Regulators at FTC, DOJ caution against misuse of patents

“We think the promise made by the holder of the patent to license on [fair, reasonable, and non-discriminatory] terms really tips the balance in favor of seriously questioning why an exclusion order would be appropriate in any circumstance,” Wayland later added.

FTC Commissioner Edith Ramirez said the agency is also concerned that patent holders could use exclusion orders “to demand higher royalties or other more costly licensing terms” after an industry standard is implemented. 

The FTC is investigating whether Google-owned Motorola is using standards-essential patents to block its rivals' access to smartphone technology. 

Ramirez said the ITC has an obligation to consider whether issuing an order goes against the public interest. But Ramirez noted in her opening testimony that the trade commission has rarely used this provision to deny granting an order. 

Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) said exclusion orders could be misused to prevent new technology from entering the market, posing a threat to competition and innovation.

“When inventors and developers are willing to license their technologies to one another at reasonable rates, the cross-fertilization of ideas benefits us all,” Leahy said at the opening of the hearing. “But I am concerned that the recent trend of seeking exclusion orders from the International Trade Commission, rather than negotiating and seeking license fees, may have the opposite effect.”