The Federal Trade Commission (FTC) recently made a filing with the International Trade Commission (ITC) in which it advised the ITC against blocking certain Apple and Microsoft imports that the ITC had found to infringe standard-essential patents (SEPs) held by Motorola Mobility, Inc. While the FTC did not take a position on the facts at issue before the ITC, the agency broadly rejected the use of injunctive relief to protect certain SEPs as anticompetitive.

Interoperability can benefit consumers by, among other things, increasing innovation, competition and consumer choice. In its filing, the FTC explained that in industries where interoperability is important, a patent holder often commits to license its patent on reasonable and non-discriminatory (RAND) terms in return for becoming part of an industry standard.

The FTC's concern about injunctive relief related to RAND-committed SEPs is that once a patent becomes part of the industry standard, the holder may seek high royalties inconsistent with both the value of its patents and its RAND commitment. This is also known as patent hold-up and has long been targeted by the FTC.

While a holder's RAND commitments mitigate the threat of patent hold-up, problems may arise if a holder and an industry participant cannot agree on a reasonable royalty rate. If faced with an injunction or even the threat of injunction, an industry participant which is already locked into a standard by investing in the holder's SEP may have to choose between:

The FTC stated that either choice could result in higher costs to consumers and the breakdown of interoperability. In addition, the threat of patent hold-up may reduce firms' reliance on the standard setting process.

The FTC also provided that limiting the injunctive remedies of an SEP holder which had committed to license on RAND terms did not contradict the goals of the patent system because the holder:

The FTC's filing was made in response to the ITC's Notices of Request for Statements on the Public Interest in the Motorola Mobility cases. While the FTC's statement is not binding on the ITC, it clearly gives the agency's stance against injunctive relief for certain SEP infringement, particularly where the SEP holder both:

The filing also raises questions about whether the agency will actively pursue and investigate SEP holders who attempt to use injunctive relief as a means to get excessive licensing fees.