Tuesday, August 11, 2020

Qualcomm wins first-class antitrust acquittal from Ninth Circuit: patent licensing practices don't contravene Sherman Act

The United States Court of Appeals for the Ninth Circuit has just published its long-awaited FTC v. Qualcomm panel opinion, reversing the district court's ruling and vacating as moot the 2018 partial summary judgment on contractual obligations to grant exhaustive component-level standard-essential patent (SEP) licenses (this post continues below the document):

20-08-11 9th Cir. Opinion R... by Florian Mueller on Scribd

The decision comes as no surprise. The appellate hearing, held earlier this year, had very much gone Qualcomm's way.

If it's such a clear case, why did it take the appeals court so long? There can be any number of reasons, and I guess a majority in favor of reversal already existed months ago, but they took their time to reach a unanimous panel decision.

The Federal Trade Commission (FTC) can petition for an en banc review. The Ninth Circuit, with its 29 judges, is too large for a full-court review to be a practical option, so if an en banc took place, there'd be "only" 11 of those 29 judges on the bench.

The fact that an ideologically diverse panel decided unanimously ups the ante for an en banc petition by the FTC. But given how much is at stake in this case, it might still happen.

I have been and continue to be critical of certain aspects of Qualcomm's business model, particularly the chipmaker's refusal to grant exhaustive SEP licenses at the component level. Nevertheless I do congratulate Qualcomm's lawyers on a sweeping victory--an accomplishment of gigantic proportions--and wish to point out that I already expected something like this to happen prior to the appellate hearing. The FTC's trial team did a tremendous job last year; at the appellate stage, I was underwhelmed, also by some of the amicus curiae briefs supporting the FTC.

Should the FTC give an en banc petition a try, I doubt the outcome would be different. And whether the FTC could even petition the Supreme Court depends on whether a vote would have to be held. Should a vote be required, there almost certainly wouldn't be a majority in favor of a cert petition.

The fact that the summary judgment under contract law has been vacated as moot without reaching the merits is unfortunate, but it makes sense that the Ninth Circuit panel didn't want to remand the case if the outcome under the antitrust laws was so very clear--to the panel--regardless of whether or not Qualcomm had contractual obligations to grant component-level licenses.

It's a setback for the push for component-level access to SEP licenses without a doubt. But the fight will go on in multiple jurisdictions.

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