DoJ, U.S. Patent Office say sales bans from SEP suits should be a rarity
In a joint policy statement issued late Tuesday, the Department of Justice and the U.S. Patent and Trademark Office said companies that own so-called standard-essential patents should rarely be allowed to garner sales bans due to infringement findings.
While coming down hard on tech companies leveraging their SEPs to gain an advantage in the U.S. market, the statement is also an appeal to the U.S. International Trade Commission to keep the public interest in mind when ordering injunctions, reports Reuters.
"The USITC, may conclude, after applying its public interest factors, that exclusion orders (sales injunctions) are inappropriate," the statement read.
Instead of injunctions, the Justice Department and USPTO said monetary damages should be implemented as punishment in cases where infringement is found. The bodies went on to say that only in a handful of specific cases should sales bans be levied.
The policy statement is germane to ongoing worldwide smartphone litigation, much of which involves the battle between Apple and multiple Android manufacturers including Samsung and Google's Motorola.
As for the ITC, the commission is currently reviewing a decision from an administrative law judge that cleared Apple of infringing on Samsung patents, two of which are deemed standard-essential.
Tuesday's policy statement is not binding in court, but federal judges may heed the opinions in upcoming cases.
While coming down hard on tech companies leveraging their SEPs to gain an advantage in the U.S. market, the statement is also an appeal to the U.S. International Trade Commission to keep the public interest in mind when ordering injunctions, reports Reuters.
"The USITC, may conclude, after applying its public interest factors, that exclusion orders (sales injunctions) are inappropriate," the statement read.
Instead of injunctions, the Justice Department and USPTO said monetary damages should be implemented as punishment in cases where infringement is found. The bodies went on to say that only in a handful of specific cases should sales bans be levied.
The policy statement is germane to ongoing worldwide smartphone litigation, much of which involves the battle between Apple and multiple Android manufacturers including Samsung and Google's Motorola.
As for the ITC, the commission is currently reviewing a decision from an administrative law judge that cleared Apple of infringing on Samsung patents, two of which are deemed standard-essential.
Tuesday's policy statement is not binding in court, but federal judges may heed the opinions in upcoming cases.
Comments
This is an absolutely awful decision by the Obama Administration and undercuts the whole idea of intellectual property. Why reward intellectual thieves? Intellectual property is critical to our economy in the 21st Century.
Paul Harding, FAIA
Harding Partners Architects
Chicago
Quote:
Originally Posted by pharding
This is an absolutely awful decision by the Obama Administration and undercuts the whole idea of intellectual property. Why reward intellectual thieves? Intellectual property is critical to our economy in the 21st Century.
Paul Harding, FAIA
Harding Partners Architects
Chicago
Amazing. An article that short, and you still didn't even bother to read it before posting. Either that, or you haven't wrapped your head around the concept of the "Standards Essential Patent", in which case, why post on something you don't understand? I suppose there's also the third possibility this was a lame attempt to troll, but I'll assume that's not the case ... for now.
So, what "intellectual thieves" are you referring to? How is this undercutting the "whole idea of intellectual property"? The piece is talking about [generally] disallowing sales bans requested by IP holders who abuse SEP patents (for example, by demanding unfair/unreasonable licensing fees for a contribution that's encumbered with FRAND obligations). It has nothing to do with non-SEP IP infringement or sales bans of [non-SEP] infringing products.
Quote:
Originally Posted by AppleInsider
While coming down hard on tech companies leveraging their SEPs to gain an advantage in the U.S. market, the statement is also an appeal to the U.S. International Trade Commission to keep the public interest in mind when ordering injunctions, reports Reuters.
"The USITC, may conclude, after applying its public interest factors, that exclusion orders (sales injunctions) are inappropriate," the statement read.
Good luck. The ITC's entire purpose and sole enforcement power is stopping importation of infringing products. Not even Presidential appeals work on them most of the time.
They might issue a policy statement saying they'll try not to use exclusions in most cases, but they sure aren't going to give them up entirely.
This looks like a power struggle between departments.
Instead of injunctions, the Justice Department and USPTO said monetary damages should be implemented as punishment in cases where infringement is found.
Only the courts can issue monetary damages. The ITC cannot. It only has exclusionary powers.
Tuesday's policy statement is not binding in court, but federal judges may heed the opinions in upcoming cases.
