July 12, 2012, 11:45 AM — Senior Obama administration officials on Wednesday expressed concern about the escalating patent wars that have
gripped the wireless industry, warning a Senate panel that the import bans that litigants such as Google's Motorola Mobility
division and Apple have been
seeking could pose significant harm to consumers by driving up prices and limiting choice.
Appearing before the Senate Judiciary Committee, representatives from the Department of Justice and Federal
Trade Commission stressed that seeking an exclusion order or injunction to prohibit imports of certain smartphones
or other devices should be a strategy of last resort for patent holders, only to be exercised after good-faith
royalty negotiations have failed and a remedy cannot be obtained through civil courts.
But often that has not been the case, as recent months have seen a flurry of litigation through which a company
appeals to the U.S. International Trade Commission (ITC) to bar imports of a rival's device that allegedly
infringes on its patents.
"These issues are currently front and center in the markets for smartphones and tablets, where the risk of
competitive harm from such orders can be especially acute," said Edith Ramirez, a commissioner at the Federal Trade
Commission. "Complex, multi-component products are the norm in IT markets. For example, a smartphone has hundreds
of components and technologies that enable it to communicate over wireless networks, stream video, access the
Internet and perform all of the functions that consumers expect. The vast majority of these components and
technologies are covered by patents."
Ramirez said that a "conservative estimate" of the number of patents in a typical smartphone hovers in the tens
of thousands, many of which are so-called standard-essential, meaning that they are tied to an industry standard
that underlies core operations of the device, such as connecting to a 3G network or communicating over a Bluetooth
Often, when a standards-setting organization approves a certain technology, it will secure a commitment from the
owner of the essential patent to license its intellectual property to competitors under fair, reasonable and
non-discriminatory (FRAND, or, alternatively, RAND) terms.
But a spate of lawsuits and countersuits seeking import bans, pitting Apple against Motorola Mobility and HTC,
Motorola Mobility against Microsoft in a case involving technology in the Xbox 360, and others, has left many
officials worried that the framework of standard-essential patents has become rife with abuse.