Companies that participate in standard setting organizations
(SSOs) typically agree to license any
patents essential to practice the standard on reasonable
and non-discriminatory terms (RAND or, adding
fair, FRAND terms). Often, those patents are submitted
to a related group patent licensing effort, and licensed
with other patents that are deemed essential to
the standard. Alternatively, as with other intellectual
property assets, patents that are subject to a FRAND
commitment can be sold, transferred or enforced
However, FRAND patents are not always treated the
same as ordinary patents by the courts, raising these
and other questions:
s Are there risks to a patent owner if it decides to
sell a FRAND patent and the purchaser later decides to
ignore the FRAND commitment?
s Should a patent owner or its assignee be able to
obtain injunctive relieve when bringing an infringement
action to enforce its FRAND patent?
s What impact should the FRAND commitment have
on potential damages?
The developing law in this field is addressed below.
Considerations for Assigning Standard-Essential
The developing case law supports the view that
FRAND commitments will not be trumped by the assignment
of a standard-essential patent. Courts have
recognized that the assignment of a patent does not alter
any license or other rights conferred by the patentee.
1 Accordingly, a patent holder’s rights have been
found to be subject to any license agreement executed
by its predecessor in interest.2
1 See, e.g., In re Access Beyond Techs., Inc., 237 B.R. 32, 38
n. 5 (Bankr. D. Del.1999) (recognizing ‘‘that federal law regarding
the assignment of patents makes patent assignments
subject to the conditions of any licenses or other rights previously
conferred by the patent holders’’) (citing Waterman v.
Mackenzie, 138 U.S. 252, 256 (1891); see American Dirigold
Corp. v. Dirigold Metals Corp., 125 F.2d 446, 452, 52 U.S.P.Q.
510 (6th Cir. 1942) (noting that ‘‘any person acquiring by assignment
or license an interest in [a patent] takes title subject
to prior assignments or licenses’’).
2 In re Access Beyond Techs., 237 B.R. at 38.
Paul Ragusa is a partner and Henry Chen is
an associate in the New York office of Baker
Botts LLP, where they practice intellectual
property law including standards-related patent
litigation, licensing and counseling.
COPYRIGHT 2013 BY THE BUREAU OF NATIONAL AFFAIRS, INC. ISSN 0148-7965
& Copyright Journal®
Other district courts have recognized that a legally
binding obligation that attaches to a patent will not be
altered by an assignment.3
Another issue is the potential consequence to a patent
seller if the patent buyer does not abide by such
FRAND obligation. One case, Visio v. Funai, suggests
that there could potentially be antitrust issues if the assignor
and the assignee colluded to charge royalty rates
in excess of the FRAND obligations for the assigned
patent.4 The transfer of the patent from the assignor to
the assignee does not in itself present harm to competition
which would raise antitrust concerns.5 However,
allegations that the assignor and assignee conspired to
charge royalty rates in excess of the FRAND obligations
could be sufficient to provide for an antitrust claim
against the assignor.6 In light of Visio, patentees who
sell their standard-essential patents should exercise
caution in situations where they continue to be involved
with the new patent owner on issues involving royalty
Considerations for Enforcing Standard-Essential
When attempting to enforce a standard-essential patent,
the patent owner may face challenges seeking injunctive
relief for the patent due to its FRAND obligations
to the SSO. In one recent International Trade
Commission case, however, the patentee was successful
in securing injunctive relief for a standard-essential patent.
7 The ITC issued an exclusion order and cease-anddesist
order despite the fact that the asserted patent was
a standard-essential patent for the Universal Mobile
Telecommunications System standard.8 The commission
also rejected the argument that the patent owner
forfeited any right it might otherwise have to obtain an
exclusion or cease-and-desist order when it made its
FRAND commitments for the standard-essential patents.
In contrast, the district courts have generally been reluctant
to grant injunctive relief for the infringement of
standard-essential patents, and the Federal Trade Commission
has taken the position that injunctive relief
should be disfavored when dealing with standardessential
patents. Each is addressed below.
