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US mulls outlawing rival product bans using standards patents

Congress probes essential designs used to win injunctions

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The US Congress is holding a hearing today to consider whether companies that own standards-essential patents (SEP) should be allowed to use them to get sales and import bans on their rivals' products.

The Senate Judiciary Committee is meeting to hear from the Federal Trade Commission and the Department of Justice on whether firms can wield SEP over their rivals in patent battles, an issue which could have a big impact on firms like Samsung and Motorola Mobility.

Firms like Microsoft and Apple have been whinging to lawmakers about the use of SEP in patent litigation, as Microsoft faces a ban on its Xbox 360 from an essential patent for video brought by Motorola Mobility and Apple's many lawsuits face counter suits over SEP from the likes of Samsung.

The committee will be hearing about the antitrust implications of granting sales bans based on SEP and its witness list includes FTC commissioner Edith Ramirez and acting assistant AG of the DoJ Joseph Wayland.

The FTC has already made its position clear by filing the case of Motorola v Microsoft with the International Trade Commission, which has the power to impose the bans, while urging the ITC not to issue an injunction.

The FTC said it was concerned that companies were trying to use the threat of a sales ban to force others who wanted to use the standard to pay higher royalty fees. That would of course be directly against the point of SEP, which is supposed to be licensed on a fair, reasonable and non-discriminatory (FRAND) basis so that everyone's kit can be interoperable and on the same standard.

"Incorporating patented technologies into standards has the potential to distort competition by enabling SEP owners to negotiate high royalty rates and other favourable terms, after a standard is adopted, that they could not credibly demand beforehand," the FTC said in its filing.

Meanwhile, the UN's telecommunications arm, the ITU, is holding a roundtable on the issue in October.

SEP owners like Motorola have argued that the bans are a necessary threat for firms that refuse to pay licensing fees.

If rules against using SEP to get sales bans were introduced, it could have a big impact on the Apple v Android manufacturer cases, as many of these are from the old guard of mobile firms and rely on SEP to fight back.

However, even if bans aren't allowed, SEP owners could still use legal means to prove infringement, which could win them damages and/or force the infringing firm to pay royalties. ®

The smart choice: opportunity from uncertainty

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