Monday, February 4, 2013

InterDigital’s Standard Essential Patents: Dilemmas to US Patent System

Recently, ITC (U.S. International Trade Commission) started investigation for InterDigital’s complaint against major foreign smartphone manufactures including Samsung that the accusers infringed its 3G and 4G standard essential patents. This is not the first time alleging infringement of standard essential patents and asking ban for importations of infringed products. However, considering the current debate that increasing activities of patent trolls and intensive smartphone patent infringement litigations caused the current patent system in crisis, InterDigital’s litigation will be a hard-to-decide case for ITC.

 Generally, it is not presumed that holding a patent means its owners have market power in the context of antitrust violation analysis (35 U.S.C. Section 271(d); Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006)). However, a standard locks in a specific industry because the products should be compatible with the standard specifications. Thus, holding a standard essential patent can be considered as having a market power because all products compatible with the standard specifications should infringe the standard essential patents. For example, the European Commission recently announced its preliminary view that Samsung's seeking of injunctive relief basis on its 3G mobile communication standard essential patents can be considered as abuse of exclusive IPRs prohibited by EU anti-competition laws.

To avoid the antitrust issue with the standard essential patents, therefore, a patentee should license the patents on ‘fair, reasonable and non-discriminatory (FRAND)’ terms. Thus, when a patentee tries to obtain an injunction from courts or ITC for enjoining potential infringers of the standard essential patents, it can be considered as contractual violation with respect to FRAND terms. In parallel with the current movement to limit the IPRs of standard essential patents, several US government agencies (DOJ, USPTO, FTC) insisted that, in some instances, standard essential patents cannot be used for block sales or imports of infringed products.

Furthermore, after the U.S. Supreme Court decision in eBay v. MercExchange (547 U.S. 388 (2006)), federal courts are very cautious in granting injunctive relief, especially for NPEs. Therefore, even if ITC does not need to reflect courts’ decisions and follow other administration agencies’ policy suggestions, InterDigital’s case will be very burdensome to ITC’s rulings considering the fact that injunction is its only relief.

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[1] 35 U.S.C. Section 271(d); Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006).

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