In a press conference that took place at 1pm Eastern time today, the United States Federal Trade Commission announced that it has entered into a consent decree with Google in which Google agreed to forego seeking injunctive relief as a remedy for infringement of SEPs that have been pledged to be licensed on RAND terms. The FTC voted 4-1 in favor of the decision, with Commissioner Maureen Olhausen dissenting.
FTC Chair Jon Leibowitz spoke at length in the press conference about the FTC’s concerns that improper assertion of standard-essential patents may be having on competition and commerce – a position that is well-known, given the FTC’s recent amicus briefs and public interest statements in several SEP-related cases. But interestingly, the FTC’s order and the consent decree do not constitute a complete ban on all injunctive relief: in certain cases, the FTC’s order does not prohibit Google/Motorola from seeking injunctive relief for the infringement of SEPs, such as where:
- A company that is outside the jurisdictional reach of the United States District Courts infringes a Google SEP, in which case Google could use the in rem jurisdiction of the U.S. International Trade Commission to seek an exclusion order (though this may be limited given the broad personal jurisdiction U.S. courts have given over foreign entities);
- A company refuses to pay a FRAND rate for Google’s SEPs determined after the company adjudicated the issue in a court or an abitrator (though such refusal is unlikely); or
- A company refuses in writing or in sworn testimony to take a license on “any terms” to Google’s SEPs, or fails to respond to an FTC-approved “Confirmation Letter” or “FRAND terms letter” as part of the FTC-approved FRAND negotiation process (though such refusal is unlikely).
The FTC-approved negotiation process provides guidelines for Google/Motorola to follow when engaging in SEP negotiations with a potential licensee, and is mostly set forth in Sections III-IV of the FTC Order (pp. 8-12). It requires Google/Motorola to provide notice of the FTC Order to potential licensees and abide by certain time periods and procedures (such as offering to enter into binding arbitration) before being eligible to seek injunctions for SEP infringement. The FTC Order also prohibits Google from seeking injunctive relief during a “Qualified Request for a FRAND Determination,” which is defined as a request filed in a U.S. District Court to determine at least the royalty component of a license to Google’s SEPs. Lastly, the FTC Order prohibits Google from requiring a cross-license to a potential licensee’s non-essential patents as part of a RAND agremeent, but it does allow Google to condition its RAND license offers on reciprocal license grants to the same standard(s) at issue.
This settlement has implications for pending SEP infringement actions involving Motorola Mobility, of course: Chairman Leibowitz stated that he expected that Google would withdraw its requests for exclusion orders and injunctions based on infringement of SEPs from its currently-pending actions against Microsoft and Apple in the ITC and the district courts (although the rate-setting RAND case with Microsoft in Judge Robart’s court in Seattle will still go forward). But the settlement and the FTC’s decision and order will likely reverberate far beyond cases involving Motorola. Importantly, this may moot the appeal of Judge Posner’s decision in the Apple v. Motorola case that is currently pending before the Federal Circuit, which could have been the first chance the Federal Circuit would have to address injunctive relief and SEPs. And Motorola has not been the only high-profile company seeking injunctions or exclusion orders over RAND-pledged SEPs: both Samsung and Ericsson have sought exclusion orders in the ITC over SEPs, against each other and (in the case of Samsung) against others. It will be interesting to see if the RAND licensing framework outlined in the FTC decision is adopted as guidance by either the ITC or district courts in these pending and future cases (or if the FTC brings separate Section 5 actions against these companies).
The FTC’s press release announcing the settlement, its complaint, the decision and order, and the consent decree can be found below: