FTC: Motorola bid for Apple product injunction 'inappropriate'

Posted:
in General Discussion edited January 2014
In an amicus curiae brief filed on Wednesday in the Federal Circuit Court of Appeals, the U.S. Federal Trade Commission offered its take on the proper use of so-called standard-essential patents (SEPs) in litigation, saying that a previous district court decision to deny a Motorola injunction of certain Apple products was correct.

The amicus brief made special note that a court-ordered injunction is "ordinarily inappropriate" when a patent holder has already licensed the leveraged properties under fair, reasonable and nondiscriminatory (FRAND) terms. In particular, the FTC's most recent brief pertains to the claims Motorola asserted against Apple's iPhone and iPad, which allegedly infringe on certain wireless patents.

From an FTC statement regarding the brief:
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 body, companies can use the specter of an injunction to manipulate competition in a practice called "patent hold-up." Once a patent becomes an SEP, its owner can threaten legal action and sales bans to net unusually high royalty rates and licensing terms that would previously have been impossible if the IP was not considered essential.

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At issue is how companies take advantage of the standard setting process, which is overseen by organizations that most times require FRAND practices be instituted in return for receiving SEP status. The FTC concedes that some patent holders may not always find agreeable licensing terms, however instead of seeking an outright injunction, the Commission believes the correct way for a court to deal with such a snag is to allow only monetary damages.

"This is generally the proper approach, because allowing a patent holder to seek an injunction on a SEP can facilitate patent-holdup, which can raise prices to consumers, while undermining the standard-setting process," the FTC said.

Going further, if an injunction were to be instated, it would do more harm to the party accused than not winning an injunction would harm the plaintiff. Besides the obvious negative impact on consumers who would no longer be able to purchase devices like the iPhone, injunctions involving SEPs would be detrimental to standards setting, as well as industry growth from companies that innovate on a given standard.

Out of the five member of the Commission, four agreed with the amicus brief, with Commissioner Maureen Ohlhausen being the lone holdout.

Google-owned Motorola has been the target of other FTC actions recently, including a staff recommendation to the organization's five-member Commission to sue the company over alleged SEP-related antitrust practices. It was also announced in June that the FTC was formally investigating whether the internet search giant was illegally using standard-essential patents acquired from its $12.5 billion takeover of Motorola against smartphone competitors.

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Comments

  • Reply 1 of 43
    gatorguygatorguy Posts: 20,577member


    The correct stance too. SEP's should not be susceptible to injunction demands except in the most extreme cases where a proven infringer simply refuses to pay for a license.


     


    That should help Samsung as well with Ericsson also demanding an injunction for supposed Sammy infringement on their SEP's. It's only a matter of time before Nokia too will make the same injunction demands on another mobile device provider using FRAND-pledged IP, same as they did with Apple several months ago. They're only going to get more aggressive in their patent monetization.


     


    It would be great to get an actual court ruling that SEP injunctions are generally disallowed except in very specific cases. FTC opinions don't cut it.

  • Reply 2 of 43
    hill60hill60 Posts: 6,989member

    Quote:

    Originally Posted by Gatorguy View Post


    The correct stance too. SEP's should not be susceptible to injunction demands except in the most extreme cases where a proven infringer simply refuses to pay for a license.


     


    That should help Samsung as well with Ericsson also demanding an injunction for supposed Sammy infringement on their SEP's. It's only a matter of time before Nokia too will make the same injunction demands on another mobile device provider using FRAND-pledged IP, same as they did with Apple several months ago. They're only going to get more aggressive in their patent monetization.


     


    It would be great to get an actual court ruling that SEP injunctions are generally disallowed except in very specific cases. FTC opinions don't cut it.



     


    The Ericsson case is interesting, Samsung's lawyers will be arguing one view against Apple and the opposite view against Ericsson.


     


    Samsung's refusal to renew Ericsson's previously existing licensing arrangements also puts them into a different class than Apple, whose existing licenses via chipmakers were rescinded by Samsung.


     


    It came out in some of the Ericsson cases that Apple reached license agreement with them a long time ago.

  • Reply 3 of 43
    sockrolidsockrolid Posts: 2,788member
    $12.5 billion. For Motorola and its FRAND-encumbered patents.
    Maybe Google's executive team should look up "due diligence."
    I'm sure it's right there in Wikipedia.
  • Reply 4 of 43
    patsupatsu Posts: 429member
    As it should. Amen.
  • Reply 5 of 43
    hill60hill60 Posts: 6,989member

    Quote:

    Originally Posted by SockRolid View Post



    $12.5 billion. For Motorola and its FRAND-encumbered patents.

    Maybe Google's executive team should look up "due diligence."

    I'm sure it's right there in Wikipedia.


     


    If Apple (and Microsoft) had agreed to Motorola's extortionate license demands without a fight, the $12.5 Billion would almost have been recouped by now.


     


    Then Motorola was also threatening to sue other Android OEM's, Google was played like a small town hick visiting the city for the first time.

  • Reply 6 of 43
    gatorguygatorguy Posts: 20,577member

    Quote:

    Originally Posted by hill60 View Post


     


    The Ericsson case is interesting, Samsung's lawyers will be arguing one view against Apple and the opposite view against Ericsson.


     


    Samsung's refusal to renew Ericsson's previously existing licensing arrangements also puts them into a different class than Apple, whose existing licenses via chipmakers were rescinded by Samsung.


     


    It came out in some of the Ericsson cases that Apple reached license agreement with them a long time ago.



