Wednesday, September 30, 2020

Epic Games announces motion for judgment on the pleadings to dispose of some of Apple's counterclaims, and both parties prefer bench trial

There have been further filings since the Epic Games v. Apple preliminary injunction on Monday (which didn't go too well for Epic), and two of them are worth reporting and commenting on.

Let's start with the shorter and simpler one. Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California had said on Monday (part of the hearing was about case management) that she didn't like the idea of having to try two cases between these parties only because one requested a jury trial on its claims (which Apple did with respect to its counterclaims) while the other (Epic) did not. The federal judge would actually have preferred a jury trial as I explained in my report on the PI hearing.

There were three possibilities: the parties could have agreed on a jury trial (which appeared most likely because it would have been the judge's preference); the parties could have disagreed (which would have entailed some bidirectional fingerpointing); but what appeared least likely actually happened, and the parties now both want a bench--not jury--trial (this post continues below the document):

20-09-29 Epic Games & A... by Florian Mueller

In order to enable this, Apple has to withdraw its request for a jury trial, which it does with Epic's consent.

It's highly speculative why this surprising choice was made. While Apple's in-house litigation department has hugely more experience with high-stakes commercial disputes than Epic, outside counsel for both parties is well-matched. It's just a gut feeling, but this looks like one of the cases in which both parties believe very strongly they're going to win--not the kind of case where a plaintiff has that strong belief but the defendant is trying a long shot and stalling, or where a plaintiff attempts a crapshoot (which often happens in patent cases).

The way the Monday hearing went might have made Apple reasonably comfortable with leaving such determinations as market definition to Judge Gonzalez Rogers (whose reference to a wider games distribution market and whose skepticism regarding Epic's tying claim suggest she may, at least for now, be more inclined to side with Apple on market definition)--and Epic never wanted a jury involved, probably because Apple has more fans, especially in the Bay Area, than the Fortnite maker.

The other filing to discuss here is Epic's answer to Apple's counterclaims (this post continues below the document):

20-09-29 Epic Games' An... by Florian Mueller

That answer is reasonably focused and not an outright attempt to capitalize on the sequence of events (first the PI hearing, then the deadline for the answer to the counterclaims) in order to file a de facto post-hearing PI brief.

The most interesting procedural information is that Epic "will soon move the Court (pursuant to Federal Rule of Civil Procedure 12(c)) for judgment on Apple's tort claims and on Apple's claim based on the implied covenant of good faith and fair dealing, which fail as a matter of law." If that motion succeeded, there would still be some contractual and competition counterclaims.

An FRCP 12(c) motion is a motion for judgment on the pleadings. It can be brought when pleadings are complete, but before discovery, and without delaying a trial. It's easily confused for a motion to dismiss for failure to state a claim upon which relief can be granted (FRCP 12(b)(6)), but is actually closer to a summary judgment motion. Judgment on the pleadings is possibly only if no material fact is in dispute. Apart from conversion, a theory Judge Gonzalez Rogers said she'd throw out anyway, Apple will presumably defend the counterclaims to be challenged by Epic and will argue that there are material facts in dispute. Epic will then have to convince the court that there is no real dispute, or that the disputed facts aren't material.

In Epic's parallel litigation against Google over the Google Play Store, Epic will soon have to defend its claims against a motion.

Epic's preliminary statement to its defenses against Apple's counterclaims contains a passage that accuses Apple of inconsistent treatment of app developers:

"Epic does not dispute that this competing payment solution was prohibited by contractual provisions that Apple has unlawfully forced on developers like Epic who sell in-app digital content, even though Apple allows numerous other app developers to use competing solutions. Epic also does not dispute that, if Apple's contracts were lawful, all in-app purchases made by Fortnite users on iOS would be subject to Apple's 30% tax, even though Apple has exempted numerous other developers from this tax." (emphases added, except for "Fortnite")

It's key to understand that discriminatory treatment under antitrust law does not mean that there can'be any differences. Treating two parties differently is only discriminatory if there's no justification for doing so, and it can, in fact, even be an antitrust violation to treat two parties the same if different treatment would be warranted. If Apple collected a 30% commission on an Amazon sale of physical goods, it would appear at first sight to treat Amazon the same way as Epic, but structural economic differences between the two types of transactions would raise serious questions.

As for Epic's 28 defenses (throwing in the kitchen sink just like Apple did before), Epic obviously argues once again that Apple's App Store terms are anticompetitive, illegal, and unenforceable. There's one defense, however, that I really find absurd: Epic's 9th defense says that Apple ratified, agreed to, acquiesced in, or consented to (all of which comes down to saying that Apple appeared OK with something) "Epic's alleged conduct, including based on, without limitation, [...] Apple's longstanding acceptance of the hotfix process [...]"

Epic can't be serious about Apple's acceptance of unharmful hotfixes precluding Apple in any way from taking action against an outright breach of its in-app payment provision. Epic's "hotfix" here was just that the server told the client (the Fortnite app) to activate a certain feature that had been hidden from Apple. It wasn't a "fix" or a simple addition of content such as another island on which to have a battle royale. It was simply the remote activation of something that Epic itself says, in the document shown above, "was prohibited by contractual provisions."

Finally, the 28th defense indicates Epic will hold positions taken by Apple "in prior court actions" against Apple in this one, as it "cannot take contrary positions in this litigation." I'm curious at to what this means. Potentially Epic's lawyers, some of whom previously represented Qualcomm against Apple (and the Federal Trade Commission), believe Apple said something in the dispute with Qualcomm that runs counter to what it's saying now when defending itself against Epic.

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Tuesday, September 29, 2020

Misinformed EU commissioner Thierry Breton spreads Nokia-funded fake news of European 5G patent leadership: anything but "a fact"

Further below you can find previously not published data showing what a huge problem with the expiration of 5G-essential patents Nokia faces in the coming years. If you wish to skip right to that passage, please click here.

Among the three most powerful members of the current European Commission, EU commissioner Thierry Breton (Twitter profile) is "Monsieur Non" with respect to enforcing EU competition law against standard-essential patent (SEP) abuser Nokia. He and his cabinet are the ones who adamantly oppose what would not only be right from an antitrust perspective but also benefit Europe's economy at large, from small Internet of Things startups to car makers.

For the EU, it should be a no-brainer to require SEP holders to extend exhaustive component-level SEP licenses to component makers. The enforcement priorities of the Commission's Directorate-General for Competition (DG COMP) appear to pursue only one principle: protectionism. By letting Nokia and its partners in crime (the Avanci gang) get away with what they're doing (they've already obtained two Germany-wide patent injunctions against Daimler and are seeking many more), while coming up with novel and at times even absurd theories of harm concerning American companies, the Commission is systematically destroying the reputation as a competition regulator that it worked so hard to build in earlier decades. But Mr. Breton doesn't care.

