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FTC Cautions Against Bans When Essential Patents Involved

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Dec 5, 2012, 9:09 PM   by Eric M. Zeman

The U.S. Federal Trade Commission today filed an amicus brief that outlines its position on patent cases and product bans. The FTC believes that products should not be blocked from sale in the U.S. when standard essential patents are concerned. Standard essential patents are supposed to be licensed on fair, reasonable, and non-discriminatory (or FRAND) terms. The FTC, however, thinks that standard essential patent holders can "use the threat of injunctions to distort competition by insisting on high royalties and other favorable licensing terms that they could not have credibly demanded before the standard was set." This can lead to what the FTC calls "patent hold-up," which is what happens when a company is faced with either delaying a product to get around a patent or submitting to the higher licensing terms of patent holder. The end result of all this legal maneuvering could lead to higher prices for consumers, which the FTC wants to avoid. Moving forward, the FTC believes monetary damages are the only proper remedy for standard essential patent cases, and product injunctions — or bans — should not be used. Many smartphone patent holders have filed petitions with the FTC seeking bans of competitors' products for just these reasons. The amicus brief was filed pertaining to a patent lawsuit between Motorola and Apple that was summarily dismissed by a judge earlier this year. Apple accused Motorola of abusing its FRAND obligations with respect to its standard essential patents.

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