Thursday, December 29, 2016

U.S. tech companies welcome Korean antitrust ruling against Qualcomm over FRAND abuse

South Korea's competition watchdog, the Korea Fair Trade Commission (KFTC), has just imposed a $853 million fine on Qualcomm for "monpolistic" practices involving its patent dealings. In particular, the antitrust agency stated that Qualcomm "has violated its agreement to license patents on fair, reasonable and non-discriminatory (FRAND) terms."

Qualcomm can and will appeal this decision, but the mobile device industry at large is keeping its fingers crossed that Korea's top court will affirm the KFTC ruling. The fact that Qualcomm filed an action in the U.S. in order to get access to information provided by Apple, Samsung and others to Korea's competition authority is interesting. It's hard to imagine that those companies would have told the KFTC "we're OK with what Qualcomm is doing and we're happy to pay even more going forward."

ACT | The App Association (which I'm not a member of, though I am an app developer), a tech industry group headquartered in Washington, DC, has just sent out the following statement that applauds the Korean competition enforcers:

"The Korea Fair Trade Commission (KFTC) has, after an extensive investigation, decided to significantly fine, and impose a corrective order on, Qualcomm Incorporated for systematically violating the commitments the company made to license its standards essential patents under fair, reasonable and non-discriminatory (FRAND) terms. FRAND abuse is an anticompetitive danger that poses a serious threat to the future of mobile computing and the Internet of Things.

Curbing the abuses the KFTC is addressing is an issue we are passionate about. That is why we launched All Things FRAND, an effort committed to ensuring a balance between patent licensor and licensee that FRAND commitments safeguard. And while FRAND promises are important, they are meaningless – and undermine innovation, particularly for small businesses – when ignored during subsequent licensing negotiations. ACT | The App Association applauds the KFTC's decision in this matter, and looks forward to analyzing the details of its corrective order that will contribute to growing global precedent upholding the purpose and meaning of FRAND obligations."

I wish to point out that ACT is generally very IPR owner-friendly, but when it comes to FRAND licensing of standard-essential patents, its positions are pretty consistent with mine. An organization that takes similar positions on FRAND (and of which Google is a member) is the Brussels-based Fair Standards Alliance. Presumably the reason the FSA hasn't spoken out on the Korean ruling yet is simply that people in Brussels tend to be on vacation this week (to a far greater extent than in the U.S.).

Many years ago, the European Commission was taking a look at Qualcomm's practices but failed to take decisive action. Qualcomm currently does face an EU antitrust issue but with a somewhat different focus than the Korean case. I think the Korean regulator has the right set of priorities; maybe the EU Commission will bring additional charges, as it did against Google (more than once). I would also like to see some antitrust inquiry into Qualcomm's practices by the FTC or DoJ under the incoming Trump Administration. President-elect Trump highlighted the uniqueness of America's top innovators at a recent meeting with tech industry CEOs, and I'm optimistic he and his staff will be more sympathetic to the concerns of the likes of Apple, Google and Amazon than to those seeking to extract undue leverage from standard-essential patents.

If anyone would like to provide me with information on Qualcomm's practices and antitrust complaints or cases anywhere in the world, please get in touch via my contact form. I'm very interested in finding out more about this and I'll try to draw more attention to major SEP issues involving Qualcomm or anyone else.

[Update] A reader has kindly pointed me to an unofficial translation (apparently created by Qualcomm itself) of the KFTC press release, which is a highly informative document that warrants further discussion here at a later stage. [/Update]

Share with other professionals via LinkedIn:

Monday, December 26, 2016

App developers matter: Apple should fight Nokia with all its might but not leverage its App Store against Withings

Before the Christmas weekend, Apple and Nokia went back to legal war against each other, more than five years after a settlement. I agree with Apple that Nokia's industrial-scale privateering is highly abusive, and I wish Apple luck for both its antitrust suit against Nokia and its defense against Nokia's patents. I followed Nokia's last scattershot litigation (against HTC, from 2012 to 2014) and I saw countless Nokia patent assertions fail, mostly in Germany but also in the most difficult U.S. patent litigation venue, the International Trade Commission. I would really be surprised if the patents Nokia is presently asserting against Apple were, on average, better than what they used against HTC. Based on this assumption, I believe Apple can handle this and Nokia will probably end up with a result below (or even far below) its initial expectations.

In my previous post, I already wrote that Nokia's "all-out war and global carpetbombing" would "probably not sit well with Cupertino." When I wrote that, I had no idea that the next Apple-Nokia news was going to be that Apple removed Withings' iOS-compatible eHealth devices from its store. Seven months ago, Nokia completed its acquisition (PDF) of Withings, a French digital health company founded in 2008, for approximately $190 million.

I haven't found an official Apple statement, but it would be quite a coincidence if the delisting of those products had nothing to do with the patent dispute. A coincidence is made even less likely by the fact that this happened during the iTunes Connect Holiday Shutdown (December 23-27), a period when no new app reviews take place, which shows it's the part of the year when Apple doesn't usually want to change its catalog.

When I go to the Apple website and search for certain Withings products, I get the same message as the one reported in the media, basically saying the products are no longer available but they have a list of alternatives. I managed to download Withings' Health Mate app to my iPhone 7 Plus over here in Germany. I opened it once, just to check, and then I deleted it immediately because I don't want to support patent abusers in any way (unless they have products to which I can't find a viable alternative, which is not the case here).

A reader just told me that one can presently download five Withings apps from the U.S. App Store. It appears that Apple just removed Withings' physical products (which it also used to distribute in its stores).

I'm an iOS app developer myself (my first product will be launched soon) and I've checked the terms of Apple's developer agreement for anything that might trigger the removal of Withings' stuff form the App Store. The developer agreement doesn't allow reverse engineering of certain materials, and if Nokia brings infringement assertions against them, there is a possibility that some reverse engineering occurred. Also, Apple has reserved the broadest possible discretion for its decision to unilaterally terminate the agreement.

Nokia's litigation tactics and privateering ways are, without a doubt, vexatious. So I couldn't disagree with Apple if it made the case that it's just not reasonably acceptable for Apple to have to do "business as usual" with a Nokia subsidiary under the present circumstances.

However, if Apple ever went beyond removing Withings' physical products and also delisted its apps, I doubt that the leverage Apple might get from this would be worth the cost. The problem is that app developers like me need to rely on Apple giving all of us fair access to its customer base. Yes, Apple has the right and it always should have the right to reject or delist apps under certain circumstances. Case in point, I have expressed support here for Apple with a view to its disagreement with Spotify. But Apple should always remember: with great power comes great responsibility.