Atypically for a Frenchman, he doesn't even give a damn about his own country's economic interests. France holds few cellular SEPs, but has a sizable automotive industry, which may so far not have been sued by the Avanci gang, yet will inevitably face the same shakedown as German and American car makers. There is no such thing as a free lunch--much to the contrary, whatever royalties Nokia and its allies extract from foreign companies will be used as "comparable license agreements" in any license fee dispute with their French counterparts. There are purely tactical reasons for which it hasn't happened yet. Back royalties will be huge.

Mr. Breton's negative influence extends far beyond his informal veto of any DG COMP investigation of Nokia's refusal to live up to its FRAND licensing promise. You can set your watch by him: once the Commission has to provide input to the Court of Justice of the EU on component-level licensing, Mr. Breton is going to have no more regard (i.e., zero) for the Commission's Legal Services than he has for DG COMP's regulatory responsibility. And the Commission's IP policy unit is part of DG GROW, formerly (and less euphemistically) called the Directorate-General for the Internal Market ("growth" is something at which the EU has failed miserably, with no chance that it would ever close the digital-economy gap). The Commission's SEP Expert Group is coordinated by that IP policy unit, which is ultimately under Mr. Breton's control.

What I heard about Mr. Breton acting like a Nokia/Ericsson lobbyist, coupled with the fact that the former CEO of France Telecom may have longstanding contacts with Nokia and Ericsson, made me wonder why a commissioner would do that. The only plausible explanation is that he actually--and very much mistakenly--believes he's doing the right thing for Europe's future. In a recent YouTube interview with Politico EU, he credibly comes across as someone driven by a desire to strengthen Europe in political and economic terms (this post continues below the video):

At minute 39, however, he spouts nonsense--and repeats himself multiple times insisting that it's "a fact":

"We have been always leading in mobile communication, including in 5G. Today, Europe is the leading continent in 5G: the most patents and contracts. We are happy to have two European global companies [Nokia and Ericsson, he means] and these two companies are having [sic] more patents than others. [...] but this is a fact [...] this is just a fact [...] facts are extremely important--not just rhetoric--it's a fact."

No, Mr. Breton. You--and probably your advisers first--have to get your facts right. You're entitled to your opinion, and to your agenda, but not to your own facts. What you say about Europe leading in 5G patents is simply the opposite of a fact. It's completely untrue, and if you check the facts, chances are no one will be more embarrassed than you. So let me give you the real facts since your advisers have either failed to do so or you didn't listen to them because you're predisposed toward buying whatever Nokia's and Ericsson's lobbyists tell you.

There's not even one serious SEP study in the whole wide world that sees Europe ahead in 5G SEPs. All the independent studies see Europe behind, and losing ground.

There's only one plausible--and regrettably poisoned--source for Mr. Breton's misinformation, and that's a "study" that the very law firm representing Nokia in the automotive SEP licensing talks (including the mediation that failed earlier this year) put together. Ericsson published its key findings. Interestingly, the study is not even consistent with what the author of that Ericsson blog post, Mrs. Peterson, testified in FTC v. Qualcomm when she was trying to devalue Qualcomm's portfolio.

[Update on 09/30/2020] Bird & Bird has meanwhile stated on LinkedIn that there's a more recent version of the study, which in fact has Asia ahead of Europe, confirming my point and suggesting that Mr. Breton relies not only on incorrect, but even outdated information. [/Update]

The "methodology" of that "study" is vaguely described as applying Justice Birss's Unwired Planet v. Huawei "filtering" approach (paragraphs 325 et seq. of the ruling, but that one was actually derived from what expert witnesses paid by the litigants told the court. What the ruling indicates is that the methodology involved essentiality determinations based on a sample of patents. If Nokia's own lawyers performed that kind of analysis here, I wouldn't recommend anybody--and especially not an EU commissioner--to take the result at face value.

That "study" was published in response to other statistics based on declarations (such as IPlytics) and/or contributions to the standardization process. Those other approaches didn't lead to the kind of result Nokia and Ericsson would have liked, and while one can indeed level criticism at simple counts, they're at least performed by independent entities, not Nokia's own lawyers.

If, however, the name of the game is to take a critical perspective and conduct an essentiality analysis, Amplified and GreyB did just that, did it independently, and did a great job (click on the image to enlarge; this post continues below the image):

In the Amplified/GreyB study, Nokia's essentiality rate (i.e., the percentage of declared SEPs that passed a technical plausibility test) was just average, and Ericsson's was rather poor.

Nokia is facing a huge patent expiration problem

Many of Nokia's so-called 5G SEPs are actually patents that were already declared essential to earlier standards. The age of Nokia's portfolio is a huge issue, and I wanted to shed some light on it here. Given that the Amplified/GreyB study is currently the best 5G SEP portfolio analysis out there, I contacted them and asked them for data on how many of the "5G Core SEPs" (i.e., patent families (note they correctly focus on patent families as opposed to separately counting patents on the same invention filed in parallel in multiple jurisdictions) that were declared essential to 5G and passed their plausibility test) will expire in the years ahead. Thankfully, Amplified/GreyB provided the following table showing the number of patent families to expire by the end of a given year as well as subtotal for the years 2020-2023 (click on the image to enlarge; this post continues below the image):

Based on the numbers in the above table, I've done some further calculation that shows the cumulative percentage of the currently-live 5G SEP families (only the ones that passed the Amplified/GreyB plausibility test) that will have expired by then (click on the image to enlarge; this post continues below the image):

The dark green line at the top shows that a far higher percentage of Nokia's currently-live 5G SEP families will expire than of any other major SEP holder. In fact, over the course of the next five years, Nokia alone will lose more 5G SEP families as a result of expiration than the rest of the industry combined.

Amplified and GreyB have nothing to do with the content of this blog post other than that I asked them for the percentages of patent families set to expire in certain years. I very much appreciate the fact that they answered my question, and as I expected, the numbers are telling.

By protecting Nokia, Mr. Breton is placing a postfactual bet on a dying company's shrinking portfolio, coming from an incorrect assumption of Europe's competitiveness in that field. The alternative for him would be to show more appreciation for the innovative potential of European IoT startups and the automotive industry, including the suppliers of digital components. If he did that, his numbers might even work out.

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Monday, September 28, 2020

Epic Games struggling to persuade court of likelihood of winning its case against Apple: preliminary injunction over Fortnite not too likely

The Epic Games v. Apple preliminary injunction hearing took place this morning (Pacific Time) before Judge Yvonne Gonzalez Rogers in the Northern District of California. The first and longest part--during which the court discussed with counsel for both parties the likelihood of success on the merits--was particularly key. In fact, Cravath's Katherine Forrest, one of two attorneys who argued for Epic, acknowledged that an injunction would not issue in this case unless the court agrees with Epic on its likelihood of prevailing on the merits.

