Are Tech Companies Abusing Standard-Essential Patents?

Are Tech Companies Abusing Standard-Essential Patents?

IMG_3105_3_4_tonemappedAs competition amongst smart phone and tablet creators quickly ramps up, so have the legal implications behind patent infringement. The Federal Trade Commission and the courts have seen an influx of legal matters related to the alleged misuse of standard-essential patents by high profile technological firms like Google, Apple, and Microsoft. While conventional patents may be used by companies to stop a competitor from creating and selling a product, standard-essential patents are different in that the patent holder has made a promise to license a product and agreed to weakened property rights in order to expand the industry.

In May of this year, Google obtained Motorola Mobility in a $12.5 billion deal that included Motorola’s 17,000 patents, many related to wireless technology. However, Google’s Motorola unit pledged that it would license these newly acquired patents to others on “fair and reasonable” terms in order to help stimulate the industry and not hinder progress.

In June of this year, the FTC launched an investigation focused on patents related to smartphone technology. Many of Google’s standard-essential patents are related to the central operations of smart phones and tablets including methods of communication and data handling. The current investigation by the FTC is looking into Google’s policy in obtaining these patents and their lawsuits claiming rival companies are infringing on their licensed technology.

Some antitrust experts argue that companies are taking advantage of standard-essential patents in an effort to maintain a monopoly over certain products or technologies. An early example of this behavior is the 1912 case of United States v. Terminal Railroad Association in which a group of railroads controlling bridges and switch yards in St. Louis attempted to prevent rival railroad companies from providing transportation in and out of the city by claiming it infringed on their essential patents. In this case the court declared that this was an illegal restraint of fair trade. Similarly, the FTC is concerned that the buildup of patents by large technology companies such as Google and Apple will end up stifling fair trade and competition in the smart phone industry.

As patent lawsuits related to smart phone and tablet technology continue to flood the court system, the FTC and courts will need to be firm and clear in communicating what constitutes a standard-essential patent breach. With the patent war raging on, it remains to be seen whether or not technological firms will ever back down.

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