As app developers, we make enormous investments of money, energy, creativity, and time. For example, I started my project almost three years ago and made the first four hirings in 2014. When you make all of this effort and investment, you want to have certainty that Apple will give your products a fair review and won't just shut you down arbitrarily. I'm not saying that a removal of any Withings apps would be arbitrary; it could be an exceptional case and app developers like me usually don't have to worry about this. Also, should Nokia have violated the clause that prohibits reverse engineering, then I'll agree with Apple, but we just don't know. What I do know is that Apple reserves termination in its sole discretion, which is fine as long as we can all rely on Apple not abusing that discretion. A silent removal of apps would be bad because it would be intransparent. Apple should at least provide an explanation that makes all other app developers comfortable in case it delists any Nokia apps.

Apple is normally very rational. The removal of Withings' physical products from its store is one thing, but delisting Withings' apps would appear emotional if it happened.

Nokia spent much less on its Withings deal than it almost certainly expects to collect from Apple every year in the form of patent royalties every year. This here is not going to make Nokia back down. It will show to Nokia's senior leadership that a pissing contest with Apple is a bad idea, but it doesn't solve the fundamental problem that Nokia doesn't have much of a product business that Apple can attack. Maybe Apple holds some patents (such as the ones it acquired from Nortel) that it can use against Nokia's wireless infrastructure business (the former Nokia Siemens Networks business), unless past license agreements between Nortel and Nokia make that impossible. Maybe there are some new patents Apple could acquire somewhere to countersue Nokia. But there won't be nearly as much of an opportunity for countersuits (if any) as in 2009-2011, when Nokia was still a handset maker.

If Apple really wants to flex its muscles to demonstrate to Nokia that excessive aggression backfires, it should use law firms and strawman litigation firms such as Skepsis Telecom to launch invalidation strikes against many--and by "many" I don't mean 10, 20 or 30, but more like 150, 200 or 300--Nokia patents in different jurisdictions. Apple can afford the prior-art search for this. It can afford all those petitions for reexamination or revocation and the German nullity lawsuits. That would really teach Nokia and any other aggressor of that kind a lesson, and it would devalue their portfolios and make their investors nervous.

Nokia itself and its closest ally in that context, HTC, started about 100 proceedings against different IPCom patents in different jurisdictions, including Italy, where all they wanted was to slow-roll proceedings in other jurisdictions (called the "Italian torpedo"). It hoped that IPcom would run out of cash, but IPCom had received enough money from investors and from other licensees that it was able to handle all of this. And IPCom's founder could handle it, too: it was certainly an annoyance but also generated additional fee income for his own law firm. For Nokia, this would be a different situation. It's publicly-traded, meaning that investors may sell shares on any bad news from the litigation front. And to the best of my knowledge, its management doesn't own the law firms that represent it.

The only risk is that some Nokia patents might emerge stronger if they were reaffirmed by courts and patent offices. But that's where Apple can use its judgment and really focus on those 150 or 200 patents against which it can field extremely strong prior art.

Make Nokia bleed patents!

Share with other professionals via LinkedIn:

Thursday, December 22, 2016

Apple now suing Nokia itself on antitrust grounds; Nokia suing Apple over 40 patents in 11 countries

Yesterday, Apple's antitrust lawsuit in the Northern District of California against certain Nokia privateers (patent assertion entities that Nokia has fed with patents) became known. Then, Nokia announced its new wave of patent infringement suits against Apple. And I have now just found something very interesting in a court filing of the usually rather uninspiring kind: Apple has added Nokia Corporation, Nokia Solutions and Networks Oy (using a Texas address) and Nokia Technologies Oy to the defendants in its antitrust case. Here's the relevant part of the list of defendants (click on the image to enlarge; this post continues below the image):

What has happened procedurally is that the court rejected this proposed summons because it lists defendants not listed in the complaint. But that's just a clerical thing: no doubt Apple will amend the complaint accordingly. Apple's lead counsel, Wilmer Hale's Mark Selwyn, who is also a key player in Apple's protracted dispute with Samsung, has faced greater logistical challenges.

While the original complaint targeted Nokia in practical terms, it does make a difference that Apple decided, apparently in response to Nokia's patent infringement suits, to add three Nokia entities to the list of defendants. I can attribute it only to diplomatic considerations that Apple didn't do this initially. If you sue over an alleged conspiracy (the term itself is in the complaint, it makes sense to go after all conspirators, not just after some.

There's quite some escalation going on: a couple of hours ago, Nokia announced the filing of further complaints against Apple. The most notable changes are that Nokia has also filed an ITC complaint, seeking a U.S. import ban over eight patents, and that it's suing in nine more countries. Last time Apple and Nokia met at the ITC, neither made a lot of headway there; it turned out to be a patent graveyard. In addition to the U.S. (Eastern District of Texas, with a total of 18 patents in play, including H.264 video codec patents) and Germany (eight patents in Düsseldorf, four in Mannheim, and two in Munich, where the first hearings in this new dispute will likely take place in March or April), Nokia is now also asserting three patents in Helsinki, Finland; three patents in London; four in Turin, Italy; three in Stockholm, Sweden; one in Barcelona, Spain; three in The Hague, Netherlands; one in Paris, France;one in Hong Kong, China; and one in Tokyo, Japan.

According to Nokia's press release, there are 40 patents-in-suit, meaning that some patents are being asserted in more than one jurisdiction.

I watched Nokia's patent assertions against HTC a few years ago. There was significant escalation, but it took longer than one day. After more than a year and a half of litigation, that dispute spanned seven countries on three continents. With Apple, it took one day to go from two countries to eleven.

With HTC, this strategy paid off, and it was necessary since most of Nokia's patent assertions either failed or resulted in symbolic wins without commercial impact. I believe that what carried the day for Nokia in the end was that certain patents covered hardware designs and HTC suppliers Qualcomm and Broadcom couldn't easily have worked around them, at least not without cost implications. HTC did a very good job defending itself, but Apple will probably do an even better one and it will simply get more support from its chipset suppliers if it needs workarounds, simply because no one will want to lose Apple's business.

Nokia may find that it's barking up the wrong tree. This all-out war and global carpetbombing will probably not sit well with Cupertino. Normally Apple is willing to pay royalties and move on. Its dispute with Ericsson is an example. But Apple is ready, willing and able to litigate for years if it feels it has to. Nokia's decision-makers may believe that "brute force" is the way to get Apple to pay up quickly, but this approach may backfire. What if Apple now decides to prove that it can defeat one Nokia patent infringement claim after the other and get one Nokia patent after the other invalidated? Should that happen, Nokia will have to wait for its payday much longer than it might have thought. Its portfolio might be devalued in the end. And the return might be quite a disappointment. On top of all of that, Nokia risks being held to be an antitrust violator. There is considerable risk to the failed Finnish device maker.

Talking about antitrust, the U.S. lawsuit against Nokia's privateering could also, with or without a formal EU complaint by Apple, lead the European Commission to investigate Nokia. Commissioner Vestager will have to take some serious action against European tech companies for the sake of at least appearing to be more balanced than one would think based on her current focus on Apple, Google, and Facebook.

