5846 Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Notices 

1 The comment must be accompanied by an 

explicit request for confidential treatment, 

including the factual and legal basis for the request, 

and must identify the specific portions of the 

comment to be withheld from the public record. 

The request will be granted or denied by the 

Commission’s General Counsel, consistent with 

applicable law and the public interest. See 

Commission Rule 4.9(c), 16 CFR 4.9(c). 

Form No.: FCC Form 731. 

Type of Review: Revision of a 

currently approved collection. 

Respondents: Business or other forprofit. 

Number of Respondents: 600 

respondents; 10,000 responses. 

Estimated Time per Response: 25 

hours. 

Frequency of Response: On occasion 

reporting requirement and third party 

disclosure requirement. 

Obligation to Respond: Required to 

obtain or retain benefits. 

Total Annual Burden: 250,000 hours. 

Total Annual Cost: $11,017,500. 

Privacy Act Impact Assessment: N/A. 

Nature and Extent of Confidentiality: 

Minimal exemption from the Freedom 

of Information Act (FOIA) under 5 

U.S.C. 552(b)(4) and FCC rules under 47 

CFR 0.457(d) is granted for trade secrets 

which may be submitted as attachments 

to the application FCC Form 731. No 

other assurances of confidentiality are 

provided to respondents. 

Needs and Uses: The Commission 

will submit this information collection 

to the OMB as a revision during this 

comment period to obtain the full threeyear clearance from them. There is an 

increase in the number of responses, 

burden hours and annual costs due 

recalculations of the burden estimates. 

On April 23, 2007, the FCC adopted 

and released a Second Report and 

Order, FCC 07–56, ET Docket No. 03–

201 that modified Parts 2 and 15 of the 

Commission’s rules for equipment 

approval and unlicensed devices. The 

amended rules provide for more 

efficient equipment authorization of 

both existing modular transmitter 

devices and emerging partitioned (or 

‘‘split’’) modular transmitter devices. 

These rule changes will benefit 

manufacturers by allowing greater 

flexibility in certifying equipment and 

providing relief from the need to obtain 

a new equipment authorization each 

time the same transmitter is installed in 

a different final product. The rule 

changes will also enable manufacturers 

to develop more flexible and more 

advanced unlicensed transmitter 

technologies. 

To effectively implement the 

provisions of the new rules, various 

modifications to the existing FCC Form 

731 are required. The changes are 

intended to simplify the filing process, 

however, there is no anticipated change 

in the per application burden for FCC 

Form 731 submittal. The following 

specific changes are proposed on the 

FCC Form 731 to accommodate 

modifications (revisions) and simplify 

filing processes: 

(1) Modular Type field addition—a 

new required field will be added to 

Section 1 of the form entitled ‘‘Modular 

Type’’. 

(2) Equipment Authorization 

Waiver—a new field set requesting 

information on equipment authorization 

waivers will be added. The first 

question ‘‘Is there an equipment 

authorization waiver associated with 

this application?’’ will have a default 

value set to ‘‘No’’. If the user answers 

‘‘Yes’’, a second question ‘‘* * * has 

the associated waiver been approved 

and all information uploaded?’’ requires 

a positive response. 

(3) FCC ID Related Fields—additional 

instances of the ‘‘Related FCC ID’’ field 

will be added, to allow the user to 

inform the FCC of more than one 

application associated with the current 

application. 

(4) Short-Term Confidentiality 

Modifications—Short Term 

Confidentiality questions will be 

modified to allow the applicant to 

request Short-Term Confidentiality on 

the FCC Form 731, and to request a 

Short-Term confidentiality date no 

greater than 180 days from the date of 

Grant. 

(5) Knowledge Data Base (KDB) 

Associated Question—a new field group 

will be added to the form that captures 

KDB inquiry information related to the 

FCC Form 731 application filing. The 

applicant will be asked ‘‘Is there a KDB 

inquiry associated with this 

application?’’ The default response is 

‘‘No’’, and if the applicant responds 

‘‘Yes’’, the user will be required to enter 

a valid KDB inquiry tracking number. 

In addition to the changes to the FCC 

Form 731 which are necessary to 

implement the requirements of the new 

rules, an increase in the burden hours 

is requested in anticipation of a 

continuing increase of the greater than 

10% annually in the number of 

applications requiring equipment 

authorization. This 10% increase is 

reflected in application submittals 

directly to the FCC, and to 

Telecommunications Certification 

Bodies (TCBs) that act on behalf of the 

FCC to review application submittals 

and issue equipment authorization 

grants. 

The Commission will use the 

information gathered on the FCC Form 

731 to determine compliance of the 

proposed equipment with the 

Commission’s rules. Following 

authorization of the equipment for 

marketing by either the FCC or the TCB 

on behalf of the FCC, the information 

may also be used to determine: 

(a) Whether the operation of the 

equipment is consistent with the 

information supplied at the time of 

authorization, and 

(b) whether the equipment marketed 

complies with the terms of the 

equipment authorization. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

[FR Doc. E8–1791 Filed 1–30–08; 8:45 am] 

BILLING CODE 6712–01–P 

FEDERAL TRADE COMMISSION 

[File No. 051 0094] 

Negotiated Data Solutions LLC; 

Analysis of Proposed Consent Order 

to Aid Public Comment 

AGENCY: Federal Trade Commission. 

ACTION: Proposed Consent Agreement. 

SUMMARY: The consent agreement in this 

matter settles alleged violations of 

federal law prohibiting unfair or 

deceptive acts or practices or unfair 

methods of competition. The attached 

Analysis to Aid Public Comment 

describes both the allegations in the 

draft complaint and the terms of the 

consent order—embodied in the consent 

agreement—that would settle these 

allegations. 

DATES: Comments must be received on 

or before February 22, 2008. 

ADDRESSES: Interested parties are 

invited to submit written comments. 

Comments should refer to ‘‘Negotiated 

Data Solutions, File No. 051 0094,’’ to 

facilitate the organization of comments. 

A comment filed in paper form should 

include this reference both in the text 

and on the envelope, and should be 

mailed or delivered to the following 

address: Federal Trade Commission/ 

Office of the Secretary, Room 135-H 

(Annex D), Pennsylvania Avenue, NW, 

Washington, D.C. 20580. Comments 

containing confidential material must be 

filed in paper form, must be clearly 

labeled ‘‘Confidential,’’ and must 

comply with Commission Rule 4.9(c). 

16 CFR 4.9(c) (2005).1 The FTC is 

requesting that any comment filed in 

paper form be sent by courier or 

overnight service, if possible, because 

U.S. postal mail in the Washington area 

and at the Commission is subject to 

delay due to heightened security 


rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Notices 5847 

precautions. Comments that do not 

contain any nonpublic information may 

instead be filed in electronic form by 

following the instructions on the webbased form at http:// 

secure.commentworks.com/ftcNegotiatedDataSolutions. To ensure that 

the Commission considers an electronic 

comment, you must file it on that webbased form. 

The FTC Act and other laws the 

Commission administers permit the 

collection of public comments to 

consider and use in this proceeding as 

appropriate. All timely and responsive 

public comments, whether filed in 

paper or electronic form, will be 

considered by the Commission, and will 

be available to the public on the FTC 

website, to the extent practicable, at 

www.ftc.gov. As a matter of discretion, 

the FTC makes every effort to remove 

home contact information for 

individuals from the public comments it 

receives before placing those comments 

on the FTC website. More information, 

including routine uses permitted by the 

Privacy Act, may be found in the FTC’s 

privacy policy, at http://www.ftc.gov/ 

ftc/privacy.htm. 

FOR FURTHER INFORMATION CONTACT: Kent 

E. Cox (202) 326-2058, Bureau of 

Competition, Room NJ-6213, 600 

Pennsylvania Avenue, NW, Washington, 

D.C. 20580. 

SUPPLEMENTARY INFORMATION: Pursuant 

to section 6(f) of the Federal Trade 

Commission Act, 38 Stat. 721, 15 U.S.C. 

46(f), and § 2.34 of the Commission 

Rules of Practice, 16 CFR 2.34, notice is 

hereby given that the above-captioned 

consent agreement containing a consent 

order to cease and desist, having been 

filed with and accepted, subject to final 

approval, by the Commission, has been 

placed on the public record for a period 

of thirty (30) days. The following 

Analysis to Aid Public Comment 

describes the terms of the consent 

agreement, and the allegations in the 

complaint. An electronic copy of the 

full text of the consent agreement 

package can be obtained from the FTC 

Home Page (for January 23, 2008), on 

the World Wide Web, at http:// 

www.ftc.gov/os/2008/01/index.htm. A 

paper copy can be obtained from the 

FTC Public Reference Room, Room 130- 

H, 600 Pennsylvania Avenue, N.W., 

Washington, D.C. 20580, either in 

person or by calling (202) 326-2222. 

Public comments are invited, and may 

be filed with the Commission in either 

paper or electronic form. All comments 

should be filed as prescribed in the 

ADDRESSES section above, and must be 

received on or before the date specified 

in the DATES section. 

Analysis of Agreement Containing 

Consent Order to Aid Public Comment 

The Federal Trade Commission 

(‘‘Commission’’) has accepted, subject to 

final approval, an Agreement 

Containing Consent Order 

(‘‘Agreement’’) with Negotiated Data 

Solutions LLC (‘‘N-Data’’), a limited 

liability company whose sole activity is 

to collect royalties in connection with a 

number of patents. The Agreement 

settles allegations that N-Data has 

violated Section 5 of the Federal Trade 

Commission Act, 15 U.S.C. § 45, by 

engaging in unfair methods of 

competition and unfair acts or practices 

relating to the Ethernet standard for 

local area networks. Pursuant to the 

Agreement, N-Data has agreed to be 

bound by a proposed consent order 

(‘‘Proposed Consent Order’’). 

