ITU Patent Roundtable Mark Seidman Federal Trade Commission

ITU Patent Roundtable Mark Seidman* Federal Trade Commission October 10, 2012 * The views expressed in these slides and in my oral presentation are my own and do not necessarily reflect the views of the Federal Trade Commission or any individual Commissioner.

Introduction • Federal Trade Commission background – Share antitrust jurisdiction with Dept. of Justice – Section 5 of the FTC Act • Topics to Cover – FTC’s Interest in Standard Setting – Concerns about Patent Hold-Up – Standard Essential Patents and Injunctions 2

The FTC and Standard Setting • FTC’s Interest in Standard Setting – Two decades of enforcement and policy research – FTC recognizes the pro-competitive benefits of standard setting and interoperability – Abuse of market power created through standard setting 3

Balance between IP Rights and Competition • Patent Law and Antitrust Law work towards similar goals – Efficient Competition – Innovation • Risk: Patent Hold-Up – Once the industry has adopted the standard, implementer investment is tied to the standard – Higher royalties based on switching costs, not on the value on the invention 4

Managing Hold-Up • Standards Development Organizations (SDOs) have sought to mitigate hold-up – Disclosure of IP • Patent implications of adopting a particular standard – RAND (Reasonable and Non-Discriminatory) commitments • Intended to protect implementers who need access to SEPs 5

What is the FTC’s Concern? • Patent Hold-Up with Standard Essential Patents – RAND Commitment is made in Standard Setting Process – An SEP holder may threaten or seek injunctive relief as a way of securing terms that are inconsistent with the RAND commitment 6

ITC vs. District Court • Two venues in the U. S. to seek injunctions – Federal District Court • Can grant injunctions and/or monetary remedies • Controlled by e. Bay Inc. v. Merc. Exchange LLC, 547 U. S. 388 (2006) – Limits circumstances where court will grant an injunction – International Trade Commission • Primary remedy is injunction (exclusion order) • Not bound by the e. Bay case 7

Conclusion • SDOs are capable of solving the hold-up problem – Clarification of the RAND commitment with respect to injunctions • FTC will continue to monitor the standard setting process – Investigate instances of hold-up – Develop policies to mitigate the likelihood of hold-up – Protect the standard setting process 8