Judge Gonzalez Rogers, who asked counsel for both parties tough questions, appeared at least hesitant--if not very reluctant--to conclude at this early stage of proceeding that Epic was on the road to victory. That doesn't mean she thinks Epic is likely to lose. It's just that under the current circumstances the court would have to reach a conclusion based on a limited amount of briefing. What's in the record now is almost nothing compared to what will be available at trial time (i.e., in July 2021).

Toward the end of the hearing, Judge Gonzalez Rogers strongly recommended putting the factual questions here (and she categorized market definition as a question of fact as well) before a jury, given that appeals courts--in her observation--don't afford district court judges much deference for their factual determinations. She mentioned that sometimes district judges write hundreds and hundreds of pages, but the appeals court just does what it wants. That may have been an allusion to what happened in FTC v. Qualcomm, where a three-judge panel overruled the district court on everything, though there is a possibility of a rehearing en banc leading to a more nuanced ruling. But that's another case. For Epic Games v. Apple, it means the judge would really prefer not to have to decide any factual dispute if it can possibly be avoided--which isn't great news for Epic.

At the PI stage, Epic focuses on a monopoly abuse argument and a tying theory. Judge Gonzalez Rogers started the "tying" part (with Epic arguing that the App Store and in-app payments are separate products and Apple allegedly "ties" IAP to the App Store) by saying she was "not particularly persuaded" with that one--and she also sounded unconvinced of monopoly abuse. Obviously, one cannot know for sure what she will decide after giving this more thought, but if what she said today is any indication, Epic is unlikely to obtain a preliminary injunction with respect to Fortnite, with the realistic best case for Epic being that the court would convert last month's temporary restraining order (TRO) over Unreal Engine (but not the Fortnite game) into a preliminary injunction.

Just like I wrote after reading Epic's reply brief, it's now most likely that the court won't obligate Apple to tolerate an undisputed breach of Apple's App Store terms by Epic and that Epic will keep the iOS version of Fortnite out of the App Store for a few more months and appeal this to the Ninth Circuit. If the appeals court affirms a hypothetical denial of a PI over Fortnite, I don't think it will take long before Epic puts the iOS version of Fortnite back.

The likelihood of success on the merits is just one of the four PI factors, but as Judge Gonzalez Rogers noted, there wasn't "all that much new [in the PI briefing] with respect to the remaining elements." The judge noted that there was "a calculated decision here" and "self-help" in terms of Epic having known full well that Apple would remove Fortnite from the App Store after a "hotfix" that activated a payment system in contravention of the App Store terms.

The possibility of an escrow account (where, for instance, Epic could put the 30% cut it contractually owes Apple) was discussed. It's hard to see that this would solve any particular problem for either party.

The judge is aware of the fact that some other companies besides Epic also complain about Apple's App Store terms. Interestingly, Judge Gonzalez Rogers was wondering whether Epic was the best plaintiff to bring this challenge, given that iOS is just one of several platforms for games, while there may be other types of apps that are more dependent on access to Apple's customer base. What must have made that remark particularly discouraging for Epic is that it suggests the court isn't--at least for now--inclined to agree with Epic on market definition (treating the iOS app distribution market as the relevant market for antitrust purposes, as opposed to a wider games distribution market).

A written order will come down soon, but probably not as fast as last time, when it just took a few hours. The least likely outcome is that Fortnite will be "free" to bypass Apple's in-app payment system, but one thing Epic cannot complain about is the amount of time the court gave its lawyers today.

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Saturday, September 26, 2020

Component-level SEP licensing gains ground as Avanci member and notorious patent troll Sisvel settles litigation with Switzerland's u-blox

With respect to the component-level licensing of standard-essential patents (SEPs), the Federal Trade Commission's petition for a Ninth Circuit rehearing en banc of the Qualcomm case is not going to make a difference either way, given that the FTC's theory is not an actual antitrust duty to deal but just an allegation of a violation that would (should the court agree) consist of a breach of contract. Any positive effects of the FTC's continuing efforts would be of an indirect nature in terms of preserving the ability of antitrust law to combat SEP abuse. But there's been meaningful progress toward exhaustive component-level SEP licenses on multiple other fronts this third calendar quarter:

Sisvel is already the third well-known Avanci member with which u-blox has announced such an agreement. In November 2019, u-blox settled with InterDigital ("InterDigitroll"), and two years ago struck a license deal with Philips.

When the Avanci pool gets bypassed like in the case of Sharp and Huawei as well as those u-blox deals, it benefits in only one way: the fact that such agreements are concluded makes it hard to allege that Avanci effectively prevents component-level license deals from happening. Continental's lawsuit was basically dismissed as a conspiracy theory. But the downside clearly outweighs the upside as Avanci's unwillingness to grant exhaustive component-level licenses on FRAND terms continues to be part of the problem, not part of the solution.

Every exhaustive component-level SEP license agreement that an Avanci member enters into makes Avanci's model more defensible, but less viable. If the majority of industry players continue to reject Avanci's abusive terms (license deals--such as with Volkswagen--that don't even cover 4G fail to validate Avanci), the time will come when Avanci will have to choose between meeting the demand for component-level licenses and dissolving itself dishonorably.

We're not there yet, though. Various Avanci members such as Nokia, Conversant, and the PanOptis/UnwiredPlanet troll group keep pressuring car makers such as Tesla through infringement litigation instead of simply licensing their suppliers.

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Friday, September 25, 2020

FTC petitions for rehearing en banc of Qualcomm antitrust decision, tells Ninth Circuit "panel opinion tears the fabric of antitrust law"

Today, competition authorities on both sides of the Atlantic made filings with appeals courts after deciding not to give up after negative decisions by three-judge panels. First, the European Commission brought a further appeal after losing the first round to Apple and Ireland in a tax policy matter styled as a "state aid" case. Second, the United States Federal Trade Commission filed a petition for rehearing en banc (meaning an enlarged panel of 11 circuit judges) by the Ninth Circuit of its Qualcomm case (this post continues below the document):

20-09-25 FTC Petition for N... by Florian Mueller

The FTC won in district court, but a three-judge panel ruled for Qualcomm on all counts last month. Given the Republican 3-2 majority, it was uncertain whether the FTC would defend its decision, but institutional reasons (the implications of the panel decision not only for this particular case, but also for many other antitrust cases to be litigated in the future) may have been the reason for which at least one Republican sided with the two Democratic commissioners in seeking a rehearing.

