Coalition (of two) urges FCC to oversee patent licenses as well as broadcast licenses

Now and then we get an item down here in the CommLawBlog bunker that leaves us scratching our heads.

This week’s baffler is a Petition for Rulemaking from an entity calling itself the “Coalition United to Terminate Financial Abuses of the Television Transition LLC,” or CUT FATT. As far as we can tell from its own description of itself, the membership consists of a grand total of two manufacturers of TV sets. (Any fewer, of course, and it loses its “Coalition” status.) 

CUT FATT states as follows:

  • The technical standards for digital TV sets, adopted by the FCC back in 1996, include elements that were (and still are) protected by patent.
  • The owners of those patents are overcharging set manufacturers, by $20-30 per set, for the licenses the manufacturers need to make the sets.
  • The DTV transition leaves consumers no choice but to buy the sets and pay the inflated prices.
  • The FCC should adopt a rule that limits patent royalties and imposes high fines on patent-holders that charge more.

The first question that comes to mind – okay, the second question, after “Who comes up with these acronyms?” – is whether the FCC can do what CUT FATT asks. The FCC does not usually regulate patent licenses. Why does CUT FATT think the FCC can do it now?

In the proceeding that adopted the DTV standard, the FCC acknowledged that some components were under patent, and expressed its confidence that those would be licensed on reasonable and nondiscriminatory terms. It added: “[I]f a future problem is brought to our attention, we will consider it and take appropriate action.” QED! says CUT FATT. The FCC has jurisdiction!

Or maybe not. The FCC’s comment was arguably not part of its ruling at all, but rather just obiter dictum, Latin for “idle musings that have no legal effect.” And even if the FCC meant to commit itself, it cannot create its own jurisdiction. Only Congress can do that. But nowhere does any statute grant the FCC authority over patent royalties. To be sure, there is a provision allowing the FCC to do anything “as may be necessary in the execution of its functions,” but the courts insist that this language does not let the FCC grant itself new powers. Besides, if the problem is as urgent and important as CUT FATT says, why are they coming forward only now, when the DTV transition is just about over?

CUT FATT may in fact have a good case. Next time we upgrade all the 72-inch high-def plasmas down here in the bunker, we’ll be happy to pay $20-30 less. But in calling on the FCC, CUT FATT may have knocked at the wrong door.

Still and all, the FCC (for whatever reason) has invited comments on the CUT FATT petition. If you want to chip in your two cents’ worth (bearing in mind, of course, that you could end up $20-30 on the plus side if things work out), you can file comments by April 27, and reply comments by May 27.