District Courts Decisions Addressing Injunctive
Relief for Standard-Essential Patents
In Apple v. Motorola, the U.S. District Court for the
Northern District of Illinois held that injunctive relief is
not available for infringing a standard-essential patent
because monetary relief is an adequate remedy.10 The
court held that:
[G]iven [Motorola’s] FRAND [commitment], [the court
would not be justified] in enjoining Apple from infringing
the ‘898 [the standard-essential patent] unless Apple refuses
to pay a royalty that meets the FRAND requirement.
By committing to license its patents on FRAND terms, Motorola
committed to license the ‘898 to anyone willing to
pay a FRAND royalty and thus implicitly acknowledged
that a royalty is adequate compensation for a license to use
In addition, although Apple rejected a prior Motorola
FRAND license offer at a 2.25 percent royalty rate, the
court held that that did not excuse Motorola from complying
with its FRAND obligations and did not mean
that Motorola was entitled to an injunction rather than
damages in the case.12 The court held that in order for
an injunction to be granted, monetary relief must be inadequate;
however, it said, ‘‘[a] FRAND royalty would
provide all the relief to which a smartphone manufacturer
would be entitled if it proved infringement of its
patent, and thus it was not entitled to an injunction.’’13
In another case, RealTek v. LSI, the Northern California
district court rejected injunctive relief when the patentee
did not offer to license the standard-essential patent.
Realtek brought an action against the owners of
standard-essential patents, alleging that they breached
their obligations to license the patents on RAND terms
by filing a complaint with the ITC.14 The court granted
a preliminary injunction against enforcement of a potential
ITC exclusion order based on infringement of
the standard-essential patents, holding that the patent
owners breached their RAND licensing obligation by
seeking an ITC exclusion order without previously offering
a license on RAND terms.15 The court reasoned
that ‘‘the act of seeking injunctive relief (here, at the
ITC before proposing a RAND license to Realtek) is inherently
inconsistent and a breach of defendants’ promise
to license the patents on RAND terms.’’16 The court
noted, however, that injunctive relief may be warranted
when an accused infringer of a standard-essential patent
outright refuses to accept a license on RAND
Obtaining monetary relief for the infringement of
standard-essential patents may likewise present challenges.
In In re Innovatio IP Ventures, the Northern Illinois
district court limited the monetary relief available
to the owner of standard-essential patents to less than
10 cents per unit.18 After concluding that the patents-in-
3 In re Novon Int’l., Inc., No. 98–CV–00677-JTE, slip op. at
*5 (W.D.N.Y. Mar. 31, 2000) (‘‘While the assignee of a patent
becomes vested with the rights of the patentee, he also takes
subject to the legal consequences of the patentee’s previous
acts, and subject to the licenses previously granted by assignor.’’);
Barnes & Noble, Inc. v. LSI Corp., 849 F. Supp. 2d
925, 932, 2012 BL 30737 (N.D. Cal. 2012) (‘‘Novon states that
not only licensing agreements, but also any of ‘‘the patentee’s
previous acts’’ that have ‘‘legal consequences,’’ flow to the new
assignee of a patent.’’).
4 Visio, Inc. v. Funai Elec. Co., No. CV 09-0174 AHM (RCx),
2010 BL 321643, at *2 (C.D. Cal. Feb. 3, 2010).
5 Id. at *4 (noting that ‘‘the transfer of a valid patent has no
antitrust significance but merely shifts a lawful monopoly into
6 Id. at *6.
7 In re Certain Elec. Devices Including Wireless Commc’n
Devices, ITC Inv. No. 337-TA-794, Doc. No. 510578 (June 4,
9 ITC Inv. No. 337-TA-794, Doc. No. 512742 (July 5, 2013).
10 Apple, Inc. v. Motorola, Inc., 869 F. Supp. 2d 901, 2012
BL 157789, 104 U.S.P.Q.2d 1611 (N.D. Ill. 2012).
