ITC to review Xbox ban recommendation in Microsoft, Motorola case

The investigation by the ITC has attracted interest from the FTC, U.S. Congressmen and the industry

The U.S. International Trade Commission has decided to review an April decision by its administrative law judge in a patent dispute between Microsoft and Motorola Mobility that has attracted a lot of attention including from the U.S. Federal Trade Commission on the issue of licensing of standards-essential patents.

ALJ David Shaw had recommended a ban on Xbox consoles in the U.S. He also found that Microsoft failed to establish that Motorola's alleged obligation to provide a license on fair, reasonable and non-discriminatory terms (FRAND) precluded a finding of violation of section 337.

Section 337 investigations conducted by the ITC most often involve claims regarding intellectual property rights, including allegations of patent infringement and trademark infringement by imported goods.

In a decision on Friday, the Commission decided to review the determination by the ALJ and also determined to remand the investigation to the ALJ, to among other things apply the Commission's opinion in December in an investigation into a complaint by S3 Graphics against Apple, and to rule on a June 22 motion by Microsoft for partial termination of the investigation.

The ALJ will also now set a new target for the completion of the investigation, which was earlier expected to complete by Aug. 23. The Commission had last week communicated that it would decide on whether it needed to review the ALJ's determination on Monday.

In a submission in the public interest in the investigation, the FTC said last month it was concerned that a patent owner can make a FRAND commitment as part of the standard setting process, and then seek an exclusion order for infringement of the FRAND-encumbered standards-essential patent as a way of securing royalties that may be inconsistent with the FRAND commitment.

FTC said that ITC's issuance of an exclusion or cease and desist order in matters involving implementation of standards-essential patents, that were committed to be licensed on FRAND terms, has the potential to cause substantial harm to U.S. competition, consumers and innovation.
 FTC made the submission in the context of the ITC investigation into Motorola Mobility's charges of patent infringement against Apple and Microsoft.

Tech companies as well as U.S. Congressmen expressed similar concerns. The licensing of standards-essential patents has also come under scrutiny by courts. "By committing to license its patents on FRAND terms, Motorola committed to license the [patent] to anyone willing to pay a FRAND royalty and thus implicitly acknowledged that a royalty is adequate compensation for a license to use that patent," Judge Richard A. Posner wrote last month in an order on a dispute between Motorola and Apple in an Illinois court.

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John Ribeiro

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