Injunctions for FRAND-Licensed Patents: Debate Continues

October 10, 2012 Published Work
Law 360, Competition Law360, Appellate Law360, New York

Commonly adopted technical standards promote efficiency and compatibility between products and components from different companies. For instance, the H.264 (MPEG-4) standard governs video compression. High-definition digital television, video cameras and Blu-ray players and recorders rely on H.264 to ensure interoperability. Often, technical standards are developed in the context of a collaboration of industry players within a standard setting organization ("SSO"). In order to deal with patents of its member companies that potentially could encumber the industry standard, SSOs typically require their members to disclose potentially relevant patents and to promise to license them on fair, reasonable and nondiscriminatory ("FRAND") terms.

An important question has arisen in cases involving the enforcement of standard-essential patents: Can the holder of a standard-essential patent obtain an injunction against an alleged infringer? Some commentators have argued that obtaining an injunction on a standard-essential patent would be fundamentally inconsistent with the promise to license that patent on FRAND terms. With so many patentees asserting standard-essential patents, this issue is quite significant.

The implication of a patent owner agreeing to enter into a FRAND license is an issue that has been the subject of a series of recent court and administrative agency decisions and commentary. The Ninth Circuit,[1], as well as Circuit Judge Richard Posner sitting by designation in the Northern District of Illinois[4], recently have issued opinions finding that standard-essential patents that are the subject of FRAND obligations may not be enforced by awarding injunctive relief. By contrast, the U.S. International Trade Commission[7],[8] has allowed an injunction to issue in the face of a FRAND obligation. The FTC has also recently spoken on the subject, criticizing the approach of the International Trade Commission. [9], [10]

This article reviews these recent decisions and commentary.