11 Id. at 913-914.
12 Id. at 914.
13 Id. at 915
14 RealTek Semiconductor Corp. v. LSI Corp., No. C-12-
03451-RMW, 2013 BL 133525 (N.D. Cal. May 20, 2013).
15 Id. at *10.
16 Id. at *7.
17 Id. at *7.
18 See In re Innovatio IP Ventures, LLC Patent Litigation,
No. 11-cv-9308 (N.D. Ill. Oct. 3, 2013).
11-22-13 COPYRIGHT 2013 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN 0148-7965
suit were essential to practice the 802.11 standard and
were subject to RAND obligations, the court determined
that the RAND rate to be paid for licensing the
patents-in-suit was 9.56 cents per unit, much less than
the several dollars per unit sought by the patent
Federal Trade Commission Opposes Injunctive
Relief for Standard-Essential Patents
The Federal Trade Commission has become active in
policing standard-essential patents subject to FRAND
commitments. In the recent investigation in In the matter
of Motorola Mobility and Google Inc.,20 the FTC indicated
that it did not favor injunctive relief for
standard-essential patents. The complaint alleged that
Motorola Mobility engaged in unfair methods of competition
and unfair practices by breaching its commitments
to SSOs to license its standard-essential patents
on FRAND terms. The complaint further alleged that
Google violated its FRAND commitments by seeking to
enjoin and exclude willing licensees of its FRANDencumbered
The FTC ruled that Google and Motorola violated
Section 5 of the FTC Act, 15 U.S.C. § 45. The FTC held
that Google and Motorola were prohibited from obtaining
or enforcing injunctive relief on a FRAND patent
unless they made qualified offers, under FRAND terms,
to the potential licensees against whom injunctive relief
was sought.21 Google and Motorola were prohibited
from filing a claim seeking injunctive relief based on a
FRAND patent against any potential licensee who had
not entered into an agreement pursuant to the procedure
outlined in the order.22 However, the FTC noted
that if the potential licensee refused to license the
FRAND-encumbered patents, then Google and Motorola
may then seek an injunction.23
The FTC came to a similar conclusion on a previous
occasion. In the investigation titled In the matter of
Robert Bosch GmbH,24 the FTC complaint was directed
to Bosch’s acquisition of SPX Service Solutions, the
leading competitor with respect to air conditioning recycling,
recovery and recharge (ACRRR) products. SPX
had previously declared to an auto industry SSO that it
believed it held patents essential to the practice of two
SAE standards for ACRRR equipment, and that it would
agreed to license these patents on FRAND terms. However,
at the same time, SPX continued to pursue injunctive
relief against competitors in patent litigation involving
these standard-essential patents. The FTC ruled that
Bosch violated Section 5 of the FTC Act, and held that
Bosh was required to deliver ‘‘a written, unconditional,
unilateral, irrevocable offer for a royalty-free, fullypaid-
up, irrevocable, perpetual, non-exclusive license’’
to the patents essential to practice the SAE standards to
competitors in the ACRRR business.25
There are different risks applicable to the assignment
and enforcement of standard-essential patents due to
FRAND commitments. Owners of FRAND-encumbered
patents should consider the availability of injunctive
relief—including in a particular forum—before bringing
an action to enforce a FRAND-encumbered patent.
Likewise, patent owners should carefully word transactional
documents when selling or otherwise transferring
FRAND-encumbered patents to a third party in order
to be clear that the seller will abide by FRAND commitments
and will be responsible for any failure to do
20 FTC File No. 1210120 (Jan. 3, 2013).
21 In the matter of Motorola Mobility and Google Inc., FTC
File No. 1210120, at 7 (Jan. 3, 2013).
22 Id. at 7.
24 FTC File No. 1210081 (Nov. 26, 2012).
25 Id. at 13.
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