As for Nokia's chances of getting leverage over Apple, injunctions will be way more important than damages, but they'll be hard to come by. In the U.S. it's pretty hard to obtain an injunction over any patent. In Germany and some other European jurisdictions, injunctive relief is a legal remedy for infringement, but if a patent is standard-essential, special rules apply (after the CJEU's Huawei v. ZTE opinion), and if it isn't standard-essential, it can be worked around.

Today's announcement by Nokia shows how much of a troll it has become. Ericsson is not as bad as Nokia, but not fundamentally better. And the European Commission's innovation policy comes down to ridiculous claims, unrealistic plans, and in some cases rather questionable regulatory action.

As for Nokia's transformation into a troll, it's very telling that Nokia used to prefer the District of Delaware as long as it was a mobile device maker itself. Nowadays, it prefers the Eastern District of Texas. Sic transit gloria mundi.

Share with other professionals via LinkedIn:

Wednesday, December 21, 2016

Enough is enough: Apple files antitrust complaint against multiple Nokia privateers

PatentlyApple was first to report on Apple's antitrust case against Acacia and other patent assertion entities (PAEs) that Nokia is using to extract, in the aggregate, excessive license fees from Apple and other companies. As a service to readers, I wanted to publish the complaint here (this post continues below the document):

16-12-20 Apple Complaint v. Acacia Et Al. by Florian Mueller on Scribd

For a long time I had hoped someone would finally do this. Last year I called out Nokia and others on their privateering ways, and it turned out that Nokia had industrialized the concept of privateering to a far greater extent than anyone else. My list of PAEs fed by Nokia contained all of the defendants in Apple's antitrust suit--Acacia and Conversant (technically, Apple is also suing particular subsidiaries of those)--and more. That post prompted attempts by Ericsson and Nokia to explain away their privateering ways.

Privateering-related issues have been raised in other litigations, including a case involving Samsung and an Ericsson privateer in London, but this is now the major anti-privateering lawsuit. Without a doubt, all other major industry players focused on making products (as opposed to those who increasingly rely on patent licensing income) will join me in wishing Apple luck. This is not just about Apple, or about smartphones and tablet computers. It's a huge issue for automotive and other IoT (Internet of things) companies as well.

I just hope Apple will see this one through. There is a risk that Apple may settle (as it did with Ericsson, though I had hoped the case would provide clarity on the "smallest salable unit" approach to FRAND royalties). In a FOSS Patents guest post I published last month, top-notch analysts from Arete noted that "a critical [for Nokia] renewal at Apple [is] forthcoming." It could be that Apple will drop this antitrust suit as part of an overall agreement with Nokia on an extension of the license agreement originally agreed upon in 2011.

The story Apple tells the court is that Nokia, after failing as a mobile device maker, changed its positions on FRAND licensing of standard-essential patents and conspired with various PAEs in order to bring numerous royalty demands and infringement lawsuits against Apple and other industry players and with the objective of circumventing its original FRAND licensing commitments:

"21. With its cell phone business dying, Nokia began to seek out willing conspirators and to commence its illegal patent transfer scheme in full force; that scheme has continued in full effect to the present. The driving force behind Nokia's strategy was to diffuse its patent portfolio and place it in the hands of PAEs. Acacia and Conversant were its chief conspirators."

"24. [...] According to an expert report that Nokia submitted in a prior proceeding: '[T]he relationship between the number of patents and the total royalty rate is not linear. For example, a license to a single [SEP] may be 2.5% ... while a license to ten or more [SEPs] rarely exceeds 5%.' Thus, by creating a network of conspiring PAEs to hold slices of its former portfolio and sharing in the proceeds of the PAEs' assertions, Nokia seeks to work with PAE collaborators like Acacia and Conversant to extract royalty rents and tax product innovators in yet another way that would not have been possible had it kept its portfolio intact."

On the remedies side, it's worth noting that Apple, besides damages, wants those patent transfers to be declared illegal and to be undone. Also, one of Apple's prayers for relief relates to injunctions: it asks the United States District Court for the Northern District of California to order an anti-suit injunction against Acacia and Conversant. The most prominent case in which an anti-suit injunction actually issued was Motorola Mobility v. Microsoft (Western District of Washington); it got upheld by the Ninth Circuit, and that's the circuit court for this case, too.

In terms of positive effects on innovation, an Apple win over Acacia and Conversant would eclipse Microsoft's win over Motorola Mobility, and that one was also very significant and positive.

I plan on talking about this some more after the defendants have filed their answer to the complaint. Also, while it's a different field of law and a different jurisdiction, I've meanwhile read the 130-page European Commission decision on what the EU says is "state aid" Ireland gave to Apple, and I'll comment on it soon. Suffice it to say for now that it's far-fetched to say the least; the EU Commission may lose the case just simply because the arm's length principle for inter-company charges is not part of Irish tax law; and there is not even the slightest indication of any wrongdoing by Apple in that whole document (wrongdoing by the recipient of alleged subsidies is, of course, not a legal requirement, but I wanted to mention it anyway).

Share with other professionals via LinkedIn:

Monday, December 19, 2016

Apple CFO: "What the [EU] Commission is doing here is a disgrace for European citizens, it should be ashamed"

When I described the European Commission as a "premier source of fake news" in yesterday's post, I knew from a Bloomberg tweet that the Commission's €13B "state aid" decision on Apple's Irish taxes was going to be published before the Holiday Season but didn't know that today was going to be the day. [Update] Here it is (PDF). [/Update] In order to counterbalance Commissioner Vestager's claims, the Irish government and Apple have just launched pre-emptive strikes:

  • Ireland has published a summary of its key arguments against the Commission ruling (PDF). In a nutshell, Ireland says the Commission misunderstands Irish tax laws, views as a preferential treatment what was available to any other international company, wants Ireland to collect taxes on what Apple should pay taxes on in the U.S., and accuses the Commission of improper procedures. It's clear that Ireland ideally aims for the Commission ruling to be overturned in its entirety but, as a Plan B, would at least like to limit its impact.

  • Apple's General Counsel Bruce Sewell and Chief Financial Officer Luca Maestri gave Reuters' Brussels competition expert Foo Yun Chee (a reporter I've been in contact with for many years and whom I regard as very thorough and objective) an interview in Cupertino. Apple's executives pointed out, among many other things, that their Irish operation "doesn't do any engineering, doesn't generate any intellectual property."

  • In parallel to the Reuters interview, Apple's CFO also gave an interview in Cupertino to Die Welt, a well-respected German newspaper that belongs to Europe's largest newspaper publisher, the Axel Springer group. That interview has only been published in German, so let me translate Mr. Maestri's strongest statement here:

    Maestri accuses EU competition commissioner Margrethe Vestager of pursuing a political agenda. "What the Commission is doing here is a disgrace for European citizens, it should be ashamed."

    Mr. Maestri, an Italian, is a European citizen himself. This statement is similarly tough as Apple CEO Tim Cook's initial reaction to the decision, calling it "total political crap."

    In the Die Welt article, Mr. Maestri then argues that Europe's economy will suffer massive harm at the end of the day, given that many companies must make decision on where to set up research and development. And in light of how the Commission is dealing with Apple, they may prefer such places as Singpore or Hong Kong.

Legal certainty is probably the most basic prerequisite for business and innovation. The same concern was raised three months ago by the Business Roundtable in a letter sent to political leaders of the EU's 28 member states. The Business Roundtable is an association of CEOs whose companies, according to the organization's website, have "more than $6 trillion in annual revenues and nearly 15 million employees."

I have been interested in the intersection of IP (which also plays a role in the Apple tax case) and competition policy/regulation for a long time, and my main concern has always been innovation. As a European (albeit a somewhat Americanized one and Donald Trump supporter) and as a startup founder (I founded an online gaming network in 1996 and sold it to Telefónica in early 2000, and in 2014 I started my current app development company), I care about this. And when it comes to Irish corporate taxes and corporate decisions on where to set up subsidiaries, I also have a personal connection to the subject: in 1995, I persuaded Davidson & Associates, then the parent company of Blizzard Entertainment (which later became the world's most successful computer games company on a per-title basis), to manufacture the German version of Warcraft II - Tides of Darkness in Ireland. Without my strong recommendation, the same activities would have taken place outside of Europe.

The EU's innovation policy has been a failure and a laughing stock. There was that thing called "Lisbon Agenda": they wanted to make the EU the world's most competitive and dynamic knowledge-based economy by 2010. By now, no one is even talking about it because, quite obviously, it didn't materialize to any noteworthy degree. Or, as my favorite political commentator, the insightful Rush Limbaugh, said in late August:

"The way the European Union is looking at Apple -- the European Union is nothing but a bunch of takers. The European Union wouldn't know how to produce diddly-squat."

This is sad but true. The Apple tax case won't make Europe more competitive, but it threatens to discourage investment in Europe. Ireland could have said: "Let's just collect an amount that corresponds to 26% of our national budget." Instead, Ireland's minister of finance said he didn't want to eat the seed potatoes: the longer-term implications of this are too bad, so any short-term windfall would be unwise to take.

It's not just a disgrace what the EU is doing in this "state aid" case (it's not "state aid" by any stretch of the imagination since it has nothing to do with giving one company an advantage over others). The EU's innovation policy as a whole is a disgrace, as are EU policies in some other areas (common currency, migration, cross-border crime).

I'm afraid that too many people in Europe will be misled by politicians who will portray Apple as a greedy large corporation that doesn't want to meet its obligations to society. It looks like redistribution if you tax the most profitable company in the world, but that's just populism. Before you have anything to redistribute, it must be created, and in order for something to be created, you need far better policies than the ones the EU has adopted and implemented so far.

A populist campaign against Silicon Valley isn't going to result in the creation of a European Silicon Valley. Instead, it will benefit other economies. In Asia, for example.

Share with other professionals via LinkedIn:

Sunday, December 18, 2016

From software patents to Apple's tax case, the European Commission has been a premier source of fake news

The political establishment on both sides of the Atlantic still can't deal with the fact that Donald Trump won because voters rejected corrupt, incompetent and unprincipled "all talk, no action" politicians for all the right and left reasons. One of the transparent attempts to delegitimize a historic victory for common, hardworking and law-abiding people is centered around so-called "fake news." Very worryingly, we may even see legislation in Germany and other parts of Europe aiming to impose fines on social networks for not playing their part in the political establisment's censorship efforts led by a future equivalent of what George Orwell already envisioned to be a "Ministry of Truth" in his novel "1984." I'll take a closer look at such Orwellian initiatives some other time.

In reality, the political establishment in Europe, which has been committing treason against European citizens for some time and continues to do so, just hates the fact that the truth about its failures spreads virally. They say that "fake news" about crimes commmitted by "refugees" leads people to vote for "populists," but there simply are cases of rape committed by so-called "refugees" on a daily basis in Germany, and those cases are not merely reported by anti-establishment websites but by reputable, local newspapers. Those articles go viral on Facebook, but "viral" isn't necessarily "fake." The victims range from young children (8-14 years of age) over men in their thirties to women in their seventies or eighties. Those numerous incidents just don't make it into national news because leftist journalists don't want the truth to come about how misguided their ideology is and because politicians don't want citizens to realize how terrible the situation has become, much less in a pre-election year.

The Austrian government replied to a parliamentary inquiry about rape cases involving "asylum seekers" and stated 91 suspects in the first nine months of 2016. Considering that Germany has about ten times the population size of Austria and, just in terms of a power of ten, also about ten times as many "asylum seekers," this means a couple of cases per day in Germany. If politicians don't like those news, they have to change their migration policies, but instead of protecting citizens against crimes, they complain about "fake news" and seek to regulate social networks.

If anyone truly wanted to drain the "fake news" swamp in Europe, Brussels would be a good place to start. While I agree with the European Commission on some issues and disagree on others, I view the institution's public statements with utmost skepticism and believe Brussels-based journalists are all too often misled by what comes out of the Berlaymont building.

Just a few examples of EU Commission "fake news":

EU software patent directive: the CII lie

In 2002, the EC proposed a "directive on the patentability of computer-implemented inventions." It claimed back then and throughout the years of the legislative process (which ended when the bill got thrown out by the European Parliament in 2005, which is exactly what I had been campaigning for) that patents on "computer-implemented inventions" weren't software patents. The examples that the supporters of the proposal gave all the time were about computer-controlled washing machines, automated braking systems, and airplanes. They said that the whole plan was only to ensure that innovations in those fields could be patented but software patents? No, they said that our movement was totally wrong since software "as such" was going to be excluded.

It was nothing but a damn lie. A damn lie propagated by the Commission, by the equally-mendacious national governments of the EU member states, large corporations (also including their industry bodies, of course), the European Patent Office (with respect to its credibility, let me just refer you to Dr. Roy Schestowitz's great work concerning what is going on there), and patent attorneys in private practice.

What frustrated us the most was not even that those who directly or indirectly stood to gain from software patents were dishonest. That was very bad for sure, but the worst part was that news agencies and the general press kept propagating those lies--not merely in the form of quotes but in ways that portrayed the Commission position as the truth and our position as an opposing view by "open source" people. And when we talked to them, they often just referred us to what the European Commission was saying--no matter how much of a lie it was.

With only one exception, the Brussels-based journalists who covered that legislative process weren't particularly sharp. By comparison, I met far more receptive and intelligent people a few years later in connection with some competition cases. But, to be fair, it wasn't easy for the general press to figure out something at the complex intersection of law, technology, and economics. The proposed directive appeared to focus on "technical" inventions except that its definition of what is "technical" was purely tautological. It also didn't help that we had some lunatics in our movement who pursued a radical anti-IP agenda. Still, reasonably intelligent and committed journalists could have figured things out if they had made an effort:

  • The easiest-to-understand indication that should have given anyone except the most obtuse people pause was SAP's public support (at government roundtables, conferences, etc.) and its claim (which it even made in an advertisement in a Brussels publication shortly before the decisive vote) that the proposed directive would provide SAP with protection for its innovations. SAP never made washing machines, automated braking systems, airplanes, or any other hardware. There you had a pure software company saying that this directive would afford it patent protection.

  • While the Commission's original 2002 proposal did not allow so-called "program claims," a clause that allowed patent claims of "a computer program, characterized by [...]" kind made its way into the proposal as the European Council (where the governments of the member states meet and decide) got involved, but the Commission nevertheless kept saying the directive wasn't going to result in patents on software "as such". A patent claim defines the scope, and anyone who practices what the claim describes is an infringer. If the claim is on a "computer program," then it's obviously a software patent claim (and not a washing machine claim). For example, if the software that optimizes the fuel consumption of an airplane is covered by a program claim, then it's also infringed by a flight simulator that uses the same formula.

Unitary patent propaganda: first published, then taken down

Last year, the IPKat blog dismantled the Commission's ridiculous propaganda for its unitary patent package (including the Unified Patent Court). Then the Commission pulled its statement, almost certainly due to the IPKat's competent criticism.

Juncker: "When things get serious, you have to lie"

The Euro currency is one of the EU's top three failures. Economists had warned politicians that a common currency was doomed to fail without a common fiscal and economic policy, but Mitterrand wanted the euro in order to prevent Germany from becoming too powerful after reunification and Kohl just wanted to make history no matter what damage this would do in the long run.

In connection with the EU's sovereign-debt crisis, Commmission president and former Eurogroup chief Jean-Claude Juncker said: "When it becomes serious, you have to lie." You can read this in Bruno Waterfield's article, and the quote has been widely reported by other media as well.

So how can anyone trust the Juncker Commission anymore? I, for one, can't.

This YouTube video featuring Juncker may be part of what certain politicians would like to ban as "fake news."

Apple's "state aid" tax case

When the Commission's Apple tax ruling becomes public, I'll look at it in detail, but even before all details are known, it's already clear that the Commission can't really be trusted in this context.

The first issue I have is that the Commission has tried to manufacture a "state aid" case. Article 107 of the Lisbon Treaty defines "state aid" as follows:

"any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favoring certain undertakings or the production of certain goods"

There is no distortion of competition here. I would agree with the Commission if this were a case of Ireland giving Apple subsidies that Apple would use to undercut its competitors. However, Apple has never undercut anyone. It took almost ten years after the launch of the iPhone for a company not to undercut Apple (Google, with its Pixel phone).

It's not competition that the Commission is concerned about. All major tech companies do the same. There's a populist agenda in play here.

The following claim by Commissioner Vestager fails to pass even the most basic plausibility check:

"[T]his selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014."

Nobody has ever denied that Apple paid approximately $400 million in Irish taxes in 2014 (Tim Cook disclosed that number in a radio interview on September 1, 2016). So, obviously, Apple's overall tax rate was a whole lot higher than 0.005%. Otherwise Apple would have had to generate profits in Ireland of 20,000 times $400 million, which would be $8 trillion!

Again, I'll try to find out more, but so far this looks like just as ridiculous as saying that a proposed piece of patent legislation doesn't cover software "as such" when SAP said it did.

Share with other professionals via LinkedIn:

Saturday, December 10, 2016

Application of problematic CJEU ruling on copyright infringement by hyperlinks is getting out of hand

The European Union, which is already dysfunctional in some even more important regards, threatens to become the world's craziest, most innovation-hostile copyright jurisdiction. Copyright rationality is facing a two-front war in Europe:

  • Just last month, the European Commission announced a push for a "neighboring" right demanded by mediocre, traditional media companies who just can't deal with Google's brilliance and well-deserved success.

    If what happens in other industries on an almost daily basis is any indication, those companies will offer former European commissioners and other EU officials some nice jobs in a few years' time. They may not even wait that long: Bertelsmann has officially had an influential "conservative" MEP on its payroll for decades and there may be more cases like that one.

  • In parallel, courts are extending the rights of copyright holders against website operators in a way that is nothing short of frightening. The Internet itself is under judicial attack. That's what I'm going to talk about in the remainder of this post.

Let's start with the statute. Directive 2001/29/EC of the European Parliament and of the [European] Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society (official PDF ), briefly called the "EU Copyright Directive," says the following in its Article 3(1):

"Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them."

The two court decisions establishing liability for Internet hyperlinks to websites that contain copyright-infringing material--one by the CJEU and one by the Landgericht Hamburg (Hamburg Regional Court) based on the CJEU opinion--that I'll discuss below are based exclusively on that statute.

Seriously, how could that statute ever have given rise to the current situation?

There's a two-letter word in the statute that we need to focus on: "of" as in "communication to the public of their works" and "making available to the public of their works." A regular Internet hyperlink does not match either definition, not by any stretch of the imagination:

  • An Internet link that points and, if clicked on, redirects users to another website (as opposed to incorporating an image or text from an external URL into one's own site) is not a "communication of" whatever may be on the referred site. It's a communication about the referred site.

  • Nor does such a link constitute a "making available [...] of" whatever may be on the other site (unless, which is not what we're talking about here, the other site is password-protected and you need to go through some other site to gain access). You can't make available what already is available. If lawmakers had intended to cover promotional activities, they could and would have phrased it differently. Again, the preposition "of" means that what is made available must be the copyrighted works, not just information about or pointers to such works.

But here's the rule established by the Court of Justice of the European Union (CJEU) in its Second Chamber's September 8, 2016 judgment (case no. C-160/15, GS Media BV v. Sanoma Media Netherlands BV, Playboy Enterprises International Inc., and Britt Geertruida Dekker):

"Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that, in order to establish whether the fact of posting, on a website, hyperlinks to protected works, which are freely available on another website without the consent of the copyright holder, constitutes a 'communication to the public' within the meaning of that provision, it is to be determined whether those links are provided without the pursuit of financial gain by a person who did not know or could not reasonably have known the illegal nature of the publication of those works on that other website or whether, on the contrary, those links are provided for such a purpose, a situation in which that knowledge must be presumed."

That's just unbelievable. I have read this sentence over and over again, and I don't think I've ever seen anything like that in a U.S. ruling, let alone by higher courts. It happens in all jurisdictions that concepts get conflated or confused, but the words "conflation" and "confusion" are by far not strong enough to describe this.

It's highly illogical that unrelated factors such as a profit motive and knowledge of an infringement cold have any bearing on the term "communication to the public." You either communicate (including that you make available) something to the public or you don't, but that is unrelated to whether you do it for profit, for fun, or pro bono, just like it has nothing to do with whether you do it on a Tuesday or a Wednesday. Also, a "communication to the public" (including a "making available") is a communication to the public regardless of whether it's legal or illegal. That is a subsequent question then.

At any rate, the critical question here is not whether an Internet link is a "communication to the public": it's whether it's a "communication to the public of [some copyrighted material]" as opposed to just some communication "about" it, which clearly falls outside the scope of the statute.

Even if we give that decision the benefit of the doubt and just assume they (like the court that posed the question for review) incorporated "of their works" by referring to the statute, the fundamental problem is still the same: whether or not something (here, a link) is a "communication to the public of [something else]" is not a matter of motivation, legality, or knowledge. The statute defines the scope of an author's exclusive right, not infringement, and that's why it doesn't even obliquely mention the circumstances of a potential act of infringement.

If you look at the court's reasoning, it just turns logic on its head and seeks to justify it with an understanding that the EU Copyright Directive was generally meant to afford strong protection to copyright holders.

This illogical attempt to import the circumstances of an infringement into the definition of the scope of an author's exclusive right was even more unnecessary in light of the fact that Attorney General Melchior Wathelet had explained very well in his final pleading (which the CJEU follows most but not all of the time). Here are my favorite sentences from his opinion:

  • "If the Court were to rule that the posting on a website of hyperlinks to protected works which are freely available on another website cannot be classified as an 'act of communication', the question of the copyright holder not having authorised the placement of his work on other websites operated by third parties would no longer arise." (paragraph 45)

  • "Although it is true that hyperlinks posted on a website make it much easier to find other websites and protected works available on those websites (28) and therefore afford users of the first site quicker, direct access to those works, (29) I consider that hyperlinks which lead, even directly, to protected works do not 'make available' those works to a public where the works are already freely accessible on another website, but merely facilitate the finding of those works. As the Portuguese Republic states in its observations, the act which constitutes the actual 'making available' was the action by the person who effected the initial communication." (paragraph 54) "It follows that, in order to establish an act of communication, the intervention of the 'hyperlinker' must be vital or indispensable (33) in order to benefit from or enjoy works." (paragraph 57)

  • "Since one of the cumulative criteria necessary for establishing a ‘communication to the public’ under Article 3(1) of Directive 2001/29 is not met, the question of the copyright holder not authorising the placement of his work on other websites operated by third parties (36) is, in my view, immaterial." (paragraph 61)

  • "I consider that extending the concept of 'communication to the public' to cover the posting of hyperlinks to protected works freely accessible on another website would require action to be taken by the European legislature." (paragraph 79)

The court also ignored input from the European Commission and the governments of Germany, Portugal, and Slovakia. And the government of France argued that the copyright image would not have been easily accessible on its original site due to the need for a "key," which would have been a way to find in favor of the right holder based on "making available of" as opposed to a highly illogical interpretation of the term "communication to the public of [a copyright work]." The French position would have been considerably narrower than the disastrous one the CJEU adopted. That would be an example of a "vital or indispensable" intervention by the hyperlinker.

Copyright is the most important protection for me as a software developer. I've taken very pro-copyright positions on this blog, particularly in connection with application programming interfaces (APIs), a context in which large parts of the open source and "open Internet" communities disagree with me. But even I want the scope of copyright to have reasonable boundaries.

If you think it through, this approach to hyperlinks has pretty much no boundary: if a direct hyperlink to a site that contains infringing material makes the original site an infringing site, what about sites linking to that site? Or sites linking to sites linking to that site, which in turn links to the site that contains the copyrighted work?

To the extent that AG Wathelet and some governments argued that a decision holding hyperlinks to constitute potentially-infringing communications to the public was "to the detriment of the proper functioning and the very architecture of the internet, and to the development of the information society," I agree in principle but, philosophically, can also appreciate the CJEU's desire to close a potential loophole: profit-seeking infringers could work with a partner site in a territory where copyright enforcement is hard and then link to the illegal copies of some material, including computer programs.

I don't deny that there is a potential enforcement issue, but I agree with AG Wathelet that any related questions would have to be addressed by lawmakers. (Needless to say the EU has an enforcement directive.) If someone really tried to hide behind hyperlinks in order to benefit commercially from copyright infringement, there should be a means of shutting that activity down. In some jurisdictions, including Germany, copyright infringement can (under certain circumstances) constitute a crime. If there's a criminal infringement, such as an illegal file-sharing site, and someone drives traffic to that site, then he aids and abets a crime. Let's go after those bad guys and, if and wherever necessary, the law should be adjusted to today's technological realities. But a statute that defines a scope, not an infringement, remains a statute that defines a scope, not an infringement.

It didn't take long before the first national court applied the CJEU decision to another hyperlink case. The Landgericht Hamburg (Hamburg Regional Court) found in favor of a right holder who was represented by lawyers who simply wanted to test the boundaries and advance the development of case law. They published the decision (PDF, in German). I don't want to go into detail on that one. The gist is that the Hamburg court interpreted the CJEU guideline to the effect that anyone who generates any income from a website, even if that income is not directly related to a link to a website that infringes someone's copyright, the failure to know about the infringement is not an excuse because the Hamburg judges believe the CJEU ruling implicitly requires some IP clearance by the hyperlinker.

I disagree with this result, of course, and I hope the appeals court will overturn it and restore sanity. But the Hamburg application of the CJEU ruling is not contrary to what the CJEU wrote. The CJEU established liability for cases in which the hyperlinker has some kind of "financial gain" and could reasonably have found out about the infringement on the referred site. That is not the only and, in my opinion, not even the most reasonable interpretation of the CJEU decision. Short of also holding someone responsible for linking to a site that links to a third site, which then contains unlicensed material, the Hamburg approach is the most extreme interpretation, but it's not indefensible (unlike the CJEU's importing of infringement criteria into the definition of a scope).

The CJEU could have prevented the Hamburg court's interpretation by making it clear that the failure to be aware of an infringement only results in liability if there was what is called "willfull blindness" in U.S. law. The CJEU could also have limited the concept of reasonableness to the presumption of someone's knowledge of an infringement. But it didn't, and that's why the Hamburg decision wasn't baseless at all.

The weakness of the Hamburg ruling is that anyone who knows the practicalities and realities of the Internet would disagree with the idea that IP clearance of sites one links to is commercially reasonable. Furthermore, anyone who knows about the subject understands that such a requirement would have chilling effects on linking, making right holders lose a lot more (because of fewer links) than they would gain from occasionally having an additional enforcement opportunity (besides going after someone who published unlicensed content) by shutting down hyperlinks. It's in this area that I believe other courts (the Hamburg decision is not binding for any court, not even for the Hamburg court itself) will usually reach different conclusions. But until then, there will be chaos and confusion.

