Is There a FRAND Problem with U.S. Tech Patents?
The top in-house lawyers for Intel Corp. and Qualcomm Inc. on Tuesday butted heads on Capitol Hill over whether a significant standard essential patent (SEP) problem exists.
Testifying at a Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights hearing, Intel General Counsel A. Douglas Melamed and Qualcomm General Counsel Donald Rosenberg couldn’t agree on whether the federal government should upend the status quo on patents for Wi-Fi and other technologies used by multiple companies' products.
Melamed, whose company is the world's largest semiconductor chip maker, said the tech industry is under threat from SEP holders that more and more frequently back out on commitments to license their patents used in industry-standard technologies on fair, reasonable, and nondiscriminatory (FRAND) terms. He said the reneging has caused "significant harm" to innovation, competition, and consumers, fueling a need for the government to ensure that SEP holders live up to the FRAND obligations under their licensing agreements.
Rosenberg, whose company manufacturers semiconductors for wireless devices, said such problems are "marginal," but thinks the courts and federal agencies are appropriately handling SEP disputes that may exist.
"The so-called problem with SEPs is more one perceived than real," Rosenberg said.
Suzanne Munck, chief counsel for intellectual property at the Federal Trade Commission, said it isn't a "theoretical problem." She noted that her agency this year found that Google Inc. reneged on its FRAND commitments to allow competitors access to SEPs needed to make smartphones, laptops, tablets, and gaming consoles. The FTC also is advocating for policies that mitigate instances of disregarded FRAND obligations, she said.
"Competition and intellectual property laws work together to promote innovation," Munck said. "Voluntary consensus based standard setting facilitates this purpose. However, including patented technology in a standard creates the potential for" broken FRAND commitments.
Senator Amy Klobuchar (D-Minn.), chairwoman of the subcommittee, said she is looking to introduce legislation that would address unfair competition related to patents.
"To me, there's clearly some legitimate antitrust concerns here," she said, adding that "the risk to consumers is clear."