Or not. Some might even feel that the USPTO overstepped their bounds by getting involved.
I'd love to skip forward 20 years and see if this problem is solved yet.
Pay attention to the actual statement from the DoJ. It's not even as restrictive as the recent agreement between Google and FTC. The Justice Dept appears to be OK with SEP injunction requests as long as the licensee is unwilling to negotiate. Note the use of that specific word, which leaves the open interpretation of what encompasses negotiation. If the licensor makes an offer which is rejected but the potential licensee fails to make a counter-offer, is it a negotiation? IMHO it would not be. At least one Federal judge already ruled that negotiations on SEP licensing terms should not be required in the first place. And what if the licensee makes a ridiculously low counter-offer. Is it still a real negotiation? Hardly a clear and concise statement issued by the DoJ and USPTO.
At the end of the day the only thing clear is that injunctions for standards-essential IP is certainly legal and acceptable under certain circumstances. Otherwise the appropriateness for anyone other than Google is murky. The FTC/Google agreement doesn't apply to other SEP holders and the DoJ appears to be much more open to the use of injunctions.
And that's how it should be. No prelim injunctions during court cases. No injunctions after, so long as the infringer agrees to pay for future use. If they refuse after it has been confirmed there was infringement then it doesn't matter if its SEP, so long as a fair deal is on the table. If I ask $1 from everyone else, you can't refuse because you would simply only pay 5 cents. You can ask the court to decide if that $1 is reasonable but if they say yes, and you still won't pay then you earned a ban.
And so on.
Prelim injunctions never happen at the ITC anyway.
This statement is basically to discourage current suits like the Ericsonn VS Samsung cases from wasting the ITC's resources deciding FRAND SEPs. Why waste the government resources on what is basically a contract/pricing dispute.
The DOJ/USPTO are basically saying that they would support congressional changes to the ITC powers if this system keeps getting abused.
Quote:
Originally Posted by pharding
This is an absolutely awful decision by the Obama Administration and undercuts the whole idea of intellectual property....
Can you explain this?? They are still going to hold them responsible. We are discussing SEP properties licensed under FRAND here.
Quote:
Originally Posted by pharding
...Why reward intellectual thieves?...
Like Samsung? They are guilty for both abusing FRAND patents and lifting intellectual property rights of others.
Quote:
Originally Posted by pharding
Paul Harding, FAIA
Harding Partners Architects
Chicago
Professional credentials aren't needed in this forum, but being an Architect, bet it would make you mad if I copied to look of one of your projects just like Samsung did to Apple. But, the article is about intellectual property that is licensed under FRAND and is needed to even make a product in the market. Companies have been holding these hostage for higher royalties and even moving the license fee off the component level to the whole device. This all clearly shows they need better rules for FRAND, established license fees (decided at time it is made a SEP), and the trigger point established for the fee.
Quote:
Originally Posted by pharding
This is an absolutely awful decision by the Obama Administration and undercuts the whole idea of intellectual property. Why reward intellectual thieves? Intellectual property is critical to our economy in the 21st Century.
Paul Harding, FAIA
Harding Partners Architects
Chicago
If you are a big fan of IP, then rest assured Obama is your guy. He is in the big boys back pocket and trying hard to further expand IP rights way past what was ever intended under the Constitution. Copyright protections have become absurd in this Country and around the world.
With that said, the Justice Department is taking a common sense view WITHOUT fully embracing it. Namely, with SEPs the holders of such patents have already agreed to allow anybody to use such patents under certain terms. So, the issue shouldn't be an injunction, but damages. Take Apple. Apple is willing to pay for certain SEP patents, it simply disagrees with various patent holders what fair, reasonable, and non-discriminary terms are. With SEPs, the holders of such patents can't charge Apple more than it is charging Apple's competitors and that fee has to be deemed reasonable. SEP holders have been trying to use the treat of injunctions to get around their obligation to offer the patents under fair, reasonable, and non-discriminate terms. Again take Apple. If a company won an injunction on its iPhone based on an SEP, Apple would be forced to agree to terms other than what the holder agreed to. Meanwhile the IP holder is not damaged by not being able to get an injunction because since it already agreed to make its patents available, money will satisfy any damages.
