Yesterday the European Commission started soliciting public comments on Samsung’s proposed commitment that, during the next five years, Samsung would not seek injunctive relief within the European Economic Area (EEA) on standard essential patents (SEPs) in the field of mobile communications against companies that agree to a particular framework for determining fair, reasonable and non-discriminatory (FRAND) licensing terms either by agreement, by court determination or by arbitration (the default forum). Interested parties should submit comments within a month.
This relates to an investigation that the European Commission opened in January 2012 on whether Samsung honored FRAND commitments given to ETSI by seeking injunctive relief in Europe against Apple mobile products on Samsung 3G UMTS SEPs. In December 2012, the European Commission gave initial views (in both a press release and supporting memo of frequently asked questions) that seeking injunctive relief is a legitimate remedy, but may be “an abuse of a dominant position in the exceptional circumstances … where the holder of a SEP has given a commitment to license these patents on FRAND terms and where the company against which an injunction is sought is willing to negotiate a FRAND license.” The European Commision expressed concern that seeking injunctive relief in those exceptional circumstances “may distort licensing negotiations unduly in the SEP-holder’s favour.” The European Commision took no position on what would be a reasonable royalty rate, stating that “courts or arbitrators are generally well equipped to do this.”
In response, Samsung submitted Proposed Commitments a few weeks ago (Sep. 27, 2013) that provide a framework over the next five years where, before Samsung would seek injunctive relief on mobile communication SEPs in the EEA, Samsung and a willing licensee may negotiate licensing terms and, if they reach no agreement within 12 months, then the FRAND terms would be decided in court or arbitration (the default forum). This approach is similar to the framework proposed in the settlement earlier this year between the U.S. Federal Trade Commission and Google/Motorola.
Today the Federal Trade Commission made its long-awaited announcement that it has voted to seek public comment on a proposal to conduct a Section 6(b) study of patent assertion entities and their impact on innovation and competition. The FTC proposes this study based on requests from the public and Senators as well as the FTC’s “own role in competition policy and advocacy.” The FTC will entertain public comments on its proposal to gather information from about 25 Patent Assertion Entities (PAEs) and about 15 other entities.
Importantly, issues regarding PAEs are distinct and separate from issues relating to standard essential patents and they should not be conflated. So why does the Essential Patent Blog care? Two reasons.
First, the FTC’s study will include specific requests for information about whether a PAE owns patents that are subject to a standard setting organization (SSO) obligation (see Information Request C(1)(o) at page 5 of the proposal):
o. whether the Patent (or any claims therein) is subject to a licensing commitment made to a Standard-Setting Organization and specify:
(1) all Standard-Setting Organizations to which a licensing commitment has been made;
(2) all standards to which such a licensing commitment applies;
(3) the Person(s) who made the licensing commitment;
(4) the date(s) on which the licensing commitment was made;
(5) all encumbrances, including, but not limited to, all commitments to license the Patent or any of its claims on reasonable and non-discriminatory (RAND), fair, reasonable, and non-discriminatory (FRAND), or royalty-free (RF) terms;
Second, the FTC is targeting non-innovating, non-practicing patent monetization entities. Specifically, the FTC defines the PAEs that are the subject of its study to be ”firms with a business model based primarily on purchasing patents and then attempting to generate revenue by asserting the intellectual property against persons who are already practicing the patented technology.” The FTC distinguished such PAEs “from other non-practicing entities or NPEs that primarily seek to develop and transfer technology, such as universities, research entities and design firms.” This focus on non-innovating, non-practicing entities may address concerns that some have raised about patent assertion entities that own SEPs and do not have the reputational concerns of actively innovating SSO members whose licensing approach will seek to foster adoption of their continued innovations in future versions of the standard.
The FTC will accept public comments about its proposed study up to 60-days after it is published in the Federal Register.
Today, the Federal Trade Commission announced that it has approved a modified final order that settles its investigation into Motorola Mobility’s alleged anti-competitive practices surrounding its standard-essential patent licensing and enforcement program (for more background, see our original post on the case). Here’s the Commission’s final decision and order, as well as a final version of the complaint:
You may recall that the proposed settlement and order was announced back in January. The FTC noted that it received 25 public comments on the proposed order (many of which we’ve covered before here and here), and that in light of these comments, the FTC made certain “technical modifications” to some provisions in the order. In a letter to the public commenters, the FTC explained the reasoning behind several provisions included in the final order, along with the modifications it made.
Some interesting notes and clarifications from the FTC’s letter include the following:
The FTC decided to remove the count from the complaint that alleged that Google “engaged in unfair or deceptive acts or practices,” although it indicated that its decision to do so was limited to the facts of this particular case — not all SEP-related investigations.
The FTC rejected the concern that barring the ability to seek injunctive relief during the appeal of the FRAND determination would delay the resolution of licensing disputes, noting that fairness dictates that implementers be able to appeal FRAND determinations without facing the threat of injunction relief (as long as they have committed to be bound by the final FRAND determination).
Addressing fairly widespread concerns that its actions violate the Noerr-Pennington doctrine, the FTC found these without merit, arguing that it is simply requiring Google and Motorola to keep its FRAND promises — which the FTC concludes precludes seeking an injunction against a “willing licensee.” (Notably, the FTC cited the decisions by Judge Robart and Judge Posner as support.)
