Standard-essential patents are becoming a hot topic in intellectual property law. Google recently agreed to a consent order with the Federal Trade Commission over its pursuit of injunctions against companies needing to use its standard-essential patents.
The U.S. Patent and Trademark Office and Department of Justice issued a joint policy statement. It calls on the U.S. International Trade Commission (ITC) to exercise restraint when asked to impose injunctions in patent infringement actions involving key technologies.
A standard-essential patent is a patent for an invention that must be used to comply with a technical standard. Standards organizations often require members to disclose and grant licenses to their patents and pending patent applications that cover a standard that the organization is developing.
If a standards organization fails to get licenses to all patents that are essential to complying with a standard, owners of the unlicensed patents may demand or sue for royalties from companies that adopt the standard. This happened with DDR Memory (Rambus), GIF and JPEG standards, for example.
Determining which patents are essential to a particular standard is very complex and may not be known at the time the standard is set.
Standard-essential patents have become integral to the tablet and smartphone industry because they form the backbone of the basic technology they need to operate. While most owners of these patents have voluntarily pledged to grant licenses to other companies on reasonable and nondiscriminatory terms (RAND), they are also prone to abuse. As the DOJ and USPTO note, “The owner of that patented technology may gain market power and potentially take advantage of it by engaging in patent holdup.”
As a result, the agencies caution the ITC against handing out injunctions too freely. “Companies that own a key patent, such as those that ensure mobile and other electronic devices work together, should be allowed to win sales bans as a punishment for infringement only in rare, very specific cases,” the policy statement argues. Instead, the USPTO and DOJ are calling for monetary damages in the majority of cases.
The recommendations of the DOJ and USPTO are not binding on judges. However, courts have already demonstrated a growing reluctance to issue injunctions in cases involving standard-essential patents. Given the latest policy statement, the trend is likely to continue.
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