Technology & Auto Leaders Call on White House to Curb Anti-Competitive Patent Abuse in Industry Standards
Today, a broad group of companies and organizations representing the auto and technology industries sent a letter to the White House to raise awareness of the growing danger of standards essential patent (SEP) abuse and expressed support for government action against anti-competitive licensing practices involving SEPs. The letter was signed by 15 companies and organizations including ACT | The App Association, the Alliance of Automobile Manufacturers, Dell, Hewlett-Packard (HP), Intel, Samsung, and VIZIO.
The Federal Trade Commission (FTC) recently filed a lawsuit against Qualcomm accusing it of violating the patent licensing commitments it made to prominent standards-setting organizations in order to maintain its monopoly on the chips used in cellphones and other mobile devices.
On Wednesday, December 28, 2016, the Korea Fair Trade Commission’s (KFTC) Anti-Monopoly Bureau issued a decision imposing sanctions against Qualcomm Incorporated (Qualcomm) in the amount of 1.03 trillion Korean Won (approximately $865 million USD) for alleged violations of Korean competition laws.
Recently, the Department of Justice’s Antitrust division (DOJ) and the Federal Trade Commission (FTC) issued a request for comment on proposed updates to their Antitrust Guidelines for the Licensing of Intellectual Property (Guidelines). Last updated in 1995, the guidelines are intended to provide clarity on potential antitrust issues that may arise in the context of intellectual property licenses. DOJ/FTC have recognized the valuable role of this guidance, and the need for it to be updated to account for legal developments in U.S. intellectual property and antitrust laws since the mid-1990’s. On September 26, 2016, ACT | The App Association submitted detailed comments to DOJ/FTC on behalf of small companies in the internet economy reflecting the importance of commitments to license standards-essential patents (SEPs) on Fair, Reasonable and Non-Discriminatory (FRAND).
The Case of the Missing SEPs: Why do the New DOJ-FTC Antitrust IP Licensing Guidelines Fail to Mention the Biggest IP Licensing Issue of the Last Decade?
The U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) 1995 Antitrust Guidelines for the Licensing of Intellectual Property have, for the past 21 years, helped attorneys and businesses identify and steer clear of potential antitrust issues in their IP licensing arrangements. While the Guidelines do not themselves have the force of law, they are reliable indicators of when the principal U.S. antitrust enforcement agencies will, or will not, challenge private IP licensing transactions.
In recent years, lawsuits involving standards-essential patents (SEPs) have made headlines around the world, fueling a heated public debate regarding the role and impact of SEPs covering key interoperability standards. Enforcement agencies in the U.S., Europe and Asia have prosecuted alleged violations of competition law and private licensing commitments in connection with SEPs. But while this debate has broadly targeted standardization and patents in the information and communications technology (ICT) sector, regulators and commentators have paid little attention to differences among market segments within ICT.
ACT | The App Association Senior Counsel Brian Scarpelli discusses the growing threat of FRAND abuse and what it means to small and midsize tech firms including app developers. In this webinar from August 2016, Scarpelli covers the basics of technical standards, standards essential patents, FRAND licensing and the ways in which some SEP holders are abusing their privileged positions.
Exploring Important Opportunities for the U.S. Government to Aide the Rise of the Internet of Things by Leading in Proving Clarity on FRAND
The Internet of Things (IoT) requires seamless interconnectivity among hardware and software products which can only be achieved through technological standards like WiFi, LTE, Bluetooth, etc. However, it is up to regulatory bodies to ensure that standards’ holders do not exploit their unearned market power to overcharge licensees, ACT | The App Association described in comments to the National Telecommunications and Information Association (NTIA) on June 2, 2016, in response to a request for public comment titled The Benefits, Challenges, and Potential Roles for the Government in Fostering the Advancement of the Internet of Things.
A balanced patent system is critical to promoting innovation by rewarding inventors while also ensuring they are not inappropriately compensated for the market power they gain from standardizing their technologies. An imbalance in the system is created when holders of standard-essential patents (SEPs) disregard their affirmative promises to license their SEPs on reasonable terms. That impact is especially acute for emerging small businesses and innovators. Competition law has an important role in deterring and remedying breaches of FRAND commitment. We are thus pleased that competition agencies in key markets have increasingly grappled with FRAND related issues, and we will continue to report on and analyze these developments.
Recently, the Government of India’s Department of Industrial Policy and Promotion (DIPP) issued a request for comment on its “Discussion Paper on Standard Essential Patents and Their Availability on FRAND Terms”. In inviting comments, DIPP noted its goal of “develop[ing] a suitable policy framework to define the obligations of [Standard] Essential Patent [SEP] holders and their licensees.” On April 22, 2016, ACT | The App Association submitted detailed comments to DIPP. This blog post provides context on the importance of DIPP’s efforts to clarify the meaning of a commitment to license SEPs on Fair, Reasonable and Non-Discriminatory (FRAND) terms in India, and summarizes our comments on its discussion paper.
As I have discussed in previous blog posts, the technical standards developed across a range of standards bodies for countless economic sectors and sub-sectors seek to enable interoperability among all industry participants.
When you peruse the AllThingsFRAND.com site, you will find judicial and regulatory developments around the globe on the meaning of the obligation to license standard essential patents (SEPs) on fair, reasonable, and non-discriminatory (FRAND) terms. In just the last 15 months, China, Japan, and Korea have each released key guidance documents that now treat certain breaches of FRAND commitments as potential violations of their respective antitrust laws. This blog post summarizes the FRAND related content of these key regulatory initiatives and the trends and common themes they raise in the most dynamic region of the world. ACT believes these initiatives are a good step in the right direction to provide balanced legal systems around the globe, but they also could benefit from some refinement.
Much of the public is aware that a number of controversies swirl around the treatment of patents. However, due to the high-powered litigation surrounding these disputes between large companies with household recognition (and the sometimes staggering damage awards that grab headlines), some may perceive this as simply another front in the wars between these mega corporations fought by armies of attorneys that do not relate to or impact small- and medium-sized companies.
Our industry is building an “Internet of Things.” The entire mobile ecosystem is focused on seamlessly stitching together our homes, cars, phones and watches in ways that will create endless opportunities to improve our healthcare, safety, and lifestyles. That seamless interconnectivity is made possible by technological standards, like WiFi, 4G, Bluetooth, etc., that are often developed collaboratively between several companies who own the patents to the relevant technologies.