> For those of you who thought that Motorola has been violating the law on its FRAND obligations this is a reality-check.
I don't see how that follows from the rest of your comment. It is quite possible for Motorola to be breaking their commitments to FRAND licensing it just isn't going to be tested in this case. [I agree with the rest of your comment.]
I'm going to read the article now but even if you are right then that is really bad news for the world as owners of standards essential patents have the power to bring whole industries to gridlock and to demand massive sums for patent licensing.
Edit: I've read it now. As i read it there is nothing that closes the question of whether Motorola is breaching it's contract with ETSI. The judge doesn't want to spend time to decide a FRAND value if that doesn't close the case (because Apple aren't committed to pay the price). I stand by my point that this does nothing to decide whether Motorola has breached their commitments. I didn't see any comment regarding anti-trust law from this judge and I don't know if that topic was ever on the table in this case.
>I'm going to read the article now but even if you are right then that is really bad news for the world as owners of standards essential patents have the power to bring whole industries to gridlock and to demand massive sums for patent licensing.
I don't think it's that bad, considering where FRAND comes from: It's a contract term they put into agreements that industry bodies require members to adhere to before they'll accept known patented technologies into industry standards. If it turns out that the courts interpret it to mean something disastrous then they'll just start using a different term for future standards. Or just put the actual licensing price in the contract.
In theory that would still leave a problem for all the existing standards, but I don't see how that problem is significantly worse than the existing problem with submarine patents that were never FRAND in the first place because the patentees didn't participate in the standards process.
>I didn't see any comment regarding anti-trust law from this judge and I don't know if that topic was ever on the table in this case.
The relationship between patents and antitrust is by nature inscrutable. The whole point of a patent is to create a temporary monopoly to reward the inventor with monopoly profits. But the patent is only supposed to cover the claims -- so when a patent is essential for a standard, the patent inherently can be used to block implementation of the standard, including those aspects of it that supposedly aren't covered by the claims.
The result is a situation where either you de facto prohibit the patentee from enforcing the patent against any infringer (i.e. everyone) who is implementing the standard (perhaps in exchange for some almost certainly below-market royalty chosen arbitrarily by the courts), or you de facto allow the patentee to expand the scope of the patent to the entire standard rather than only the claims as it ought to be. There isn't really a lot of middle ground: You have to pick whether you want meaningful patents (else anyone can just make a standard around it and claim a right to violate the patent's guarantee of exclusivity) or meaningful antitrust (else anyone can allow their submarine patents into a standard and then sue the world). There is no guarantee that the courts will be able to find a solution to that capable of making everyone happy.
You are right that standards going forward may be able to rewrite the conditions BUT they cannot set the license prices themselves that would be anti-competitive against the patent holders* . And it could render existing standards for video encoding, mobile telephony, wifi, bluetooth and many more unusable or at least with rising costs if two or three patent holders each try to squeeze as much as they can out each standard.
The anti-trust aspect comes in because the patent only becomes important because of it's inclusion by the standards body(/industry cartel).
The patent owner has the monopoly on the technology but they cannot form a cartel to push people to implement the technology they have a monopoly on (unless they make FRAND or similar commitments).
[* A former colleague of mine led the establishment of a group to create an industry standard outside of ETSI although the output was later submitted there to become one of their standards. The line he had to walk to get it legally set up correctly was tricky with massive fines on the member companies if the European Commission decided that he had got it wrong (anti-competitive behaviour can be fined upto 10% of group global turnover and Sony was doing a bit better then than now).]
>You are right that standards going forward may be able to rewrite the conditions BUT they cannot set the license prices themselves that would be anti-competitive against the patent holders*
I'm not going to pretend to know the antitrust laws in any given jurisdiction, but do you see what I mean by inscrutable? It's fine (and indeed mandatory) to require "fair and reasonable non-discriminatory" terms, but nailing down an upper bound on what that actually means as a number is anti-competitive? It doesn't make any sense because it can't. Patents and antitrust are diametrically opposed things that happen to overlap one another.
Yes it's a mess. But it does make some sense as standards bodies may have members without patents that want to minimise the price and others who want to get high prices.
I'm not a lawyer but I wonder if there is room to require patent holders to declare a cap on the price of each patent before it is included in the patent and the standards group could decide to accept or reject the patent at that point.