Just when one terrible appellate ruling was overturned in the U.S. (design patent damages in Apple v. Samsung), it becomes clearer than ever that EU copyright law is a mess. It's not like the Internet has been "destroyed," but it's yet another failure by the EU.

Share with other professionals via LinkedIn:

Tuesday, December 6, 2016

Supreme Court agrees with Samsung: Federal Circuit got design patent damages ($399 million for Apple) wrong

It has taken the Supreme Court of the United States less than two months since a mid-October hearing and less than ten pages (counting only the opinion per se, not the two-page syllabus) to determine and explain that the United States Court of Appeals for the Federal Circuit got the law on design patent damages fundamentally wrong. A unanimous Supreme Court has overruled a unanimous Federal Circuit panel and whoever hadn't requested a vote on, or voted for, Samsung's June 2015 request for a rehearing.

The top U.S. Court disagrees with the Federal Circuit's interpretation of the term "article of manufacture," which is central to a disgorgement of a design patent infringer's entire profits under 35 U.S.C. § 289. Apple used to argue--in district court and on appeal--that it was entitled to a disgorgement of Samsung's total profits on any smartphones held to infringe any of Apple's three design patents-in-suit (which a jury had held infringed back in August 2012). Samsung asked the Federal Circuit to find that Judge Lucy Koh (United States District Court for the Northern District of California) had erred in how she instructed the jury: Samsung said the article of manufacture could also be a component, such as a smartphone case, as opposed to an entire multifunctional smartphone. The Federal Circuit nevertheless affirmed the related §399 million part of the damages award in the first California Apple v. Samsung case because it argued that consumers buy smartphones, not components.

Today's Supreme Court opinion says the following:

"The Federal Circuit's narrower reading of 'article of manufacture' cannot be squared with the text of §289. The Federal Circuit found that components of the infringing smartphones could not be the relevant article of manufacture because consumers could not purchase those components separately from the smartphones. [...] But, for the reasons given above, the term 'article of manufacture' is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not. Thus, reading 'article of manufacture' in §289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase."

That is absolutely wonderful! Large parts of the (U.S. and global) tech industry will breathe a sigh of relief now. As I said at different points in time, I believe the Federal Circuit's extreme position wouldn't have been good for Apple either--thinking of longer-term implications, not just this one Apple v. Samsung case.

Samsung and its lawyers--Samsung's lead counsel before the Supreme Court was Quinn Emanuel Urqhart & Sullivan name partner Kathleen M. Sullivan--can be proud of what they have achieved here for themselves and for the economy at large. Had they accepted the Federal Circuit opinion as the final word on this issue (considering that cert petitions rarely persuade the Supreme Court to look at a case), numerous companies would have overcompensated design patent holders through settlements and district courts across the United States would have instructed juries the way Judge Koh did, resulting in who-knows-how-many exorbitant damages awards. Sooner or later, someone would have tried to appeal this to the Supreme Court, but who knows whether someone else would have done such a great job (in briefing the court but also in mobilizing industry support) and, therefore, how long it would have taken before the huge mistake at the heart of the Federal Circuit decision would have been corrected.

But...'s not really over yet.

The Supreme Court's ruling was so quick and short because it's strictly focused on the key question of statutory interpretation presented. Toward the end of the decision, the Supreme Court says it wasn't possible to determine, in addition to the question that has been resolved, what the right "article of manufacture" should be in this dispute.

At the mid-October hearing, the justices asked the parties questions about what the proper test should be. The parties had not specifically proposed a test (though they both made various points that relate to what the test should be) in their filings. So the Supreme Court "decline[d] to lay out a test for the first step [this means the identification of the relevant "article of manufacture"] of the §289 damages inquiry in the absence of adequate briefing by the parties."

I'm slightly disappointed that no justice filed a concurring or dissenting opinion to express views and outline ideas for the "article of manufacture" test. That could have been so helpful.

Now the case goes back to the Federal Circuit. On remand, the Federal Circuit might develop a test, and if it does so, it hopefully won't reflect the same kind of extreme pro-patentee bias as its interpretation of $nbsp;289 showed. Theoretically, whatever test the Federal Circuit comes up with could be reviewed again by the Supreme Court. But that's purely hypothetical.

I guess Apple will try hard to avoid this, and even Samsung would probably prefer to win rather than get a test. At the Supreme Court hearing, Apple stressed the record, claiming that Samsung hadn't presented any evidence for anything other than a smartphone being the relevant article of manufacture. Samsung argued that Apple had the burden of proof and failed to prove that the relevant article should be an entire smartphone. Obviously, the parties also disagree on the burden of proof...

It's very hard for outsiders like me to form an opinion on a record we don't have access to. The party's filings contained some claims and citations but simply not enough to come down on one side or the other, except that I deem it unlikely (based on what I know now) that a huge record doesn't contain anything about it. Maybe it isn't perfectly specific, but there's probably something. On remand, the parties will address this question and then we'll all be a lot wiser, too.

Absent a miracle (i.e., a near-term settlement), Apple v. Samsung will go into 2017, and possibly way beyond. In connection with their second California case, the Federal Circuit has issued a mandate based on its recent surprise decision (its potentially most controversial one ever according to Donald Chisum of "Chisum on Patents", a treatise that today's Supreme Court opinion cites to), but there would still be time for a petition for writ of certiorari in that context, too.

A lesson for Europe

This is only the latest of many patent cases in connection with which the Supreme Court has restored sanity after an extremist ruling by the Federal Circuit. Knowing that many industry players read this blog, I want to make an urgent call for action here:

Let us try to prevent Europe from putting the Unified Patent Court (UPC) in place in the form in which it was originally envisioned! Otherwise, judges that will be handpicked by the same people who are in charge of the European Patent Office are going to make decisions that will be worse than anything you've ever seen from the Federal Circuit and there normally won't be any chance of petitioning a court with a broader and more balanced perspective.

It's disappointing that the UK plans to ratify the UPC agreement despite this year's Brexit vote. With more political action in the UK, it may be possible to prevent this from happening. I always got along very well with the UK Independence Party, whether it was about software patents or soccer broadcasting rights and sports governance. In the latter context, I had a great conversation with a young assistant to an MEP. His name was Paul Nuttall. He's now the party chairman. Those are the kinds of people that industry players concerned about Federal Circuit-style pro-patentee bias should talk to. I can't help on that front as I must stay in Munich and finish my app (at long last). But please, if you don't want Europe to become a patent troll's paradise, take action now!

