[DMCA-Activists] FTC Finding re False Representations on Patents

[Seth Johnson]

> http://www.techlawjournal.com/topstories/2004/20040707.asp


FTC Rules Noerr-Pennington Doctrine Does Not Block Antitrust
Action for False Representations Regarding Patents During
Standards Setting Process


July 7, 2004. The Federal Trade Commission (FTC) issued an order
[2 pages in PDF] titled "Order Reversing and Vacating the Initial
Decision and Order and Remanding for Further Proceeding" in the
FTC's proceeding titled "In the Matter of Union Oil Company of
California". The full Commission reversed an administrative law
judge's decision that the Noerr-Pennington doctrine prevents the
FTC from pursing an antitrust enforcement action against Union
Oil Company of California (Unocal) in connection with its making
false representations to a government standards setting body
regarding its patent rights. 

The FTC also issued an opinion [56 pages in PDF] explaining its
order. See also, FTC release.

This is an oil industry action. However, this will also affect
the application of antitrust laws to technology companies that
engage in misrepresentation regarding their patents and patent
applications in standards setting processes.

The FTC filed its Administrative Complaint on March 4, 2003
alleging that Unocal subverted the California regulatory standard
setting proceedings relating to low emissions gasoline standards,
in violation of Section 5 of the FTC Act. 

The complaint alleged that Unocal engaged in unfair methods of
competition through knowing and willful misrepresentations, to
the California Air Resources Board (CARB) and to competing
gasoline refiners, that Unocal lacked, or would not assert,
patent rights concerning automobile emissions research results.
The complaint also alleged that Unocal induced the CARB to adopt
standards that overlapped its patents, and that Unocal induced
other refiners to reconfigure their refineries in ways that
exposed them to Unocal patent claims.

On November 25, 2003, an FTC Administrative Law Judge issued his
Initial Decision [74 pages in PDF] in the proceeding captioned
"In the Matter of Union Oil Company of California". The ALJ
dismissed the FTC's administrative complaint against Union Oil
Company of California (Unocal) pursuant to the Noerr-Pennington
doctrine, and because the FTC "lacks jurisdiction to decide the
fundamental and substantial patent issues raised by the
allegations of the Complaint."

The FTC wrote in its July 7 opinion that "A private business
allegedly has used false and misleading statements to induce a
government body to issue regulatory standards that conferred
market power upon the firm. Respondent argues that, even taking
the Complaint’s factual allegations as established as is required
at this preliminary stage, its deliberate use of
misrepresentations to secure monopoly power is protected from
antitrust challenge under the Noerr-Pennington doctrine, which
shelters certain petitioning for government action. We disagree."

See, Eastern R.R. Presidents Conference v. Noerr Motor Freight,
Inc., 365 U.S. 127 (1961) and United Mine Workers v. Pennington,
381 U.S. 657 (1965).

See also, story titled "ALJ Dismisses FTC's Patent Ambush
Complaint Against Unocal" in TLJ Daily E-Mail Alert No. 789,
December 1, 2003.

The July 7 order states that "the Commission has determined to
reverse and vacate the Initial Decision and to vacate the Order
accompanying it, and to remand this matter for further
proceedings."

The July 7 opinion was written by FTC Chairman Timothy Muris, and
joined by the four other Commissioners. The November 25, 2003
Initial Decision was written by Administrative Law Judge Michael
Chappell. This is Docket No. 9305. See also, FTC's collection of
pleadings in this proceeding.




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