The FRAND debate: is the tide turning?

18.03.2014

The outspoken FTC Commissioner, Joshua D. Wright, recently made a speech where he spoke out against the FTC’s “new IP agenda”and its opposition to the availability of injunctive relief for standard essential patent (“SEP”) holders. Wright states that the FTC now appears to view merely seeking an injunction in respect of an SEP as anti-competitive and against the public interest (he cites the FTC’s actions in Bosch and Motorola). He suggests that the FTC’s approach is a departure from the long-established ‘symmetry principle’, i.e. that the application of antitrust law to IPRs should be in parity with the approach to real property, and that it is not necessary to have a different analytical framework or special rules to enforce the antitrust laws in order to promote consumer welfare.
“IPRs, like other property rights, play a critical role in a property rights regime focused on voluntary commercial exchange and competition. Linking the antitrust analysis of IPRs to the already well- developed toolkit available to analyze the economics of business arrangements involving real property rights encourages methodological consistency and analytical rigor in identifying the appropriate limits on the exercise of IPRs.”
The departure from the symmetry principle, in his view, risks creating uncertainty and a “regression towards an antitrust enforcement regime that is overly hostile to the exercise and exchange of IPRs.” Highlighting the need to acknowledge the risk of reverse patent hold-up (or licensee ‘hold-out’ as it is sometimes referred to) in addition to that of patent hold-up, Wright points out that even if the seeking of an injunction in this context does constitute a breach of contract, such an act does not in itself generally violate competition law. Furthermore, he vehemently rejects the notion that a FRAND commitment comprises an implicit agreement not to seek an injunction – no SSO appears to forbid injunctions and some have expressly considered and rejected such a rule.
Wright’s comments are fascinating, whether you agree with his views or not. First, it is refreshing to see this type of open debate within a competition authority – this is in stark contrast to the highly polished (and sometimes quite repetitive) official lines taken by EU competition officials when speaking publicly – I’m all for openness about the difficulties that officials must be debating internally.
Second, Wright’s advocacy for consistency reminds me of the recent paper by Professor Petit, in which he discusses the appropriate and consistent ‘legal standard’ that ought to be applied in the EU in assessing whether those who have given FRAND commitments for SEPs have abused a dominant position by seeking, or threatening to seek, injunctions (see our earlier post on this here). A thoroughly excellent read for anyone genuinely interested in the legal theory, and not just the policy, underpinning these cases.
Finally, although of course the FRAND debate has been going on for many years, it’s bizarre that these more high level debates are taking place so late in the day, on both sides of the Atlantic. Personally, I think it’s always useful to oscillate from the micro to the macro, and from professional advocates’ views to more academic theories. Perspective is important – I guess as the adage goes, better late…