On September 10, 2014, FTC Chairwoman Edith Ramirez delivered a speech at the Georgetown University Law Center on the FTC's antitrust enforcement agenda regarding standard-essential patents (SEPs). Chairwoman Ramirez's speech focused on:

Chairwoman Ramirez emphasized that antitrust and IP are complementary bodies of law that promote innovation and consumer welfare. Specifically:

While there are procompetitive strategies for monetizing IP, the FTC will act when a licensing agreement harms competition by, for example:

Chairwoman Ramirez noted that, because licensing has the broad potential to enhance competition, most licensing arrangements are evaluated under a rule of reason framework. That approach focuses on whether the licensing arrangement is likely to have anticompetitive effects.

Chairwoman Ramirez then discussed how the enforcement principles that guide the analysis of IP rights can be applied to SEPs. Standards have many procompetitive benefits, including:

However, consensus also limits competition because firms that own essential patents may gain the leverage to demand costly licensing terms, which can discourage investments to implement the standard. To reduce this risk of patent holdup, many standard setting organizations (SSOs) require members to:

Alternatively, a patent-holder may voluntarily agree to license its technology on FRAND terms as a condition of becoming part of the standard. In that case, the FTC is particularly concerned with a breach that reintroduces the risk of patent holdup, especially if it threatens to deprive consumers of the procompetitive benefits of the standard.

The FTC addressed this issue in its 2013 Section 5 lawsuit against Google and Motorola Mobility. The FTC alleged that, prior to its acquisition by Google, Motorola breached commitments to license patents essential to implementing certain cellular, video and WiFi standards on FRAND terms by seeking injunctions and exclusion orders against implementers that were willing to abide by a FRAND license. Google allegedly continued this practice post-merger. Google agreed to a consent order that requires Google to resolve disputes over FRAND licensing before a neutral third party before seeking an injunction. The consent also prohibits Google from seeking injunctions or exclusion orders against willing licensees of its FRAND-encumbered declared-essential patents. For more information, see Practice Note, Antitrust Risks in Standard-Setting Organizations: Patent Holdups: Federal Enforcement.

Chairwoman Ramirez concluded by discussing royalty rates, noting that additional clarity on a framework for determining FRAND royalties would be beneficial. Generally, US courts and juries calculate reasonable royalty rates by relying on the Georgia-Pacific factors, which look at:

In a 2011 report, the FTC recommended use of the hypothetical negotiation concept and creation of additional guidelines for that negotiation. While that report focused broadly on patent damages, the FTC suggested that courts apply it to calculating royalties for FRAND-encumbered patents. More recently, courts have employed various methodologies for determining these royalties, including using a modified version of the Georgia-Pacific factors that accounts for:

For more information on FRAND royalties, see Practice Note, Antitrust Risks in Standard-Setting Organizations: Setting a F/RAND Rate.