Antitrust Law Daily Wrap Up, ANTITRUST NEWS: International Trade Commission should not presume patent holdup: Ohlhausen, Wright, (Jul 21, 2015)

By Greg Hammond, J.D.

The U.S. International Trade Commission (ITC) should not impose on standard-essential patent (SEP) holders the burden of proving an accused patent infringer is unwilling or unable to take a license on fair, reasonable, and non-discriminatory (FRAND) terms, concluded FTC Commissioners Maureen K. Ohlhausen and Joshua D. Wright. The Commissioners made their recommendation in reply to the ITC’s Notice of Request for Written Submissions in In the Matter of Certain 3G Mobile Handsets and Components Thereof, Investigation No. 337-TA-613.

In 3G Mobile Handsets, the ITC is determining whether it should presume patent holdup is prevalent, as some commentators believe, when it considers whether to preclude an exclusion order on public interest grounds in a matter involving SEPs burdened by a commitment to license on FRAND terms. The Commissioners are of the opinion that the ITC should take an evidence-based approach to the public interest inquiry, rather than presuming patent holdup.

First, the Commissioners suggested that empirical evidence demonstrates that patent holdup is not prevalent or a systemic problem that causes harm to consumers. Rather, patent holders frequently enjoy a first-mover advantage if their technology is adopted as the standard. Consequently, patent SEP holders may find it more profitable to offer attractive licensing terms in order to promote the adoption of the product using the standard, increasing demand for their product rather than extracting high royalties.

Second, Commissioners Ohlhausen and Wright noted that shifting the burden of proof to require SEP holders to prove unwillingness would be contrary to the U. S. Trade Representative’s directive in Samsung, and would create a conflict between the standard imposed by the ITC and that required by federal courts.

Finally, the Commissioners posed that an evidence-based approach to the public interest inquiry, requiring proof that patent holdup actually occurred in a given case, will protect incentives to participate in standard setting, because it allows SEP holders to seek and obtain exclusion orders when permitted by the standard-setting organization agreement at issue and in the absence of showing improper use.

News: Antitrust FederalTradeCommissionNews