In an exclusive interview, David Kappos explains how American courts and policy makers have handed SEP leadership to Europe and China, and explains the importance of pools

David Kappos has spent a career at the heights of the US IP profession: in industry, as IBM’s chief patent lawyer until 2009; in government, as Undersecretary of Commerce and Director of the USPTO from 2009 to 2011; and, for the last 13 years, as a partner at law firm Cravath.

Speaking exclusively to Sisvel Insights at the end of May, Kappos shared insights into many of the major IP issues facing the US and the wider world, including on the new leadership at the USPTO, potential reforms to the US patent system, the direction of travel in SEP/FRAND and the role patent pools play in delivering access to technology.

Notably, he said that court decisions and policy choices have left the US in a position where it plays a secondary role in global disputes over SEPs – even as the corporate world pays greater attention than ever to the business value of intellectual property.

As the new Trump administration settles in and IP’s role in geopolitics becomes ever more central, tapping into the knowledge and experience of people like David Kappos is essential. We were grateful for the opportunity to do it.

David J Kappos is a partner in Cravath, Swaine & Moore LLP's Corporate Department and serves as Co-Chair of the Firm's Intellectual Property Practice

What do you make of the Howard Lutnick (Commerce Secretary) – John Squires (USPTO Director nominee) IP leadership team in the US and do you see any chance the new administration will weigh in formally on SEPs?

Both are highly experienced with IP generally and patents in particular and understand the importance of IP to innovation outcomes. I am optimistic they’ll do good things to advance strong and effective IP rights for the benefit of economic growth, jobs and technology development to address humankind’s great challenges.

Given the high-level attention SEPs are getting on the world stage in markets like Europe and China, I do see a chance that the administration will act. One simple, positive move would be to reinstate the SEP policy from the first Trump administration. Another very positive move would be to work with Congress to craft and advance pro-SEP legislation.

There are a number of patent reform bills before the US Congress – PERA (addressing patent eligibility), the RESTORE Act (addressing injunctive relief) and the PREVAIL Act (addressing the PTAB). What’s the outlook for these bills?

The prospects for all three bills have improved. They have been re-introduced, with issues from the last term of Congress addressed. They have more support and less credible opposition. If the Administration gets behind them, that would be a game-changer and would enable them to move.

If I could advocate just one change to the US patent system, it would be enactment of the RESTORE Act. The eBay case has been blown far out of scope by lower court interpretations, and it needs to be brought back under control. The RESTORE Act does that, simply and directly. It would dramatically turn around the weakened US patent system.

There seems to be bipartisan agreement on addressing the challenges posed by technology competition with China. How can US leaders do this without inadvertently harming innovation, the patent system, standards-setting, etc?

One key component of competition with China is incentivising investment in innovation here in the US. We have a mechanism for doing that. It is called the patent system. One of the surest ways to position the US for competition with China is to strengthen our IP laws. That will directly cause more investment in innovation, more technology breakthroughs, more leadership products and services in the marketplace, more economic growth, more jobs and more national security.

You criticised the direction UK courts were taking after the Lenovo v Ericsson ruling, writing in IAM that “granting implementers short-term licences to SEPs will visit massive damage upon innovators”. What’s your view on the more recent Optis decision?

I was pleased to see that the Court of Appeal corrected the royalty setting methodology used in finding Apple’s royalty obligation in the Optis case. In the process it has also moved past the novel royalty-setting approach of the High Court, which failed to credit expert submissions on reasonable royalty rates applicable to the case.

The UPC is increasingly playing a central role in SEP enforcement strategies, while implementers continue to bring cases in the UK and China. What's your view on the role the US has to play in these important global disputes? Are US courts becoming a secondary arena?

The fact is that the US is playing a secondary role in SEP disputes currently. Why? Because injunctions are not available, and even damages awards are being routinely diminished by appeals courts. The UPC on the other hand is poised to play a major role and needs to do that. It is the one forum where practical and realistic requirements are being imposed on both innovators and implementers of SEPs.

You work on a lot of major corporate acquisitions and transactions. How does the Fortune 500 C-suite view IP in 2025 – has much changed in the past 10 years?

Everything has changed in the last 10 years. IP has become a regular topic in C-suites when deals are being considered and architected. It is a discussed component of every deal, and dominant in a much larger fraction of them than 10 years ago.

For instance, in biopharma transactions I work on, the IP, especially patents, is *the* definitive factor. The deal either signs or dies based on the how the purchaser’s economic model handicaps patent-based exclusivity. The views of the IP lawyers regarding likelihood of the patent estate withstanding validity challenges, patent term adjustment and patent term extension, are highly influential.

In software deals, the ability to maintain proprietary control over the software is definitive, and required disclosure due to open source or other restrictions can scuttle a deal. Similarly, where data is a key value-driver. In trademark-heavy transactions, broad protection for the key brands across jurisdictions and classes of goods/services can significantly influence deal value.

What role do patent pools have in the future of technology licensing?

A huge role. Pools and platforms finally enable us to solve the conundrum of global licensing. There is a reason why platforms like Sisvel, and pools have gained so much traction in recent years – they provide one-stop shopping for implementers to obtain virtually all the rights they need to license SEP portfolios required to implement important standards, as well as for innovators to receive a reasonable recovery on their innovation investments. All this is on a global basis, done with a minimum of friction and disputes.

There is much more that could be done by regulators and policymakers to encourage pool-based licensing solutions. I would like to see them create best practices, provide no-action letters, and advocate in favour of pools and platforms in speeches and papers. And best of all would be legislation to support and champion the advantages of pools and platforms.