Apple

The U.S. Federal Trade Commission recently offered its take on the proper use of so-called standard-essential patents (SEP) in an amicus curiae brief. The FTC states that the previous district court decision to deny a Motorola injunction of certain Apple products was correct.

The brief made a special note that a court-ordered injunction is “ordinarily inappropriate” when a patent holder has already licensed the leveraged properties under fair, reasonable and nondiscriminatory (FRAND) terms. To be more specific, the FTC’s recent brief pertains to the claims Motorola asserts again Apple’s iPhone and iPad, which both allegedly infringe on certain wireless patents. An FTC statement regarding the brief stated the following:

Based on the body’s statements, companies can use the specter of an injunction to manipulate competition in a practice called “patent hold-up.” Once a patent becomes an SEP, its owner can threaten legal action and sales bans to net unusually high royalty rates and licensing terms that would previously have been impossible if the intellectual property was not considered essential. The issue that comes up is the fact the companies tend to take advantage of the standard setting process, which is overseen by organizations that most times require FRAND practices to be instituted in return for receiving SEP status. Here, the FTC concedes that some patent holders may not always find agreeable licensing terms, however instead of seeking a flat out injunction, the Commission believes the correct way for the court to deal with such a snag is to allow only monetary damages.

The FTC said the following regarding the matter:

If an injunction were to be instated, it would end up doing more harm to the party accused than not winning would harm the plaintiff. Aside from the negative impact on consumers who would no longer be able to purchase devices like the iPhone, injunctions involving SEPs would also be detrimental to standards setting, as well as growth from companies that innovate on a given standard.

Of the five Commission members, four ended up agreeing with the amicus brief, with Commissioner Maureen Ohlhausen being the only one to hold out. Motorola has been the target of other FT actions recently as well; including a staff recommendation to the organization’s five member Commission to sue the company over alleged SEP-related antitrust practices. It was also previously announced that the FTC was formally investigating whether Google was illegally using standard-essential patents acquired from its $12.5 billion takeover of Motorola against smartphone competitors. We’ll have to wait and see what’s to come.

Source: FTC via The Verge