Posts Tagged: "FRAND"

The brief addresses this issue in the context of patent infringement claims that Motorola, Inc. has filed against Apple, Inc. regarding technologies used in iPhones and iPads that allegedly are covered by Motorola’s SEPs. It concludes that a district court correctly applied the governing legal principles when it dismissed Motorola’s request for an injunction that could have blocked Apple from selling iPhones and iPads in the United States.

According to the FTC’s complaint, Bosch’s acquisition of SPX’s Service Solutions business would give Bosch monopoly power in the U.S. market for ACRRR devices. Following the transaction as proposed, Bosch would control an overwhelming share of the market. Four other firms are in the market, each with a very small share. The acquisition also would eliminate the current direct competition between Bosch’s RTI and Bosch brands and SPX’s Robinair brand, and would allow the combined firm to raise prices by unilaterally exercising its newly gained market power, in violation of the FTC Act, the FTC alleged. The FTC complaint also alleges that SPX has been pursuing a strategy of suing to enjoin competitors from using patents that may be necessary to meet the standards for manufacturing ACRRR devices.

J. Posner also brought the value of the patents declared to be essential under standards bodies to bear on the damages question.  Essential patents must be evaluated for absolute value and relative value to the full-declared portfolio.  These values are needed where a non-linear function is proposed for a royalty determination based on infringement of a subset of the declared patents.  The difficulty presented by an assertion of a single essential patent from a much larger portfolio is “that if [the potential licensee] had wanted to license any of the patents in [the standard’s essential portfolio], the license fee would have exceeded the product of the percentage of the portfolio represented by the patent and the value of the entire portfolio.”  Objective data to present a non-linear function was needed, and even where presented, the notion of a FRAND royalty applied to “confine the patentee’s royalty demand to the value conferred by the patent itself as distinct from the additional value – the hold-up value – conferred by the patent’s being designated as standards essential.”

Last month, both the U.S. Senate and U.S. House of Representatives held hearings related to patent disputes, the ITC, SSOs and FRAND licensing – no doubt precipitated by the smart phone patent wars. On July 11, 2012, the full Senate Judiciary Committee held a hearing entitled “Oversight of the Impact on Competition of Exclusion Orders to Enforce Standard-Essential Patents.” Witnesses at the Senate hearing included the Acting Assistant Attorney General, Antitrust Division, U.S. Department of Justice, and the Commissioner of the Federal Trade Commission (FTC). A week later, on July 18, 2012, the House Judiciary Committee’s Subcommittee on Intellectual Property, Competition and the Internet held a hearing entitled “The International Trade Commission and Patent Disputes.” Witnesses at the House hearing included Professor Colleen Chien of Santa Clara University School of Law, IP Counsel for Ford, VP of Litigation for Cisco, the General Counsel of Tessera Technologies, and the President of The American Antitrust Institute (AAI).

Commenting on the Yahoo! Inc. patent infringement lawsuit filed against Facebook in March of 2012, Mr. Cuban concludes his post by stating: “I hope Yahoo[!] is awarded $50 billion dollars. It is the only way that consumers will realize what is at stake with patent law as is. Then maybe we can get it right and further innovation and competition in this country.” These statements are from a very influential technology entrepreneur, investor and generally-recognized American business guru. Thus, it would seem that the continuous negative headlines from the smart phone patent wars are definitely giving patents a bad rap!

In all cases, the IEEE, JEDEC, ITU and TIA policies apply to both issued patents and pending applications (regardless of whether such applications are published). Further, all four policies make clear that the SSO will not get involved in the particulars as to what constitutes FRAND licensing practices. Interestingly, and for those paying attention, the IEEE, JEDEC and ITU policies require disclosure of essential patents, whereas the TIA policy simply encourages disclosure of essential patents. Again, there simply is no generally-accepted test to determine whether a particular license offer satisfies the reasonable aspect of an SSO participant’s FRAND commitment. How does this play out in practical terms? A recent case is instructive.