Here’s What the FTC Thinks of Motorola’s Apple Injunction

Lending its opinion to the Federal Circuit Court of Appeals in an amicus curiae brief filed on Wednesday, the U.S. Federal Trade Commission made a case against the court-ordered injunction requested by Google’s (NASDAQ:GOOG) Motorola Mobility as the sales ban on Apple (NASDAQ:AAPL) devices could harm “competition, innovation, and consumers.”

Both companies are appealing a patent infringement case dismissed last June by a district court in Illinois. However, the FTC concluded that the court “correctly applied the governing legal principles when it dismissed Motorola’s request for an injunction that could have blocked Apple from selling iPhones and iPads in the United States.”

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In his decision, Judge Richard Posner determined that Motorola could not halt sales because the patent in question was a standard essential patent, or SEP. Because those types of patents enable devices manufactured by different companies to function together, SEPs are typically regarded differently in litigation. In this case, Motorola had agreed to license the patent in question on fair and reasonable terms so that the technology could be adopted as a wireless industry standard.

According to the FCC, injunctions often cause patent hold-ups, which raise prices and undermine the standard-setting process. “Patent hold-up risks harming competition, innovation, and consumers because it allows a patentee to be rewarded not based on the competitive value of its technology, but based on the infringer’s costs to switch to a non-infringing alternative when an injunction is issued,” the agency wrote in its brief.

The Commission expressed similar concerns about the anticompetitive effects of injunctions earlier this year when Motorola sued Microsoft (NASDAQ:MSFT). At the time, the FTC wrote a letter to the U.S. International Trade Commission, recommending that companies should have only a limited ability to threaten injunctions based on standard essential patents.

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