United States: In A Rarely-Seen Joint-Effort In The Competition Arena, The DOJ And The USPTO Unite In Issuing A Policy Statement On Remedies Involving Standard Essential Patents

Last Updated: January 21 2013
Article by Mona Solouki

On January 8, 2013 - less than a week after the Federal Trade Commission ("FTC") entered into a consent order with Google,1 under which Google is generally banned from seeking injunctions on its F/RAND2 -encumbered standard essential patents ("SEPs")3 - the United States Department of Justice ("DOJ") banded together with the United States Patent and Trademark Office ("USPTO") (jointly referred here as "the Agencies") in issuing the Policy Statement on Remedies for Standard Essential Patents Subject to F/RAND Commitment ("Policy Statement on Remedies for SEPs").

This was a rare pairing in that, in the past, the DOJ has generally joined forces with the FTC in jointly issuing guidelines in the area of competition and antitrust enforcement policy. Examples include the DOJ-FTC joint "Antitrust Policy Enforcement Regarding Accountable Care Organizations," "Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition," "Antitrust Guidelines for the Licensing of Intellectual Property," "Antitrust Guidelines for Collaborations Among Competitors," and "Horizontal Merger Guidelines." The Policy Statement on Remedies for SEPs is, therefore, a departure from that established practice.

The DOJ issued the policy statement in its capacity as "the executive-branch agency charged with protecting U.S. consumers by promoting and protecting competition," and the USPTO in its capacity as "the executive-branch agency charged with responsibility for examining patent applications, issuing patents, and' through the Secretary of Commerce' advising the President on domestic and certain international issues of intellectual property policy." Policy Statement on Remedies for SEPs at 8.

Noting the procompetitive virtues of consensus-driven standards along with their risks, the Agencies sought to balance the rights of SEP holders against the risk of hold-up to implementers. On the one hand, the Agencies recognized that "[i]n some circumstances, the remedy of an injunction or exclusion order may be inconsistent with the public interest" and "may harm competition and consumers." Id. at 6. On the other hand, they rejected a general ban on injunctive relief actions for SEPS, see id. at 7-8, or rigid imposition of "one-size-fits-all mandates for royalty-free or below-market licensing, which would undermine the effectiveness of the standardization process and incentives for innovation," id. at 5-6.

In determining whether an injunction or exclusion order may be appropriate, or otherwise should be denied, the Agencies offered a flexible approach that could be used to adapt the remedy to the specific facts of each case by identifying non-exhaustive "relevant factors when determining whether public interest should prevent the issuance of an exclusion order... or when shaping such a remedy." Id. at 7-9. One such factor is "whether a patent holder has acknowledged voluntarily through a commitment to license its patents on F/RAND terms that money damages, rather than injunctive or exclusionary relief, is the appropriate remedy for infringement." Id. at 9.

However, according to the Agencies, "This is not to say that consideration of the public interest factors ... would always counsel against the issuance of an exclusion order to address infringement of a F/RAND-encumbered, standards-essential patent"; such an order may still be "an appropriate remedy" in some circumstances. Id. at 7.

For example, an exclusion order by the International Trade Commission ("ITC") or a district court injunction may be appropriate when "a putative licensee refuses to pay what has been determined to be a F/RAND royalty, or refuses to engage in a negotiation to determine F/RAND terms." Id. The Agencies also made clear that "a constructive refusal to negotiate" could be the basis for injunctive relief or an exclusion order, such as when the putative licensee "insist[s] on terms clearly outside the bounds of what could reasonably be considered to be F/RAND terms in an attempt to evade the putative licensee's obligation to fairly compensate the patent holder." Id. Other factors relevant to a particular case may also justify such a relief, making the inquiry a case-specific one. See id. (noting that "[t]his list is not an exhaustive one," thus leaving room for other considerations).

In contrast, the FTC has taken a much more restrictive view of SEP inunctions. For example, in its Google order, the FTC generally banned efforts by Google to seek injunctive relief on its SEPs, except in the following narrowly enumerated circumstances against a potential licensee who (a) is outside the jurisdiction of the United States, (b) has stated in writing or sworn testimony that it will not license on any terms, (c) refuses to enter a license on terms determined to be F/RAND in the "Final Ruling" of a court (after exhaustion of all appeals) or through binding arbitration or other mutually-agreed process, or (d) fails to provide a written confirmation to a SEP owner in response to a F/RAND Terms Letter as outlined in the FTC Order. FTC Decision & Order at 7-8. The order also allows Google to seek injunctive relief in certain circumstances when the putative licensee first sues Google for injunctions on the potential licensee's own SEPs. Id. at 11-12. The order also requires rigid adherence to an offer of a detailed licensing agreement and specific steps for negotiating and resolving disputes before pursuing any injunctive relief consistent with the above conditions. See, e.g., id. at 9-12.

Notably, the FTC order is not based on the antitrust laws, but instead relies on Section 5 of the FTC Act, which is primarily a consumer protection statute that prohibits "unfair method of competition" and "unfair acts or practices." See FTC Complaint, ¶¶ 31-32. Commissioner Ohlhausen dissented generally questioning the applicability of Section 5 to Google's conduct and the "doctrinal confusion" the order would cause, among other reasons. See generally Dissenting Statement of Commissioner Ohlhausen. Commissioner Rosch issued a separate statement that called into question the FTC's use of Section 5's "unfair method of competition" prong without any "limiting principles" - such as "the requirement that a respondent have monopoly or near-monopoly power" - which risked "unsettl[ing] 'settled principles of [Sherman Act] Section 2 law' as defined by the Supreme Court case law under Section 2, ... as well as the language of Section 2 itself." Sep. Stmt. of Commissioner Rosch at 3-4.

Footnotes

1. All of the relevant documents, including the FTC Complaint, the Decision and Order, and Separate and Dissenting Statements respectively of Commissioners Rosch and Ohlhausen can be found on the FTC's website at http://www.ftc.gov/os/caselist/1210120/index.shtm.

2. "F/RAND" refers to a commitment made by a patentee to an industry standard setting organization ("SSO") that the patentee will license its patents that are, or will become, essential to a standard adopted by the SSO on fair, reasonable, and non-discriminatory terms.

3. Throughout, "SEPs" is used to refer only to F/RAND-encumbered standard essential patents. These are patents that have been designated as essential to the functionality of an approved standard, such as the telecommunications standards applicable to mobile devices operating on a 3G network, pursuant to the specifications of an SSO.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Mona Solouki
 
In association with
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
Accounting and Audit
Anti-trust/Competition Law
Consumer Protection
Corporate/Commercial Law
Criminal Law
Employment and HR
Energy and Natural Resources
Environment
Family and Matrimonial
Finance and Banking
Food, Drugs, Healthcare, Life Sciences
Government, Public Sector
Immigration
Insolvency/Bankruptcy, Re-structuring
Insurance
Intellectual Property
International Law
Litigation, Mediation & Arbitration
Media, Telecoms, IT, Entertainment
Privacy
Real Estate and Construction
Strategy
Tax
Transport
Wealth Management
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.