A cornerstone of the FTC's strategy is to stress that "panel did not overturn any of Judge Koh’s factual findings." Indeed, Judge Lucy H. Koh of the United States District Court for the Northern District of California had made a clear distinction in her ruling between findings of fact and conclusions of law, and her factual determinations are entitled to a great deal of deference. But the Ninth Circuit panel thought it could reverse based on purely legal questions.

In attacking the appellate panel's ruling, the FTC says it "conflicts with Supreme Court precedent on three questions of exceptional importance to the Nation's antitrust laws":

  1. The panel took the position that whatever could theoretically be addressed in patent litigation (such as royalty amounts) wasn't an antitrust issue. The FTC finds this inconsistent with "the Supreme Court's instruction that courts must apply the antitrust laws based on economic substance, not formal labels [by which the FTC particularly means the term 'patent royalties']." The FTC's petition criticizes the panel's "form-over-substance approach." In the same context, the FTC points to the Supreme Court's Apple v. Pepper decision on consumer standing in an App Store antitrust case as well as a 2013 decision according to which patent-related agreements can be evaluated under antitrust law (FTC v. Actavis).

    The FTC may have been concerned that by accepting the panel decision the agency would find it extremely hard to apply the antitrust laws to patent-related business models in the future. Toward the end of the petition, the FTC says "{t]he panel's errors have cast doubt on fundamental matters of antitrust principle and will encourage monopolists to cloak anticompetitive practices beneath false invocations of patent law and the appearance of neutrality."

  2. The FTC's second point involves the old United Shoe decision. Earlier this year I explained why I tend to agree with Qualcomm that it's inapposite. I will read the FTC's petition in detail and see whether it changes my mind regarding United Shoe (which I doubt, but you never know).

  3. The FTC's third point is that the panel erred in holding that harm to Qualcomm's customers (smartphone makers) is "outside the relevant antitrust markets." Here again, the FTC points to Apple v. Pepper as a very recent Supreme Court antitrust ruling that described "protecting consumers from monopoly prices" as the "central concern of antitrust."

The issues in this case are reasonably likely to spark the interest of enough circuit judges for the rehearing en banc to happen. The far harder part for the FTC will be to get a better outcome.

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Politically--not legally--logical decision: EU competition commissioner Margrethe Vestager to appeal humiliating defeat in Apple-Ireland "state aid" case

Of the three key decisions that were scheduled for today, the least important one (a Nokia v. Daimler patent infringement ruling in Munich) has been pushed back on very short notice by more than a month, and the second one will be announced any moment now (and probably will have been announced by the time you read this, unless you're an early bird catching a premature worm):

According to the Financial Times, which is the European Commission's favorite media outlet when it comes to leaking competition-related (and many other types of) decisions, EU competition commissioner Margrethe Vestager has persuaded enough of the other commissioners that the Directorate-General for Competition (DG COMP) can appeal Apple and Ireland's victory in the EU General Court, which held that the Commission's "state aid" decision alleging favorable tax treatment of Apple by Ireland was baseless. The final decision will be made by the Court of Justice of the EU (CJEU), which is based in Luxembourg like the EU General Court (which was previously called Court of First Instance) and focuses exclusively on questions of law, not fact--which is a huge problem for the Commission given that the factual findings didn't support its decision in the first place.

This blog has been--and obviously has no reason not to continue to be--critical of the Commission's 13-billion euro decision (by now there's even another billion and a half in play, it appears), which was deficient, self-contradictory, and hard to reconcile with the Commission's acceptance of special tax rules in other parts of Europe that do look like state aid at first sight.

25 years ago, I actually recommended to Blizzard Entertainment (now part of Activision-Blizzard) to set up an Irish subsidiary to benefit from the low corporate tax rate there that was available to foreign investors meeting certain requirements. I had previously met officials of the Irish Development Agency at Software Publishers Association (SPA) Europe conferences, and I wanted the best for my client. But it's not the best for Europe. While I'm in favor of fair tax competition, what Ireland has been doing for a long time is just to take advantage of the EU's fundamental flaws.

The EU is a failing experiment of a "supranational" (neither an international organization like the UN, where you need unanimity for all decisions and member countries retain full sovereignty, nor a single nation state) body and the idea of "ever closer (and irreversible) integration." A few U.S. tech giants now have a market capitalization in excess of all publicly-traded companies from all industries in all European countries. Tesla, which just turned 17, is more than twice as valuable as the entire German automotive industry. The Digital Age belongs to America and parts of Asia, and Europe is the continent of losers that is more concerned with its history and diversity, and with taking care of poor neighbors, than its own future. But while the EU fails most of its citizens, some small countries like Ireland and Luxembourg have managed to take advantage of the EU's systemic deficiencies, at the expense of all others. Ireland can offer its low corporate tax rate only because it markets its access to the EU's Single Market, which is about 100 times as large as Ireland's domestic market.

The problem that the founders of the EU and its predecessors faced was that the benefits of integration (stronger together) were as clear as the impossibility--in the past and even today--of getting the governments of its member states to give up all sovereignty, and to convince the populations of particularly southern countries that the continent as a whole would have to accept one set of laws--and a common language, for which English would have been the obvious choice--while still retaining some local traditions, but practically demoting national languages to regional dialects. If the EU had done that, and if the focus had been on building an economy that can compete with places in the world where people simply work a lot harder than in most of Europe, then European digital startups could address a market with half a billion inhabitants, a single language, a single set of laws (even EU directives are not a substitute for a single jurisdiction), and make it big. Instead, the EU is going down the tubes, economically speaking.

It's telling that some of Europe's most affluent countries like Switzerland and Norway aren't EU member states, and with the UK the European country with arguably the best education system has already left.

Instead of realizing and addressing those structural shortcomings, the EU Commission changed direction in a different way over the course of the 2010s: having given up on fair competition, and being unable to cure its own diseases (by the way, the EU has also failed completely to make anything positive happen with respect to the COVID-19 pandemic; actually, open borders made everything worse), the EC opted for protectionism.

That protectionism is reflected by the EU Commission's unwillingness to require Nokia to live up to its FRAND licensing obligations vis-à-vis automotive suppliers, and its new plans for a Digital Services Act designed to give the EU Commission maximum leverage over global tech giants.

Mrs. Vestager has clearly turned a blind eye to antitrust violations by European companies, with only a few token investigations meant to create the perception of a balanced approach to enforcement, while going after each and every U.S. company, no matter how absurd the theory might be.

On the subject of absurdity, the Apple-Ireland "state aid" case was a transparent attempt to scapegoat a successful company that was on the verge of bankruptcy in the 1990s and went on to become the most valuable corporation in the history of the world, without needing any oil reserves to get there. It was a smear campaign, styled as an antitrust decision.

