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Senate committee to debate ending sales bans stemming from essential patents

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Tomorrow, the Senate Judiciary Committee will hold a hearing to the antitrust implications of sales bans based on standard-essential patents. Typically the patents have been licensed on FRAND terms, but some companies like Motorola are using the threat of bans to extract higher licensing fees.

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Tomorrow, the Senate Judiciary Committee will hold a hearing to determine the antitrust implications of sales bans based on infringement of standard-essential patents. The FTC and Justice Department are also weighing in, in order to help determine whether patent holders should be forbidden from asking for the bans in the first place.

Standard-essential patents are for inventions that a device needs to have in order to conform to an industry standard, like Bluetooth or MPEG. These kinds of patents, which differ from something like Apple’s patent on “slide-to-unlock,” are typically licensed on fair, reasonable, and non-discriminatory (FRAND) terms. That means anyone is free to use the patent so long as they pay the license fee, which is typically small. However, the acutely litigious climate of the mobile market has allowed some companies to demand higher licensing fees for their patents — if licensees don't pay up, patent holders always have the threat of a sales ban in their back pockets. Motorola has successfully pursued injunctions against Microsoft’s Xbox 360 at the ITC and in Germany for patents related to H.264 video encoding, although the latter has been rendered temporarily unenforceable by a US federal court ruling.

As reported by Reuters, Motorola insists that it needs the leverage provided by the possibility of sales bans in order to ensure that its rivals pay the licensing fees. Time will tell if the argument is enough to win over the Committee.