Sunday, March 8, 2020

Timing and political affiliations may favor FTC in en banc review of panel decision in Qualcomm case

This is the third post today on FTC v. Qualcomm. I previously discussed the scenario of a remand of the contract law part of the case to the district court (summary judgment on chipset licensing) and the difficulties that judges with a non-expansive approach to antitrust law have with the broad "No License-No Chips" part of the FTC's case.

There are various possibilities and permutations as to what could happen next. But for the reasons outlined in the two previous posts, a remand of the contract law part is somewhat (though not overwhelmingly) probable, and a reversal of the "No License-No Chips" part fairly likely, as far as the panel that heard the case last month is concerned.

The FTC has five commissioners: three Republicans and two Democrats. The Democratic minority supports this case; the Republican majority doesn't, but Chairman Simons recused himself, so the "red" commissioners can't outvote the "blue" ones. There's a stalemate. The Democrats can block a settlement, or a decision to drop the case--but they can just keep defending the pending case.

What I still haven't been able to find out is whether the FTC could even file a petition for writ of certiorari (request for Supreme Court review) without holding another vote. If anyone knows the answer, please let me know (such as via my contact form).

One thing the Democrats at the FTC certainly wouldn't be able to do under the current circumstances is to bring a follow-on case for 5G, should the appeals court determine that the injunction entered by Judge Koh doesn't apply to 5G. While Qualcomm conceded on appeal that it had a monopoly in the two relevant markets defined by the FTC, those were WCDMA and 4G/LTE markets.

Apart from the fact that Qualcomm needs to keep fighting the contract law part of the case (licensing rival chipset makers), a settlement would make a lot of sense for both sides. But the Democratic FTC minority might not want to do that unless President Trump gets reelected, in which case the Democrats at the FTC would be more interested in a face-saving exit.

The panel that heard the case last month will need some time. It's a complex case as the presiding circuit judge, Judge Johnnie Rawlinson, noted at the end of the hearing. I guess we'll see a panel decision in June or July.

Assuming that the FTC loses at least in part (wholesale affirmance really appears extremely unlikely based on how the hearing went), it may very well seek an en banc review--and if it files a petition, I think it's quite likely that many circuit judges will vote in favor. The Ninth Circuit is such a large appeals court that it won't be a full-court review. But with 11 judges picked from a pool in which there are still more Democrats than Republicans, it's unlikely Qualcomm will get lucky again. Qualcomm already benefited from a conservative majority last summer when its motion to stay was granted (any panel might have done so, even one consisting of three Democrats, but the impact of the DOJ's submission was visibly massive). And now the merits panel consists of two Republicans and probably the most conservative Democrat among all federal judges on the West Coast. Statistically, an en banc panel will be virtually certain to have a Democratic majority unless someone manages to game the system.

Qualcomm's allies (those writing op-eds, in particular) repeatedly portrayed FTC v. Qualcomm as an "Obama case." That PR strategy could hurt Qualcomm in an en banc scenario. And regardless of whether the judges would view this one as an "Obama case," or see the DOJ's support of Qualcomm as a "Trump campaign," Democrats are always more likely than Republicans to support novel, aggressive, expansive antitrust theories.

Even if the en banc didn't improve the outcome for the FTC, the passage of time would have value in itself for the Democratic FTC minority: in the meantime, the presidential elections would take place. It's no secret that I hope (though for different reasons than this antitrust case) that President Trump will be reelected. Should "Quid pro quo Joe" run against him, many people may realize whose dealings (via his son) with Ukraine raised the far more serious issues. But Democratic voter turnout will probably be very high. And between now and November, anything can happen, even a global economic crisis due to the coronavirus, which in turn could affect the outcome of the presidential election.

I wish to stress that in an ideal world, politics wouldn't affect antitrust enforcement. But in the world in which we live, especially when a case has been politicized like this one (by others than me), political factors can't be ignored. It's just about figuring out what may happen next and why.

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