The FTC kept in the order the “defensive use” exception, which allows Google/Motorola to seek injunctive relief for SEP infringement if it is facing a threat of injunction based on its own alleged SEP infringement. The FTC found that despite concerns by commenters that this was too broad and could allow for gamemanship, the provision was appropriate tailored and consistent with the goals of the order.
Importantly, the FTC order does not require Google/Motorola to withdraw all pending legal claims for SEP-related injunctive relief (for instance, in the Apple-Motorola Federal Circuit appeal of Judge Posner’s decision). However, the FTC noted that the order does prohibit Motorola/Google from enforcing any injunctive relief that it may win in pending litigations unless it first complies with the provisions of the order.
As for the modifications made to the order, they were largely minor (and made with Google’s consent, which was required). The FTC made some clarifying and technical changes to the definitions, and also slightly altered the required arbitration procedure. The FTC also changed a provision that would have required Google/Motorola to respond to inquiries from potential licensee with an offer to license, instead now only requiring that Google/Motorola timely respond (but that the content of the response need not include an instant offer to license, but may be dictated by the circumstances).
The final vote was 2-1-1, with Commission Maureen Olhausen dissenting and Commissioner Josh Wright recused.
Late last week, the American Antitrust Institute submitted a very interesting petition to the U.S. Dept. of Justice and the Federal Trade Commission. In the petition, which is titled “Request for Joint Enforcement Guidelines on the Patent Policies of Standard Setting Organizations,” the AAI urges these agencies to step up their enforcement of the antitrust laws with respect to SSOs themselves — not merely the participants in the standard-setting process. To that end, the AAI requests that the FTC/DOJ (1) issue specific guidelines for what should be included in SSO patent policies, and (2) hold SSOs liable for not adopting procedural safeguards to prevent patent hold-up behavior.
Back in December 2012, the Federal Trade Commission and the Department of Justice held a joint workshop to explore the impact that patent assertion entities (PAEs — or non-practicing entities/NPEs) may be having on innovation, competition, and the U.S. economy. The FTC and DOJ invited the public to submit comments for consideration by the agencies, even extending the deadline for submission until early April. All in all, 68 separate submissions have been received and posted on the FTC/DOJ workshop’s site.
The commenters represent a wide variety of industries and interests, and express divergent viewpoints and positions about the effects of PAE activity. Many comments focus on the newly-reintroduced SHIELD Act. Given that the main focus of this blog is on standard-essential patent issues, we won’t even try to give a comprehensive rundown of all of the comments — we’ll leave the focus on non-practicing entities to others. But several of the comments do express particular concern about the interplay between PAEs, standard-setting organizations and standard-essential patents. After the jump, we’ll discuss some of these issues that are being flagged as troublesome.
On March 5, 2013 at 2:00pm, the Intellectual Property Owners Association is holding a webinar to discuss the potential implications that the FTC-Google consent decree may have on the world of standard-essential patents. The webinar is taking place as part of of IPO’s weekly IP Chat Channel series. David W. Long, a member of Dow Lohnes’s Litigation group and a co-author of The Essential Patent Blog, will be one of the webinar presenters. Details on the webinar and information on how to register for it is after the jump.
Yesterday we covered several public comments submitted to the FTC by various professional organizations and trade/industry associations surround the FTC-Google consent decree. Today, we’re here to tackle the submissions from several large companies that chose to comment on the FTC order. These companies include Apple, Ericsson, Microsoft, Qualcomm, and Research in Motion.
We’ve finally sifted through the many public comments submitted in response to the FTC-Google consent decree and proposed order. As we noted Monday, over two dozen individuals, companies, and organizations representing a wide range of interests submitted comments. Later this week, we will do a post featuring the details of some of the post submitted by interested companies, such as Apple, Ericsson, Microsoft, Qualcomm, and Research In Motion. But today, we are going to focus on the comments that have been submitted by other types of organizations, which include a veritable alphabet soup of interest groups, professional organizations, and industry or trade associations.
This past Friday (Feb. 22) was the deadline for the public to submit comments to the Federal Trade Commission on the FTC’s consent decree that it entered into last month with Google and Motorola Mobility. More than two dozen individuals, companies, and organizations chose to submit comments, and their submissions reflected a wide range of interests and opinions about issues relating to both standard-essential patent issues and Google’s search practices.
These comments may be accessed from the FTC’s web site. In a future post, we will do a deep dive into some of the more interesting comments submitted. In the meantime, after the jump is a list of the entities that submitted comments, along with links to their web sites:
Later this year, in the case of Apple Inc. v. Motorola Inc. (Nos. 2012-1548, -1549), the Federal Circuit is set to address several issues that could have a big effect on future licensing and assertion of standard-essential patents. As explained in our previous post “catching up on” the details of this dispute, this appeal follows Judge Posner’s dismissal of both Apple’s and Motorola’s dueling infringement claims, which was based on the parties’ failure to prove entitlement to the remedies sought. Because Motorola had asserted a FRAND-encumbered standard-essential patent against Apple’s UMTS-compliant products, the Federal Circuit is likely to decide at least two issues that may have widespread implications for SEP licensing and litigation for years to come: (1) whether injunctive relief may be an appropriate remedy for Apple’s alleged infringement of Motorola’s FRAND-pledged SEPs; and (2) how to calculate damages for Apple’s alleged infringement of Motorola’s FRAND-pledged SEPs.