Standard-Essential Patents and FRAND: Settlement of Charges of FTC Act Violation by Seeking Injunctive Relief

On July 24, 2013, the Federal Trade Commission (FTC) announced its entry of a modified consent order settling the Google-Motorola Mobility matter. The FTC charged Google-Motorola Mobility with violating § 5 of the FTC Act, 15 U.S.C. § 45, by seeking in courts and the U.S. International Trade Commission (ITC) injunctions and exclusion orders against infringement of standard-essential patents (SEPs) by allegedly “willing licensees,” where the patents are subject to commitments to license them on fair, reasonable, and non-discriminatory (FRAND) terms. See http://www.ftc.gov/opa/2013/07/google.shtm.

The FTC published its proposed consent order for public comment in January 2013 (see http://ftc.gov/opa/2013/01/google.shtm) and entered the modified order after considering those comments. The FTC modified that proposed order in minor, technical ways.

The consent order requires that, before seeking an injunction or exclusion order for infringement of FRAND-encumbered SEPs, Google must comply with certain requirements. Those requirements include providing a potential licensee with (1) a written offer containing all material license terms necessary to license its SEPs, and (2) an offer of binding arbitration to determine any license terms that are not agreed upon. The FTC also said in its public statement in January that the order may set a template for the resolution of SEP licensing disputes in many industries.

In its letter responding to comments from the public, the FTC:

• Defended its use of its § 5 authority for this matter, but said it removed the count from the complaint that had alleged that Google engaged in unfair or deceptive acts or practices
• Rejected arguments that its action against a party for seeking certain relief from a court or the ITC violated the First Amendment right to petition the government for relief
• Supported a provision allowing Google to defensively respond by seeking an injunction or exclusion order, if an owner of a FRAND-encumbered SEP charges Google with infringement and seeks an injunction or exclusion order without first offering to license Google on FRAND terms, or obtaining a ruling on FRAND royalty terms for its SEP in a proceeding in which Google was a party
• Explained that the order does not require Google to withdraw all pending claims seeking an injunction or exclusion order, but prohibits Google from actually obtaining or enforcing such relief unless Google complies with the consent order’s provisions

The Google settlement follows the FTC’s settlement of similar charges involving Bosch in April 2013. Those charges were based on injunctions against infringement of SEPs with FRAND commitments sought by a company Bosch proposed to acquire. See http://www.ftc.gov/opa/2013/04/bosch-illcrna.shtm.