Not only in terms of the amount at stake, but also the extreme contortion of the law and the total absence of facts that would have underpinned those theories, Mrs. Vestager's Apple-Ireland decision has been the most ridiculous Commission ruling to date. The judges of the EU General Court realized this, and tossed it in its entirety. The Commission decision even contained two fallbacks: a Plan B, where the relevant amounts of money would have been approximately 10% of Plan A, and a totally unspecified Plan C. None of the three plans worked out and the appeals court overturned the whole thing.

In order to side with the Commission, the top EU court would have to engage in the most massive miscarriage of justice in its history, and it's not like all of its decisions had been uncontroversial. The Commission's only chance is for that to happen. It's not the kind of appeal that is reasonably likely to succeed. It's a long shot, and the only way for the Commission to prevail would be for the CJEU to place politics above the law just like the Commission did when it decided to bring this appeal.

For Mrs. Vestager personally, but also for the Commission as a whole, this is worth trying even if the chances are extremely slim. It's going to take a couple of years, and by then Mrs. Vestager's going to be nearing the end of her second term as competition commissioner. The embarrassment is going to be even greater then in all likelihood, but later is better than sooner in this case--for the commissioner, for the Commission, not for Europe, which would have a greater benefit from the Commission focusing on real issues, of which there are many, some of which I just mentioned, such as Nokia's abuse of standard-essential patents to the detriment of Europe's automotive industry and IoT startups.

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Thursday, September 24, 2020

Political clout of newly founded Coalition for App Fairness will depend on more app firms joining Epic, Spotify, Match Group (Tinder), others

Through a Wall Street Journal article (behind paywall) I just became aware of the announcement of the newly created Coalition for App Fairness (CAF). Its Twitter handle is @appfairness.

The primary location, as per the website and the Twitter profile, is Washington, DC, but the press release states two locations: "BRUSSELS and WASHINGTON D.C." This means the CAF seeks to influence not only the Antitrust Division of the Department of Justice and the Epic v. Apple and Epic v. Google lawsuits in the Northern District of California, where an Epic v. Apple preliminary injunction hearing will be held on Monday (September 28, 2020), but also the ongoing investigation of Apple's App store terms by the European Commission's Directorate-General for Competition (DG COMP).

The EU investigation was instigated by Spotify, which has been running a "Time to Play Fair" website for a while, with no signs of others throwing their weight behind Spotify's cause. It appears that the "AppRising" (as some call it) of app firms against Apple's App Store and Google's Play Store terms has some momentum now as a result of Epic's aggressive action against Apple. Epic prepared a multi-level campaign against Apple, initially sneaking a Trojan horse-style payment system past Apple's App Store review only to activate it via the cloud after emailing down the gauntlet to Apple's leadership at an ungodly hour, provoking the removal of the non-compliant version of Fortnite from the App Store, doing the same with respect to Google's Android app store, and filing complaints of approximately 60 pages against either company and publishing a "Nineteen Eighty Fortnite" campaign video. Epic's legal team is led by former U.S. antitrust chief Christine Varney and former federal judge Katherine Forrest, both of the Cravath firm, which many of my contacts in the legal community profoundly admire.

Spotify was quick to publicly welcome Epic's private antitrust lawsuits--and Tim Sweeney, the outspoken CEO of Epic Games who had criticized Apple's App Store terms on Twitter long before bringing suit, said shortly after the filings that he was working on the creation of a broadbased coalition of companies.

Here's an overview of the founding members of the Coalition for App Fairness, in alphabetical order:

The diversity of those companies and their interests may appear to be a strength, but it will presumably be a challenge for them to agree on anything other than the benefits to them of reducing Apple's and Google's app distribution fees. That's because their business models are so different. Spotify, for instance, is concerned with subscription revenues, while Epic Games sells virtual items through in-app purchasing.

In the short term, the CAF's activities may be more focused on Apple, but as the list of founding members shows, some longstanding Google foes are on board as well.

How influential this new group is going to be will depend on its ability to attract more members. On the group's website there's already a mentioning of a disagreement between the founder of WordPress and Apple, making it a possibility that his company (named Automattic) might join at some point.

The role model for the CAF is presumably the European Committee for Interoperable Systems (ECIS), an anti-Microsoft lobbying group that was effectively managed by a Clifford Chance antitrust lawyer in Brussels. But in the Microsoft EU antitrust context, a few major companies like IBM, Oracle and Sun were all it took for such an organization to be credible. If the CAF wants to convince policy-makers that there's widespread disagreement with Apple's and Google's app distribution terms, the group will need to represent a far more significant percentage of the millions of smartphone apps out there than it does today, with several of its members having very specific disagreements with Apple that are not per se representative of the relationships with Apple and Google that the app developer community at large enjoys.

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Nokia v. Daimler ruling postponed from tomorrow to day before Halloween: Munich I Regional Court

Instead of three key decisions in cases this blog has commented on, there'll "only" be two tomorrow as the Landgericht München I (Munich I Regional Court) just postponed its Nokia v. Daimler (case no. 21 O 3891/19 over German patent DE60240446C5 on a "hybrid automatic repeat request (HARQ) scheme with in-sequence deliver of packets") ruling from tomorrow (September 25, 2020) to October 30, 2020.

I also mentioned this upcoming Munich decision earlier today in my report ("More unhinged standard-essential patent injunctions to come down in Germany in wake of Sisvel v. Haier") on yesterday's Conversant v. Daimler trial, where the Munich court took its misreading of Huawei v. ZTE one important step further, potentially enjoining companies over standard-essential patents without any such thing as a FRAND analysis. On October 23, 2020, the court intends to make a decision in the Conversant v. Daimler case that went to trial yesterday. That's one week before the new ruling date in Nokia v. Daimler. Both cases are pending before the 21st Civil Chamber (Presiding Judge: Tobias Pichlmaier).

The rescheduling is due to unspecified court-internal reasons.

It can't be ruled out that whatever happened yesterday might have led this panel of judges (the 21st Civil Chamber) to subsequently postpone that other automotive ruling. It's also possible, however, that the continuation was a done deal, and the fact that the court was in session all day yesterday stood in the way of officially entering the order.

While it is impossible to know whether the postponement will lead to a different outcome (or just a modified reasoning, or is purely a delay without anything changing), one thing can be said for sure: should Nokia win, it will be less likely to gain real leverage. That's because the Dusseldorf Regional Court is virtually certain to refer a set of component-level SEP licensing questions to the Court of Justice of the EU (CJEU) on November 12--within less than two weeks of the new Munich ruling date. It's hard to imagine that the appeals court wouldn't stay the enforcement of an injunction predicated on a refusal to license suppliers that the top EU court is asked to declare a violation of Art. 102 TFEU.

