The FTC’s recent consent order in its merger review in In the Matter of Robert Bosch GmbH – a combination of manufacturing companies that make air conditioning recycling, recovery, and recharge products that are essential for repairing and servicing the coolant systems on motor vehicles – contained an interesting twist. While reviewing the merger, the FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]. discovered that the target company SPX held patents that were likely standards essential as part of SPX’s participation in the SAE International standards setting process. The FTC concluded that “SPX continued to seek previously initiated injunction actions against competitors using those patents to implement the SAE International standards” and required Bosch to consent to offering these patents on royalty-free terms as a condition of approving the merger.
As part of this review, the FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]. had the opportunity to opine on standard essential patents (SEPs), FRAND"Fair, Reasonable, and Non-Discriminatory" licensing. A licensing commitment made for standard-essential patents in the context of technology standard setting activities. See also RAND. commitments, and their impact on competition at a time when the issue is gaining much attention. The tie-in to patents in the high-tech world is obvious. There are many high-profile cases currently in litigation or appeals for which SEPs and FRAND"Fair, Reasonable, and Non-Discriminatory" licensing. A licensing commitment made for standard-essential patents in the context of technology standard setting activities. See also RAND. commitments are prominent, including (but not limited to):
- Microsoft v. Motorola in Washington – The trial just ended, and they are awaiting decision.
- Apple v. Motorola appeal in CAFC (from Illinois) – Judge Posner, sitting by designation, concluded that neither party had presented evidence on damages, and dismissed the case. Both parties have appealed to CAFCThe U.S. Court of Appeals for the Federal Circuit, commonly referred to as ‘the Federal Circuit.’ The appellate court that has exclusive jurisdiction over patent appeals from district courts as well as the USPTO. The Federal Circuit was established in 1982 to regularize patent law across the country but has often been criticized for what many perceive as an applicant/patentee.
- Samsung v. Apple at the ITC – The full Commission announced it will review the ALJ’s initial determination of no violation, and has requested public submissions concerning certain FRAND"Fair, Reasonable, and Non-Discriminatory" licensing. A licensing commitment made for standard-essential patents in the context of technology standard setting activities. See also RAND. questions.
- Motorola v. Microsoft at the ITC – They are awaiting initial determination.
- Motorola v. Apple at the ITC – It was partially remanded, and is on appeal at the CAFCThe U.S. Court of Appeals for the Federal Circuit, commonly referred to as ‘the Federal Circuit.’ The appellate court that has exclusive jurisdiction over patent appeals from district courts as well as the USPTO. The Federal Circuit was established in 1982 to regularize patent law across the country but has often been criticized for what many perceive as an applicant/patentee.
The SEPStandard-Essential Patent. A patent that a participant in standards development process declares to be essential to the practice of the standard. debate is rife with questions, both on fact and law, and the smartphone wars may be the venue where some answers are given. However, the FTC’s approach is not the only analysis out there. In the recently dismissed case between Apple and Motorola in the Western District of Wisconsin, Judge Crabb had the opportunity to weigh in on several of the questions presented in the SEPStandard-Essential Patent. A patent that a participant in standards development process declares to be essential to the practice of the standard./FRAND issue. Whether right or wrong, some of the conclusions reached in the Western District of Wisconsin may help guide future analysis.
From Summary Judgment (Filing #194)
- The Noerr-Pennington Doctrine precludes antitrust claims – Judge Crabb reasoned at Summary Judgment “the Noerr-Pennington doctrine provides Motorola immunity from Apple’s antitrust and unfair competition claims premised on Motorola’s patent infringement litigation and from Apple’s claims for declaratory judgmentA lawsuit in which one party asks the court to resolve an issue and declare its judgment. In patent litigation, a company that thinks it may be accused of infringing may choose to file a declaratory judgment action, asking the court to declare that the patent is not infringed and/or invalid. Filing a declaratory judgment can have tactical, procedural, or, to the extent that those claims are premised on a theory of antitrust or unfair competition.”
- “Pop-Out” Counterclaims from the ITCInternational Trade Commission are not subject to claim preclusion – Judge Crabb reasoned at Summary Judgment that when a defendant in an ITCInternational Trade Commission investigation files a counterclaim, it does not continue at the ITCInternational Trade Commission, but rather is subject to mandatory removal to federal court. The ITCInternational Trade Commission defendant/counterclaim plaintiff will not be barred from asserting these claims through res judicata. This includes scenarios in which the same claims have been made affirmatively by ITCInternational Trade Commission defendant in other jurisdictions.
- A FRAND"Fair, Reasonable, and Non-Discriminatory" licensing. A licensing commitment made for standard-essential patents in the context of technology standard setting activities. See also RAND. commitment to a standard setting body creates a contract under Wisconsin law – Judge Crabb reasoned at Summary Judgment that a standard setting body’s Intellectual Property Rights policies constitute an offer of membership, and that choosing to join the standard setting body constitutes acceptance of that offer. Furthermore, all participants benefit.
