Making A Federal Case Of It…

Pop Quiz: What do the Justice Department, Patent & Trademark Office, and Federal Trade Commission have in common?

Answer: An increased concern about problems in the patent system.

******************************************************************************************************************

Yesterday the USPTO and the DOJ (Antitrust Division) issued a joint statement urging the International Trade Commission not to order injunctions in cases involving “standards–essential patents” (patents that cover basic communications and data–handling in the smartphone and tablet markets). These types of patents are FRAND–encumbered, when owners voluntarily pledge to license such patents on fair, reasonable and nondiscriminatory terms.

This announcement comes on the heels of Google’s recent announcement, following on the heels of an FTC investigation into potentially anti–competitive practices, that it would not seek to enjoin rivals from using patents essential to key technologies—a tactic previously used by Google before the district court and the ITC.

It is relatively easy to see why the availability of injunctive relief could result in a “patent hold up” option for owners, who may leverage the threat of an injunction to extort huge licensing costs, which in turn drive up the cost of devices paid for by consumers. With such a devastating blow—a potential shutdown—looming over defendants like a Damocles sword, they may also make a business decision to settle unrelated to the merits of the litigation.

Patent practices are certainly on the radar for the U.S. Government this winter season. In addition to the joint conference held by the FTC and DOJ in December relating to patent–assertion entity activities, there’s renewed Congressional interest in patent trolling practices percolating as well. It will be interesting to see what 2013 has in store for patent licensing and litigation.