Competition, Intellectual Property Rights and Collaboratively Set Standards:
Federal Trade Commission Advocacy and Enforcement
John E. Dubiansky
Attorney Advisor
U.S. Federal Trade Commission
Office of Policy Planning
The views expressed herein do not purport to represent those of the U.S. Federal Trade Commission or any individual Commissioner.
The Federal Trade Commission
• Created in by the F.T.C. Act in 1914.
• Dual mission: – Protect Consumers
– Promote Competition
• Promotes competition through:
– Law Enforcement
– Competition Advocacy
2
Competition Law Enforcement
Federal Trade Commission Act (1914)
• §5 Prohibition on unfair methods of competition
Sherman Act (1890) • §1 Prohibition of agreements in restraint of trade
• §2 Prohibition of acquisition or maintenance of monopoly
3
Research and Advocacy
•
Policy Research
– Workshops
– Studies
– Reports
•
Competition Advocacy
–
–
–
–
–
Federal and State Legislatures
Regulators
Federal Courts (amicus curiae) Patent Office International Trade Commission
4
The FTC’s Approach to IP and Antitrust
• The intellectual property laws and the antitrust laws share the common purpose of promoting innovation and enhancing consumer welfare.
• Three General Principles
– intellectual property is essentially comparable to any other form of property for the purpose of antitrust analysis; – no presumption that intellectual property creates market power; and – intellectual property licensing is generally procompetitive.
5
In re Google/MMI(2013)
2005
In re Bosch (2012)
2000
In re N-Data (2008)
1995
In re Unocal (2005)
1990
In re Rambus (2002)
1985
In re Dell (1996)
In re ASSE (1985)
1980
337-TA-745 (2012)
337-TA-752 (2012)
Apple v. Motorola (2012)
EVOLVING IP MARKETPLACE (2011)
ANTITRUST ENF. & IPR (2007)
ANTICIPATING 21ST CEN. (1996)
Allied Tube (1988)
STANDARDS & CERTIFICATION (1983)
ASME v. Hydrolevel (1982)
The FTC’s History with Collaborative Standard Setting
2010
2015
6
Collaborative Standard Setting with Patented Technologies
Patent Law
Competition Law
Private Contract
7
Competition Between Technologies
Alternatives
Standard Setting Process
Standard
8
Abuse of SSO Procedures
• Proceedings
– American Society of Mechanical Engineers (1982)
– American Society of Sanitary Engineering (1985)
– Allied Tube (1988)
• Facts
– Members of standard setting organizations circumvent SSO
procedures to influence outcome of standard setting process.
– Conduct results in:
• Letter claiming that competitor’s product does not meet safety standard.
• Failure to amend standard to incorporate innovative products by competitors. – SSO members’ rivals are unable to compete in product market because their products are not standard‐compliant.
• Theories
– F.T.C. Act § 5
– Sherman Act § 1
9
Guidance Regarding Ex Ante Licensing
• Context
– License terms are agreed to prior to the standard being set.
• Guidance – Unilateral or bilateral conduct not likely to raise concerns.
– Concerns regarding:
• Naked restraints on trade
• Exercise of group buying power
• Theories
– Sherman Act § 1
Guidance provided in U.S. DEPARTMENT OF JUSTICE & FEDERAL TRADE COMMISSION, ANTITRUST ENFORCEMENT AND INTELLECTUAL PROPERTY RIGHTS: PROMOTING
INNOVATION AND COMPETITION (2007).
10
Deceptive Conduct Regarding IPR
• Proceedings
– In re Dell Computer Corp. (1996)
– In re Rambus Inc. (2002)
– In re Union Oil Co. of Cal. (2003)
• Facts
– Participant in the standard setting process engages in deceptive conduct during deliberations on the technical content of the standard. – As a result, the SSO adopted patented technology without knowledge of relevant IPR. – Subsequent attempt to obtain royalties from implementers.
• Theories
– F.T.C. Act § 5
– Sherman Act § 2
11
Reneging on Licensing Commitment
• Proceeding
– In re Negotiated Data Sol’ns LLC (2008)
• Facts
– Participant in standard setting process made explicit commitment to $1000 royalty if its technology incorporated in the standard.
– SSO adopts standard with the technology.
– Patents assigned to party which seeks royalties beyond $1000 from implementers.
• Theory
– F.T.C. Act § 5
12
Reneging on FRAND Commitment
• Proceedings
– In re Robert Bosch GmbH (2013)
– In re Motorola Mobility LLC and Google Inc. (2013)
• Facts
– Participants in standard setting process made FRAND
commitments. – SSO adopts standard with their technology.
– Participants seek injunctive relief against prospective licensees when seeking royalties from implementers.
• Theory
– F.T.C. Act § 5
13
FTC Advocacy Regarding Patent Remedies
• Remedies for patent infringement are one area where patent policy and competition policy can be balanced.
– The patent system provides incentives to innovate.
– Competition benefits consumers through competition between technologies.
• Remedies for patent infringement influence market behavior by providing the backdrop for license negotiation and valuation.
– Patentee undercompensation can diminish incentives to innovate.
– Patentee overcompensation can distort competition between technologies.
14
FTC Analysis Regarding Injunctive Relief
• FTC’s 2011 Report provided general economic observations regarding the patent system – not limited to SEPs or FRAND.
• Injunctive relief raises balancing issues.
– In most cases, granting injunctive relief supports the patent system’s incentives to innovate.
– In limited cases, injunctive relief distorts competition between technologies by allowing patent holder to negotiate royalty based upon switching costs and not ex ante relative value of technology.
• Existing legal frameworks can take these considerations into account.
– Equitable analysis: eBay
– Public interest analysis: § 337
15
Injunctive Relief and Standard Essential Patents
• High switching costs in standard setting context can exacerbate concerns regarding the use of injunctions to engage in patent hold up.
• The presence of the FRAND commitment influences the analysis under existing standards:
– Apple v. Motorola
– 337‐TA‐745
– 337‐TA‐752
16
Thank You
[email protected]