Patent News | "ITC patent disputes highlight growing antitrust concerns"

By : Raymond Barrett   
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Category : Patent News 

Antitrust considerations must play a larger role in the functioning of Standard Setting Organizations (SSOs), according to John Conyers (D-MI), Ranking Democrat on the House Judiciary Committee. His comments were made during an 18 July hearing before the committee on the role of the US International Trade Commission (ITC) in patent disputes.

A rise in the number of patent assertion entities (PAEs, or “patent trolls”) seeking exclusion orders for alleged patent violations through the ITC has led companies who have faced such injunctions -- including Cisco Systems (NASDAQ: CSCO) and Ford (NYSE:F) -- to describe the actions as bad for consumers.

The committee also considered the problem of companies such as Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT), and Qualcomm (NASDAQ: QCOM) assembling large portfolios of standard essential patents (SAEs) and employing them in methods that should be addressed by antitrust law.

Conyers said US consumers need be protected from “monopolistic and anticompetitive practices” and that there is “insufficient antitrust enforcement” in this field.

Conyers added that companies that are collecting patents as a way to attack competitors are “concentrating market power in an unhealthy way”.

Acting Assistant Attorney General Joseph Wayland told a Senate hearing last week the Department of Justice’s (DoJ) Antitrust Division is closely monitoring a number of pending actions before the ITC involving standard-essential patents.

In the 18 July hearing Conyers proposed that SSOs, which oversee the selection of the SAEs that powerful companies and patent trolls have both employed as a powerful legal tool, ought to pay more attention to antitrust concerns. One proposal suggests that in order for patent holders to receive an SAE, the SSO should compel them to first waive the right to seek an injunction or exclusion order at the ITC.

The idea that antitrust issues must play an increased role in the functioning of SSOs was also endorsed by Bert Foer, president of the American Antitrust Institute, during the same 18 July House Judiciary Committee hearing.

Following the hearing, Foer told PaRR that the DoJ and the Federal Trade Commission (FTC) should publicly state which direction they want SSOs to go in terms of antitrust issues.

Foer said if SSOs cannot be persuaded to change their behavior voluntarily, the agencies should give more specific guidance.

“I could imagine joint guidelines between the FTC and the Justice Department, involving the various agencies involved in international trade and the SSOs,” he said.

Along with the issue of patent trolls, the high-profile patent disputes involving Google, Microsoft, Qualcomm, and others have also thrown a spotlight on how such disputes might affect competition in the telecommunications sector.

Foer characterized the current environment, in which companies are forced to acquire large portfolios of patents in order to compete, as one of “mutually assured destruction” that blocks rather than helps innovation.

Foer said coalitions of leading competitors should not be allowed to purchase portfolios of patents with the intent to exclude competitors.

However, Bernard Cassidy, general counsel to Tessera Technologies (NASDAQ: TSRA), a tech company that has won patent infringement cases at the ITC, said a blanket rule prohibiting exclusion orders to holders of SAEs would tip the balance in favor of infringers.

He said such proposals would essentially create a compulsory licensing regime and might create disincentives for innovators to participate in SSOs.

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