FTC Says Potential Harm Could Come from iPhone, Xbox Bans; Sends Letter to ITC

June 7, 2012 9:54 AM EDT
Investors in Microsoft (Nasdaq: MSFT) and Apple (Nasdaq: AAPL) are responding to a positive call from the Federal Trade Commission (FTC) issued late Wednesday.

According to reports, the FTC said a ban on Microsoft's Xbox and Apple's iPhone due to Motorola Mobility patents now owned by Google (Nasdaq: GOOG) would do damage to competition in the U.S.

Accordingly, the FTC recommended limits be imposed on standard-essential patents (SEPs). In a letter written to the International Trade Commission (ITC) -- which has final say on the ban -- the FTC noted a patent "hold-up" over SEPs "could raise prices to consumers while undermining the standard setting process."

Some remedies suggested include a FRAND-pledged SEP offering royalties and/or a delay on any ban to allow parties to remedy past infringements and negotiate future payments. For the latter, pressure is on both parties as one is seeking to gain allowance of a product which might be in competition with the issuers own interests, providing for a higher royalty payment request, while the issuer might have its patent vacated if the ITC finds unreasonable refusal of a reasonable offer.

For more in-depth color on the topic and the full FTC letter, check out FOSS Patents here.

Microsoft shares are up 0.2 percent early while shares of Apple are 0.9 percent higher on the session.

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