The Proposed Consent Order has been 

placed on the public record for thirty 

(30) days for comments by interested 

persons. Comments received during this 

period will become part of the public 

record. After thirty (30) days, the 

Commission will again review the 

Agreement and the comments received 

and will decide whether it should 

withdraw from the Agreement or make 

final the Agreement’s Proposed Consent 

Order. 

The purpose of this analysis is to 

facilitate comment on the Proposed 

Consent Order. This analysis does not 

constitute an official interpretation of 

the Proposed Consent Order, and does 

not modify its terms in any way. The 

Agreement has been entered into for 

settlement purposes only, and does not 

constitute an admission by N-Data that 

the law has been violated as alleged or 

that the facts alleged, other than 

jurisdictional facts, are true. 

Background 

The Institute of Electrical and 

Electronics Engineers (‘‘IEEE’’) is a 

standard-setting organization active in a 

number of different industries. IEEE 

standards often enhance the 

interoperability of communications 

products. One important example, 

which is at issue here, is the 802 series 

of networking standards. Many of the 

standards in the 802 series allow users 

to reliably access and share information 

over communications systems by 

interconnecting many compatible 

products manufactured by different 

producers. 

The IEEE 802.3 standard, first 

published in 1983, and commonly 

referred to as ‘‘Ethernet,’’ applies to 

local area networks (‘‘LANs’’) built on 

copper, and more recently fiber optic, 

cables. That standard initially 

accommodated a maximum data 

transmission rate of 10 megabits per 

second (10 Mbps) between networked 

devices. By 1994, the 802.3 Working 

Group was developing a new 802.3 

standard for ‘‘Fast Ethernet,’’ which 

would transmit data across a copper 

wire at 100 Mbps. The Working Group 

determined that it would be desirable 

for Fast Ethernet equipment to be 

compatible, to the extent possible, with 

existing LAN equipment and with 

future generations of equipment. A 

technology, variously known as 

‘‘autodetection’’ and ‘‘autonegotiation,’’

was developed that would permit such 

compatibility. 

Employees of National Semiconductor 

Corporation (‘‘National’’) were members 

and active participants in the 802.3 

Working Group. In 1994, National 

proposed that the 802.3 Working Group 

adopt its autonegotiation technology, 

referred to as ‘‘NWay,’’ into the Fast 

Ethernet standard. At the time, National 

disclosed to the Working Group that it 

had already filed for patent protection 

for the technology. Several other 

participants also had developed 

competing technologies and the 

Working Group considered several 

alternatives, each having advantages 

and disadvantages compared to NWay. 

The 802.3 Working Group also 

considered adopting the Fast Ethernet 

standard without any autonegotiation 

feature. 

At IEEE meetings to determine which 

autonegotiation technology to include in 

802.3, one or more representatives of 

National publicly announced that if 

NWay technology were chosen, National 

would license NWay to any requesting 

party for a one-time fee of $1,000. In a 

subsequent letter dated June 7, 1994, 

and addressed to the Chair of the 802.3 

Working Group of IEEE, National wrote: 

In the event that the IEEE adopts an 

autodetection standard based upon 

National’s NWay technology, National 

will offer to license its NWay 

technology to any requesting party for 

the purpose of making and selling 

products which implement the IEEE 

standard. Such a license will be made 

available on a nondiscriminatory basis 

and will be paid-up and royalty-free 

after payment of a one-time fee of one 

thousand dollars ($1,000). 

Based on National’s licensing 

assurance, and following its normal 

balloting and voting procedures, IEEE 

incorporated NWay technology into the 

Fast Ethernet standard, which IEEE 

published in final form in July 1995. To 

maintain compatibility with the 

installed base of Ethernet and Fast 

Ethernet equipment, subsequent 

revisions of the 802.3 standard also have 


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5848 Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Notices 

2 Vertical subsequently sold its remaining 

business assets and ceased operations. 

3 The conduct by Vertical and N-Data has led to, 

or threatened to lead to, increased prices in the 

markets for autonegotiation technology (1) used in 

802.3 compliant products and (2) used in products 

that implement an IEEE standard enabling 

autonegotiation with 802.3 compliant products. 

4FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 

239 (1972); see also FTC v. Ind. Fed’n of Dentists, 

476 U.S. 447, 454 (1986). See generally Concurring 

Opinion of Commissioner Jon Leibowitz, In re 

Rambus, Inc., Docket No. 9302, available at 

http://www.ftc.gov/os/adjpro/d9302/060802 

rambusconcurringopinionofcommissioner 

leibowitz.pdf; Statement of Commissioner J. 

Thomas Rosch, ‘‘Perspectives on Three Recent 

Votes: the Closing of the Adelphia Communications 

Investigation, the Issuance of the Valassis 

Complaint & the Weyerhaeuser Amicus Brief,’’

before the National Economic Research Associates 

2006 Antitrust & Trade Regulation Seminar, Santa 

Fe, New Mexico (July 6, 2006) at 5-12, available at 

http://www.ftc.gov/speeches/rosch/Rosch-NERASpeech-July6-2006.pdf. 

incorporated NWay autonegotiation 

technology. The ‘‘Fast Ethernet’’

standard became the dominant standard 

for LANs, and users are now locked in 

to using NWay technology due to 

network effects and high switching 

costs. Therefore, today, autonegotiation 

technologies other than NWay are not 

attractive alternatives to NWay for 

manufacturers who want to include 

inter-generational compatibility in their 

Ethernet products. 

NWay contributed to the success of 

Fast Ethernet technology in the 

marketplace. An installed base of 

millions of Ethernet ports operating at 

10 Mbps already existed when IEEE 

published the Fast Ethernet standard. 

The autonegotiation technology in the 

Fast Ethernet standard allowed owners 

of existing Ethernet-based LANs to 

purchase and install multi-speed, Fast 

Ethernet-capable equipment on a 

piecemeal basis without having to 

upgrade the entire LAN at once or buy 

extra equipment to ensure 

compatibility. 

National benefitted financially from 

its licensing assurance. The assurance 

accelerated sales of National products 

that conformed to the Fast Ethernet 

standard by first, allaying concerns 

about the future costs of 

autonegotiation, and so speeding 

completion of the standard, and second, 

making Fast Ethernet-compatible 

products backward compatible with 

Ethernet equipment already installed on 

existing LANs, increasing the demand 

for Fast Ethernet products by those with 

existing systems. 

In 1997, the United States Patent and 

Trademark Office issued U.S. Patent 

Nos. 5,617,418 and 5,687,174 (the ’418 

and ’174 Patents) to National. Both 

patents arose from the patent 

application that National disclosed to 

the IEEE in 1994. National later received 

equivalent patents in other countries. 

In 1998, National assigned a number 

of patents, including the ’418 and the 

’174 Patents, to Vertical Networks 

(‘‘Vertical’’), a telecommunications startup company founded by former 

National employees. Before the 

assignment, National gave Vertical a 

copy of the June 7, 1994 letter to the 

802.3 Working Group. Vertical’s outside 

patent counsel, Mr. Alan Loudermilk, 

acknowledged in writing that National 

had informed him ‘‘that several of the 

patents may be ‘encumbered’’’ by 

actions National had taken with respect 

to the IEEE standards. The final 

agreement between Vertical and 

National stated that the assignment was 

‘‘subject to any existing licenses that 

[National] may have granted.’’ It further 

provided, ‘‘Existing licenses shall 

include . . . [p]atents that may be 

encumbered under standards such as an 

IEEE standard ... ’’

In 2001, Vertical turned to its 

intellectual property portfolio in an 

effort to generate new revenues by 

licensing its technology to third parties. 

One aspect of this strategy was 

Vertical’s effort to repudiate the $1,000 

licensing term contained in National’s 

1994 letter of assurance to the IEEE. On 

March 27, 2002, Vertical sent a letter to 

the IEEE that purported to ‘‘supersede’’

any previous licensing assurances 

provided by National. Vertical 

identified nine U.S. patents assigned to 

it by National, including the ’174 and 

’418 patents, and promised to make 

available to any party a non-exclusive 

license ‘‘on a non-discriminatory basis 

and on reasonable terms and conditions 

including its then current royalty rates.’’

In the Spring of 2002, Vertical 

developed a list of ‘‘target companies’’

that practiced the IEEE 802.3 standard 

and which it believed infringed on the 

‘174 and ‘418 patents. Vertical sought to 

enforce the new licensing terms on 

these companies. These companies, 

which included many large computer 

hardware manufacturers, represented a 

substantial majority of all producers of 

802.3 ports. Vertical’s patent counsel, 

Mr. Loudermilk, sent letters to most of 

these companies between 2002 and 

2004 offering a license for patents 

covering aspects of ‘‘the autonegotiation functionality’’ in networking 

products, including products compliant 

with IEEE 802.3. Vertical also filed suit 

against a number of companies alleging 

that ‘‘switches, hubs, routers, print 

servers, network adapters and 

networking kits’’ having autonegotiating 

compatibility, infringed its ’174 and 

’418 patents. Vertical entered into 

several licensing agreements producing 

licensing fees far in excess of $1,000 

from each licensed company. 

In late 2003, Vertical assigned some of 

its patent portfolio, including the ’174 

and ’418 patents, to N-Data, a company 

owned and operated by Mr. 

