FTC against import ban in Xbox 360 and iPhone patent cases

Import bans too harsh, the FTC told the International Trade Commission

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The FTC recommended not to ban U.S. imports of Microsoft's Xbox 360 and Apple's iPhone, despite patent infringements.

Google, along with with the International Trade Commission, is currently pushing the import ban on Xbox 360 systems and the iPhone for their infringements of industry standard patents held by its Motorola Mobility division.

Citing a potential hindrance to innovation and industry competition, the FTC wants companies to be limited in their ability to request an import ban for products infringing on industry standard patents.

The FTC's position is that industry standard patents should be considered under Reasonable and Non-Discriminatory licensing terms (RAND).

RAND ensures that unfair licensing practices don't cause royalty rates to rise unfairly for industry standards, leading to higher product prices for consumers.

"A royalty negotiation that occurs under threat of an exclusion order may be weighted heavily in favor of the patentee in a way that is in tension with the RAND commitment," the FTC said.

The FTC submitted its comments to the ITC, which is set to make its ruling on the cases in August.

A stalemate in reasonable negotiations

In April, it was ruled that Microsoft's Xbox 360 infringes on Motorola's H.264 video compression codec and wireless technologies patents.

An ITC judge then recommended an import ban on the gaming console due to the infringement.

Similarly, in April Motorola won its patent case against Apple for infringing one of its Android patents.

Motorola Mobility has said it "would welcome having Apple and Microsoft join the more than 50 other companies" to license its industry standard patents.

However, the firm claims that neither company will discuss a license agreement "on reasonable terms and thus we all find ourselves in seemingly endless litigation."

The matter boils down to what licensing terms are deemed reasonable by each of the companies.

While Motorola doesn't consider Apple and Microsoft's terms reasonable, according to the FTC it's unreasonable to negotiate those terms while pushing to ban Xbox and iPhone imports.

The stalemate will lead to an important decision for the ITC in August, which could set a new precedent for how companies can use patent disputes as leverage to combat competing devices.