Antitrust Law Daily Wrap Up, ANTITRUST NEWS: American Antitrust Institute Endorses FTC’s Positions on Standard-Essential Patents in Google-Motorola Mobility Settlement, (Mar 1, 2013)

By Tobias J. Gillett, J.D., LLM.

The American Antitrust Institute (AAI) today sent a letter to the FTC, supporting the agency’s positions that an acquirer of standard-essential patents (SEPs) should consider itself bound by the commitments of the SEPs’ prior owner to license the SEPs on fair, reasonable, and non-discriminatory (F/RAND) terms and that the commitments should generally prevent the acquirer from pursuing injunctive relief or an exclusion order related to those SEPs, as expressed in the FTC’s recent consent order with Google, Inc. and Motorola Mobility LLC (MMI).

The AAI applauded the FTC’s adoption of an “unequivocal position” on the SEP acquirer’s duty to comply with the F/RAND commitments of the SEPs’ prior owner. The AAI endorsed the view that the SEP acquirer’s attempt to obtain injunctive relief or an exclusion order against a “willing licensee” of the patent would constitute an unfair method of competition under Section 5 of the Federal Trade Commission Act. The AAI also expressed its support for the view, in line with a recent suggestion from Deputy Assistant Attorney General Renata Hesse of the Department of Justice Antitrust Division, that such an endeavor may also violate Section 2 of the Sherman Act, as an attempt to “take advantage of the market power that standardization of their patented technology creates by engaging in hold-up.”

Patents become “standard-essential” through their inclusion in standards established by standard-setting organizations (SSOs) in various technology industries that apply to products produced by companies in those industries. These standards can ensure interoperability between components of a device or technology network. As part of this process, technology companies agree to license certain patents on F/RAND terms, and the SSOs take into consideration which patents are able to be licensed on F/RAND terms in deciding which technologies should be incorporated into the standards.

Google acquired MMI in 2012, in the process obtaining MMI’s extensive portfolio of patents. The FTC alleged that Google and MMI had broken their commitments to license certain SEPs owned by MMI on F/RAND terms. Google had allegedly pursued, or threatened to pursue, injunctions in federal district court and at the United States International Trade Commission against companies seeking to use the SEPs in their products, even if the companies were willing to license them on F/RAND terms.

In the settlement order, Google agreed not to seek or threaten injunctions against licensees willing to license its SEPs on F/RAND terms. It further agreed not to revoke any previously-made F/RAND commitments unless all standards to which they apply have been revoked, Google no longer has an interest in the patents, or the patents are no longer enforceable, among other provisions.

The AAI is a non-profit organization seeking “to advance the role of competition in the economy, protect consumers, and sustain the vitality of the antitrust laws.” The AAI enclosed with its letter a recent AAI paper discussing the intersection between competition policy and intellectual property law.

News: Antitrust