As I recalled in my previous post, Nokia isn't able to enforce the injunction it recently obtained in Mannheim as the appeals court presented the failed smartphone maker with only two choices: enter into a covenant not to enforce while the appeals court is resolving Daimler's motion for an enforcement stay--or the appeals court would have ordered a micro-stay for the month or two it takes to adjudge the said motion. Also, Nokia wouldn't have had the liquidity to make a €7 billion deposit (and no bank would have provided a bond without Nokia putting the money into a separate account for that purpose).

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More unhinged standard-essential patent injunctions to come down in Germany in wake of Sisvel v. Haier: Munich trial in Conversant v. Daimler

Before talking about yesterday's Munich trial in Conversant v. Daimler, let's look at the strategic landscape:

In general, Daimler's efforts to fend off Nokia, its patent trolls like Conversant, and the abusive Avanci gang at large, are on the right track. The Dusseldorf Regional Court's foreseeable referral of questions relating to the entitlement of suppliers to an exhaustive component-level license is likely to result in exactly the kind of clarification that the automotive industry and the wider IoT sector need, provided that the top EU court won't be indirectly affected by lobbying: Nokia, Ericsson, and their traditional allies are going to get a number of EU member state governments, and possibly the EU Commission, to make submissions to the court that will advocate the cause of abusive SEP holders, given that the European automotive industry's lobbyists know less about IP policy than their counterparts in the telecommunications industry have already forgotten. Therefore, even some countries with a significant number of automotive jobs may end up siding with Nokia.

I hope the Fair Standards Alliance will manage to counterbalance the SEP abusers' lobbying efforts. Otherwise a number of key FSA members will have no one but themselves to blame. They don't even need to win the lobbying battle; all it takes is to neutralize the Nokia camp's efforts.

There have been cases in which the CJEU didn't care about all those submissions and just interpreted the law the way it saw fit; but there have also been cases in which the positions taken by various member states influenced the Commission, which in turn shaped the Advocate General's thinking, and the AG's recommendations are adopted by the court in a solid majority of cases.

In the short term, it's reasonably encouraging that Presiding Judge Andreas Voss ("Voß" in German) of the Karlsruhe Higher Regional Court got Nokia to commit not to enforce, while the appeals court is weighing Daimler's motion for an enforcement stay pending its appeal (i.e., for approximately a year), a Mannheim injunction that misapplies Huawei v. ZTE and may also simply be wrong on the purely technical question of essentiality. Nokia had no other choice as the appeals court made it clear that it would otherwise have ordered a micro-stay for the month or two it takes to resolve the motion for a stay. Those micro-stays are rarely seen in Germany, where the irreparable-harm standard is not just exacting but next to impossible to meet, making decisions on stays in almost all cases entirely dependent on the likelihood to prevail.

In Munich there's even more of a need for the regional appeals court to restore sanity. It will be interesting to see how the Munich Higher Regional Court's 6th Civil Senate under Presiding Judge Konrad Retzer will adjudge Daimler's motion for an enforcement stay concerning an injunction that Sharp won and could enforce by posting collateral of a negligible amount.

The Munich I Regional Court's 21st Civil Chamber, before which yesterday's trial took place, will announce a Nokia v. Daimler ruling tomorrow. While the court didn't indicate a clear inclination in July, the way yesterday's Conversant v. Daimler trial went definitely increases the likelihood of an injunction--and makes it extremely hard to imagine that Daimler could prevail on its FRAND defense. If anything can help Daimler tomorrow, it will be one of the technical defenses (non-essentiality or invalidity).

I have to update my top three list of the most outrageous German SEP trials I ever watched:

  1. Conversant v. Daimler, Munich I Regional Court, 21st Civil Chamber -- September 23, 2020

  2. Motorola v. Microsoft, Mannheim Regional Court, 2nd Civil Chamber -- February 7, 2012 (Presiding Judge Dr. Holger Kircher obligated Microsoft to withdraw its challenge to the validity of the patents-in-suit as a precondition for even evaluating an Orange-Book-Standard FRAND defense; only a U.S. antisuit injunction against Motorola prevented a disaster, and by now it's clear the Mannheim court's position was totally irreconcilable with EU antitrust law)

  3. Nokia v. Daimler, Munich I Regional Court, 7th Civil Chamber -- February 6, 2020 (one tidbit tells it all: the court's official minutes, which were extremely one-sided, even note that "Counsel for Plaintiff declared herself in agreement with the Court" on FRAND)

As you can see above, yesterday's trial had to beat some formidable competition to claim the top spot, and it did so handily with respect to FRAND/SEP issues. Note that this ranking does not take into consideration the way those trials went with respect to the purely technical merits. In that regard, Presiding Judge Tobias Pichlmaier yesterday set an extremely high standard: after going into the courtroom with a skeptical perspective on Daimler's invaldity defense, he was super-receptive.

The invaldity part (and there was no discussion of essentiality, which was apparently conceded given the breadth of the patent-in-suit) can be summed up as follows: Quinn Emanuel's Dr. Marcus Grosch initially argued that the prior art fell in the scope of the asserted claim(s) of EP2934050 on an "apparatus and method for providing a connection" (a divisional of a patent Nokia once gave to Conversant), suggesting that the basis of the invalidity analysis should be the plain and ordinary meaning of the "core network element identifier" claim limitation. On this one, I actually agreed with the court, which insisted that each claim term would have to be interpreted in light of the patent description--though one of the side judges embarrassed himself when he vaguely described a certain approach as the line of the Federal Court of Justice but, when asked by Daimler's counsel, was unable to name a single decision to that effect.

Conversant sought to narrow the term (so as to avoid an overlap with the prior art), but in that effort had to take a position that was inconsistent with the prosecution history of the patent-in-suit. As a result, the court was no longer fully convinced of the patent being valid. My feeling is that Daimler now has at least a 30% chance of winning a stay pending the opposition proceeding before the European Patent Office.

Then came the FRAND part, and it was outrageous beyond belief. It proved that there's no such thing as hitting rock bottom in FRAND matters in Germany. Every time you think this has to be the end, some court will find a path to a new low, especially since utter intellectual dishonesty has been a trait of many German FRAND decisions for years.

Not long ago, both patent infringement panels of the Munich I Regional Court and the 2nd Civil Chamber of the Mannheim Regional Court departed from the previous application of Huawei v. ZTE in the sense of evaluating the implementer's counteroffer first and ordering an injunction even if the SEP holder's original demand didn't appear to be FRAND-compliant in the first place. That doesn't make sense under any reasonable reading of Huawei v. ZTE, but some judges will get away with this until an appeals court sets the record straight.

The 21st Civil Chamber of the Munich I Regional Court is now trying to take this one step further by means of a shortcut--which is actually more of a short circuit: Emboldened by the Federal Court of Justice's recent Sisvel v. Haier decision, they seek to import a murky soup of considerations into the question of whether the implementer was willing to take a license. In Sisvel v. Haier, there were some unusual circumstances, such as that the implementer's first counteroffer was made only after the relevant patents had already expired. Here, the patent-in-suit is still going to be a valid for a few more months, and Daimler made a counteroffer well ahead of the trial, which used to be deemed more than timely in Germany.