Loudermilk.2 N-Data was aware of 

National’s June 7, 1994 letter of 

assurance to the IEEE when Vertical 

assigned those patents to N-Data. Yet it 

rejected requests from companies to 

license NWay technology for a one-time 

fee of $1,000. Instead, N-Data threatened 

to initiate, and in some cases 

prosecuted, legal actions against 

companies refusing to pay its royalty 

demands, which are far in excess of that 

amount. 

The Proposed Complaint 

Vertical and N-Data sought to exploit 

the fact that NWay had been 

incorporated into the 802.3 standard, 

and had been adopted by the industry 

for a number of years, by reneging on a 

known commitment made by their 

predecessor in interest. Even if their 

actions do not constitute a violation of 

the Sherman Act, they threatened to 

raise prices for an entire industry and to 

subvert the IEEE decisional process in a 

manner that could cast doubt on the 

viability of developing standards at the 

IEEE and elsewhere. The threatened or 

actual effects of N-Data’s conduct have 

been to increase the cost of practicing 

the IEEE standards, and potentially to 

reduce output of products incorporating 

the standards.3 N-Data’s conduct also 

threatens to reduce the incentive for 

firms to participate in IEEE and in other 

standard-setting activities, and to rely 

on standards established by standardsetting organizations. 

The Proposed Complaint alleges that 

this conduct violates Section 5 of the 

FTC Act in two ways: first, N-Data 

engaged in an unfair method of 

competition; and second, N-Data 

engaged in an unfair act or practice. 

1. Unfair Method of Competition 

N-Data’s conduct constitutes an unfair 

method of competition. The Supreme 

Court in FTC v. Sperry & Hutchinson 

Co. endorsed an expansive reading of 

the ‘‘unfair method of competition’’

prong of Section 5, stating that the 

Commission is empowered to ‘‘define 

and proscribe an unfair competitive 

practice, even though the practice does 

not infringe either the letter or spirit of 

the antitrust laws’’ and to ‘‘proscribe 

practices as unfair ... in their effect on 

competition.’’4 That description of the 


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Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Notices 5849 

5See, e.g., Cong. Rec. 12,153 (1914) (statement of 

Sen. Robinson) (‘‘unjust, inequitable or dishonest 

competition’’ proscribed), 51 Cong. Rec. 12,154 

(1914) (statement of Sen. Newlands) (conduct that 

is ‘‘contrary to good morals’’ proscribed). 

6Official Airline Guides v. FTC, 630 F.2d 920, 927 

(2d Cir. 1980) (‘‘OAG’’). 

7E.I. Du Pont v. de Nemours & Co. v. FTC, 729 

F.2d 128, 139-40 (2d Cir. 1984) (‘‘Ethyl’’). 

8See Standard Sanitary Mfg. Co. v. United States, 

226 U.S. 20, 41 (1912); Allied Tube & Conduit Corp. 

v. Indian Head, Inc., 486 U.S. 492, 500 (1989); Am. 

Soc’y of Mech. Engineers, Inc. v. Hydrolevel Corp., 

456 U.S. 556, 571 (1982). 

9 It is worth noting that, because the proposed 

complaint alleges stand-alone violations of Section 

5 rather than violations of Section 5 that are 

premised on violations of the Sherman Act, this 

action is not likely to lead to well-founded treble 

damage antitrust claims in federal court. See 

Herbert Hovenkamp, Federal Antitrust Policy at 588 

(2d ed. 1999). 

10 15 U.S.C. § 45(n) (1992). 

11Id. 

12Orkin Exterminating Co. v. FTC, 849 F.2d 1354, 

1364 (11th Cir. 1988). 

13See Letter from Federal Trade Commission to 

Senators Ford and Danforth (Dec. 17, 1980), 

reprinted in H.R. Rep. No. 156, Pt. 1, 98th Cong., 

1st Sess. 33-40 (1983) available at http:// 

www.ftc.gov/bcp/policystmt/ad-unfair.htm, 

appended to the Commission’s decision in 

International Harvester, 104 F.T.C. at 949, 1061 

(1984), and subsequently codified by Congress at 15 

U.S.C. § 45(n). 

14 The IEEE designed its rules to avoid just such 

a result. IEEE’s stated purpose for requesting letters 

of assurance was to avoid giving ‘‘undue preferred 

status to a company’’ and to ensure that the 

adoption of a technology would not be 

‘‘prohibitively costly or noncompetitive to a 

substantial part of the industry.’’ 1994 IEEE 

Standards Operations Manual §6.3. 

scope of Section 5 accords with the 

legislative history of Section 5.5

Notwithstanding that broad 

description, the unfair method of 

competition prong of Section 5 is 

subject to limiting principles. The first 

relates to the nature of the conduct. In 

OAG, the Second Circuit held that such 

a violation could not be found where 

the respondent ‘‘does not act 

coercively.’’6 Similarly, in Ethyl the 

Second Circuit held that ‘‘at least some 

indicia of oppressiveness must exist 

...’’7 This requirement is met here, given 

N-Data’s efforts to exploit the power it 

enjoys over those practicing the Fast 

Ethernet standard and lacking any 

practical alternatives. This form of 

patent hold-up is inherently ‘‘coercive’’

and ‘‘oppressive’’ with respect to firms 

that are, as a practical matter, locked 

into a standard. 

The second limiting principle relates 

to the effects of the conduct. Although 

the Supreme Court has made it clear 

that the respondent’s conduct need not 

violate the letter (or even the spirit) of 

the antitrust laws to fall under Section 

5, that does not mean that conduct can 

be considered an unfair method of 

competition if it has no adverse effect at 

all on competition. That requirement, 

however, is also satisfied here, given the 

conduct’s adverse impact on prices for 

autonegotiation technology and the 

threat that such conduct poses to 

standard-setting at IEEE and elsewhere. 

Respondent’s conduct here is 

particularly appropriate for Section 5 

review. IEEE’s determination to include 

National’s technology in its standard 

rested on National’s commitment to 

limit royalties to $1,000. That 

commitment had substantial 

competitive significance because it 

extended not to a single firm, but rather 

to an industry-wide standard-setting 

organization. Indeed, in the standardsetting context—with numerous, injured 

third parties who lack privity with 

patentees and with the mixed incentives 

generated when members may be 

positioned to pass on royalties that raise 

costs market-wide—contract remedies 

may prove ineffective, and Section 5 

intervention may serve an unusually 

important role. 

N-Data’s conduct, if allowed, would 

reduce the value of standard-setting by 

raising the possibility of opportunistic 

lawsuits or threats arising from the 

incorporation of patented technologies 

into the standard after a commitment by 

the patent holder. As a result, firms may 

be less likely to rely on standards, even 

standards that already exist. In the 

creation of new standards, standardsetting organizations may seek to avoid 

intellectual property entirely, 

potentially reducing the technical merit 

of those standards as well as their 

ultimate value to consumers. 

A mere departure from a previous 

licensing commitment is unlikely to 

constitute an unfair method of 

competition under Section 5. The 

commitment here was in the context of 

standard-setting. The Supreme Court 

repeatedly has recognized the 

procompetitive potential of standardsetting activities. However, because a 

standard may displace the normal give 

and take of competition, the Court has 

not hesitated to impose antitrust 

liability on conduct that threatens to 

undermine the standard-setting process 

or to render it anticompetitive.8 The 

conduct of N-Data (and Vertical) at issue 

here clearly has that potential.9

2. Unfair Act or Practice 

N-Data’s efforts to unilaterally change 

the terms of the licensing commitment 

also constitute unfair acts or practices 

under Section 5 of the FTC Act. The 

FTC Act states that ‘‘unfair or deceptive 

acts or practices in or affecting 

commerce[] are . . . unlawful.’’ An 

unfairness claim under this part of 

Section 5 must meet the following 

statutory criteria: 

The Commission shall have no 

authority . . . to declare unlawful an 

act or practice on the grounds that 

such act or practice is unfair unless 

the act or practice causes or is likely 

to cause substantial injury to 

consumers which is not reasonably 

avoidable by consumers themselves 

and not outweighed by 

countervailing benefits to 

consumers or to competition.10

The Commission may consider 

established public policies as evidence 

to be considered with all other 

evidence, though not as a primary basis 

for a determination of unfairness.11 As 

the Eleventh Circuit emphasized in 

Orkin Exterminating Co. v. FTC,12 the 

Commission has applied limiting 

principles requiring a showing that (1) 

the conduct caused ‘‘substantial 

consumer injury,’’ (2) that injury is ‘‘not 

. . . outweighed by any countervailing 

benefits to consumers or competition 

that the practice produces,’’ and (3) it is 

an injury that ‘‘consumers themselves 

could not reasonably have avoided.’’13

This Section 5 claim against the 

efforts of Vertical and N-Data to 

unilaterally increase the price for the 

relevant technology by knowingly 

reneging on National’s commitment 

meets these statutory criteria, and thus 

constitutes a violation of Section 5’s 

prohibition of unfair acts and practices. 

