Friday, January 1, 2021

Ten patent and antitrust predictions for 2021

Happy New Year!

Let me start with what I believe will be some of the hottest items on the patent and antitrust agenda (with a focus on the information and communications technology industry, of course) this year. There's always a risk of making predictions that don't play out, but I can live with that. I've had a very high hit rate--but obviously sub-100%--with respect to judicial and regulatory decisions. Unlike practitioners, I don't incur the risk of clients losing faith in me. Instead, I believe many of my readers actually prefer me to just share my thoughts and speak my mind.

  1. Mobile app platforms to be the clear #1 antitrust topic

    I'm convinced that this is bigger than the "smartphone patent wars" were in the first half of the last decade, and I'd definitely say so even if I had not released an app shortly before Christmas, which, by the way, has been lauded for its quality as well as for making a positive contribution to the fight against COVID-19. Some examples:

    No, it's not just that I'm seeing the world through an app developer's lens. Throughout this year, there's going to be news from numerous countries on multiple continents concerning app store antitrust matters. There'll be a spectacular Epic Games v. Apple trial in Oakland. From what I hear, and without stating my own position on the legal framework yet, I predict that the European Commission's Directorate-General for Competition (DG COMP) is going to hand down a Statement of Objections (SO) in the investigation of Spotify's October 2019 complaint (prior to which Spotify was already informally lobbying the EC heavily). The Coalition for App Fairness will certainly continue to grow. There will be cases in which apps are rejected, or will be removed from an app store despite originally having been approved, such as Vybe Together. But there's also a potential for further improvements in favor of developers--and room for improvement there clearly is, not only on iOS but also on Android.

    While some organizations primarily rely on regulatory intervention and judicial decisions, others will look for "workarounds" as we can see in the case of game streaming services, where Microsoft decided to bring its xCloud--and Google its Google Stadia service--to iOS devices on the basis of HTML5 web apps.

  2. It's a safe assumption that things can't get worse with respect to the USPTO and patent-related antitrust enforcement under the incoming Biden Administration than they were under the outgoing Trump Administration.

    With Andrei Iancu, a litigator whose firm does most of its patent assertion business with trolls, and Makan "Macomm" Delrahim, a Qualcomm lobbyist, #45 put not only fox in charge of the hen house, but two. #46 can't possibly make worse choices in that regard, even if he tried.

  3. But, to my dismay, I expect very negative developments in the 117th United States Congress. With Senators Thom Thillis (R-N.C.) and Chris Coons (D-Del.) having been reelected, their unholy alliance is set to continue for many more years. Presumably they're going to launch a massive legislative assault on Alice (§ 101) with lots of support on both sides of the aisle. Silicon Valley largely supports the Alice case law, but will the tech industry thwart that foreseeable attempt to overrule the Supreme Court by means of new legislation? What the United States needs in 2021 is what the EU had about 20 years ago: an anti-software-patent movement (or at least an anti-abstract-software-patent movement). I didn't found that one; I joined it in 2004 and launched one prominent campaign within that movement. There still would be a potential for mobilizing the developer community at large, and that would be a way to contribute to efforts to dissuade Capitol Hill lawmakers from overturning Alice. If it comes down to traditional, run-of-the-mill lobbying, the anti-Alice movement will win handily.

  4. What I believe can be avoided (but even that is not sure) is that Congress, in one fell swoop, also does away with the patent injunction requirements under eBay v. MercExchange. Sen. Thillis appears to have become a little more balanced in that regard, though he has yet to figure out how essential Alice is to protect America's true high-tech innovators (as opposed to trolls).

  5. COVID-19 is still going to have a major impact on patent litigation. Expect to see delays in reasonable districts--but also irresponsible decisions by out-of-control superspreader judges on both sides of the Atlantic.

    In one major hotspot region, Germany, there are presently more people dying from and with COVID-19 every day, relative to population size, than in the United States, and it appears highly unlikely--barring an unforeseeable improvement of the situation, such as by a sudden burst of vaccine production capacity somewhere--that herd immunity will be achieved in Germany or any other large EU member state in 2021.

