We’ve finally sifted through the many public comments submitted in response to the FTC-Google consent decree and proposed order. As we noted Monday, over two dozen individuals, companies, and organizations representing a wide range of interests submitted comments. Later this week, we will do a post featuring the details of some of the post submitted by interested companies, such as Apple, Ericsson, Microsoft, Qualcomm, and Research In Motion. But today, we are going to focus on the comments that have been submitted by other types of organizations, which include a veritable alphabet soup of interest groups, professional organizations, and industry or trade associations.
We have not endeavored to provide a deep analysis of each submission — instead, we only note some of the high points of each submission. Links to each party’s submission are provided within each respective heading. As you will see, several of these organizations feel that the FTC’s complaint improperly targets conduct that is protected from antitrust scrutiny by the First Amendment and the Noerr-Pennington doctrine — an issue that was raised by Commission Olhausen in her dissent from the FTC’s decision.
American Intellectual Property Law Association (AIPLA)
- First Amendment/Noerr-Pennington concerns are a primary issue for AIPLA — specifically, AIPLA is concerned that while the FTC states that Motorola willingly gave up the right to seek injunctive relief as part of its FRAND commitments, the FTC cites no facts to support this assertion.
- AIPLA believes that the courts and the ITC are equipped to deal with FRAND issues. This is because courts apply the eBay analysis in deciding whether to issue injunctions, and the ITC takes into account the public interest in evaluating whether to issue exclusionary relief.
- AIPLA also echoes Commissioner Olhausen’s concerns about whether the FTC may be reading its Section 5 authority too broadly in issuing its complaint.
Application Developers Alliance (ADA)
- The Alliance supports the proposed FTC order as “an appropriate, balanced, and limited generally applicable model” for addressing issues relating to FRAND and injunctive relief. The Alliance particularly approves of the order’s inclusion of the defensive use/reciprocity provision (which allows Google to seek injunctive relief if Google itself is facing a claim for an injunction based on a FRAND-pledged SEP). Additionally, the Alliance approves of the provision preventing Google from transferring a FRAND SEP to third parties who do not agree to be bound by the FTC order.
- In addition to its focus on SEPs, the Alliance also encourages the FTC to be more vigorous against other alleged abuses relating to patents in the mobile technology sector, including patent assertion entity activity.
Computer & Communications Industry Association (CCIA)
- In its statement, the CCIA notes that while it approves of the FTC’s objective, it worries that the FTC’s order may turn the tables against patent holders who accumulate standard-essential patents for defensive purposes, as well as potentially diminish incentives to participate in standard-setting activities.
- Much of the CCIA’s statement urges the FTC to consider increased enforcement in non-SEP areas (patent assertion entities and anti-competitive aspects of the patent system in general), but it includes a detailed section that delves into how FRAND obligations have historically been interpreted. According to the CCIA, FRAND is purposefully vague, and this ambiguity has had many positive aspects that have allowed many companies with varying business models to participate in standard-setting activities and achieve freedom of operation for their products.
- The CCIA also expresses concern about “second-order problems” stemming from the FTC’s order – namely, a potential escalation in defensive patenting strategies and increased litigation. The CCIA claims that “SEP constraints will strengthen the hand of instigators who clearly have no qualms about aggressively invoking their IP,” which could actually increase litigation activity in the smartphone wars (at least in the short-to-medium-term).
- The IA’s statement leads with concerns over whether Google/Motorola’s actions should be immune from FTC action under the Noerr-Pennington doctrine. The IA claims that while the FTC’s order acknowledges potential First Amendment concerns, it does not do enough to address this issue. In particular, the IA notes the lack of an express waiver of the right to injunctive relief (and also argues that there has been no implied waiver). The IA argues that Google/Motorola’s conduct does not fall under the exceptions to the Noerr-Pennington doctrine, either.
- As with AIPLA, the IA expresses concerns that the FTC may be reading its scope of authority under Section 5 too broadly in this case. The IA claims that the “primary injury” – higher royalties for SEPs – is not actionable, and that any harm to consumers is “unproven and speculative.”
- The IA also expresses concerns about the negotiation mechanisms that the FTC is requiring of Google/Motorola, saying that they may “diminish the procompetitive benefits that flow from the freedom to license.”
- Lastly, the IA requests clarification from the FTC about when it is appropriate to seek injunctive relief for FRAND-pledged SEPs – arguing that “both the courts and the ITC are well-positioned and well-equipped to determine whether an injunction or exclusion order is warranted in a particular case.”
International Center for Law & Economics (ICLE)
- According to ICLE, the FTC’s action “has no proper grounding in antitrust law…because the exercise of lawfully acquired monopoly power is not actionable under the antitrust laws.” ICLE also argues that there is no evidence of consumer harm here.
- With respect to the mechanisms of the FTC consent decree itself, ICLE questions the use of “process restraints from above” to deal with contractual FRAND disputes. While ICLE acknowledges a need for clarity in the SEP licensing arena, ICLE appears worried that that FTC’s order may do more harm than good.
- ICLE believes that the proposed order upsets the balance that FRAND policies are supposed to strike, which “encourages infringement by lowering its costs and creates a disincentive to standardize and to license.”
Intellectual Property Owners Association (IPO)
- The IPO expressed concerns that basing FTC action in these situations on conduct deemed “unfair” creates great uncertainty for market participants and patent owners. In particular, the IPO cited the fact that while an Act of Congress (35 U.S.C. § 283) expressly authorizes courts to grant injunctions for patent infringement, the FTC’s complaint asserts that here, a party seeking such injunctions here was violating the FTC Act.
- The IPO also expressed similar concerns about broad scope of Section 5; it opposes “unrestricted use” of Section 5 as a standalone basis for intervention when there is no other antitrust violation. As with AIPLA, the IPO echoed Commissioner Olhausen’s concerns about the expansive use of Section 5.
Washington Legal Foundation (WLF)
- The main thrust of WLF’s submission is a “strenuous objection to the FTC’s exercise of its Section 5 authority with total disregard for the Noerr-Pennington doctrine.”
- After explaining its reasoning for why the Noerr-Pennington doctrine applies to the FTC, WLF asserts that Google/Motorola’s conduct fits squarely within Noerr-Pennington. WLF further argues that Google/Motorola did not explicitly waive its First Amendment rights in making its FRAND commitments, and such an explicit waiver is required for the FTC to be able to take the actions that it did under Section 5. WLF does not mince words – it accuses the FTC of “hedging its bets” because “there is not one shred of evidence” that Google/Motorola waived its right to seek injunctive relief through its FRAND commitments. It also accuses the FTC of “taking the side of defendants” in standard-essential patent disputes. According to WLF, if there has been any type of misconduct by Google/Motorola, it appears to be a breach of contractual obligations, not the antitrust laws.
- But WLF does have some kind words for the FTC. Noting the difficulty in quantifying the value of SEP licenses, WLF encourages the FTC of finding ways to encourage low-cost methods of settling royalty disputes, and applauds the encouragement of mandatory arbitration regimes.
Later this week, we will take a look at the corporate submissions.