Concern is building up over the use of litigation over standards-essential patents to block sales of products, with the International Telecommunication Union (ITU) planning to hold a conference that will address what the U.N. agency described as a “worldwide surge in patent litigation and the growing lack of adherence to standards bodies’ existing patent policies.”
In June, the U.S. Federal Trade Commission, companies, and U.S. Congressmen also expressed concern about the potential misuse of standards-essential patents to block the sales of products, or demand unreasonable royalty rates from licensees.
ITU said Friday it will host a roundtable discussion among standards organizations, key industry players and government officials at its headquarters in Geneva on Oct. 10, that will focus on the relevance of current arrangements based around reasonable and non-discriminatory (RAND) patent policies.
Many disputes over standards-essential patents are in the area of mobile and other telecommunications technologies.
RAND-based policies have thus far been an effective way of managing tensions between patent holders, standards implementers and end users, the ITU said. However, the definition of what constitutes ‘reasonable’, and whether or not holders of standards-essential patents are entitled to injunctive relief are now emerging as major points of contention, it added.
“We are seeing an unwelcome trend in today’s marketplace to use standards-essential patents to block markets,” ITU secretary-general Hamadoun Touré ³aid in a statement. “There needs to be an urgent review of this situation: patents are meant to encourage innovation, not stifle it.” ITU said that as “the world’s pre-eminent global standards-making body,” it strives to accommodate both end user requirements and the intellectual property requirements of the originator of the technology.
Microsoft, and some trade associations and industry standards bodies like the China Communications Standards Association and Telecommunications Technology Association in South Korea have supported the conference.
The FTC told the U.S. International Trade Commission in June in a statement in the public interest that ITC’s issuance of exclusions or cease and desist orders in matters involving implementation of standards-essential patents, that were committed to be licensed on RAND terms, has the potential to cause harm to U.S. competition, consumers and innovation.
FTC made the submission in the context of ITC investigations into Motorola Mobility’s charges of patent infringement against Apple and Microsoft. The ITC recently decided to review an earlier recommendation by the administrative law judge David Shaw that sales of Microsoft’s Xbox should be banned in the U.S.
The FTC said it was concerned that a patent owner can make a RAND or FRAND (fair, reasonable, and non-discriminatory) commitment as part of the standard setting process, and then seek an exclusion order for infringement of the RAND-encumbered standards-essential patent as a way of securing royalties that may be inconsistent with the RAND commitment.
Verizon Wireless recommended that the ITC should direct a patent holder to seek remedies in federal court, where it should be limited to monetary damages as measured by the value of the patented invention before it was incorporated into the industry standard.
In November, Apple sent a letter to ETSI (European Telecommunications Standards Institute), asking for more consistency in the licensing of essential patents. Apple has suggested including a promise not try to block the sale of products when negotiations have failed.