FTC turns back challenge on patent coverage

The US Federal Trade Commission (FTC) has overturned a decision by one of its administrative law judges, which held that the agency lacked power to stop patent owners from deceptively inducing state regulatory agencies to adopt standards subject to patent protection. The charge in controversy was that the Union Oil Company of California (Unocal) violated antitrust laws by deceiving the California Air Resources Board (CARB). This alleged misconduct occurred in regulatory proceedings for setting a gasoline content standard to lessen air pollution. The FTC’s administrative law judge had ruled the FTC had no regulatory power over conduct occurring in such government proceedings, and dismissed the charges without a factual trial of the allegations. This led to an appeal to the five-commissioner FTC, which unanimously reversed the initial decision. The effect of the reversal is to reinstate the proceeding against Unocal for a determination as to whether it had committed the alleged fraud on CARB concerning patents.