Injunctions for SEP patent infringement fail – empirics: contracts, negotiations and more!
Ginsburg et al 14 Douglas H. Ginsburg is Senior Circuit Judge, U.S. Court of Appeals for the D.C. Circuit, and Professor of Law at George Mason University. Taylor M. Owings is Law Clerk to Judge Ginsburg. Joshua D. Wright is Commissioner, Federal Trade Commission, and Professor of Law at George Mason University (“ENJOINING INJUNCTIONS: THE CASE AGAINST ANTITRUST LIABILITY FOR STANDARD ESSENTIAL PATENT HOLDERS WHO SEEK INJUNCTIONS” 14-2 Antitrust Magazine Online 1, October 2014, NexisUni via University of Michigan Library Systems, DOA: 7/29/24)//LFS—LMH
The end result is that, despite all the handwringing over the prospect of SEP holders using injunctions and exclusion orders to suppress competition and extract above-FRAND licensing fees, we have not found even one injunction or exclusion order that actually kept a product off the shelf because it infringed a SEP. Gupta and Snyder's recent study of cases filed since 2000 in the "smart phone wars" found no injunction and only one exclusion order imposed for infringing a patent that was pled as a SEP, but even that exclusion order was vetoed by the U.S. Trade Representative as contrary to the public welfare. n17 The one example commonly invoked by concerned commentators, Commonwealth Scientific & Industrial Research Organisation v. Buffalo Technology Inc., n18 involved a patent the holder did not plead as a SEP. In any event, the judge granted an injunction only after expressly considering the competitive conditions in the market and concluding the "public interest would not be disserved by a permanent injunction because [standardized end] products are obtainable from multiple sources other than [the infringer]." n19
If a SEP holder cannot eliminate (or credibly threaten to eliminate) competition by getting an injunction, then it cannot distort licensing negotiations, contrary to what some commentators have suggested, n20 and contract law should provide SEP users with sufficient means for protecting their interests in a FRAND licensing rate. Antitrust enforcement is therefore an unnecessary response to a SEP holder seeking an injunction.
Some commentators have argued that manufacturers using SEPs will not bother to assert their contract rights, figuring they face no competitive disadvantage if the SEP holder extracts an above-FRAND price from every SEP user that manufactures the end product, n21 which would result in a uniformly higher cost being passed on to the consumer. n22 We depart for a moment from our focus upon injunctions to point out that both theory and evidence make this concern implausible. If a manufacturer can undercut all its rivals' prices by going to court to vindicate its contract right to a FRAND price, then the incentive to do so, i.e., the opportunity to increase its sales and to capture the market even for a time, will be great. That SEP users are in fact modifying SSO contracts over time in order better to protect their rights n23 certainly suggests they intend to assert those rights.