The Federal Trade Commission investigates Google’s use of patents

Federal Trade Commission headquarters, DC

News in today’s NY Times that the Federal Trade Commission has opened an antitrust investigation into Google’s use of “standards essential patents” — i.e., patents that are necessary to the basic operation of smartphones and tablet computers. Google has represented to standards setting organizations (private industry groups that define and adopt rules meant to allow devices from different manufacturers to work together on a common standard) that if standards were adopted that would require smartphone and tablet makers to use its patents, that it would license them on “fair, reasonable, and non-discriminatory” terms. Many standard setting organizations require this sort of “FRAND” licensing commitment as a condition of participation in the standard setting process. In any event, the article suggests that the FTC is investigating to see whether Google is living up to these commitments, or whether they are using their standards essential patents to disadvantage rivals.

This is an important issue. Abuse of standards essential patents can harm competition. And the FTC is well aware of that fact. In Senate testimony in July, Edith Ramirez, an F.T.C. commissioner, speaking of the potential abuse of standard-essential patents, said, “Holdup and the threat of holdup can deter innovation by increasing costs and uncertainty for other industry participants, including other patent holders.”

Stay tuned.