- Whether a contract exists and whether this contract is breached are separate questions, and the question of breach requires a piercing factual inquiry – Though Judge Crabb found that a contract existed, she did not rule on whether this contact was breached as a result of the SEPStandard-Essential Patent. A patent that a participant in standards development process declares to be essential to the practice of the standard. holder’s negotiations with licensees. The court held that Apple must show that “Motorola breached a contract…by failing to offer a license to its essential patents to Apple on fair, reasonable, and nondiscriminatory terms. As to the licensing offer, Apple must prove that Motorola’s initial offer of a 2.25% royalty rate and attempts to negotiate were unfair, unreasonable or discriminatory and violated Motorola’s commitments to ETSI and IEEE.”
- Other standard setting body members are third party beneficiaries to the contract between the SEPStandard-Essential Patent. A patent that a participant in standards development process declares to be essential to the practice of the standard. holder and the standards body – Judge Crabb explained “As a potential user of the standards at issue and a prospective licensee of essential patents, Apple is a third party beneficiary of the agreements between Motorola” and the standards setting bodies.
From October & November Orders
- Specific performance may be an appropriate remedy – the court holds that it would be “highly inefficient” for a licensee to have to go to court for a FRAND"Fair, Reasonable, and Non-Discriminatory" licensing. A licensing commitment made for standard-essential patents in the context of technology standard setting activities. See also RAND. license every time a patentee sues for infringement over an SEPStandard-Essential Patent. A patent that a participant in standards development process declares to be essential to the practice of the standard. (Filing #424). The court reasoned that requiring the patentee to offer a license on certain terms may be the only way to deter future litigation. The court also suggested it would be reasonable for the court to determine the FRAND"Fair, Reasonable, and Non-Discriminatory" licensing. A licensing commitment made for standard-essential patents in the context of technology standard setting activities. See also RAND. terms, including both the base and rate.
- Specific performance is not an appropriate remedy if it will not solve the problem, and it will not solve the problem if the licensee does not commit to the FRAND"Fair, Reasonable, and Non-Discriminatory" licensing. A licensing commitment made for standard-essential patents in the context of technology standard setting activities. See also RAND. rate – Despite the court’s rationale in Filing #424, Judge Crabb backtracked and dismissed the case after Apple declared it would not agree to pay anything more than $1 per device (Filing #448). It is not appropriate for the court to declare a FRAND"Fair, Reasonable, and Non-Discriminatory" licensing. A licensing commitment made for standard-essential patents in the context of technology standard setting activities. See also RAND. rate and enforce specific performance on the patentee if the licensee is not also bound by the FRAND"Fair, Reasonable, and Non-Discriminatory" licensing. A licensing commitment made for standard-essential patents in the context of technology standard setting activities. See also RAND. rate determined by the court. Judge Crabb recognized that this would not end litigation, but merely reposition it.
- Whether mandatory cross-licenses may be part of a FRAND"Fair, Reasonable, and Non-Discriminatory" licensing. A licensing commitment made for standard-essential patents in the context of technology standard setting activities. See also RAND. license is an open question – Judge Crabb described the ambiguity of mandatory cross-licenses “[The ETSI IPRIntellectual Property Rights. Usually associated with formal legal rights such as patent, trademark, and copyright. Intellectual property is a broader term that encompasses knowledge, information, and data considered proprietary whether or not it is formally protected. policy] does suggest that Motorola cannot be found to have made an unreasonable or discriminatory offer simply because it demanded that Apple provide a reciprocal license to Apple’s standards-essential patents. Additionally, this provision suggests that Apple may have been required to engage in licensing negotiations related to its own patents. In other words, evidence that Apple refused to provide a license to its own patents or refused to engage in negotiations related to its own patents would be relevant to whether Motorola breached its contract with ETSI.” The court noted that the parties had not yet addressed his question, and instructed them to be prepared to address it at trial.
- Dismissal with prejudice is not appropriate if the court does not reach a decision on the merits – Judge Crabb held that all of Apple’s claims that were discussed at the Summary Judgment stage (Filing #194) shall be dismissed with prejudice. This includes Sherman Act claims, California Unfair Trade Practices claims, and tortious interferenceA proceeding, formerly conducted before the USPTO Board of Patent Appeals and Interferences, to determine priority of invention between applications that appear to cover the same invention. Interferences occurred under the first-to-invent system that was changed to first-inventor-to-file by the America Invents Act of 2011. of contracts claims. Judge Crabb holds that Apple’s claims for equitable estoppel, breach of contract, and declaratory judgmentA lawsuit in which one party asks the court to resolve an issue and declare its judgment. In patent litigation, a company that thinks it may be accused of infringing may choose to file a declaratory judgment action, asking the court to declare that the patent is not infringed and/or invalid. Filing a declaratory judgment can have tactical, procedural, or are dismissed without prejudice. The court reasoned that these claims were dismissed without reaching a decision on the merits, but rather on permanent injunction standards.