    I wish Florian Mueller were more consistent on this point. In general he's giving Ericsson a pass, with short shrift given to discussing their SEP injunction demands. When it came to Nokia asking for an injunction on Apple products over FRAND patents it was barely mentioned. The fact that Microsoft's business partner Nokia went before the UN panel discussing FRAND policy and said injunctions were a proper remedy never even got mentioned by him. It appears he only considers injunction demands over standards-essential patents to be outrageous when the entity holds an Android license. 

  • Reply 7 of 43
    quinneyquinney Posts: 2,525member
    sockrolid wrote: »
    $12.5 billion. For Motorola and its FRAND-encumbered patents.
    Maybe Google's executive team should look up "due diligence."
    I'm sure it's right there in Wikipedia.

    Good call, but I think Schmidt's inability to understand Apple's legal tactics indicates that they just project their own preferences
    onto everything around them. They wanted the Motorola patents to be able to harm Apple, so when they did their "due diligence",
    they concluded they would.

    In the meantime, I wish the news stories would refer to the plaintiff as Google, rather than the name of their cellphone division.
  • Reply 8 of 43
    gatorguygatorguy Posts: 20,577member

    Quote:

    Originally Posted by hill60 View Post


     


    If Apple (and Microsoft) had agreed to Motorola's extortionate license demands without a fight, the $12.5 Billion would almost have been recouped by now.


     



    FWIW Google only valued Motorola's IP at about $5B. Not that it matters really.

  • Reply 9 of 43
    gtrgtr Posts: 3,231member


     


    image

  • Reply 10 of 43
    gatorguy wrote: »
    The correct stance too. SEP's should not be susceptible to injunction demands except in the most extreme cases where a proven infringer simply refuses to pay for a license.
    What if a patent holder makes a ridiculous demand and the "infringer" refuses to pay that demand? Would that count as "extreme"? Should Samsung be able to ask for the moon knowing they won't get it and then seek an injunction?
  • Reply 11 of 43
    gatorguygatorguy Posts: 20,577member

    Quote:

    Originally Posted by EricTheHalfBee View Post





    What if a patent holder makes a ridiculous demand and the "infringer" refuses to pay that demand? Would that count as "extreme"? Should Samsung be able to ask for the moon knowing they won't get it and then seek an injunction?


    I can't imagine a court would deem an injunction appropriate for a "ridiculous" demand. That's why the courts handle it.


     


    Of course that doesn't mean that the infringer won't consider something as minimal as a dollar a device "ridiculous", potentially inviting an injunction if they refuse a court-determined license for such a tiny amount.image On the other hand thinking $30 per device is a realistic licensing demand would plainly be ridiculous.

  • Reply 12 of 43
    aaarrrggghaaarrrgggh Posts: 1,577member
    gatorguy wrote: »
    I can't imagine a court would deem an injunction appropriate for a "ridiculous" demand. That's why the courts handle it.

    Which gets you back to needing binding arbitration rather than injunctive relief, no?
  • Reply 13 of 43
    charlitunacharlituna Posts: 7,215member
    What if a patent holder makes a ridiculous demand and the "infringer" refuses to pay that demand? Would that count as "extreme"? Should Samsung be able to ask for the moon knowing they won't get it and then seek an injunction?

    IF the 'offending' party tried to get a license and was asked for something they felt was outside of FRAND, the FTC is saying that injunctions before the suit should not be allowed. After, if it turns out the terms were deemed okay, sure an injunction is merited if the fees aren't paid or some other deal reached
  • Reply 14 of 43


    "I will make it legal." -- Darth Sidious.

  • Reply 15 of 43
    One bullet to kill, but now the bullet becomes mere a thorn.
  • Reply 16 of 43
    hill60hill60 Posts: 6,989member

    Quote:

    Originally Posted by Gatorguy View Post


    FWIW Google only valued Motorola's IP at about $5B. Not that it matters really.



     


    If Apple and Microsoft conceded to Motorola's demands for 2.X% on gross sales of finished products payable at least twice for separate groups of standards essential patents encompassing cellular, wifi and H.264, Google would have made more than $5 Billion in the first year in license fees.

  • Reply 17 of 43
    hill60hill60 Posts: 6,989member

    Quote:

    Originally Posted by Gatorguy View Post


    I can't imagine a court would deem an injunction appropriate for a "ridiculous" demand. That's why the courts handle it.


     


    Of course that doesn't mean that the infringer won't consider something as minimal as a dollar a device "ridiculous", potentially inviting an injunction if they refuse a court-determined license for such a tiny amount.image On the other hand thinking $30 per device is a realistic licensing demand would plainly be ridiculous.



     


    For many standards essential patents $1 is ridiculously high, seeing as how they are usually factored in to the cost of the chip that actually makes use of them, not the total price of the finished device.

  • Reply 18 of 43
    Lol

    So google question why apple isn't suing them directly for ripping them off.

    Yet they sue apple directly (albeit in cowardice using their Motorola brand) for no reason at all.

    Google's new motto. "be evil. Just wear white."
  • Reply 19 of 43


    The scales and wings in the logo look like a face making a drôle expression, especially with the heavy lower lids glancing sideways and the curled mouth.


     


  • Reply 20 of 43

    Quote:

    Originally Posted by EricTheHalfBee View Post





    What if a patent holder makes a ridiculous demand and the "infringer" refuses to pay that demand? Would that count as "extreme"? Should Samsung be able to ask for the moon knowing they won't get it and then seek an injunction?


     


     


    Oh that's easy. As Samsung has already done to Apple, with regarding the HTC agreement, force the demanding party to allow the court to review, in closed session, all previous agreements. 


     


    That's the catch.. Now that the precident for allowing a court to see agreements (and the price set) has been set, the court could demand to see all and truly see if they are gouging. Now making those demands is dangerous, and likely not to hold up. No more of this BS.. kids caught with hands in the cookie jar! 


     


    Good on the courts I say.

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