In recent years, competitors cooperatemore than ever in standards developingorganizations (SDO) to develop standardsthat will enable their products to interoperateand exchange information. It is widelybelieved that the benefits of such cooperationamong competitors outweigh anypotential harm to competition. However, theFederal Trade Commission hasshown a willingness to become involvedwhen it perceives that standards developmentactivities are harming competition.

Previous FTC enforcement actions havefocused on situations in which a party participatingin the development of a standard misledthe SDO concerning the nature of thepatents it held relating to the technologybeing incorporated into the standard. TheFTC is concerned that participants in SDOswill fail to disclose essential patents duringdevelopment of the standard and then, afterits widespread adoption, sue those thatimplement the standard for patent infringement– an activity the FTC refers to as a”hold up” of the industry.

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