Lost in the all of the publicity surrounding the FTC’s consent decree that ended its investigation of Google and Motorola Mobility yesterday is the fact that while the FTC’s decision not to proceed with action against Google for its search practices was unanimous, its decision to issue a complaint and order relating to Google’s enforcement of its SEPs was not – Commissioner Maureen K. Olhausen submitted a dissenting statement. (Commissioner J. Thomas Rosch issued a separate statement, but voted in favor of issuing the complaint). The mere fact that the decision was not unanimous isn’t that remarkable in and of itself, as the five-member Commission often reaches split decisions. However, Commissioner Olhausen’s dissent raises some issues about the FTC’s action that warrant mentioning here.
Commissioner Olhausen begins her dissent by noting that she believes the Noerr-Pennington Doctrine – the doctrine that holds, among other things, that private parties are immune from antitrust liability for seeking to enforce legal remedies — prohibits imposing Section 5 liability on Google simply because Google sought to enforce its exclusionary rights under the patent laws. This is not surprising, because she took a nearly identical position in her statement in In re Robert Bosch GmbH (No. 121-0081), another recent FTC investigation that touched on standard-setting and FRAND licensing issues. But most of the dissent lays out Commissioner Olhausen’s “chief concerns” about why she believes the FTC-Google consent agreement will cause “greater uncertainty for patent holders” about their FRAND obligations.
“Ambiguous Guidance to Market Participants”
Commissioner Olhausen’s first concern is that the FTC’s order does not offer sufficient guidance to market participants about their FRAND obligations. While the FTC’s order prescribes specific steps for Google to take going forward, she claims that the lack of detail as to what may trigger an FTC action in the future “will leave patent owners to guess” about whether seeking injunctive relief for a FRAND-encumbered SEP is appropriate.
Commissioner Olhausen also asserts that the majority’s injunction position– that injunctive relief is inconsistent with a FRAND obligation–contradicts the understanding of many in industry, the SSO policies, and prior court decisions. She cites a ruling by Judge Crabb in the Apple-Motorola case in the Western District of Wisconsin that found that no SSO had banned injunctive relief, as well as comments on the meaning of FRAND made by parties such as Research in Motion. She also takes issue with the majority’s characterization of Apple as a “willing licensee,” finding that Apple’s behavior in Judge Crabb’s court indicated otherwise where Apple refused to be bound by the court’s FRAND decision.
Failure to meet the FTC’s “unfairness standard”
Commissioner Olhausen states that the traditional FTC standard for alleging an “unfair act or practice” under Section 5 is that the challenged conduct “causes or is likely to cause substantial injury to consumers” and is not outweighed by countervailing benefits of the conduct to consumers or competition. She questioned whether the FTC should address the SEP dispute between two experienced businesses, rather than consumers. The majority claimed that by seeking injunctive relief, Google might impose increased costs on consumers and deprive them of innovative products from companies such as Microsoft and Apple. Commissioner Olhausen counters that these harms are “merely speculative” and that the FTC is essentially making itself into a “general overseer of all business disputes” based on the possibility that these disputes might affect consumer prices.
Inadequate to meet standard of prior N-Data consent decree
Finally, Commissioner Olhausen explains her belief that the FTC’s action fails to meet the standard set forth in its 2008 N-Data decision. In that investigation, the FTC found that N-Data’s making certain license demands and filing infringement lawsuits violated a promise made by a prior patent owner (National Semiconductor) to license the patented ethernet technology to all comers for a $1,000 one-time fee. In her dissent here, the Commissioner reiterates that, unlike the clear promise to license for a set fee in N-Data, neither Google nor Motorola made any explicit promise to any of the standard-setting organizations to waive injunctive relief for SEPs. Commissioner Olhausen points out that one SSO, ETSI, had even previously rejected including an outright ban on injunctions as part of a party’s FRAND promise, and notes that at least one federal court has issued an injunction for a RAND-encumbered patent (in CSIRO v. Buffalo Techs.).
While it’s almost certain that some parties involved in current and future SEP disputes will cite the FTC’s consent agreement as persuasive authority, that agreement is binding on only Google going forward. It will be interesting to see how SEP patent holder and potential licensee behavior is affected (both in negotiations and in litigation), and if Commissioner Olhausen’s concerns about the ambiguity and lack of guidance in the FTC’s order will ring true.