found that rates demanded by 

SEP holders were not FRAND.

19 And, finally, I should note that the operation of the problem 

may obscure the availability of data; if small and medium entities are agreeing to supra-FRAND 

terms because they are afraid of the threat of exclusion after litigation, there necessarily will not 

be a high volume of cases challenging licensing demands. 

I’m reminded of an anecdote I read recently about Abraham Wald.20 During World War 

II, Wald was trying to help solve the problem of why bombers were being shot down. Engineers 

looked at bombers that returned to see where they had taken on bullets and found lots of bullet 

holes in the wings. This suggested reinforcing the wings. But Wald said, no, we should reinforce 

the bellies. The ones with bullet holes in the bellies are likely the ones that are sitting at the 

 18 Brian J. Love, Yassine Lefouili and Christian Helmers, Do Standard-Essential Patent Owners Behave 

Opportunistically? Evidence from U.S. District Court Dockets (November 8, 2020), 

https://ssrn.com/abstract=3727085.

19 See Microsoft Corp. v. Motorola, Inc., 963 F.Supp.2d 1176 (W.D. Wash. 2013); In re Innovatio IP Ventures LLC 

Patent Litigation, No. 2303, 2013 WL 5593609 (N.D. Ill. Oct. 3, 2013); Realtek Semiconductor Corp. v. LSI Corp., 

946 F.Supp.2d 988 (N.D. Cal. 2013). See also Jorge L. Contreras, Much Ado About Holdup, 3 U. Ill. L. Rev. 875 

(2019).

20 JAN ECKHOUT, THE PROFIT PARADOX n.11 (2021) (citing JORDAN ELLENBERG, HOW NOT TO BE WRONG: THE 

POWER OF MATHEMATICAL THINKING (2014)).
8

bottom of the ocean. The ones with bullet holes in the wings are the ones that made it back. 

Looking at the data that was available did not provide the whole picture, or even the most 

important parts of the picture. This story is a helpful reminder of why selection bias can be real 

when looking at data and that we cannot take absence of data points as evidence of absence of 

data itself when we are not able to see the entire picture. 

Another argument I’ve heard is that because holdup is based on the breach of a 

contractual FRAND commitment between a patent holder and the SDO, contract law is sufficient 

for parties to vindicate those contractual rights.

Contract law may be sufficient to address the breach of FRAND commitments and it may

be best to let parties work it out. But contract law may not be enough and we should not

foreclose an entire body of law—antitrust law—when we find conduct that results in competitive 

harm. I can see no justification for saying that because one area of the law applies to a certain set 

of facts, the FTC should disregard its statutory obligation to enforce the antitrust laws. Antitrust 

law is a critical supplement to contract law, just like it’s a critical supplement to IP law. To say 

that there should be an artificial barrier to applying antitrust law is misguided at best and harmful 

to innovation and competitive markets at worst. 

Finally, I routinely hear complaints that implementers are often large, well-financed 

companies that can handle their market disputes just fine on their own. This is absolutely the 

case. I want to be very clear: I think the FTC should investigate antitrust violations related to 

SEPs, but I think we should focus our energy on cases where the market power abuse harms 

small and medium enterprise implementers. I’m not interested in getting us involved in extensive 

cross-licensing disputes between large-well financed patent holders and implementers. My focus 

is entirely different from an enforcement perspective.

I mentioned my work on IP on Capitol Hill; trust me, I am very familiar with just how 

much lobbying energy large companies on all sides of the IP debates can muster to get the 

government to create more favorable market conditions for them. In my current role as an 

enforcer, I am interested in applying our limited enforcement dollars to helping those companies 

that do not have that lobbying muscle on their side. 

Any articulation of a general policy with respect to standards is going to make some 

powerful companies upset and others happy; the important question from an enforcement 

perspective is not just what the policy is, but how do we apply that policy. It is important to me 

that we get the policy right, but it is equally important that we apply it in a way that protects 

honest small businesses and end users. 

On that note, let me close by saying that I think the FTC ought to be vigilant in this space 

and use the full range of its authority to investigate and halt anticompetitive conduct. I look 

forward to the FTC continuing to work closely with DOJ as we jointly pursue our shared mission 

to protect and promote innovation.