On May 9, 2011, the Federal Trade Commission (FTC) announced that it will be hosting a public workshop on June 21, 2011, as well as accepting public comments by July 8, 2011, on the legal and policy issues surrounding the problem of potential patent “hold-up” when patented technologies are included in collaborative standards. The FTC seeks views of consumers and the legal, academic, and business communities on IP rights issues related to standard setting.

The collaborative standard setting process is a key component of the global economy and is a central competitive element in numerous industries that rely on the process to produce products and provide services that are interoperable. In fact, standards have increasingly served an extremely useful role in addressing the complexities of developing enhanced technology utilizing the intellectual property rights of multiple owners. The FTC, however, has stated that “when standards incorporate technologies that are protected by patent rights, there is a possibility for “hold-up” by a patent owner – a demand for higher royalties or other more costly or burdensome licensing terms after the standard is implemented than could have been obtained before the standard was chosen.” The FTC intends to examine the extent to which such activities by an IP owner can have a negative impact on the overall competitive process of selecting the appropriate technologies for a standard. Additionally, they anticipate considering whether consumers are detrimentally affected by the ability of manufacturers to charge higher prices that are alleged to result from a patent hold-up.

The FTC workshop, which will be held on June 21, 2011 at the FTC, will create an opportunity for interested parties, particularly companies participating in standards development to present their views with respect to ways to prevent patent hold-up including: (1) patent disclosure rules of standard setting organizations; (2) commitments given by patent holders that they will license users of the standard on reasonable and non-discriminatory (RAND) terms; and (3) ex ante licensing negotiations by patent holders before the standard is adopted. Information and concerns to industries participating in standards that may shed light on the standards process will be of benefit to the FTC’s consideration. The FTC also will be examining each issue in the context of antitrust, contract, patent, and consumer protection laws.

The FTC announcement allows for the submission of written comments to inform discussion at the FTC workshop by June 14, 2011 while comments in response to the Federal Register Notice are due by July 8, 2011.

For more information or for guidance with respect to participating in the FTC process please contact:

Pamela M. Deese
deese.pamela@arentfox.com
202.828.3431