The United States (US) has a very strong regime of IP Law linked with that of Competition Law or Antitrust Law. The US law grants the IP holder to use, offer, and sell the invention within the US and also import the same. Since the economy of the US is primarily based upon the industries which deal with IP, hence, the US generally is more tilted towards providing more room to those who work for innovation and promotion. The first Antitrust Law was passed in 1890 and two more followed in the year 1914. The primary aim was to prevent companies from getting too big and more importantly, allowing smaller firms to enter the market. Two agencies work for antitrust enforcement and focus on concerted action, exclusionary unilateral action, and merger review. These are the Department of Justice (hereinafter, DOJ) and Federal Trade Commission (hereinafter, FTC) and the three core antitrust law being the Sherman Act, the Clayton Act, and the FTC Act, which is solely enforced by the FTC prohibiting unfair method of competition and deceptive practices.
FRAND and Injunction
Seeking injunctive relief on SEP will not result in a violation of antitrust law, and that too, no US court has given the decision on the other side and instead of dealing it under the Contract Law principle. The dealing of such principle under contract law arise the notion of contractual commitments not giving rise to an antitrust issue. But a stark difference under the FRAND obligation is its legally binding nature of even the "third party beneficiaries", and this has been well approached under the US Federal Law of Contract. But this contractual nature can never ignore the aspect of antitrust interpretation of FRAND terms. The 'traditional principle of equity' as observed under eBay (Petitioner) v. MercExchange (Respondent),( L.L.C., 547 US 388, 394 (2006)) does apply to the injunctive relief allowing the court to take up the matter of antitrust and other policies regarding innovation if the court feels that the particular matter is important for the case. Here, the petitioner functioned as a popular internet website whereby sellers of private nature were allowed to sell their products, by listing the same, either through a fixed price or by auctioning. Now, a wholly owned subsidy of eBay, Half.com, was operating a website of similar nature and the respondent on the other hand had several patents and one of them included a method of business that facilitated the transaction between private entities, for an e-market. The respondent, as it had done in the past, had sought to license its patent to the petitioner but a consensus could not be reached and as a result, the respondent filed a patent infringement suit against the petitioner in the US District Court for the Eastern District of Virginia. It was found that the patent in question was a valid one and the petitioner had indeed infringed the same. Therefore, the jury awarded damages but the motion for a permanent injunction was denied by the District Court. This issue does raise some important questions regarding the condition of issuance of a permanent injunction. The condition is similar to what we see in a different reading, such as, the irreparable injury, coupled with the inadequate legal remedies, considering the hardship of the plaintiff and the public interest.
Following the decision given in eBay, the Ninth Circuit, in the case of Microsoft v. Motorola (Microsoft v Motorola Inc, 696 F3d 872 (C App 9th Circuit, 2012)., held that injunctions should never be enforced in case of patents that are FRAND encumbered, where the infringing defendant has acknowledged paying the FRAND royalty rates. The Court of Appeal held that "injunctive relief against infringement is arguably a remedy inconsistent with the licensing commitment".
Observing Apple Inc. vs. Motorola, Inc. (No. 2012-1458, 2014, Fed. Cir. Apr. 25, 2014) the court negated any per se rule of barring injunction to enforce the FRAND encumbered patents, but on the other hand this obligation does create “unique aspects of … establishing irreparable harm.” The observation is very important to us. By committing to FRAND terms, Motorola had agreed to license the essential patents to anyone willing to pay a FRAND royalty, so that injunctions could no longer be granted unless the licensee refused to pay a royalty meeting the FRAND requirement." Motorola was denied an injunction against Apple since irreparable harm could not be established and that monetary damages were satisfactory to make up for the infringement. It would be fair to grant an injunction where the infringing party has been unwilling to pay the royalty or has deferred in negotiating the same, unreasonably. The US courts have reiterated these conclusions and upheld these decisions in several cases related to the infringement of SEPs.
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.