USPTO, DOJ: Injunctions on FRAND patents can be anticompetitive

The agencies weigh in on a controversial issue facing the mobile market

Companies that license their patents under fair, reasonable and nondiscriminatory (FRAND) terms, but then seek import or sales injunctions against competitors, may often be

acting outside the public interest, according to a policy paper from two U.S. agencies.

The paper from the U.S. Department of Justice and the U.S. Patent and Trademark Office doesn't take a firm stand against patent injunctions when companies have committed to FRAND licensing, but in some cases, seeking an injunction may harm competition and consumers, it said. Injunctions can degrade the ability of standards-setting organizations to "mitigate the threat of such opportunistic actions" by the holders of FRAND patents, the paper said.

With the policy paper, the DOJ and USPTO are wading into a growing controversy in the mobile industry. Last Thursday, the U.S. Federal Trade Commission settled an antitrust case with Google, with the company agreeing to stop seeking injunctions on mobile and Web patents that its subsidiary Motorola Mobility had committed to license on FRAND terms.

Motorola had asked the U.S. International Trade Commission to bar some products, including Microsoft's Xbox and Apple's iPad and iPhone, from being imported into the U.S. over patent disputes, but the FTC found that Google engaged in "unfair methods of competition" and "unfair acts and practices," in violation of U.S. law.

In some cases, product injunctions, or exclusion orders, may be incompatible with a patent holder's FRAND commitment to a standards-setting body, the policy paper said. A patent holder may, for example, wield an injunction "to reclaim some of its enhanced market power over firms that relied on the assurance" that the FRAND patents would be available for reasonable licenses, the paper said.

But injunctions may still be appropriate in cases where the target company refuses to take a license or pay royalties on a FRAND patent, or when the target company is outside U.S. jurisdiction, the two agencies said. Those two exceptions line up with exceptions the FTC allowed in its antitrust settlement with Google.

The two agencies recommended "caution" in the use of injunctions in FRAND patent cases, but also advocated for patent holders receiving payment.

"DOJ and USPTO strongly support the protection of intellectual property rights and believe that a patent holder who makes a [FRAND] commitment should receive appropriate compensation that reflects the value of the technology contributed to the standard," the paper said. "It is important for innovators to continue to have incentives to participate in standards-setting activities and for technological breakthroughs in standardized technologies to be fairly rewarded."

The paper praised standards-setting activities, saying they benefit the public in several ways, including bringing many complex communications technologies into the marketplace faster.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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