NWay was chosen for the standard on 

the basis of the assurances made by 

National to the IEEE 802.3 Working 

Group. Further, the industry relied, at 

least indirectly, on National’s 

assurances regarding pricing, and made 

substantial and potentially irreversible 

investments premised on those 

representations. After the standard 

became successful, and it became 

difficult, if not impossible, for the 

industry to switch away from the 

standard, Vertical and then N-Data took 

advantage of the investments made by 

these firms by reneging on National’s 

commitment. Because it is now no 

longer feasible for the industry to 

remove the technologies, the value that 

N-Data was able to extract from market 

participants was due to the 

opportunistic nature of its conduct 

rather than the value of the patents.14

Accordingly, an action against this 

conduct meets the criteria set forth in 

the statute and in Orkin. First, N-Data’s 

reneging on its pricing commitments 

here involved ‘‘substantial consumer 

injury.’’ The increase in royalties 

demanded by Vertical Networks and 

later N-Data could result in millions of 

dollars in excess payments from those 


rwilkins on PROD1PC63 with NOTICES
5850 Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Notices 

15 The Commission has a ‘‘longstanding position 

that the statutory prohibition against ‘unfair or 

deceptive acts or practices’ includes practices that 

victimize businesspersons as well as those who 

purchase products for their own personal or 

household use,’’ given that businesses ‘‘clearly do 

consume goods and services that may be marketed 

by means of deception and unfairness.’’ Brief of 

Federal Trade Commission as Amicus Curiae at 3- 

4, 8-9, Vermont v. International Collection Service, 

Inc., 594 A.2d 426 (Vt. 1991) (citing cases); see also, 

e.g., 16 C.F.R. § 436.1 (FTC rule protecting 

franchisees); United States Retail Credit Ass’n v. 

FTC, 300 F.2d 212 (4th Cir. 1962) (deception 

involving business clients); United States Ass’n of 

Credit Bureaus, Inc. v. FTC, 299 F.2d 220 (4th Cir. 

1962) (same). 

16 Susan A. Creighton, Cheap Exclusion, 72 

ANTITRUST L.J. 975, 994 (2005). 

17Orkin, 849 F.2d at 1365. 

18In re Orkin Exterminating Co., 108 F.T.C. 263 

(1986), aff’d, 849 F.2d 1354 (11th Cir. 1988). 

19See Allied Tube & Conduit Corp. v. Indian 

Head, Inc., 486 U.S. 492, 500-01 (1998) (regarding 

the potential procompetitive advantages of private 

associations promulgating safety standards). 20Orkin, 849 F.2d at 1361. 

practicing the standard, not to mention 

the legal fees those firms might spend 

defending lawsuits.15 In addition, often 

in market-wide standard-setting 

contexts, the licensees have an incentive 

to pass along higher costs to the 

ultimate consumers who purchase the 

products.16 Thus, these end consumers 

who purchase products using N-Data’s 

technology may face increased prices 

due to the higher royalties. Further, 

those demands also have no apparent 

‘‘countervailing benefit’’— to those 

upon whom demands have been made, 

ultimate consumers, or to competition—

so the second requirement is also met. 

With respect to the third requirement, 

both the Commission and the Eleventh 

Circuit in Orkin stated that consumers 

‘‘may act to avoid injury before it occurs 

if they have reason to anticipate the 

impending harm and the means to avoid 

it, or they may seek to mitigate the 

damage afterward if they are aware of 

potential avenues to that end.’’17 Here, 

those who created the standard had no 

way to anticipate the repudiation of the 

price commitment before it occurred 

and, apart from expensive litigation, 

those locked into the standard had no 

way to avoid the threatened injury 

posed by the demands that they faced. 

Thus, those practicing the standard 

were locked in to even a greater extent 

than the consumers in Orkin. Put 

simply, this is a form of what has been 

described as ‘‘patent hold-up.’’

The facts alleged in the complaint 

here are similar to those found in the 

Commission’s decision in Orkin, which 

was affirmed by the Eleventh Circuit.18

In that case, the respondent signed 

contracts with consumers to supply 

lifetime extermination services at a 

fixed annual renewal fee. Years later, 

the respondent unilaterally increased 

these fees. Consumers needing 

extermination services had no reason to 

anticipate Orkin’s unilateral price 

increase and there was no evidence that 

they could contract with Orkin’s 

competitors on terms similar to Orkin’s 

initial terms. The Commission held, and 

the Eleventh Circuit agreed, that Orkin’s 

unilateral price increase was an unfair 

act or practice under Section 5. 

Similarly, National made non-expiring 

royalty commitments that Vertical and 

N-Data later repudiated with unilateral 

increases, which the industry could not 

have reasonably anticipated before the 

market wide adoption of the standard 

and which consumers had no chance of 

avoiding due to network effects and 

lock-in. 

Clearly, merely breaching a prior 

commitment is not enough to constitute 

an unfair act or practice under Section 

5. The standard-setting context in which 

National made its commitment is 

critical to the legal analysis. As 

described above, the lock-in effect 

resulting from adoption of the NWay 

patent in the standard and its 

widespread use are important factors in 

this case. In addition, the established 

public policy of supporting efficient 

standard-setting activities is an 

important consideration in this case.19

Similarly, it must be stressed that not all 

breaches of commitments made by 

owners of intellectual property during a 

standard-setting process will constitute 

an unfair act or practice under Section 

5. For example, if the commitment were 

immaterial to the adoption of the 

standard or if those practicing the 

standard could exercise 

countermeasures to avoid injury from 

the breach, the statutory requirements 

most likely would not be met. Finally, 

it needs to be emphasized that not all 

departures from those commitments 

will be treated as a breach. The Orkin 

court suggested that there might be a 

distinction between an open-ended 

commitment and a contract having a 

fixed duration.20 That distinction does 

not apply here because the context of 

the commitment made it plain that it 

was for the duration of National’s 

patents. However, most such 

commitments, including the one here, 

are simply to offer the terms specified. 

Indeed, those principles are reflected in 

the remedy set forth in the consent 

decree. 

The Proposed Consent Order 

The Proposed Consent Order 

prohibits N-Data from enforcing the 

Relevant Patents, defined in the order, 

unless it has first offered to license them 

on terms specified by the order. The 

terms of that license follow from those 

promised by National Semiconductor in 

its letter of June 7, 1994, to the IEEE. 

Specifically, N-Data must offer a paidup, royalty-free license to the Relevant 

Patents in the Licensed Field of Use in 

exchange for a one-time fee of $1,000. 

The form of this license is attached as 

Appendix C to the order. The Licensed 

Field of Use is defined in the license as 

the ‘‘use of NWay Technology to 

implement an IEEE Standard,’’ and this 

includes ‘‘optimization and 

enhancement features’’ that are 

consistent with such use. NWay 

Technology is defined in the license to 

have the same meaning as it did in the 

June 7, 1994 letter, and the license gives 

examples of documents describing the 

use of NWay Technology. 

The Commission recognizes that some 

firms may inadvertently allow the 

$1,000 offer from N-Data to languish. 

Therefore, if an offeree has failed to 

accept such an offer within 120 days, 

the Proposed Consent Order allows NData to sue to enforce the Relevant 

Patents. At the time N-Data files suit, 

however, it must make a second offer. 

This second offer provides a prospective 

licensee with an opportunity to accept 

the patent license specified by the order 

in return for a payment of thirty-five 

thousand dollars ($35,000). The 

requirement that the second offer be 

delivered in the context of litigation 

gives N-Data an incentive to pursue 

patent enforcement only against 

companies over which it has a 

reasonable likelihood of prevailing in 

court. It will also ensure that the second 

offer will receive the full attention of 

knowledgeable counsel for the offeree. 

A $35,000 license fee will offset some of 

N-Data’s costs of litigation, and it will 

discourage recipients of an initial offer 

from simply waiting to be sued, and 

then accepting the first offer. The 

offeree’s time to accept the second offer 

expires with the time to file a 

responsive pleading to the filing that 

accompanies the second offer. After 

that, the amount that N-Data can collect 

from an accused infringer is not limited 

by the order. 

The Proposed Consent Order requires 

N-Data to distribute copies of the 

complaint and the Proposed Consent 

Order to specified persons. It also 

prohibits N-Data from transferring any 

of the Relevant Patents, except to a 

single person who has agreed to be 

bound by the Proposed Consent Order 

and by the patent licenses formed 

thereunder. The Proposed Consent 

Order also contains standard reporting, 

notification and access provisions 

designed to allow the Commission to 

monitor compliance. It terminates 


rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Notices 5851 

1 Commissioners Harbour, Leibowitz, and Rosch 

support the issuance of the Complaint and 

proposed consent agreement and join in this 

statement. 

2 Section 5 of the FTC Act prohibits ‘‘unfair 

methods of competition in or affecting commerce, 

and unfair or deceptive acts or practices in or 

affecting commerce.’’ 15 USC § 45(a)(1). 

3 One dissent recites a different set of facts than 

those alleged in the Complaint. We do not agree 

with that version of the facts. Rather, we believe 

that staff’s investigation, as described in the 

Analysis to Aid Public Comment, accurately depicts 

the facts in this case. 

4 See generally Fed. Trade Comm’n , To Promote 

Innovation: The Proper Balance of Competition and 

Patent Law and Policy ch. 2 at 31, n. 220; ch. 3 at 

38-41, available at http://www.ftc.gov/os/2003/10/ 

innovationrpt.pdf (2003) (conduct by ‘‘nonproducing entities’’—sometimes referred to as 

‘patent trolls’—may harm consumers when such 

firms force manufacturers to agree to licenses after 

the manufacturers have sunk substantial 

investments into technologies). 

5 See, e.g., E.I. du Pont de Nemours & Co. v. FTC, 

729 F.2d 128 (2d Cir. 1984) (‘‘Ethyl’’); Official 

Airline Guides v. FTC, 630 F.2d 920 (2d Cir. 1980). 

