FTC Opposes Bans Over Standards Essential Patents

IT Management

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Last week Tim Cook spent time on stage during the opening session of AllThingsD's D10 Conference talking to Walt Mossberg and Kara Swisher about a variety of topics. Among the issues discussed was Apple's position on patent lawsuits. After from stating that patent litigation is "a pain in the ass," Cook spent some time talking about how he believes the system is being abused by companies (he did not mention names like "Motorola") who seek injunctions over standards essential patents.

Standards essential patents cover technology that is vital to a particular industry, and the owners of such patents are legally obligated to license them on fair, reasonable, and non-discriminatory (FRAND) terms. Certain companies, however, have a pattern of declining to license these patents, instead seeking injunctions against the companies that allegedly infringe them. The fact that such litigation is allowed to continue, Cook said, is proof that the system is being abused and requires regulatory intervention to fix.

Now it seems that the Federal Trade Commission agrees with Cook. Yesterday the FTC sent a letter to the International Trade Commission (ITC; keep your acronyms straight, there will be a quiz later) expressing concern over the handling of cases involving standards essential patents. Specifically, the FTC urged the ITC to deny efforts by Google subsidiary Motorola Mobility to block the importation of Microsoft's Xbox 360 and Apple's iPhone and iPad. Motorola has some time seeking injunctions against each device in various courts on the grounds that they violate certain standards essential patents that Motorola (now Google) owns.

According to the letter, parts of which were published by CNet, the FTC is "concerned that a patentee can make a RAND commitment as part of the standard setting process, and then seek an e xclusion order for infringement of the RAND-encumbered SEP [standards essential patent] as a way of securing royalties that may be inconsistent with that RAND commitment." Such actions, the FTC argues, are harmful to consumers, to innovation, and to competition.

The FTC's letter came in response to an ITC request for comment on Motorola Mobility's ITC cases against Apple and Microsoft. The FTC, though, is not alone in wanting the ITC to enforce Motorola's FRAND obligations. Florian Mueller of FOSS Patents is reporting today that several technology companies and industry organizations have also written to the ITC in support of the FTC's position. Nokia, HP, Verizon, the Business Software Alliance, Retail Industry Leaders Association, and Association for Competitive Technology have all voiced their support. In addition, Microsoft has submitted its own letter in support of Apple's case.

Google's purchase of Motorola Mobility has led many to wonder whether Google would continue pursuing its new subsidiary's patent litigation, particularly the suits dealing with standards essential patents. I contacted Google in hopes of gaining some insight on that issue, however they have not yet responded.