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Dept. of Justice Blesses IEEE Rules On Injunctions and Reasonability
Andy Updegrove writes During the mobile platform patent wars of recent years Apple, Microsoft, Samsung, Motorola and the rest of the major vendors sought injunctions against each other to prevent their competitor from selling their products at all. The suits were often based on claims that a vendor had to pay a reasonable royalty on a 'standards essential patent.' The resulting litigation clogged up the courts, and the regulators were not amused. Now, after almost two years of vigorous debate, the standards development organization behind WiFi and thousands of other ICT standards (IEEE-SA) has received the blessing of the U.S. Dept. of Justice to forbid members that have pledged to license such patents from seeking an injunction until all other remedies have been exhausted. Whether other standards organizations will follow suit remains to be seen.
The first step should be to require that all negotiated prices be made available publicly. As it stands the contracts are confidential and no one really knows who is paying what to license 'standards essential patent.'
The price list should be set by the vendor and once set they shouldn't be able to change it depending on who wants to pay for it.
I would rather go with, they can change the price at any time they want but must make it available to all: e.g. within any private negotiation, once they reach a price, before they are allowed to enter into an agreement, they must conspicuously publish a neutral non-discriminatory offer at the price in a public price, the offer must be optionally redeemable by any entity without signing any contract (Simply paying royalties is sufficient to accept), and the offer cannot be withdrawn and must be valid at least until a new offer is published, or 36 months, whichever is later.
Once this is published it is an open offer to any member of the public (not just the party to negotiate), can avail themselves.
No additional restrictive terms allowed, except a minimum number of units, but a price for a single unit must be offered and cannot exceed 200% of the best offered price for units sold or produced with any required minimum number of units.
Basically, what the DoJ has done is said that the IEEE can as part of its membership rules and participating in various standards committees, ban any member who agreed to have their patents licensed FRAND from pursuing an injunction without going through other avenues of remedy first.
Basically the rules are if your patent is required for a standard, then as part of the windfall you get for this, the patent becomes FRAND licensed. And as a holder, you cannot ask for an injunction on an FRAND license without exhausting other avenues of redress first. Do this and the IEEE can kick you off the technical standards committee and the next standard will not incorporate your patents.
Remember in technical standards committees the goal is to get your patents in as much as possible, even doing backroom deals (I'll scratch your back if you scratch mine) as getting your patent in means everyone has to license from you. it's just in this case, FRAND patents are no longer like regular patents - because they're standards essential, you must try other forms of redress - injunctions are only allowed if the whole process falis.
This was brought on because of Motorola and Samsung who were trying to assert FRAND patents against Microsoft and Apple respectively and to which it was decreed that it's a big violation of the FRAND spirit.
In case anybody was wondering why the DoJ was involved, it was most likely to ensure that the IEEE's rules passed anti-trust muster. A bunch of erstwhile competitors gathering together and deciding jointly on restraints on their conduct (and the conduct of future competitors) is subject to heightened scrutiny to make sure that the rules are not written to discourage new market entrants.
The IEEE-SA rules are legally binding, so with standards subject to the new rule, such an injunction would be relatively easy to fight off.
The DoJ was involved to make sure the IEEE-SA was not engaging in conduct that would fall afoul of anti-trust law. They don't personally have any dog in the patent fight; they are just making sure the IEEE was not trying to discourage competition by new market entrants by working out rules designed by current competitors.