The conduct falls squarely within the parameters of 

cases like Ethyl. One dissent quotes a passage from 

the Ethyl decision; even that excerpt makes clear 

that a Section 5 violation can be found when there 

are ‘‘some indicia of oppressiveness’’ such as 

‘‘coercive...conduct.’’ For the reasons stated in the 

Analysis to Aid Public Comment, we find reason to 

believe that Respondent engaged in conduct that 

was both oppressive and coercive when it engaged 

in efforts to exploit licensees that were locked into 

a technology by the adoption of a standard. We 

believe the Analysis to Aid Public comment 

adequately describes the limiting principles 

applicable here. See generally Statement of 

Commissioner J. Thomas Rosch, Perspectives on 

Three Recent Votes: the Closing of the Adelphia 

Communications Investigation, the Issuance of the 

Valassis Complaint & the Weyerhaeuser Amicus 

Brief, before the National Economic Research 

Associates 2006 Antitrust & Trade Regulation 

Seminar, Santa Fe, New Mexico (July 6, 2006) at 5- 

12, available at http://www.ftc.gov/speeches/rosch/ 

Rosch-NERA-Speech-July6-2006.pdf; Concurring 

Opinion of Commissioner Jon Leibowitz, In re 

Rambus, Inc., Docket No. 9302, available at 

http://www.ftc.gov/os/adjpro/d9302/060802 

rambusconcurringopinionofcommissioner 

leibowitz.pdf. 

One dissent cites the Areeda and Hovenkamp 

antitrust treatise as well as several other sources to 

mistakenly suggest that there is a ‘‘scholarly 

consensus’’ that an unfair method of competition 

cannot be found under Section 5 unless there is 

liability under the antitrust laws. Most of the 

sources cited by the dissent, however, actually 

support the Analysis to Aid Public Comment, 

which notes that, although Section 5 extends 

beyond the antitrust laws, there are limitations on 

its reach. Indeed, Professor Hovenkamp has 

explicitly acknowledged that there is a lack of 

consensus on the scope and application of Section 

5. See HERBERT HOVENKAMP, FEDERAL ANTITRUST

POLICY at 596-97 (3d ed. 2005). Professor 

Hovenkamp states that ‘‘[t]here are two views about 

the wisdom of the FTC’s use of Section 5’’ and goes 

on to discuss ‘‘[A]n alternative view, perfectly 

consistent with the proposition that the FTC’s 

antitrust concern should be limited to identifying 

practices that are economically anticompetitive.’’

Under that alternative view, it is appropriate to 

apply ‘‘the FTC Act to practices that do not violate 

the other antitrust laws . . . when (1) the practice 

seems anticompetitive but is not technically 

covered by the antitrust laws; and (2) the social cost 

of an error seems to be relatively small.’’ The social 

cost of an error here is small given the nature of 

the remedy and the low likelihood that a 

Commission consent order will be followed by a 

valid antitrust-based class action suit. See id. 

(‘‘Findings of violations of the FTC Act that are not 

also antitrust violations will not support subsequent 

private actions for treble damages’’). We 

nevertheless recognize Commissioner Kovacic’s 

concern that FTC ‘‘unfair methods’’ cases may 

support private actions based on state law, and join 

him in encouraging comment on that issue. 

6 See Allied Tube & Conduit Corp. v. Indian 

Head, Inc., 486 U.S. 492, 500 (1989); Am. Soc’y of 

Mech. Engineers, Inc. v. Hydrolevel Corp., 456 U.S. 

556, 571 (1982); Standard Sanitary Mfg. Co. v. 

United States, 226 U.S. 20, 41 (1912). See generally 

Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 

310-314 (3d Cir. 2007). 

7 U.S. Dep’t of Justice & Fed. Trade Comm’n, 

Antitrust Enforcement And Intellectual Property 

Rights: Promoting Innovation And Competition 33, 

available at http://www.ftc.gov/reports/innovation/ 

P040101PromotingInnovationandCompetition 

rpt0704.pdf (2007). 

twenty (20) years after the date it 

becomes final. 

STATEMENT OF THE FEDERAL 

TRADE COMMISSION 

The Federal Trade Commission 

(‘‘Commission’’) has voted to issue a 

Complaint against Negotiated Data 

Solutions LLC (‘‘N-Data’’) and to accept 

the proposed consent agreement settling 

it.1 The Complaint in this matter alleges 

that N-Data reneged on a prior licensing 

commitment to a standard-setting body 

and thereby was able to increase the 

price of an Ethernet technology used by 

almost every American consumer who 

owns a computer. Based on the facts 

developed by staff during the 

investigation, we find reason to believe 

that this conduct violated Section 5 of 

the FTC Act.2

The impact of Respondent’s alleged 

actions, if not stopped, could be 

enormously harmful to standardsetting.3 Standard-setting organization 

participants have long worried about the 

impact of firms failing to disclose their 

intellectual property until after industry 

lock-in. Many standard-setting 

organizations have begun to develop 

policies to deal with that problem. But 

if N-Data’s conduct became the accepted 

way of doing business, even the most 

diligent standard-setting organizations 

would not be able to rely on the good 

faith assurances of respected companies. 

The possibility exists that those 

companies would exit the business, and 

that their patent portfolios would make 

their way to others who are less 

interested in honoring commitments 

than in exploiting industry lock-in.4

Congress created the Commission 

precisely to challenge just this sort of 

conduct. 

To prohibit such unacceptable 

behavior, the Commission today accepts 

a proposed consent agreement premised 

on a Complaint that identifies two 

separate violations. First, we find that 

N-Data’s alleged conduct is an unfair 

method of competition. Second, we find 

that this conduct is also an unfair act or 

practice. 

There is little doubt that N-Data’s 

conduct constitutes an unfair method of 

competition.5 The legislative history 

from the debate regarding the creation of 

the Commission is replete with 

references to the types of conduct that 

Congress intended the Commission to 

challenge. See, e.g., 51 Cong. Rec. 

12,153 (1914) (statement of Sen. 

Robinson) (‘‘unjust, inequitable or 

dishonest competition’’), 51 Cong. Rec. 

12,154 (1914) (statement of Sen. 

Newlands) (conduct that is ‘‘contrary to 

good morals’’). The Supreme Court 

apparently agrees as it has found that 

the standard for ‘‘unfairness’’ under the 

FTC Act is ‘‘by necessity, an elusive 

one, encompassing not only practices 

that violate the Sherman Act and the 

other antitrust laws, but also practices 

that the Commission determines are 

against public policy for other reasons.’’

F.T.C. v. Ind. Fed’n of Dentists, 476 U.S. 

477, 454 (1986); see also F.T.C. v. Sperry 

& Hutchinson Co., 405 U.S. 233, 242 

(1972) (FTC has authority to constrain, 

among other things ‘‘deception, bad 

faith, fraud or oppression’’). 

We also have no doubt that the type 

of behavior engaged in by N-Data harms 

consumers. The process of establishing 

a standard displaces competition; 

therefore, bad faith or deceptive 

behavior that undermines the process 

may also undermine competition in an 

entire industry, raise prices to 

consumers, and reduce choices.6 We 

have previously noted that ‘‘[i]ndustry 

standards are widely acknowledged to 

be one of the engines driving the 

modern economy.’’7 Conduct like NData’s—which undermines standardsetting—threatens to stall that engine to 

the detriment of all consumers. 

N-Data’s conduct is also an unfair act 

or practice under Section 5(n) of the 

FTC Act and Orkin Exterminating Co., 

108 F.T.C. 263 (1986), aff’d, 849 F.2d 

1354 (11th Cir. 1988). This 

Commission—unanimously—has often 

found an unfair act or practice 

proscribed by Section 5 in conduct that 

victimizes businesses (as well as 

individuals) who are consumers. The 

dissent would distinguish those cases 

on the ground that the businesses here 

are all ‘‘large, sophisticated computer 

manufacturers’’ who are able to protect 

themselves. There is no basis for that 

distinction in Section 5. In any event, 

moreover, there is no basis in the record 

of this investigation for describing all of 

the ‘‘locked in’’ licensees that way. 


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5852 Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Notices 

1 In re Union Oil Company of California, 2004 

FTC LEXIS 115 (FTC 2004) (‘‘Unocal’’), available at 

http://www.ftc.gov/os/adjpro/d9305/ 

040706commissionopinion.pdf. 

2 In re Dell, 121 F.T.C. 616 (1996). 

3 In re Rambus, FTC Dkt. No. 9302 (Liability 

Opinion, July 31, 2006), appeal pending, Docket 

Nos. 07-1086, 07-1124 (D.C. Cir. 2007). 

4 U.S. Department of Justice and Federal Trade 

Commission, ANTITRUST ENFORCEMENT AND

INTELLECTUAL PROPERTY RIGHTS: PROMOTING

INNOVATION AND COMPETITION (April 2007) at 35-36 

[hereinafter ‘‘DOJ/FTC Intellectual Property 

Report’’], available at http://www.ftc.gov/reports/ 

innovation/P040101 

PromotingInnovationandCompetitionrpt 

0704.pdf. 

5 Id. at 36. See also Chairman Deborah Platt 

Majoras, Recognizing the Procompetitive Potential 

of Royalty Discussions in Standard Setting, 

Remarks before the Stanford University Conference 

on Standardization and the Law: Developing the 

Golden Mean for Global Trade (September 2005), 

available at http://www.ftc.gov/speeches/majoras/ 

050923stanford.pdf. 

6 DOJ/FTC Intellectual Property Report, supra 

note 4, at 36. 

7 Paragraph 31 of the Complaint alleges that 

‘‘several companies’’ entered into license 

agreements that have produced fees ‘‘far in excess’’

of $1,000 per company. In fact, three companies 

entered into license agreements (with Vertical) for 

the patents. N-Data has never received royalties or 

fees from those agreements, nor, as I understand it, 

has it collected any royalties for the relevant patents 

on terms inconsistent with those offered in the 1994 

letter. N-Data itself has initiated suit against one 

company, with which it had a dispute involving 

numerous patents other than those at issue in this 

case. 

