Federal Trade Commissioner Warns of Using ITC For Patent Disputes
FTC Commissioner Julie Brill warned that the increase in patent disputes at the International Trade Commission (ITC) has the potential to threaten innovation in the mobile space. Brill's remarks came Oct. 3 during a speech at the University of Colorado's center for law, technology, and entrepreneurship. Brill said with effective application of intellectual property law and robust enforcement of competition law, the FTC can "ensure that high tech innovation does not become collateral damage" in today's patent wars. Brill said the commission has discovered more than a few "roadblocks at the intersection of intellectual property law and antitrust" law. First, the FTC believes that trivial and overbroad patents undermine competition, she said. Second, the FTC concluded that poor patent notice and inequitable patent remedies have a "huge impact on incentives to innovate, competition and consumer welfare."
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Brill said poor notice of the scope of patents undermines competition and distorts competition while overcompensation of patent remedies can lead to higher prices and deter innovation. The FTC has urged courts to cap reasonable royalty damages at the amount that a willing licensee would pay, determined by the value of the invention over alternative technologies, she said. In the debate over what appropriate remedies are applicable in disputes involving standards essential patents, the commission is particularly interested in cases when the patent holder has agreed to license a technology on fair, reasonable and nondiscriminatory (FRAND) terms, said Brill.
The commission is particularly concerned that granting an injunction or an exclusion order for a standards essential patent is consistent with the patent holder's FRAND commitment. Brill said the ITC needs to ensure that remedies related to FRAND encumbered standards essential patents do not conflict with the public interest. Use of the ITC as a venue for patent challenges has tripled in the last ten years, said Brill, because the ITC is not required to follow the precedent set by the Supreme Court's decision of eBay vs. MercExchange. The 2006 case barred automatic injunctions for patent infringement. Brill said companies' use of the ITC as a venue for patent challenges "threatens to undermine the pro-competitive aspects of eBay vs. MercExchange, and has the potential to turn the ITC into a forum for patent holdup."