Comments
> For those of you who thought that Motorola has been violating the law on its FRAND obligations this is a reality-check.
I don't see how that follows from the rest of your comment. It is quite possible for Motorola to be breaking their commitments to FRAND licensing it just isn't going to be tested in this case. [I agree with the rest of your comment.]
I'm going to read the article now but even if you are right then that is really bad news for the world as owners of standards essential patents have the power to bring whole industries to gridlock and to demand massive sums for patent licensing.
Edit: I've read it now. As i read it there is nothing that closes the question of whether Motorola is breaching it's contract with ETSI. The judge doesn't want to spend time to decide a FRAND value if that doesn't close the case (because Apple aren't committed to pay the price). I stand by my point that this does nothing to decide whether Motorola has breached their commitments. I didn't see any comment regarding anti-trust law from this judge and I don't know if that topic was ever on the table in this case.
>I'm going to read the article now but even if you are right then that is really bad news for the world as owners of standards essential patents have the power to bring whole industries to gridlock and to demand massive sums for patent licensing.
I don't think it's that bad, considering where FRAND comes from: It's a contract term they put into agreements that industry bodies require members to adhere to before they'll accept known patented technologies into industry standards. If it turns out that the courts interpret it to mean something disastrous then they'll just start using a different term for future standards. Or just put the actual licensing price in the contract.
In theory that would still leave a problem for all the existing standards, but I don't see how that problem is significantly worse than the existing problem with submarine patents that were never FRAND in the first place because the patentees didn't participate in the standards process.
>I didn't see any comment regarding anti-trust law from this judge and I don't know if that topic was ever on the table in this case.
The relationship between patents and antitrust is by nature inscrutable. The whole point of a patent is to create a temporary monopoly to reward the inventor with monopoly profits. But the patent is only supposed to cover the claims -- so when a patent is essential for a standard, the patent inherently can be used to block implementation of the standard, including those aspects of it that supposedly aren't covered by the claims.
The result is a situation where either you de facto prohibit the patentee from enforcing the patent against any infringer (i.e. everyone) who is implementing the standard (perhaps in exchange for some almost certainly below-market royalty chosen arbitrarily by the courts), or you de facto allow the patentee to expand the scope of the patent to the entire standard rather than only the claims as it ought to be. There isn't really a lot of middle ground: You have to pick whether you want meaningful patents (else anyone can just make a standard around it and claim a right to violate the patent's guarantee of exclusivity) or meaningful antitrust (else anyone can allow their submarine patents into a standard and then sue the world). There is no guarantee that the courts will be able to find a solution to that capable of making everyone happy.
You are right that standards going forward may be able to rewrite the conditions BUT they cannot set the license prices themselves that would be anti-competitive against the patent holders* . And it could render existing standards for video encoding, mobile telephony, wifi, bluetooth and many more unusable or at least with rising costs if two or three patent holders each try to squeeze as much as they can out each standard.
The anti-trust aspect comes in because the patent only becomes important because of it's inclusion by the standards body(/industry cartel).
The patent owner has the monopoly on the technology but they cannot form a cartel to push people to implement the technology they have a monopoly on (unless they make FRAND or similar commitments).
[* A former colleague of mine led the establishment of a group to create an industry standard outside of ETSI although the output was later submitted there to become one of their standards. The line he had to walk to get it legally set up correctly was tricky with massive fines on the member companies if the European Commission decided that he had got it wrong (anti-competitive behaviour can be fined upto 10% of group global turnover and Sony was doing a bit better then than now).]
Edit: Got my * right without italics
>You are right that standards going forward may be able to rewrite the conditions BUT they cannot set the license prices themselves that would be anti-competitive against the patent holders*
I'm not going to pretend to know the antitrust laws in any given jurisdiction, but do you see what I mean by inscrutable? It's fine (and indeed mandatory) to require "fair and reasonable non-discriminatory" terms, but nailing down an upper bound on what that actually means as a number is anti-competitive? It doesn't make any sense because it can't. Patents and antitrust are diametrically opposed things that happen to overlap one another.
Yes it's a mess. But it does make some sense as standards bodies may have members without patents that want to minimise the price and others who want to get high prices.
I'm not a lawyer but I wonder if there is room to require patent holders to declare a cap on the price of each patent before it is included in the patent and the standards group could decide to accept or reject the patent at that point.