While the focus of last week's agreement between the Federal Trade
Commission and Google Inc was search, the deal's restrictions on how
Google uses its patents could have a broader impact on the technology
Under the deal, which ended an antitrust investigation by
the FTC and disappointed many critics, Google will make only minor
changes to its search business.
But Google is also now limited in
when it can seek injunctions against products from rival companies that
use certain of its patents.
Throughout recent smartphone wars and
other major patent litigation, holders of so-called standard essential
patents have been accused of using them to bully competitors into paying
high licensing rates or as leverage in patent disputes.
deal with Google clarifies the uncertainty over how standard essential
patents can be used, said Colleen Chien, a professor specializing in
patent law at Santa Clara University School of Law in California.
deal set out a process by which technology makers can avoid injunctions
and patent holders know they are going to get compensated, Chien said.
"The FTC has deflated the power of the injunction and also the
incentives to not pay that have existed."
In its case against
Google, the FTC claimed that Google and its subsidiary Motorola Mobility
Inc had breached commitments to standard-setting bodies to license its
patents on terms that are fair, reasonable and non-discriminatory. As
part of the deal, Google agreed to drop claims for injunctive relief
against competitors in certain patent disputes around the world. It also
agreed to submit to the jurisdiction of a court or arbitrator when
disputes over payment rates arise.
Throughout the FTC's
investigation, Google was represented by Susan Creighton of Wilson
Sonsini Goodrich & Rosati and John Harkrider of Axinn, Veltrop &
Harkrider. The FTC retained Beth Wilkinson of Paul, Weiss, Rifkind,
Wharton & Garrison.
The FTC said Thursday
that the threat of injunction by a holder of an essential patent hurts
competition. The agreement with Google could be used as a "template" for
other patent disputes, it said.
Unlike a court decision, the
FTC's agreement with Google is not binding on other companies. But it
could give leverage to defendants in disputes with essential patent
holders that could be used in court.
"We know in today's world,
defendants are getting more aggressive," said Matthew Woods, an
antitrust and patent attorney at Robins, Kaplan, Miller & Ciresi.
"Defendants will seize on this and tell courts that injunctions are
something the court should not even countenance."
agreement with Google may not be all good news for patent users,
according to Jay Jurata, an antitrust partner at Orrick, Herrington
& Sutcliffe, who said that it could have unintended consequences.
elaborate agreement allows Google to seek injunctions against companies
that are unwilling to pay for a license on fair, reasonable and
non-discriminatory terms. But the question of when a company is
considered an unwilling licensee is one that the FTC may have
unwittingly allowed holders of essential patents to manipulate, said
"They provided a road map for other standard essential
patent holders to engage in opportunistic behavior to paint otherwise
willing licensees as unwilling licensees," he said.
Robins Kaplan also cautioned that the FTC's deal with Google may be
unique because of the company's giant size and dominance, which can
attract the attention of regulators.
"There are a lot litigants
who aren't going to see this agreement as restraining them, because they
don't have the same portfolio as Google," Miller said.
© Thomson Reuters 2012