Comments on: The New Math of “Objective” RAND: “Over Half” Is Less Than “A Tiny Fraction” http://www.robglidden.com/2009/05/the-new-math-of-objective-rand/ My blog Wed, 26 May 2010 22:08:33 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: johnhane http://www.robglidden.com/2009/05/the-new-math-of-objective-rand/comment-page-1/#comment-404 johnhane Tue, 05 May 2009 15:00:13 +0000 http://www.robglidden.com/?p=737#comment-404 Although they diverge in specifics, the general position of the comments filed by patent holders in response to the CUT FATT petition is that the FCC has no right or power to regulate patent royalty rates. The patent-holding commenters point out, correctly, that the USPTO gives patent holders the exclusive right to their inventions and that the federal courts are charged with adjudicating infringement claims. They also argue that the ATSC itself requires RAND licensing and assert that courts are equipped to enforce the ATSC patent policy. Their message to the FCC: this area is well-regulated by the private marketplace, standards bodies and the courts. ATSC royalty rates are none of the FCC's business. The patent holding commenters conveniently mix up several discrete sets of corresponding rights and obligations: Patent rights: In exchange for disclosing an invention and eventually allowing it to pass into the public domain, inventors get a period of exclusive rights to practice their inventions. Enforcement is with the courts and, in some cases, the International Trade Commission. Standards organizations: In exchange for making certain voluntary licensing commitments, my patented invention may be included in a published standard, potentially expanding the market for my invention greatly. Enforcement is unclear. The FTC, DOJ and courts are candidates in the hands of resourceful lawyers, but in practice there may be little or no relief. It depends. The FCC: In exchange for having their patents included in a *mandatory* government standard, the FCC imposed on certain patent holders a specific commitment to license their ATSC-essential patents either free of charge or on reasonable and non-discriminatory terms. Enforcement of this particular "FRAND" obligation is squarely with the FCC. The FCC itself made this very clear when it adopted the ATSC A/53 standard and imposed the FRAND obligation as a condition: "[I]f a future problem is brought to our attention, we will consider it and take appropriate action.” None of the patent holders covered by the order adopting the ATSC A/53 standard challenged FCC authority to impose or enforce the FRAND licensing obligation, although may of them apparently see the world differently now that the FCC has raised an eyebrow. The CUT FATT petition addresses only the third set of rights and obligations. Beneficiaries of the patent holders' obligations undertaken in exchange for rights bestowed by the USPTO and the ATSC presumably have venues in which to assert grievances. But that's not the end of the inquiry, because in this somewhat unusual case, the patent holders were granted a third set of privileges (which has turned out to be by far the most lucrative benefit of all). In exchange, they accepted a third set of obligations imposed and enforced by the FCC. Protests that their exclusive FCC-granted rights came with no incremental FCC-enforceable obligations conflict are hollow. As Andrew Jackson commented in vetoing the Bank Renewal Bill on July 10, 1832, "Every monopoly and all exclusive privileges are granted at the expense of the public, which ought to receive a fair equivalent." Holders of patents used in the FCC-mandated standard have two government-granted monopolies, one USPTO-granted monopoly right to their patents, and a second FCC-granted monopoly right to the technology used in all televisions sold in the US. The public is entitled to a fair equivalent in exchange for each of these exclusive rights. Although they diverge in specifics, the general position of the comments filed by patent holders in response to the CUT FATT petition is that the FCC has no right or power to regulate patent royalty rates. The patent-holding commenters point out, correctly, that the USPTO gives patent holders the exclusive right to their inventions and that the federal courts are charged with adjudicating infringement claims. They also argue that the ATSC itself requires RAND licensing and assert that courts are equipped to enforce the ATSC patent policy. Their message to the FCC: this area is well-regulated by the private marketplace, standards bodies and the courts. ATSC royalty rates are none of the FCC’s business.

The patent holding commenters conveniently mix up several discrete sets of corresponding rights and obligations:

Patent rights: In exchange for disclosing an invention and eventually allowing it to pass into the public domain, inventors get a period of exclusive rights to practice their inventions. Enforcement is with the courts and, in some cases, the International Trade Commission.

Standards organizations: In exchange for making certain voluntary licensing commitments, my patented invention may be included in a published standard, potentially expanding the market for my invention greatly. Enforcement is unclear. The FTC, DOJ and courts are candidates in the hands of resourceful lawyers, but in practice there may be little or no relief. It depends.

The FCC: In exchange for having their patents included in a *mandatory* government standard, the FCC imposed on certain patent holders a specific commitment to license their ATSC-essential patents either free of charge or on reasonable and non-discriminatory terms. Enforcement of this particular “FRAND” obligation is squarely with the FCC. The FCC itself made this very clear when it adopted the ATSC A/53 standard and imposed the FRAND obligation as a condition: “[I]f a future problem is brought to our attention, we will consider it and take appropriate action.” None of the patent holders covered by the order adopting the ATSC A/53 standard challenged FCC authority to impose or enforce the FRAND licensing obligation, although may of them apparently see the world differently now that the FCC has raised an eyebrow.

The CUT FATT petition addresses only the third set of rights and obligations. Beneficiaries of the patent holders’ obligations undertaken in exchange for rights bestowed by the USPTO and the ATSC presumably have venues in which to assert grievances. But that’s not the end of the inquiry, because in this somewhat unusual case, the patent holders were granted a third set of privileges (which has turned out to be by far the most lucrative benefit of all). In exchange, they accepted a third set of obligations imposed and enforced by the FCC. Protests that their exclusive FCC-granted rights came with no incremental FCC-enforceable obligations conflict are hollow.

As Andrew Jackson commented in vetoing the Bank Renewal Bill on July 10, 1832, “Every monopoly and all exclusive privileges are granted at the expense of the public, which ought to receive a fair equivalent.” Holders of patents used in the FCC-mandated standard have two government-granted monopolies, one USPTO-granted monopoly right to their patents, and a second FCC-granted monopoly right to the technology used in all televisions sold in the US. The public is entitled to a fair equivalent in exchange for each of these exclusive rights.

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