    While outgoing Chancellor Angela Merkel took far more reasonable positions than various other politicians when it came to imposing undesirable but inevitable restrictions on citizens, she's always been a total disaster with respect to migration policy (even in 2020, Germany condoned that more than 100,000 illegal immigrants entered the country, with many COVID-19 outbreaks in asylum shelters and other diseases being imported) and she's always put Europe first, her own country not even second.

    Even though the first highly effective COVID-19 vaccine was invented in Germany (by legal immigrants of the most admirable and desirable kind), the German government decided to source any vaccine only through the EU. That could have worked if not for French president Muckron's protectionism. Pfizer/BioNTech offered the EU 500 million doses, and Moderna (which uses the same type of technique, mRNA) another 300 million. With 800 million doses, the EU could have vaccinated pretty much every citizen (without even needing AstraZeneca's hands-down inferior and problematic alternative)--at a minimum, it would have achieved herd immunity, and probably by the summer, if not sooner.

    But the French government, whose influence over EU politics has never been more damaging than under its current president, would rather let many people die than acknowledge French pharmaceutical giant Sanofi-Aventis' failure to innovate. Sanofi's vaccine isn't ready, and even if and when it will be, it won't be a match for what Pfizer/BioNTech and Moderna have to offer. The French government wanted to avoid two things:

    • They didn't want Sanofi-Aventis to lose market share, as a result of its failure to provide a competitive COVID-19 vaccine, to German and American companies.

    • They also wanted to avoid a situation in which a German company (founded and led by Turkish immigrants) would have "saved" Europe from COVID-19.

    So Muckron, probably through French EU fake news commissioner Thierry Breton, practically vetoed any commitment to other companies that would have exceeded the quantities the EU agreed to buy from Sanofi-Aventis. Unfortunately, the totally unethical French government didn't have to fear any objection from its equally irresponsible and ruthless German counterparts in Berlin and Brussels who don't care about and for the lives of ordinary citizens nearly as much as for their "EU über alles" ideology.

    As a result, the German government's current vaccination plan envisions that the majority of the population (45 million people categorized as those having a "low risk") would not get vaccinated before December 2021 at the earliest.

    No, this is not a conspiracy theory. It was reported by Germany's nost influential political newsweekly, Der Spiegel, which is a liberal magazine and couldn't possibly be more EU-friendly--and a columnist for its center-right competitor, Focus, picked it up and completely agreed. His conclusion: instead of "Stronger together," the EU's slogan should be "Dying together, Brussels kills people." That is a similar way to put it as what Romanian MEP Cristian Terhes told the press: "European Unity is not a strength when it is slow, cumbersome and bureaucratic; indeed it kills when it puts utopian ideologies over letting nation states protect their own citizens and best interests."

    Later today, the same Focus columnist published another piece in which he says this is Merkel's most devastating mistake in 15 years in office, and he's wondering why most of the mainstream media (with a few notable exceptions, though) remains silent about it. People are going to see the impact of this as Germany will have to impose lockdowns at a time when other countries, thanks to herd immunity, will be back to normal life more or less.

    The combination of Spiegel and Focus in Germany is comparable to MSNBC and FOX NEWS agreeing on something in U.S. politics. Also, Dr. Daniel Stelter, a German management consultant who had worldwide responsibility as a managing director at Boston Consulting Group, discussed this matter on Twitter.

    Professor Uğur Şahin, the CEO of BioNTech, told German newspaper Die Welt that the EU behaved very differently from countries that bought vaccines directly. It appeared the Commission couldn't really act without approval from some member states, and the EU gave the impression it thought there were alternatives. This is consistent with the French protectionism story: obviously the Commission didn't invite BioNTech to its internal discussions with France (if anybody was privy to them, that would have been Sanofi, of course--given that France's vision of "fairness" is that its own companies, even when they fail to innovate, must receive preferential treatment). All that BioNTech saw that how the EC was dealing with them, and it's clear now that the Commission failed the bloc's citizens. It failed so miserably that there's probably never been a stronger case for leaving the EU: the UK is already outvaccinating it. While this Daily Express article reflects strong EU skepticism, it also talks about some of what went wrong and why.

