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Patent Office, DOJ weigh in on the improper use of standards patents to ban products

DOJ briefing

The US Patent and Trademark Office and the US Department of Justice joined the ever-growing debate over the use of standards-essential patents to ban products in the country. The two agencies issued a joint statement yesterday that emphasized how sales bans — such as exclusion orders at the ITC or injunctions in federal court — aren't usually the right remedy.

While the USPTO doesn't have any power to control how these patents are used in courtrooms across the country, its insight and opinions on the subject are obviously important. The DOJ, on the other hand, is the executive agency charged with protecting US consumers and promoting fair competition. It's no surprise then that the primary emphasis of the joint statement centers around the concern that patent owners may use these types of patents to improperly "gain market power and potentially take advantage of it by engaging in patent hold-up." The statement reiterates the common fear that companies will assert these patents "to exclude a competitor from a market or obtain a higher price for its use than would have been possible before the standard was set, when alternative technologies could have been chosen." That's a nice way of saying companies might use the patents to extort unfair licensing fees from their competitors.

Injunctions may still be available if a license offer is refused

The tone of the joint statement, however, is far from heavy-handed or threatening. Instead, the goal here seems to be to provide the ITC and others with the legal justifications needed to deny sales bans when standards-essential patents are involved. But not in all circumstances. The 10-page statement doesn't promote an absolute rule that sales bans are always unavailable. It's argued that an injunction or exclusion order may still be warranted in those cases where a potential licensee "is unable to or refuses" to take a license under FRAND terms.

This is consistent with the underlying reasoning in the FTC's recent settlement agreement with Google that brought the commission's antitrust investigations into the search giant to a close, but it's not without controversy. In fact, this may be the new battleground for these types of fights. When is an offer not a legitimate FRAND offer? Can a patent holder still use the threat of a sales ban when negotiating a licensing fee — one arguably higher than FRAND terms would normally provide? Microsoft raised some of these concerns, and others, in a recent statement criticizing the agreement between the FTC and Google, and appears hopeful that the ongoing investigation into Google and Motorola in Europe will end with a more stringent and binding order. The EU just last year opened formal antitrust investigations into Motorola and Samsung's use of standards patents, so we should begin to see movement on that front in the near future. We'll keep you updated.

The Verge
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