What the CJEU meant in Huawei v. ZTE was for the SEP holder to provide a notice of infringement and, along with that one or in response to an indication that the implementer was willing to take a license on terms to be determined later, an offer that the SEP holder would not just have to make but also explain. Daimler argues that Conversant's unspecified reference to the FRAND metholodogy of an England & Wales High Court ruling (Unwired Planet v. Huawei) involving different parties and patents fell short of the kind of derivation of the royalty demand that Huawei v. ZTE requires, and the first time that Conversant went into details on its numbers was just a few months ago, with the portfolio size actually having changed dramatically since the original demand.

It's not even the most problematic part of the Munich court's position that Sisvel v. Haier, where the counteroffer came four years after the infringement notice and at a much later procedural stage (four weeks prior to the appelate hearing, and after patent expiration, would be viewed as a basis for considering Daimler an unwilling licensee. And I've discussed before that the proper application of the Huawei v. ZTE would have to begin with looking at the SEP holder's royalty demand in the first step.

The real issue is that the "willingness" analysis, as explained by the court, involves the above considerations as well as the court's assumption that Daimler's counteroffer must be unreasonably low simply because it's far below the SEP holder's demand, even though the court said it had not performed, and does not wish to perform, a quantitative analysis of Conversant's offer.

Presiding Judge Pichlmaier drew an analogy that rendered pretty much everyone on the defending side speechless: he said that if a road accident made a person lose an arm and the injured person demanded 1 million euros while the one responsible for the accident offered only 2 euros, it would be obvious, just based on the discrepancy, that something is wrong with the 2-euro counterproposal.

The fallacy here is clear. First, the court's "logic" would mean that even if in the same situation the defendant offered 10 million euros (ten times as much as what the plaintiff in the court's example demanded), it would also appear "unreasonably low" if the plaintiff simply demanded 5 billion euros. Second, the reason why everyone would intuitively say that 2 euros is not a reasonable proposal for damages in a case of severe personal injury is not that the plaintiff asked for a lot more, but that everyone intuitively realizes a loss of a limb is a massive injury, and that a 2-euro amount is chicken shit.

Well, I said something further above about the intellectual honesty of some German FRAND decisions. Instead of formally analyzing the parties' positions on FRAND licensing terms, as the CJEU outlined in Huawei v. ZTE, the court doesn't even want to seriously analyze a single one of them. Instead, the court wants to base a decision--to enter a Germany-wide Mercedes sales ban over a patent covering a tiny part of the telecommunications functionality of a car--on a hazy mix of considering Daimler should have made more efforts to advance the licensing talks and the discrepancy between the parties' offers suggesting unreasonableness on the defendant's side.

Presiding Judge Pichlmaier lamented the difficulties in determining a FRAND rate, considering it's a "range." I agree it's a range. In most SEP cases where an infringement is identified, courts would unfortunately have to go through that exercise (they can appoint expert witnesses for that purpose, but in Germany they just want to hand down as many patent rulings as possible, at the expense of fairness and proper jurisprudence)--unless they cut corners in highly questionable ways. Now, I can imagine some extreme cases in which a given party's offer can be deemed non-FRAND even without stating a precise range of FRAND royalty rates, but even then the court would at least have to conduct parts of the FRAND analysis. For instance, if a SEP holder demands something that is grossly inconsistent with all comparable licensed agreements, the failure of such a royalty demand to comply with the "ND" part of "FRAND" may obviate the need for specifying a precise range. Also, there could be a situation where some questions (such as the percentage of actually-essential patents in a portfolio) would be disputed, but the court would have formed an opinion on all other factors. If the offer to be evaluated then falls clearly outside the possible range of results, even if seen in the light most favorable to the party that made such an offer, it may not be necessary to determine the FRAND range (just a range of conceivable ranges, so to speak).

But rewarding a SEP holder for making an out-of-this-world demand is... well, I'll let you complete the sentence.

By the way, Conversant appears to be seeking €.75 per car, which is roughly a third of what Nokia demands, and Conversant's portfolio is small compared to Nokia's, and even older.

The Munich court was as unreceptive to component-licensing arguments as always. As for the intervenors, they were largely the same group as in the German Nokia v. Daimler cases, with only three differences:

  • Unlike Nokia, Conversant's prayers for relief don't have a carve-out for cars that come with telematics control units (TCUs) supplied by Samsung subsidiary Harman Becker. Therefore, Harman is an intervenor in the Conversant cases, and is represented by DLA Piper's Dr. Markus Gampp. He also appeared on Harman's behalf in a recent Sharp v. Daimler trial.

  • Judge Pichlmaier noted that Huawei wasn't present. That surprised me, actually, given that Huawei is known to be adverse to Conversant.

  • Equally surprisingly, counsel for Valeo subsidiary Peiker was in the audience, but Peiker wasn't mentioned as an intervenor.

Finally, an update on how this panel of the Munich court conducts trials in the midst of the COVID-19 pandemic. I definitely noticed major improvements over the July Nokia v. Daimler trial. There was an obligation to wear masks, and in the spectators' area there was clearly enough of a distance between any two persons. The room wasn't as crowded as in the Nokia cases. However, Munich is a SARS-CoV-2 hotspot (so bad at the moment that hotels in some other parts of Germany aren't allowed to accept guests from Munich and that the city administration now requires people to wear masks in various downtown streets within walking distance from the courthouse). With a view to the risk of aerosolized infections, ventilation is key, and originally the court opened both the door to the courtroom (which was not an option because of too much noise somewhere else in the building) and at least one window, but with ambulance and policar car sirens, that wasn't an option either except for a few breaks. Next time I'll bring a CO2 meter so I can prove that the ventilation they have there is insufficient, which I'm quite certain it was yesterday. But then, the patent-in-suit will expire in a few months' time, and from a "patent trolls über alles" perspective, it made a lot of sense to hold the trial regardless of ventilation problems...

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Monday, September 21, 2020

PanOptis/Unwired Planet patent troll group sues allegedly unwilling licensee Tesla over former Panasonic and Ericsson patents in Eastern District of Texas

There's further escalation in the standards-essential patent (SEP) conflict between the abusive Avanci gang and the 21st century's most innovative automotive company, Tesla:

After Conversant Wireless's patent infringement complaints against Tesla in the Western District of Texas and the Mannheim Regional Court, a request for a Japanese import ban by Sharp, and Sisvel doubled down on its litigation campaign against Tesla in the District of Delaware, the affiliated patent trolls named Optis Wireless, PanOptis, and Unwired Planet have just filed a patent infringement suit against Tesla in the Eastern District of Texas over four former Panasonic patents and one former Ericsson patents, all of them declared to be essential to cellular telecommunications standards (this post continues below the document):

20-09-20 Optis PanOptis Unw... by Florian Mueller

These are the four former Panasonic patents-in-suit:

In addition, the trolls are asserting a former Ericsson patent:

Legal entities from the same patent troll group received a $506 million verdict against Apple last month in the same venue: Marshall, Texas, where the exceeding troll-friendly Chief District Judge Rodney Gilstrap presides over numerous patent infringement cases every year.