    Those delays in vaccination will have an impact on German patent trials, unless judges decide to go ahead anyway, as some of them are prepared to do.

  6. German patent injunction reform is going nowhere. Some kind of bill will be passed, and the pro-reform movement will engage in some predictable spin-doctoring, but the mess is going to be just the same, except that legal fees will be higher than before. I'd love to be proven to have been wrong, and to see something good come out of that process, but the pro-reform movement consists of too many born losers.

  7. The Unified Patent Court (UPC) will be like the German patent judiciary on steroids. It's going to start its operation soon. There was no political resistance, so it's just going to happen, and possibly the first UPC hearings will already take place this year.

  8. We'll hear a lot about antisuit, anti-antisuit, and anti-anti-antisuit injunctions this year. In fact, 2020 ended with the outbreak of a major anti-anti-antisuit venue fight between Ericsson and Samsung.

  9. Finally, component-level licensing of standard-essential patents (SEPs): Nokia won't be able to prevent the referral of a set of key legal questions to the Court of Justice of the EU. The more interesting question is what the other major German patent infringement venues will do: will they stay certain cases pending the CJEU proceeding? Or will they just look for ways to duck the question, simply by finding against plaintiffs on other grounds? The lower courts won't be helpful, but the appeals courts will overrule them in some cases. After the German referral to the CJEU, courts in other EU member states may also stay SEP cases involving component-level licensing-based defenses.

  10. The Avanci SEP pool firm is not going to change its "end-product-only" policy. As a result, it's not going to do much business in 2021.

I'll look at these predictions again in a year from now.

Finally, I'd also like to highlight a macroeonomic fact: relative to the size of its economy, no other major economic area in the world has taken on nearly as much debt during the COVID-19 crisis as the eurozone. And I believe they'll have to do even more in 2021, due to the abysmal failure to procure enough doses of available and effective vaccines that I explained further above. The eurozone's perpetual lie is that they need to borrow their way out of debt in order to stimulate "growth." They've been saying so since the start of the Greek sovereign debt crisis. It just won't happen because especially Southern Europe can't compete in the Digital Age--and even Germany faces challenges (with Tesla being the world's most valuable automotive company, far more important than the entire EU automotive sector), as do the Nordic countries (Ericsson and Nokia can't simply sell their cellular base stations on the merits--they depend on patent abuse and political protectionism).

Since 2008, the ECB's central bank money supply has increased from about 900 billion euros to roughly five times that amount, if not more, as renowned economist Hans-Werner Sinn explained on YouTube. One might wonder why this hasn't led to hyperinflation. It hasn't yet, but it inevitably will at some point. The eurozone has been the loser among major economies with respect to digitization, and it's now also the loser with respect to COVID-19. The consequences will be dramatic. But we won't see much of them in 2021 as the ECB will continue to simply buy up government debt. That so-called "Modern" Monetary Theory is actually a very old concept that already failed about a century ago.

The euro currency may still exist in 10 years or even in 20 years (though I strongly doubt the latter) from now, but Europe's economic future looks extremely bleak. COVID-19 has been an accelerator, a catalyst, and it has exposed some of the structural issues facing the EU and the economies and societies of many (especially its largest) Member States. The UK--which never joined the eurozone anyway, but at some point might have had to choose between leaving the EU or giving up the pound--is going to do far better outside the EU. It will take more than one or two years until people recognize that Brexit will have been the best decision for Britain's prosperity, though I absolutely understand all those British citizens, especially young professionals, whose personal opportunities would be greater, or at least more numerous and more diverse, had the UK remained in the EU.

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