Share with other professionals via LinkedIn:

Monday, December 5, 2016

Recent events make antitrust chief Vestager the EU's second-most powerful left-winger -- but she's isolated

Leading U.S. high-tech companies like Apple (whose "state aid"--it hurts me to use that misnomer even in quotes--case I'll comment on soon) and Google (I recently outlined my differentiated take on the Android antitrust case) are facing a left-wing populist campaign that stretches the envelope of competition enforcement. I believe part of the motivation is that the EU has failed and is failing its citizens in some very critical areas. The EU's failure has many facets, including among other things that it exposes its citizens to suicide terrorism, rapism, other violent crime, and drug trafficking imported from North Africa and Western/Central Asia, does not employ effective measures of the Australian kind to keep people with a high illiteracy rate, poor education (even including "university degrees" that are a joke) and low average IQ from becoming a burden on Europe's social welfare systems, allows Eastern European (from places as far as the former Soviet republic of Georgia) gangs to break into hardworking, honest European citizens' homes (a sacrifice on the altar of "free movement"), and still doesn't have the sovereign debt crisis truly under control.

The EU's all-out antitrust war with the U.S. puts Europe at the risk of an escalating trade war with the Trump administration, which has promised and, even before formally taking over, has already started to make America great again. There is increasing legal uncertainty for investors and job creation. While I have always supported competition enforcement where it is really warranted (such as standard-essential patents), I will make my tiny contribution to rationality by outlining on this blog, not in this post here but going forward, where the EU is right to slam down the antitrust hammer and where it must be stopped--if all else fails, by the Court of Justice of the European Union (CJEU).

Over the course of only ten days, the three most powerful politicians of the European left have all stepped down, making competition commissioner Margrethe Vestager the second-most influential European left-winger -- but she's basically just a one-eyed among the blind, no more powerful than before in absolute terms and increasingly isolated. A quick timeline:

  • November 24: European Parliament President Martin Schulz, a German social democrat, finally gave up his highly questionable, self-centered quest for a third term that was, or would have been, an outright breach of an inter-party agreement (the European People's Party and Schulz's socialist block had agreed that a conservative would take office in the middle of the legislative term). The former book dealer who had left high school without a diploma may become Germany's new foreign minister (a terrible choice since he insulted Donald Trump) or his party's top candidate in next year's national elections. He presumably wants both but it would be hard to travel the world and campaign at home at the same time. Polls that have been conducted since his decision show that his party, which has committed high treason against the Germans and legal migrants among its blue-collar voter base, does not benefit from his EU-level fame at all: they're still polling around 20%.

    When announcing his return to German politics, Schulz said he wanted to keep working to make people's lives a little bit better every day. He didn't say which people's lives, though.

    The current foreign minister of Germany, Frank-Walter Steinmeier, will become federal president, which is a purely representative, next-to-powerless position.

  • December 1: The weakest French president in my lifetime, François Hollande, made the highly unusual but inevitable decision not to run for reelection. This makes him the epitome of a lame duck until next spring. No matter which candidate his party will nominate, it's virtually certain that the run-off election will take place between Marine Le Pen, who has credibly distanced herself from her father's antisemitism and other radical views and may break through Hillary's glass ceiling (just in another country and coming from another political direction), and Republican nominee François Fillon.

  • December 4: Italian prime minister Matteo Renzi, whose proposals for EU policies came down to an uncreative borrow-and-spend dogma and the idea of opening the floodgates for people who will, not in each individual case but in the aggregate, be a huge burden on our social welfare systems and a threat to our security, has stepped down after completely losing yesterday's referendum over an anti-constitutional reform proposal. While Italy does have a problem with forming stable governments and some reasonable reform may be warranted, Renzi's attempted power grab was rejected for all the right reasons. The big winners were the relatively young five-star movement and my favorite Italian party, the Lega Nord, whose leader, Matteo Salvini MEP, celebrated President-elect Donald Trump, Russian president Vladimir Putin (whom too many European politicians and journalists vilify though he would be a great ally in some ways), French Front National leader Marine Le Pen MEP, and his party in a tweet and Facebook post last night.

Now the leaders of all three European institutions (Council, Commission, Parliament) will soon be members of the European People's Party (EPP). That is exactly why Schulz was hoping to somehow secure a third term, which would have been as unusual in Europe as Franklin D. Roosevelt's extra terms (and like FDR then, Schulz sought to justify it with an unprecedented crisis). In the European Council--where the heads of state and government meet and make the ultimate decisions--EPP and libertarian politicians (and the Tories, which are part of an EU-skeptical block in the European Parliament and whose country is on the way out) control the most important countries, except for a lame duck like Hollande, and lame ducks don't count. In terms of population size and economy, Sweden is now pretty much the most important EU member state with a left-wing leader, though arguably the influence of German and Spanish social democrats as "junior partners" of their national governments is more important given the size of those countries.

With Schulz leaving the European Parliament and the Party of European Socialists (which, by the way, has some Eastern European member parties whose views on migration policy and euro bailouts are similar to mine) being in its weakest position ever in the European Council, we have to turn to the European Commission in our search for Europe's most influential left-winger.

The Commission is the executive branch of the EU government. In EU member states, the position of foreign minister is generally deemed the most prestigious and influential cabinet post. Since there isn't really such a thing as a common EU foreign policy (and now, as a result of Merkel's insane and highly divisive migration policies, less than ever before), it's still the national foreign ministers who are in charge. The EU couldn't even agree (in no small part due to British resistance) to appoint an EU "foreign minister," so the title is "High Representative of the European Union for Foreign Affairs and Security Policy." It's a difficult post for an EU politician to influence things, and Federica Mogherini is a Renzi appointee, which further reduces her influence.

In the member states, the ministers of finance are usually also very influential, and even more so in times of a sovereign debt crisis. However, the EU Commission has a limited budget, so here it's the member states who make the decisions in their "Eurogroup." Dutch labor party politician Jeroen Dijsselbloem, who appears to be rather moderate, not leftist, is the leader of the Eurogroup. He can't decide anything alone but as the public face of the euro currency and the organizer of the meetings where the decisions are made, he's now the most important politician of the European left at the EU level.

In the European Commission, the two most important areas of responsibility besides the presidency are competition and the Internal Market and Services. At times, enlargement (negotiations with potential future member states) is also somewhat interesting, but not now: the EU can't expand while struggling with enormous centrifugal forces, which includes that Italy may hold a referendum on EU membership in the near term.

The current commissioner for the internal market is Elżbieta Bieńkowska, a Polish conservative. So, antitrust commissioner Magrethe Vestager is presently the most influential left-winger in the European Commission. But this is a relative perspective. There is no absolute increase in power. Much to the contrary, she's going to find it harder and harder now to get support for her activism. She does have supporters among EPP politicians but the Party of European Socialists is in its weakest position in a long time.

Share with other professionals via LinkedIn: