FTC to Probe IT Patents' Antitrust Effect

by Don Marti

Representatives of large corporations walk into a room and come out with an agreement that excludes small companies from competing with their technology. It is an illegal conspiracy in restraint of trade, an information technology standards organization...or both?

That's what the US Federal Trade Commission wants to find out. In a speech on November 15, Federal Trade Commission Chairman Timothy J. Muris announced hearings on "Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy".

The agenda and list of speakers for the hearing have not yet been determined. (Since any patent on Batman's Batsignal must have expired by now, Linux Journal technical staff have been assigned the task of building a "Lessig Signal" to alert Prof. Lawrence Lessig.)

In a surprising attack on the US Patent and Trademark Office (USPTO)'s policy of rubber-stamping bogus patent applications, Mr. Muris said, "if the patent review process is too permissive--e.g., patents are granted too easily for trivial or non-existent improvements that do not meet statutory requirements for patentability--competition through entry and expansion by others may be impeded." The text of the speech is available on the FTC web site.

But invalid patents aren't the whole problem--it's how participants in technology standards use patents. Mr. Muris mentioned a 1995 FTC case in which the Dell Computer Corp. agreed not to collect royalties on a patent they allegedly sneaked through the VESA standards process. "Some commentators have argued that standards that rely on patents or other intellectual property rights present a great danger to competition", he said.

Scott Peterson, corporate counsel for Hewlett-Packard and a coauthor of the draft of the World Wide Web Consortium's Patent Policy Framework, says that the FTC has a new-found interest in possible antitrust consequences of what, until now, have been standard patent policies for technology standards groups. "I went to an ANSI patent group meeting last week at which an FTC staff member joined for part of the meeting, and we talked about standards and antitrust," he said.

"I think its fair to say that the topic is of interest to me, and I'm going to be following how it develops and considering the possibility of offering feedback", he added. Peterson called the FTC's decision to hold hearings "helpful", and said, "It would be appropriate for the FTC to offer some guidance."

Have the patent policies of standards bodies hurt your ability to do business or buy the products you want? Just in case we don't get the Lessig Signal working, please take advantage of FTC's invitation to submit written comments. Easy-to-follow instructions are available in the Federal Register.

First the National Institute of Standards and Technology, now the FTC. How long can the USPTO continue annoying the rest of the US government with its mindless dumping of more and broader patents?

Don Marti is Technical Editor of Linux Journal.

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