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FTC tells US courts not to ban sales of smartphones and tablets

Might dent lawyers' fees
Thu Dec 06 2012, 16:53

THE UNITED STATES FEDERAL TRADE COMMISSION (FTC) has filed an amicus brief with the US Circuit Court of Appeals for the Federal Circuit claiming it is not appropriate for a court to issue a sales injunction against a product that uses patents held by a firm that has previously adhered to "Fair, Reasonable And Non Discriminatory" (FRAND) licensing terms.

As Apple, Motorola, Samsung and various other companies try to stop their rivals from selling products by claiming patent infringement, the FTC is trying to inject some sanity into the patent wars by objecting to courts issuing sales injunctions. The FTC claims that such injunctions can be anticompetitive and be used by patent holders to distort competition.

The FTC cited Apple's and Motorola's actions as motivation and said in its brief that holders of standard-essential patents (SEP) could "use the threat of injunctions to distort competition by insisting on high royalties and other favorable licensing terms that they could not have credibly demanded before the standard was set". The FTC called such an action a "patent hold-up".

In the FTC's brief it argues that damages awarded to the patent holder should be limited and that only monetary damages should be awarded. The FTC wants the federal courts to stop handing out sales injunctions, saying, "allowing a patent holder to seek an injunction on a SEP can facilitate patent-holdup, which can raise prices to consumers, while undermining the standard-setting process".

In the past two years Apple and Samsung have become almost as famous for their courtroom battles as their smartphones and tablets, with both firms winning sales injunctions against each other for alleged patent infringement. The FTC's point about sales injunctions potentially stifling competition is a valid one but it remains to be seen if it will gain any support from the federal courts. µ


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