Recent disputes between Google, Apple, and other smartphone technology owners have sometimes involved patents that are essential for the accused companys smartphone to comply with applicable electronics standards. Recent decisions in such cases by both federal courts and the International Trade Commission may offer in-house counsel at high-tech companies some valuable guidance in charting a prudent course around challenges to participating in standards-setting organizations, commercializing products which incorporate patented standards, and protecting or licensing related standards technology.
Background
Consumer electronics and computers, to function and communicate with each other, increasingly must comply with technology standards that are generally adopted by industries participating in a corresponding standard-setting organization (SSO). SSOs may deem a member’s patent “essential” to an industry standard.
Once a patent is declared essential to an industry standard, other parties incorporating the corresponding standard in their products will, of necessity, use that patent in their own products. Thus, to prevent holders of such standard-essential patents (SEP) from charging unreasonable license fees to use SEPs, SSOs require SEP holders to agree that they will license their patent on reasonable and nondiscriminatory (RAND) terms.
Earlier this year, in the ITC patent infringement dispute between Apple and Motorola, the ITC requested briefing on whether, or under what circumstances, it is appropriate to exclude (i.e., enjoin) an infringing product (1) when its infringement was caused by adherence to an industry standard covered by the patent, and (2) when the patent owner had an agreement with the SSO to license such patent to other parties on RAND terms.
Had the ITC addressed these issues in its decision, it could have prohibited SEP holders from litigating in the ITC after an unfavorable district court decision, and it could have created more closure for corporations that have avoided multimillion dollar adverse judgments in federal court. However, since the ITC found no infringement of the SEPs, it did not address these issues, leaving uncertainty as to whether the availability of exclusionary relief from the ITC in the case of SEPs may be questioned again in a future case. In the meantime, corporate counsel should continue to monitor company participation in SSOs to assure compliance with RAND licensing requirements, and to assure that its products are appropriately licensed.