Quote:
Originally Posted by Gatorguy
Pay attention to the actual statement from the DoJ. It's not even as restrictive as the recent agreement between Google and FTC. The Justice Dept appears to be OK with SEP injunction requests as long as the licensee is unwilling to negotiate. Note the use of that specific word, which leaves the open interpretation of what encompasses negotiation. If the licensor makes an offer which is rejected but the potential licensee fails to make a counter-offer, is it a negotiation? IMHO it would not be. At least one Federal judge already ruled that negotiations on SEP licensing terms should not be required in the first place. And what if the licensee makes a ridiculously low counter-offer. Is it still a real negotiation? Hardly a clear and concise statement issued by the DoJ and USPTO.
At the end of the day the only thing clear is that injunctions for standards-essential IP is certainly legal and acceptable under certain circumstances. Otherwise the appropriateness for anyone other than Google is murky. The FTC/Google agreement doesn't apply to other SEP holders and the DoJ appears to be much more open to the use of injunctions.
I noticed this as well. The DOJ's position on SEPs don't match up with the strong view in places like Europe. I also don't think a negotiation should be required. The reason being that the terms are supposed to be non-discriminatory. The SEP holder should show what it charges others. If an SEP holder is charging company A far less then it wants to charge company B, why would company B pay?
Quote:
Originally Posted by TBell
I noticed this as well. The DOJ's position on SEPs don't match up with the strong view in places like Europe. I also don't think a negotiation should be required. The reason being that the terms are supposed to be non-discriminatory. The SEP holder should show what it charges others. If an SEP holder is charging company A far less then it wants to charge company B, why would company B pay?
By the same token if Company A is paying royalties based on a BOM on the completed device and not a chipset, why should Company B not be required to do the same? Or if Company A was required to cross-license IP to reduce their out-of-pocket payments why should Company B be treated differently to receive a lower payment?
There's a lot of (F)RAND royalty details that need to be clarified before the lawsuits over them are dismissed. Those clarifications need to come from the standards licensing agencies that were tasked with them in the first place unless the EU, US and others are going to take that away from them and do the structure themselves. Even then what happens to the prior commitments made to standards-setting groups? Throw them out and renegotiate the commitments? Allow companies who committed IP with one understanding on how they'd be monetized now opt-out since the agreement changed? Toss existing (F)RAND contracts altogether and negotiate new ones? Eliminate negotiations and have the EU or whoever make one royalty basis and percentage fee that will apply to everyone in every instance?
Changing the payment rules after the IP holder already committed to a (F)RAND structure is hardly fair to either previous licensees or the IP holder themselves, do you think?
Quote:
Originally Posted by APPLGUY
A simple solution is third party management of SEP's. When a patent becomes an SEP the third party is given control to license, collect and distribute royalties. I don't see the need for any "negotiation" for an SEP.
What would you do with a company like Qualcomm who's business plan is and always has been heavily dependent on IP licensing, including those deemed standard-essential? I don't know if Qualcomm could survive if you took away their existing model that collects royalties based on completed devices and not chipsets. What about Nokia who's becoming very dependent on monetizing (F)RAND-pledged IP? What would you do with the existing (F)RAND commitments if this new "third-party manager" changes the royalty structure to the detriment of those who committed IP to that standard? Would you allow them to change their mind and pull their IP from the pertinent standard?
I'm not saying take away there current license model just the management of the royalty fees. If the licensing model Qcom uses is based on the device the licensing company would report sales of that device and pay appropriate royalties to the third party. The third party would distribute the collected funds to Qcom. In essence the licensing company would pay once to the third party who could aggregated funds collected from other licensees and distribute them to the IP owner.
The owner of the SEP would retain full ownership and, I suppose, could pull it. I'm not a lawyer so don't know if this occurs today or if they are bound by other agreements when IP is made an SEP.
Quote:
Originally Posted by Gatorguy
By the same token if Company A is paying royalties based on a BOM on the completed device and not a chipset, why should Company B not be required to do the same? Or if Company A was required to cross-license IP to reduce their out-of-pocket payments why should Company B be treated differently to receive a lower payment?
There's a lot of (F)RAND royalty details that need to be clarified before the lawsuits over them are dismissed. Those clarifications need to come from the standards licensing agencies that were tasked with them in the first place unless the EU, US and others are going to take that away from them and do the structure themselves. Even then what happens to the prior commitments made to standards-setting groups? Throw them out and renegotiate the commitments? Allow companies who committed IP with one understanding on how they'd be monetized now opt-out since the agreement changed? Toss existing (F)RAND contracts altogether and negotiate new ones? Eliminate negotiations and have the EU or whoever make one royalty basis and percentage fee that will apply to everyone in every instance?
