The FTC has filed a brief with the U.S. Federal Circuit Court of Appeals stating that Motorola’s attempts to ban the sale of Apple devices that allegedly violate its patents “risks harming competition, innovation, and consumers.”
The brief, filed as part of an Illinois patent lawsuit involving Smartphones and tablets that was dismissed in June, recently came to light. The filing speaks to the ongoing appeals process.
The brief talks about “patent hold-up” — the way in which owners of standard-essential patents (SEPs) can use the threat of injunctions to distort competition by insisting on high royalties and other unfair licensing terms.
“Once a standard is adopted, and implementers begin to make investments tied to the standard, it becomes very difficult to change a technology in the standard without impairing interoperability,” the FTC said in a statement. “The SEP holder can then engage in hold-up by seeking compensation based not on the value of its invention, but on the costs and delays of switching away from the standardized technology.”
Although the FTC did not express opinion on if Apple violated Motorola’s patents, the agency said when the two sides cannot agree on licensing terms, “the proper approach is usually to limit the relief available to the patent holder — specifically, to allow only monetary damages, and not an injunction that prohibits the sale of products incorporating the patented technology.”
“This is generally the proper approach, because allowing a patent holder to seek an injunction on a SEP can facilitate patent-holdup, which can raise prices to consumers, while undermining the standard-setting process,” the statement said.
In its court filing, the FTC said injuctions such as the one Motorola requested against Apple also can “deter innovation by increasing costs and uncertainty for other industry participants, including those engaged in inventive activity. It can also distort investment and harm consumers by breaking the connection between the value of an invention and its reward — a connection that is the cornerstone of the patent system.”
Without passing judgment as to whether Apple actually infringed on Motorola’s patents, the FTC said that when talks break down over licensing terms, “the proper approach is usually to limit the relief available to the patent holder — specifically, to allow only monetary damages, and not an injunction that prohibits the sale of products incorporating the patented technology.”
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