Members of Congress including House Judiciary Committee Chairman Lamar Smith, a Texas Republican, wrote the ITC in June saying the benefits of adopting standard technologies “may be undermined” if patent disputes threaten the ability to sell products in the U.S. The Senate Judiciary Committee held a July 11 hearing on the issue.
Patent owners whose technologies are adopted as industry standards, such as specifications that let wireless phones communicate with one another, agree to charge fair and reasonable licensing fees. In those kinds of cases, the FTC urged the trade commission to take other steps, such as pushing for mediation of royalty amounts, before considering a ban on imports.
Blocking imports based on infringement of a standard- essential patent “has the potential to cause substantial harm to U.S. competition, consumers and innovation,” the FTC wrote in a June 6 filing with the agency. It said companies could be coerced into unreasonable licensing fees in a practice known as a “patent holdup.”
Motorola Mobility says it fulfilled its obligation to make a reasonable royalty offer and Apple refuses to negotiate.
“Apple and others -- without analyzing the facts of this case -- point to the problem of ‘hold up,’” Motorola Mobility told the commission in a July 16 filing. “But they ignore the counter problem of ‘hold out’ -- an unwilling licensee being rewarded for its intransigence in a manner that will deprive patent owners of value and create disincentives for innovative companies from participating in standards setting.”
The case represents one battle in a broader global legal war over patents, including more than a dozen complaints at the ITC over the past two years, as companies vie for increased shares of a smartphone market that grew 62 percent to $219 billion last year.
Apple, in one of the high-profile cases, is awaiting a California jury’s verdict in a separate dispute claiming that Samsung’s Android phones copied patented iPhone features.