FTC-Google Consent Decree Provides Important Lessons Regarding Standards-Essential Patents

by Orrick, Herrington & Sutcliffe LLP

On January 3, 2013, the Federal Trade Commission (FTC) entered into a Consent Decree with Google Inc. (“Google”) and its wholly owned subsidiary Motorola Mobility LLC (“Motorola”).  The decree settles allegations that Google and Motorola violated Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, by engaging in unfair methods of competition and unfair practices relating to the licensing of standard-essential patents (SEPs).  An SEP is a patent for a technical standard adopted by an industry standard-setting organization (SSO).  In return for being included in the technical standard, companies generally must promise to license their SEPs on fair, reasonable, and non-discriminatory (FRAND) terms.

Background of Dispute and Terms of Decree

The FTC alleged that Motorola, after promising to license its SEPs on FRAND terms, wrongfully sought injunctions and exclusion orders against willing licensees of those SEPs.  In doing so, the FTC believed Motorola tried to abuse the market power it gained through the standard-setting process.  Google continued Motorola’s practice after its acquisition of Motorola closed in May 2012.  These actions can damage the integrity of the standard-setting process and decrease the incentives to participate in the standard-setting process.  Electronic device manufacturers are harmed because they implemented relevant industry standards into their products in reliance on Motorola’s promise to license its SEPs on FRAND terms.  Further, this practice may decrease competition and increase prices.

The terms of the decree restrict Google from seeking injunctions on SEPs against potential licensees who are willing to enter into a license on FRAND terms.  As a result, Google is prohibited from seeking injunctions, or obtaining or enforcing existing claims for injunctive relief, for FRAND-encumbered SEPs.  Although Google is allowed to seek injunctions in certain narrow situations—such as when a potential licensee refuses to enter into a license agreement on FRAND terms—the decree outlines specific procedures that Google must follow when negotiating with potential licensees for its SEPs. 

Impact of Consent Decree on Owners of SEPs and Potential Licensees

Although the decree is specific to Google, it has broader implications for owners of FRAND-encumbered SEPs and for potential licensees.  The decree reinforces that, as a general rule, owners of SEPs may not seek injunctions.  However, by establishing elaborate procedures that Google must follow before invoking an “unwilling licensee” exception to the general rule, the decree might have the unintended consequence of encouraging opportunistic behavior by SEP owners in an attempt to portray companies as “unwilling licensees.”

Specifically, the decree likely has the following implications for SEP owners:

  • SEP owners are barred from seeking injunctions against willing licensees.  A willing licensee is a potential licensee who has not indisputably demonstrated that it is not willing to pay a reasonable fee for use of the SEP.
  • SEP owners are prohibited from revoking or rescinding any FRAND commitment that they made or assumed unless the relevant standard no longer exists, the SEP owner no longer owns the SEPs encumbered by the FRAND commitment, or such SEPs are no longer enforceable.
  • SEP owners are permitted to seek patent cross-licenses when licensing their SEPs, provided that those cross-licenses are limited only to SEPs covering the same standard.
  • SEP owners may be permitted to seek injunctive relief in four narrow situations:
    • Potential licensee is not subject to United States jurisdiction;
    • Potential licensee has declared in writing or sworn testimony that it will not accept a license for a FRAND-encumbered license on any terms;
    • Potential licensee refuses to enter a license agreement for FRAND-encumbered SEPs on terms determined by a court or through binding arbitration; or
    • Potential licensee fails to assure SEP owner, after an opportunity to do so, that it is willing to enter into a license on FRAND terms.
  • If a potential licensee desires to arbitrate or seek judicial relief to obtain a FRAND determination, SEP owners cannot seek an injunction during the pendency of the proceedings.
  • SEP owners are prohibited from selling or assigning FRAND-encumbered SEPs to third parties unless those parties agree to assume FRAND commitments and condition any further sale or assignment of the FRAND-encumbered SEPs on the same.

The decree likely has the following implications for potential licensees:

  • Potential licensees should pay particular attention to notices of alleged infringement for SEPs, as failure to respond to such notices could be interpreted as being an “unwilling licensee.”
  • In order to avoid injunctions on FRAND-encumbered SEPs, potential licensees must be willing to enter good faith negotiations after being notified of alleged infringement.  This includes being willing to determine, and accept, disputed license terms via litigation or binding arbitration.
  • While licensing negotiations are pending, potential licensees are not barred from challenging the validity, essentiality, claim of infringement, or value of the patents at issue.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Orrick, Herrington & Sutcliffe LLP | Attorney Advertising

Written by:

Orrick, Herrington & Sutcliffe LLP

Orrick, Herrington & Sutcliffe LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.