Markets Wired

The Federal Trade Commission will host a public workshop on June 21, 2011, in Washington, D.C., as part of a project to examine the legal and policy issues surrounding the competition problem of “hold-up” when patented technologies are included in collaborative standards. The workshop will be free and open to the public.

When industry-wide standards incorporate technologies that are protected by intellectual property rights, they raise the potential for “hold-up” by a patent owner – a demand for higher royalties or other more-costly or burdensome licensing terms after the standard is implemented than could have been obtained before the standard was chosen. Hold-up can subvert the competitive process of choosing among technologies during standard-setting and can undermine the integrity of those activities. Consumers can be harmed if manufacturers are able to pass on higher costs resulting from hold-up.

The FTC workshop will examine three ways to try to prevent hold-up: 1) patent disclosure rules of standard-setting organizations; 2) commitments given by patent holders that they will license users of the standard on reasonable and non-discriminatory (RAND) terms; and 3) disclosure of licensing terms by patent holders before the standard is adopted. The Commission intends to examine these issues from practical, economic and legal perspectives, and under antitrust, contract and patent law. The FTC also will consider whether certain conduct by patent holders is deceptive or unfair.

In a Federal Register notice to be published shortly, the FTC seeks the views of consumers and the legal, academic, and business communities on the issues to be explored in this project

Comments may be filed until July 8, 2011 in electronic form using the following weblink: (https://secure.commentworks.com/ftc/standardsproject) and following the instructions on the web-based form. Comments will be publicly available.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call
1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. “Like” the FTC on Facebook and “follow” us on Twitter.

(standard setting)