Changing the payment rules after the IP holder already committed to a (F)RAND structure is hardly fair to either previous licensees or the IP holder themselves, do you think?
Good points, but the concept of fair, reasonable, and non-discriminatory is based on treating all parties seeking to use SEPs equally. Yet, companies like Motorola and Samsung in their war with companies like Apple and Microsoft have been unwilling to provide examples of similar agreements with other parties. Problems would be eliminated if companies published their rates for SEPs.
Further, Motorola clearly has sought higher payments from Apple and Microsoft then other parties. Moreover, Apple's agreements with Qualcomm have shown that Apple's buying of the chips from Qualcomm covered the patent payments to the various SEP holders. In my view, that is how it should work. If Apple buys a component from a third party, the third party should have covered the patent licensing.
Quote:
Originally Posted by TBell
Good points, but the concept of fair, reasonable, and non-discriminatory is based on treating all parties seeking to use SEPs equally. Yet, companies like Motorola and Samsung in their war with companies like Apple and Microsoft have been unwilling to provide examples of similar agreements with other parties. Problems would be eliminated if companies published their rates for SEPs.
Further, Motorola clearly has sought higher payments from Apple and Microsoft then other parties. Moreover, Apple's agreements with Qualcomm have shown that Apple's buying of the chips from Qualcomm covered the patent payments to the various SEP holders. In my view, that is how it should work. If Apple buys a component from a third party, the third party should have covered the patent licensing.
According to court filings the judge in the Microsoft/Moto case said there were several contracts submitted to his court as evidence of Motorola collecting a 2.25% royalty rate for their SEP packages from at least some licensees. If they can prove 2.25% is their standard rate then are you saying Apple and Microsoft should be expected to pay the same? "Big if" I know, but just asking.
Quote:
Originally Posted by TBell
Good points, but the concept of fair, reasonable, and non-discriminatory is based on treating all parties seeking to use SEPs equally. Yet, companies like Motorola and Samsung in their war with companies like Apple and Microsoft have been unwilling to provide examples of similar agreements with other parties. Problems would be eliminated if companies published their rates for SEPs.
Yep, that's why many have published their (starting) rates for LTE.
FRAND doesn't mean everyone pays the same, of course. There can be multiple rate structures, depending on what you're willing to trade, how many licenses you're buying, what your credit is like, and so forth. It just means that everyone should have access to all the same rate structures.
For example, Nokia negotiated cross-licensing with everyone. So instead of paying the max rate of more than 30% for a GSM phone, they only pay about 3% of its price.
Quote:
Further, Motorola clearly has sought higher payments from Apple and Microsoft then other parties.
Source? Or did you simply mean you heard that they asked for higher rates if there was no cross-licensing?
Interestingly, back in the early days of cell phones when Motorola owned half of the SEPs, Motorola didn't ask for cash. They originally only had two FRAND licensing deals: either you (1) bought chips or other equipment from them, or (2) you cross-licensed everything with them. There was no other way to license their IP.
Quote:
Moreover, Apple's agreements with Qualcomm have shown that Apple's buying of the chips from Qualcomm covered the patent payments to the various SEP holders.
I don't think Apple claims they don't have to pay Motorola. They're simply claiming that Qualcomm's agreement with Motorola means Motorola cannot sue them or use their IP to block iPhone sales.
On their side, Motorola claims their covenant not to sue Qualcomm's customers, has a clause where it's nullified for any customer that sues them, as Apple did.
The question still to be decided is if such a clause is legal for a SEP.
Quote:
In my view, that is how it should work. If Apple buys a component from a third party, the third party should have covered the patent licensing.
A chipset also needs broadband software to run it, which is where some of the patents come in.
You also don't want to pay for capabilities you're not using. E.g. you use a CDMA/GSM chip, but only want to license the GSM side.
Even Qualcomm charges Apple that way. Their chip is one price. Licensing Qualcomm IP to use that chip, is another rate. As with most such patents, the rate is based on the wholesale device price. However, some analysts claim that Apple negotiated the rate to be based on what they pay Foxconn per phone (~ $245) instead of what they charge carriers (~$600).