The Federal Trade Commission took on the growing problem of injunctions in a letter addressed to the US International Trade Commission, according to a report by CNET. The letter was meant to dissuade the federal agency from approving import bans in patent and trademark infringement cases that involve industry standards like 3G. The FTC warns such injunctions against products like the iPhone, iPad and Xbox could harm consumers and stifle innovation.
The FTC writes, “Hold-up and the threat of hold-up 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.”
The ITC has been the focus of several high-profile patent infringement cases, including the recent battle between Apple and HTC, which led to the ban of select HTC Android phones. Last month, the HTC One X and the EVO 4G LTE were held temporarily at the border by US Customs, which inspected the phones for patent infringement.
A bigger issue brought up in this letter is the use of standards-related patents in litigation. Companies that own patents on standards, like those that govern 3G and 4G wireless communications, are supposed to be license these patents to other companies on fair and reasonable terms (FRAND). Now that competition is heating up, patent owners are reluctant to license their intellectual property and are using them to sue their rivals instead.
You can read an excellent analysis of this issue by Florian Mueller of FOSS Patents. He describes in detail how Samsung and Motorola are abusing the principles of FRAND licensing in their litigation with Apple.