## Facts

- Dell Computer Corporation participated in the Video Electronics Standards Association (VESA), a private standard-setting organization for computer hardware.
- VESA developed and adopted the VESA Local Bus (VL-bus) standard for computer motherboards to improve data transmission between CPUs and peripheral devices.
- Dell held U.S. Patent No. 5,036,481, which Dell claimed covered the mechanical slot configuration used to receive a VL-bus card.
- VESA used a disclosure/certification process asking members to identify patents or other intellectual property that might conflict with proposed standards, reflecting a preference for non-proprietary standards.
- During the VL-bus standard-setting process, Dell certified that it had no intellectual property rights conflicting with the proposed standard.
- VESA adopted the VL-bus standard in reliance, at least in part, on Dell’s certification.
- After the VL-bus standard was widely implemented, Dell asserted the ’481 patent against firms planning to comply with or implementing the VL-bus standard.
- The FTC initiated an administrative proceeding under § 5 of the FTC Act; the matter was resolved through a consent order with an accompanying Commission statement and a dissent.

## Issues

1. Whether a standard-setting participant’s deceptive failure to disclose potentially conflicting patent rights, followed by asserting those rights against implementers, can constitute an unfair method of competition under § 5 of the FTC Act.
2. Whether a narrowly tailored remedy precluding patent enforcement against implementers of the adopted standard is appropriate to address competitive harm caused by deception in standard-setting.

## Decision

- The FTC accepted a consent agreement and entered a final Decision and Order after notice and public comment.
- The Commission stated it had reason to believe Dell’s conduct violated § 5 and that the order served the public interest.
- The order prohibited Dell from enforcing U.S. Patent No. 5,036,481 against any company based on that company’s use of the VESA VL-bus standard.
- The order required Dell to provide notice informing relevant parties that Dell would not enforce the ’481 patent against VL-bus use.
- A Commissioner dissented, expressing concern about the sufficiency of the showing of deception/market power and the use of § 5 in a setting potentially addressed by private-law remedies.

## Legal Principles

- Deceptive conduct in a standard-setting process that induces adoption of a standard can constitute an unfair method of competition when it enables the actor to later extract standard-conferred leverage through patent assertions.
- An SSO disclosure/certification policy may create a good-faith expectation that members will identify potentially conflicting patents; misrepresentations within that process can distort the choice among technological alternatives.
- Competitive harm may be inferred where evidence indicates the SSO likely would have selected a different non-proprietary design absent the deception, and the respondent later threatens enforcement against implementers.
- A remedy precluding enforcement of the undisclosed patent against implementers of the affected standard can be appropriate where tailored to prevent exploitation of standard-conferred power, while leaving the patent otherwise intact.
- FTC enforcement in this area is fact-dependent and does not, by itself, establish mandatory procedures for SSOs.

## Conclusion

The FTC resolved the matter through a consent order that barred Dell from enforcing a patent against VL-bus implementers after Dell had certified no conflicting IP during VESA’s standard-setting process and later sought to assert the patent, treating the remedy as a narrow measure to prevent competitive harm from deception-driven standard adoption.


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