Today’s FTC statement filed in the International Trade Commission adds to the growing chorus of regulators and other government officials around the world who agree that injunctions and exclusion orders based on standard essential patents jeopardize competition and the availability and price of consumer technology.
From China’s Ministry of Commerce, to the EU’s Directorate-General for Competition, to the U.S. Department of Justice, and now the FTC, the world’s regulators are speaking clearly and consistently: companies should not misuse standard essential patents.
Industry standards don’t sound like something you should spend a lot of time worrying about, and in normal times you’d be able to take the benefits of standards for granted. But industry standards are the behind-the-scenes underpinning to wireless connectivity and the Internet, indeed, a foundation on which virtually all modern electronic devices and networks are built. Without industry standards, your computer, smartphone, tablet, home wireless network and the Internet would be far more expensive and not work together the way you’ve become accustomed – if at all.
Standards work because companies and other inventors contribute their technologies and ideas for others’ use. In doing so, they promise to make any patents they hold on the resulting standard available on reasonable and non-discriminatory licensing terms. They promise not to renege on that commitment and abuse their advantage when others start relying on the standard.
The system depends on these promises, and when companies break them, the system breaks down. Costs go up and popular technology products become less available. This harms both the companies that build products implementing those standards and consumers who depend on those products.
The reason you need to worry about industry standards now is that Motorola decided to break the system by using its standard essential patents to block other companies from selling their products. Google, Motorola’s new owner, had the opportunity to reverse Motorola’s abusive policies, but has chosen instead to embrace them. The FTC clearly understands what’s at stake, and it has taken its stand on the side of consumers, innovation, and competition.