The complaint contains a relatively detailed descriptions of efforts by the Avanci patent pool firm as well as the plaintiffs in this action to sell Tesla a license. The trolls' lawyers argue that Tesla behaved like an unwilling licensee, engaging in hold-out rather than good-faith negotiations, sometimes taking many months to respond to an offer in a way that the trolls didn't consider to be constructive. But let's not take that narrative at face value:

  • It remains to be seen how Tesla will seek to justify its negotiation style when it files it answer to the complaint, and when the case gets closer and ultiamtely goes to trial.

  • At the heart of the problem is something you can't blame Tesla for: instead of demanding SEP royalties from Tesla on the value of an entire car, the trolls and their Avanci pool firm should talk to the relevant suppliers about an exhaustive component-level license that would cover the downstream, including but not limited to Tesla.

The day after tomorrow, the Munich I Regional Court will hold a trial over one of various patent infringement cases brought by another privateer (a patent troll fed by a large company with patents for the purpose of extracting higher royalties than otherwise), Conversant Wireless, against Daimler. As I noted in the previous post, the patent-in-suit in that case is now also being asserted against Tesla in a differnet German court (Mannheim). The Munich decision in the Daimler case won't be formally binding on the Mannheim court in any way, but should Daimler lose in Munich, Tesla would have to convince the Mannheim judges that their Munich-based colleagues made a mistake.

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Sunday, September 20, 2020

Three decisions due on Friday (9/25): FTC v. Qualcomm (en banc petition?); EU "state aid" case against Apple/Ireland (further appeal?); Nokia v. Daimler

By sheer coincidence, three decisions will become known on Friday (September 25) in cases that this blog has previously discussed but which are otherwise unrelated. In two of those cases, competition authorities have to decie whether to turn things around after losing the first appellate decision. In one case, there would definitely be a way, but might not be the political win to keep fighting; in the other case, there would undoubtedly be a will, but there may not be a promising way. Furthermore, a German court will announce a decision on an automotive patent infringement complaint with major antitrust implications.

  1. The United States Federal Trade Commission (FTC) is now approaching the 45-day deadline for a potential petition for a rehearing en banc of a three-judge panel's appellate ruling in Qualcomm's favor.

    Given the high profile of the case, many Ninth Circuit judges might be interested in taking a closer look at the case. But the Republican majority of commissioners (3 vs. 2) has in the past supported Qualcomm, as has the Republican federal government. FTC chairman Joseph Simons recused himself from the case earlier on, but is no longer recused, enabling him to cast the decisive vote (assuming it's still a 2-2 tie between the other commissioners). Car makers and various other technology companies wrote an open letter to the FTC, urging the agency to bring that petition. While the more likely outcome is still that the Republican majority wants to let Qualcomm off the hook, institutional considerations would weigh in favor of a petition for a rehearing, given that the Ninth Circuit panel that decided the case has the potential to complicate antitrust enforcement way beyond the Qualcomm case.

  2. With respect to whether there's a will and a way, it's precisely the opposite outlook in Europe, where Ireland and Apple defeated the European Commission's competition chief Margrethe Vestager in the EU's General Court (formerly known as Court of First Instance).

    The Commission's 13-billion euro decision was deficient, self-contradictory, and hard to reconcile with the Commission's acceptance of special tax rules in other parts of Europe that do look like state aid at first sight.

    Mrs. Vestager's concerns are understandable, but if all of you have is a hammer, everything looks like a nail, and her hammer was competition law (in this case, state aid law). There is a problem, but it has to do with the fundamentally flawed architecture of the EU's Single Market. It would have to be solved politically, but realistically won't be. None of those structural issues makes a made-up "state aid" case any more meritorious, though.

    There's no doubt Mrs. Vestager and many others in the European Commission would want to appeal the EU General Court's decision to the Court of Justice of the EU (CJEU). But here's the problem: they'd have to raise a question of law, not fact, and the EU General Court found that the Commission simply lacked the facts to back up its ruling.

  3. Also on Friday, the 21st Civil Chamber of the Munich I Regional Court plans to hand down a decision (which may or may not be a final--though it would be appealable--judgment) in a Nokia v. Daimler case (case no. 21 O 3891/19) over German patent DE60240446C5 on a "hybrid automatic repeat request (HARQ) scheme with in-sequence deliver of packets"). At the late-July trial, the court did not indicate any particular inclination. Daimler disputes the essentiality of the patent-in-suit, its validity, and raised a FRAND defense--all in all, three major hurdles for Nokia to overcome or it will fail to obtain the injunction it's seeking. But Munich is a hotbed for patent--and increasingly also for SEP--litigation. Another panel of judges of the same court just granted Sharp an injunction against Daimler.

    The same panel that will announce the aforementioned decision on Friday will hear another SEp case against Daimler on Wednesday. In practical terms, it's another Nokia v. Daimler case, though the plaintiff is Conversant Wireless, a patent troll asserting former Nokia patents against the Mercedes maker. The patent-in-suit to be discussed on Wednesday is EP2934050 on an "apparatus and method for providing a connection."

    Come November, the Dusseldorf Regional Court will presumably refer to the top EU court a set of legal questions regarding the licensing of SEPs to component makers. The regional appeals courts in other parts of the country may also be hesitant to enjoin Daimler while its suppliers are more than willing to take exhaustive component-level licenses on FRAND terms, at least at a time when the CJEU will be looking into this. But in the meantime, Nokia and its trolls are still trying hard to obtain injunctions against Daimler. Also, Wednesday's patent-in-suit is being asserted by Conversant against Tesla in Mannheim.

    In light of those circumstances making the case more relevant than I'd have thought back when it was filed, I may attend and report on the Wednesday trial. I hope the 21st Civil Chamber will take the necessary measures to prevent coronavirus preventions. On Sunday, a regional government agency said that COVID-19 infections are on the rise again in Munich, with 55.6 infections reported per 100,000 inhabitants over the course of the past seven days (approximately 2.5 times the statewide average). The minister of health of the state of Bavaria rebuked the local soccer club's leadership for sitting next to each other in an otherwise empty stadium last Friday--and that was an open-air event, unlike a patent trial.

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