8 See, e.g., In re Valassis Communications, Inc., 

Docket No. C-4160, FTC File No. 051 008 

(Complaint), available at http://www.ftc.gov/os/ 

caselist/0510008/0510008c4160Valassis 

Complaint.pdf. In its Analysis, the Commission 

explained that competition would not be 

adequately protected if antitrust enforcement were 

directed only at consummated cartel agreements. 

The Commission further explicated the several legal 

(including precedent) and economic justifications 

that support the imposition of liability upon firms 

that communicate an invitation to collude where 

acceptance cannot be proven. Prior to the Valassis 

case, the Commission entered into consent 

agreements in several cases alleging that an 

invitation to collude—though unaccepted by the 

Similarly, as discussed in detail in the 

Analysis to Aid Public Comment, no 

meaningful distinction can be drawn 

between the circumstances in Orkin, 

where the respondent sought to exploit 

consumers who were ‘‘locked into’’ long 

term contracts, and the unique 

circumstances of this case, where 

licensees are ‘‘locked into’’ the standard 

containing technology controlled by this 

Respondent. 

We recognize that some may criticize 

the Commission for broadly (but 

appropriately) applying our unfairness 

authority to stop the conduct alleged in 

this Complaint. But the cost of ignoring 

this particularly pernicious problem is 

too high. Using our statutory authority 

to its fullest extent is not only consistent 

with the Commission’s obligations, but 

also essential to preserving a free and 

dynamic marketplace. 

By direction of the Commission, 

Chairman Majoras and Commissioner 

Kovacic dissenting. 

Donald S. Clark 

Secretary 

DISSENTING STATEMENT OF 

CHAIRMAN MAJORAS 

I respectfully dissent from the 

decision to lodge a Complaint in this 

matter and to accept the settlement 

described in the majority’s Analysis of 

Proposed Consent Order to Aid Public 

Comment (‘‘Analysis’’). The facts do not 

support a determination of antitrust 

liability. The preconditions for use of 

stand-alone Section 5 authority to find 

an ‘‘unfair method of competition’’ are 

not present. And the novel use of our 

consumer protection authority to protect 

large corporate members of a standardsetting organization (‘‘SSO’’) is 

insupportable. 

This case presents issues that appear 

on first inspection to resemble those in 

our line of standard-setting ‘‘hold up’’

challenges, including Unocal,1Dell,2

and Rambus.3 As we and the Justice 

Department have explained jointly, 

‘‘multiple technologies may compete to 

be incorporated into the standard under 

consideration’’4 by an SSO. Once a 

technology has been selected and the 

standard that incorporates the 

technology has been specified, however, 

the standard’s adopters often will face 

significant relative costs in switching to 

an alternative standard. ‘‘[T]he chosen 

technology may lack effective 

substitutes precisely because the SSO 

chose it as the standard. Thus, . . . the 

owner of a patented technology 

necessary to implement the standard 

may have the power to extract higher 

royalties or other licensing terms that 

reflect the absence of competitive 

alternatives. Consumers of the products 

using the standard would be harmed if 

those higher royalties were passed on in 

the form of higher prices.’’5 In an effort 

to avoid the hold-up problem, some 

SSOs take measures to protect their 

members, such as imposing patent 

disclosure rules or securing agreement 

on licensing terms.6

This case departs materially from the 

prior line, however, in that there is no 

allegation that National engaged in 

improper or exclusionary conduct to 

induce IEEE to specify its NWay 

technology in the 802.3u standard. No 

one contends that National deceived 

SSO members at the time of its initial 

licensing offer in 1994. Further, from 

the time National submitted its letter of 

assurance in 1994 and at least until 

2002, some patent holders changed or 

clarified the terms of their letters of 

assurance—even after the relevant 

standard was approved. And although a 

new IEEE bylaw, passed in January 

2002, purported to make patent letters 

irrevocable, it did not address whether 

it was to apply retroactively. When 

Vertical submitted its 2002 proposal 

under which it would offer its entire 

patent portfolio that originated with 

National for license on reasonable and 

nondiscriminatory terms, the IEEE’s 

Patent Administrator did not object to 

the departure from the $1,000 

commitment, even while requesting and 

securing specific changes to Vertical’s 

proposal. The IEEE then appeared to 

have accepted the revised proposal by 

posting Vertical’s letter on its web site 

along with National’s June 7, 1994 

letter. 

There is also a substantial question as 

to whether N-Data enjoyed measurable 

market power, even with the adoption 

of the IEEE standard. Under the terms of 

the standard, the NWay technology was 

an optional technique. Although 

National in 1994 had offered to grant a 

paid-up, royalty-free license to the 

technology for $1,000 to anyone seeking 

to practice the standard, no company 

had sought to accept the offer until after 

publication of the 2002 revision on the 

IEEE web site. And despite ongoing 

licensing efforts by National’s 

successors, Vertical and N-Data, only 

one company paid materially more than 

the originally-quoted $1,000 for rights to 

the NWay technology.7 Most users 

evidently have preferred to infringe, 

running the risk of presumably minimal 

patent damages that they might face at 

the outcome of litigation. 

Thus, the facts do not support 

antitrust liability here. 

The majority evidently agrees that 

respondent’s conduct does not amount 

to improper acquisition or maintenance 

of monopoly power so as to fall within 

the ambit of Section 2 of the Sherman 

Act. Instead, the majority seeks to find 

liability purely under Section 5 of the 

FTC Act. This is not advisable as a 

matter of policy or prosecutorial 

discretion. 

The majority’s first theory is that NData engaged in an unfair method of 

competition. Although Section 5 

enables the Commission to reach 

conduct that is not actionable under the 

Sherman or Clayton Acts, we have 

largely limited ourselves to matters in 

which respondents took actions short of 

a fully consummated Section 1 violation 

(but with clear potential to harm 

competition), such as invitations to 

collude.8 This limitation is partly selfVerDate Aug<31>2005 19:05 Jan 30, 2008 Jkt 214001 PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 E:\FR\FM\31JAN1.SGM 31JAN1

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Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Notices 5853 

competitor—violated Section 5 of the FTC Act. 

MacDermid, Inc., Docket No. C-3911, FTC File No. 

991 0167 (Decision & Order), available at http:// 

www.ftc.gov/os/2000/02/macdermid.do.htm; Stone 

Container Corp., 125 F.T.C. 853 (1998); Precision 

Moulding Co., 122 F.T.C. 104 (1996); YKK (USA) 

Inc., 116 F.T.C. 628 (1993); A.E. Clevite, Inc., 116 

F.T.C. 389 (1993); Quality Trailer Products Corp., 

115 F.T.C. 944 (1992). 

9 See, e.g., 5 JULIAN O. VON KALINOSKI, PETER

SULLIVAN & MAUREEN MCGUIRL, ANTITRUST LAWS AND

TRADE REGULATION, § 77.02 at 77-3 (2007) (‘‘the 

prevailing view is that there are limitations on 

Section 5’s applicability to conduct which stretches 

beyond the letter of [the Sherman or Clayton 

Acts].’’); 2 PHILIP AREEDA & HERBERT HOVENKAMP, 

ANTITRUST LAW ¶ 302(h) (2006) (‘‘Apart from 

possible historical anachronisms in the application 

of those statutes, the Sherman and Clayton Acts are 

broad enough to cover any anti-competitive 

agreement or monopolistic situation that ought to 

be attacked whether ‘completely full blown or 

not.’’’); Richard A. Posner, The Federal Trade 

Commission: A Retrospective, 72 ANTITRUST L.J. 761, 

766 (2005) (‘‘It used to be thought that ‘unfair 

methods of competition’ swept further than the 

practices forbidden by the Sherman and Clayton 

Acts, and you find this point repeated occasionally 

even today, but it is no longer tenable. The Sherman 

and Clayton Acts have been interpreted so broadly 

that they no longer contain gaps that a broad 

interpretation of Section 5 of the FTC Act might be 

needed to fill.’’); John F. Graybeal, Unfair Trade 

Practices, Antitrust And Consumer Welfare In North 

Carolina, 80 N.C. L. REV. 1927, 1949 (2002) 

(‘‘Undoubtedly, the FTC today will proceed with 

great caution under section 5 to claim as an unfair 

method of competition any conduct that does not 

violate the Sherman or Clayton Acts.’’). See also 

ABA SECTION OF ANTITRUST LAW, ANTITRUST LAW

DEVELOPMENTS (6th ed. 2007) (‘‘FTC decisions have 

been overturned despite proof of anticompetitive 

effect where the courts have concluded that the 

agency’s legal standard did not draw a sound 

distinction between conduct that should be 

proscribed and conduct that should not.’’). 

10 729 F.2d 128, 138 (2d Cir. 1984). 

11 Id. at 139-140. 

12 Analysis at 5. 

13 In Rambus, the Commission drew upon its 

experience with the law regarding deceptive acts or 

practices, which has been developed largely in 

consumer protection contexts, to inform our 

analysis of deception before an SSO as part of an 

exclusionary course of conduct. Rambus, supra 

note 3, at 29-30. We did so, however, within a 

framework based on Sherman Act jurisprudence, 

recognizing, inter alia, the need to examine 

competitive effects. Id. at 28-31. The majority’s 

extension of our authority over unfair acts or 

practices, which Congress has specifically limited 

in Section 5(n), raises altogether different issues. 

14 15 U.S.C. § 45(n) (2000). See also International 

Harvester Co., 104 F.T.C. 949, 1061 (1984). 

15 See, e.g., FTC v. Websource Media, LLC, No. 

H-06-1980 (S.D. Tex. filed June 12, 2006) (unfair 

practice of ‘‘cramming’’ unauthorized charges onto 

the telephone bills of small businesses); FTC v. 

Certified Merchant Services, Ltd., No. 4:02CV44 

(E.D. Tex. filed February 11, 2002) (unfair practice 

of unilaterally inserting additional pages that 

describe substantial, undisclosed charges into credit 

card processing contracts with small business 

merchants); FTC v. IFC Credit Corp., No. 07C3155 

(N.D. Ill. filed June 6, 2007) (unfair practice of 

accepting and collecting on invalid, fraudulently 

induced equipment contracts with small businesses 

and religious and other nonprofit organizations). 

The majority cites to the Franchise Rule as another 

example of the Commission using its Section 5 

consumer protection authority to protect small 

businesses from deceptive practices. While the 

Franchise Rule, which requires certain disclosures 

prior to the sale of a franchise, sometimes protects 

businesses, it typically protects individual 

consumers that are purchasing franchises rather 

than sophisticated corporations. In adopting 

amendments to the Franchise Rule earlier this year, 

the Commission exempted from the Rule’s coverage 

several categories of sophisticated investors. 16 

C.F.R. § 436.8(a). 

imposed, reflecting the Commission’s 

recognition of the scholarly consensus 

that finds the Sherman and Clayton 

Acts, as currently interpreted, to be 

sufficiently encompassing to address 

nearly all matters that properly warrant 

competition policy enforcement.9 But 

the limitation also reflects the insistence 

of the appellate courts that the 

Commission’s discretion is bounded 

and must adhere to limiting principles. 

In E.I. du Pont de Nemours & Co. v. 

FTC, for example, the Second Circuit 

stated: ‘‘[w]hen a business practice is 

challenged by the Commission, even 

though, as here, it does not violate the 

antitrust or other laws and is not 

collusive, coercive, predatory or 

exclusionary in character, standards for 

determining whether it is ‘unfair’ within 

the meaning of § 5 must be formulated 

to discriminate between normally 

acceptable business behavior and 

conduct that is unreasonable or 

unacceptable.’’10 Writing in the context 

of a challenge to parallel conduct that 

did not arise from an agreement but that 

facilitated oligopolistic coordination, 

the Second Circuit adopted this test: 

In our view, before business 

conduct in an oligopolistic industry 

may be labelled ‘‘unfair’’ within the 

meaning of § 5 a minimum standard 

demands that, absent a tacit 

agreement, at least some indicia of 

oppressiveness must exist such as 

(1) evidence of anticompetitive 

intent or purpose on the part of the 

producer charged, or (2) the absence 

of an independent legitimate 

business reason for its conduct. . . . 

In short, in the absence of proof of 

a violation of the antitrust laws or 

evidence of collusive, coercive, 

predatory, or exclusionary conduct, 

business practices are not ‘‘unfair’’

in violation of § 5 unless those 

practices either have an 

anticompetitive purpose or cannot 

be supported by an independent 

legitimate reason.11

In its Analysis, the majority extends 

the du Pont formulation to the 

monopolization family, asserting that 

respondent’s conduct was ‘‘coercive’’

and ‘‘oppressive’’ and had an ‘‘adverse 

impact on prices for autonegotiation 

technology[.]’’12 These assertions are 

impossible to prove on the evidence we 

have. N-Data asserts that its 

renegotiation of its licensing terms was 

motivated by nothing other than an 

independent, business reason—that is, 

the aim of collecting royalties for a new 

bundle of intellectual property rights on 

reasonable and non-discriminatory 

terms. Even if N-Data were motivated by 

a desire to strike a better bargain than 

National made several years earlier, that 

alone should not be considered a 

competition-related offense. If the 

majority’s theory is that the evasion of 

contractual price constraints triggers 

liability under Section 5 without a 

concurrent determination that the 

conduct violates the Sherman Act, then 

we are headed down a slippery slope, 

and I take no comfort from the 

majority’s representation to the 

contrary. Parties often enter into 

contractual commitments involving 

asset-specific investments, creating the 

potential for opportunism. The majority 

has not identified a meaningful limiting 

principle that indicates when an 

action—taken in the standard-setting 

context or otherwise—will be 

considered an ‘‘unfair method of 

competition.’’

Pursuing a second theory, the 

majority invokes consumer protection 

doctrine to find that respondent has 

engaged in an ‘‘unfair act or practice’’ in 

violation of Sections 5(a) and (n) of the 

FTC Act.13 Section 5(n) provides a clear 

limitation of the Commission’s 

authority: ‘‘[t]he Commission shall have 

no authority under this section or 

section 57a of this title to declare 

unlawful an act or practice on the 

grounds that such act or practice is 

unfair unless the act or practice causes 

or is likely to cause substantial injury to 

consumers which is not reasonably 

avoidable by consumers themselves and 

not outweighed by countervailing 

benefits to consumers or to 

competition.’’14 The evidence simply 

does not support the requisite findings. 

In particular, finding ‘‘substantial 

consumer injury’’ here requires the 

majority to treat large, sophisticated 

computer manufacturers as 

‘‘consumers.’’ I do not agree with such 

a characterization, and I have serious 

policy concerns about using our 

consumer protection authority to 

intervene in a commercial transaction to 

protect the alleged ‘‘victims’’ here. The 

Analysis accurately states that the FTC 

has used its authority under Section 5 

to protect small businesses against 

unfair acts and practices. We have taken 

care to exercise this authority 

judiciously, however, to protect small 

businesses, non-profits, churches, and 

‘‘mom and pop’’ operations15 that lack 


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5854 Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Notices 

16 Some may argue that the Commission has 

already made the policy decision to treat businesses 

as consumers, and that there is no rational 

distinction between the companies we have 

protected and large corporations. I disagree. 

Although it is important to draw lines, there is such 

a vast difference between sophisticated 

corporations, on the one hand, and storefront shops, 

on the other, that we do not need to draw a bright 

line to distinguish this matter from previous cases 

the Commission has brought to protect small 

businesses. 

17 108 F.T.C. 263 (1986), aff’d, FTC v. Orkin, 849 

F.2d 1354 (11th Cir. 1988). 

18 Orkin pamphlets echoed this commitment, 

promising that the annual fee would ‘‘never 

increase.’’ 108 F.T.C. at 356. 

1 Dissenting Statement of Chairman Majoras, In 

the Matter of Negotiated Data Solutions LLC, File 

No. 0510094. 

the resources and, in some cases, the 

experience or understanding to defend 

themselves adequately against fraud. 

Indeed, certain of these small business 

owners, non-profit volunteers, and 

clergy had personally guaranteed the 

contracts at issue. There is a clear 

qualitative difference between these 

entities and the computer manufacturers 

that the majority treats as injured 

consumers in this matter.16

As I stated above, I am not convinced 

that any party was injured. And 

certainly the evidence does not support 

the finding that the alleged injury here 

was ‘‘not reasonably avoidable’’

(assuming, of course, that injury can be 

made out at all). The membership of 

IEEE includes computer networking 

equipment manufacturers and 

telecommunications companies. IEEE 

knew that its members sometimes made 

or attempted to make changes in patent 

commitment letters, and it could have 

acted sooner to protect its members 

from potentially adverse changes to 

commitment letters. IEEE also could 

have objected to Vertical’s revisions, but 

instead it accepted and published them 

without objection. Moreover, any 

individual company could have entered 

into a binding agreement with National, 

but none sought timely to accept the 

1994 royalty offer. 

In re Orkin Exterminating Co., Inc.,17

on which the majority relies, is 

fundamentally different from the instant 

matter. Orkin unilaterally increased its 

fees for more than 200,000 consumers, 

all of whom had signed written 

contracts that could readily be 

understood to be binding and that 

committed to a lifetime fee structure 

that would not increase.18 If consumers 

paid the amount specified in their 

contracts, Orkin’s policy was to return 

the payments. Thus, unlike the situation 

here, Orkin involved both (a) large 

numbers of individual consumers, and 

(b) widespread injury that the 

consumers could not reasonably avoid. 

For all of these reasons, I respectfully 

dissent. 

DISSENTING STATEMENT OF 

COMMISSIONER KOVACIC 

I oppose the Commission’s decision to 

accept for comment the settlement 

described in the Analysis to Aid Public 

Comment (‘‘Analysis’’). Like Chairman 

Majoras,1 I would not find that the 

Respondent engaged in an unfair 

method of competition or an unfair act 

or practice within the meaning of 

Section 5 of the Federal Trade 

Commission Act. Below I discuss two of 

the considerations that have influenced 

my thinking about this matter. These 

can serve as focal points for public 

comment before the Commission votes 

on whether to make the provisional 

settlement final. 

Effect on Private Rights of Action 

The Commission concludes that the 

respondent did not violate the Sherman 

Act or the Clayton Act. The Commission 

finds that the respondent violated 

Section 5 of the Federal Trade 

Commission Act because its conduct 

constituted both an unfair method of 

competition and an unfair act or 

deceptive practice. One reason the 

Commission gives for basing liability on 

Section 5 alone is that, unlike liability 

theories premised on infringements of 

the Sherman or Clayton Acts, private 

parties cannot use FTC intervention 

premised on Section 5 alone to support 

claims for treble damages in subsequent 

federal antitrust suits. The 

Commission’s assumption that a pure 

Section 5 theory will have no spillover 

effects seems to be important to the 

result it reaches. Footnote 8 of the 

Analysis says: 

It is worth noting that, because the 

proposed complaint alleges standalone violations of Section 5 rather 

than violations of Section 5 that are 

premised on violations of the 

Sherman Act, this action is not 

likely to lead to well-founded treble 

damage antitrust claims in federal 

court. 

If the absence of spillover effects in 

private litigation is important to the 

Commission’s decision, then the 

proposed settlement must account for 

the impact of FTC decisions upon the 

prosecution of claims based on state, as 

well as federal, causes of action. 

The Commission overlooks how the 

proposed settlement could affect the 

application of state statutes that are 

modeled on the FTC Act and prohibit 

unfair methods of competition (‘‘UMC’’) 

or unfair acts or practices (‘‘UAP’’). The 

federal and state UMC and UAP systems 

do not operate in watertight 

compartments. As commentators have 

documented, the federal and state 

regimes are interdependent. See, e.g., 

Dee Pridgen, Consumer Protection and 

the Law 214-22 (2007 Edition) 

(discussing use of FTC precedent to 

interpret state consumer protection 

statutes); Lawrence Fullerton et al., 

Reliance on FTC Consumer Protection 

Law Precedents in Other Legal Forums 

(American Bar Association, Section of 

Antitrust Law, Working Paper No. 1, 

July 1988) (describing how FTC 

consumer protection actions inform 

application of state law). By statute or 

judicial decision, courts in many states 

interpret the state UMC and UDP laws 

in light of FTC decisions, including 

orders. As a consequence, such states 

might incorporate the theories of 

liability in the settlement and order 

proposed here into their own UMC or 

UAP jurisprudence. A number of states 

that employ this incorporation principle 

have authorized private parties to 

enforce their UMC and UAP statutes in 

suits that permit the court to impose 

treble damages for infringements. 

If the Commission desires to deny the 

reasoning of its approach to private 

treble damage litigants, the proposed 

settlement does not necessarily do so. If 

the Commission’s assumption of no 

spillover effects is important to its 

decision, a rethink of the proposed 

settlement and order seems 

unavoidable. 

The Basis of Liability 

The proposed settlement treats the 

Respondent’s conduct as both an unfair 

method of competition and an unfair act 

or practice. When a public agency 

pleads alternative theories of liability, 

especially in a settlement with a party 

that appears to lack the means to 

threaten credibly to litigate, it should 

specify the distinctive contributions of 

each theory to the prosecution of the 

matter. Suppose that an agency 

comfortably could premise its allegation 

of infringement upon theory A. If the 

agency decides to premise liability upon 

theory B as well as theory A, it is good 

practice for the agency to explain what 

theory B adds to the mix. 

The Analysis here does not discuss 

why the Commission endorses separate 

UMC and UAP claims. The Analysis 

does not integrate the two theories of 

liability. A fuller effort to explain the 

relationship between the theories of 

liability in the Analysis would have led 

the Commission to confront anomalies 

in its exposition of the decision to 

prosecute. For example, the framework 

that the Analysis presents for analyzing 

the challenged conduct as an unfair act 


rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Notices 5855 

or practice would appear to encompass 

all behavior that could be called a UMC 

or a violation of the Sherman or Clayton 

Acts. The Commission’s discussion of 

the UAP liability standard accepts the 

view that all business enterprises—

including large companies—fall within 

the class of consumers whose injury is 

a worthy subject of unfairness scrutiny. 

If UAP coverage extends to the full 

range of business-to-business 

transactions, it would seem that the 

three-factor test prescribed for UAP 

analysis would capture all actionable 

conduct within the UMC prohibition 

and the proscriptions of the Sherman 

and Clayton Acts. Well-conceived 

antitrust cases (or UMC cases) typically 

address instances of substantial actual 

or likely harm to consumers. The FTC 

ordinarily would not prosecute behavior 

whose adverse effects could readily be 

avoided by the potential victims—either 

business entities or natural persons. 

And the balancing of harm against 

legitimate business justifications would 

encompass the assessment of 

procompetitive rationales that is a core 

element of a rule of reason analysis in 

cases arising under competition law. 

The prospect of a settlement can lead 

one to relax the analytical standards that 

ordinarily would discipline the decision 

to prosecute if the litigation of asserted 

claims was certain or likely. This is 

particularly the case when, as in this 

matter, the respondent has indicated 

during negotiations that, for various 

reasons, it will not litigate and will 

accept a settlement. If the Commission 

had in mind specific analytical grounds 

for including both theories of liability 

(for example, because each theory 

standing alone contained weaknesses as 

foundations for the settlement), the 

Analysis omits them. In the logic of the 

Analysis, the UAP theory subsumes the 

UMC standard and makes the UMC 

provision superfluous. If the UAP 

concept is so broad, it is not evident 

what reasoning in this case supports the 

parallel inclusion of the UMC claim. 

More generally, it seems that the 

Commission’s view of unfairness would 

permit the FTC in the future to plead all 

of what would have been seen as 

competition-related infringements as 

constituting unfair acts or practices. 

[FR Doc. E8–1801 Filed 1–30–08: 8:45 am] 

[Billing Code: 6750–01–S] 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Health Resources and Services 

Administration 

Advisory Committee on Organ 

Transplantation Request for 

Nominations for Voting Members 

AGENCY: Health Resources and Services 

Administration, HHS. 

ACTION: Notice. 

SUMMARY: The Health Resources and 

Services Administration (HRSA) is 

requesting nominations to fill vacancies 

on the Advisory Committee on Organ 

Transplantation (ACOT). The ACOT 

was established by the Amended Final 

Rule of the Organ Procurement and 

Transplantation Network (OPTN) (42 

CFR part 121) and, in accordance with 

Public Law 92–463, was chartered on 

September 1, 2000. 

DATES: The agency must receive 

nominations on or before March 3, 2008. 

ADDRESSES: All nominations should be 

submitted to the Executive Secretary, 

Advisory Committee on Organ 

Transplantation, Healthcare Systems 

Bureau, HRSA, Parklawn Building, 

Room 12C–06, 5600 Fishers Lane, 

Rockville, Maryland 20857. Federal 

Express, Airborne, UPS, etc., mail 

delivery should be addressed to 

Executive Secretary, Advisory 

Committee on Organ Transplantation, 

Healthcare Systems Bureau, HRSA, at 

the above address. 

FOR FURTHER INFORMATION CONTACT: 

Gregory Fant, Ph.D., Executive 

Secretary, Advisory Committee on 

Organ Transplantation, at (301) 443–

8728 or e-mail 

Gregory.Fant@hrsa.hhs.gov. 

SUPPLEMENTARY INFORMATION: As 

provided by 42 CFR 121.12 (64 FR 

56661), the Secretary established the 

Advisory Committee on Organ 

Transplantation. The Committee is 

governed by the Federal Advisory 

Committee Act (5 U.S.C. Appendix 2), 

which sets forth standards for the 

formation and use of advisory 

committees. 

The ACOT advises the Secretary, 

acting through the Administrator, 

HRSA, on all aspects of organ 

procurement, allocation, and 

transplantation, and on other such 

matters that the Secretary determines. 

One of its principal functions is to 

advise the Secretary on ways to 

maximize Federal efforts to increase 

living and deceased organ donation 

nationally. Other matters that have been 

reviewed by the ACOT include: 

• Concerns about U.S. citizens 

traveling abroad in order to receive 

organ transplants (also known as 

transplant tourism); 

• Collection of data on the long-term 

health status of living donors; 

• Organ Procurement and 

Transplantation Network development 

and distribution within the transplant 

community a set of practice guidelines 

to be followed with respect to public 

solicitation of organ donors, both living 

and deceased; 

• Standards of coverage for living 

donors relating to future adverse events; 

and 

• CMS reimbursement of organ 

procurement organizations for donation 

after cardiac death. 

The ACOT consists of up to 25 

members, including the Chair. Members 

and Chair shall be selected by the 

Secretary from individuals 

knowledgeable in such fields as organ 

donation, health care public policy, 

transplantation medicine and surgery, 

critical care medicine and other medical 

specialties involved in the identification 

and referral of donors, non-physician 

transplant professions, nursing, 

epidemiology, immunology, law and 

bioethics, behavioral sciences, 

economics and statistics, as well as 

representatives of transplant candidates, 

transplant recipients, organ donors, and 

family members. To the extent 

practicable, Committee members should 

represent the minority, gender and 

geographic diversity of transplant 

candidates, transplant recipients, organ 

donors and family members served by 

the OPTN. In addition, the Director, 

Centers for Disease Control and 

Prevention; the Administrator, Centers 

for Medicare and Medicaid Services; the 

Commissioner, Food and Drug 

Administration; the Director, National 

Institutes of Health; and the Director, 

Agency for Healthcare Research and 

Quality (or the designees of such 

officials) serve as non-voting ex officio 

members. 

Specifically, HRSA is requesting 

nominations for voting members of the 

ACOT representing: Health care public 

policy; transplantation medicine and 

surgery, including pediatrics; critical 

care medicine; nursing; epidemiology 

and applied statistics; immunology; law 

and bioethics; behavioral sciences; 

economics and econometrics; organ 

procurement organizations; transplant 

candidates/recipients; transplant/donor 

family members; and living donors. 

Nominees will be invited to serve a 4- 

year term beginning between January 

and July 2009. 

HHS will consider nominations of all 

qualified individuals with a view to 


rwilkins on PROD1PC63 with NOTICES