Saturday, March 27, 2021

FTC apparently decided not to seek Supreme Court review of Ninth Circuit ruling in Qualcomm's favor

In October, the United States Court of Appeals for the Ninth Circuit denied a petition for rehearing en banc by the United States Federal Trade Commission in its Qualcomm case. The FTC could have filed a petition for writ of certiorari with the Supreme Court of the United States, but it was already reported a couple of weeks ago that this probably wouldn't happen. That's what the Wall Street Journal learned at the time.

Tech industry analyst Prakash Sangam, whom I saw at the FTC v. Qualcomm (San Jose, January 2019) and Apple v. Qualcomm (San Diego, April 2019) trials, kept an eye on developments and tweeted the following a few hours ago:

A different source had told me that the deadline would be March 27, i.e., Saturday, and I haven't been able to verify whether a cert petition deadline falling on a weekend would automatically be extended to Monday. I trust Mr. Sangam had checked on this before he tweeted.

Assuming that Qualcomm's acquittal is now definitive, just a few comments:

  1. With respect to component-level licensing of SEPs, Judge Lucy H. Koh's contract interpretation stands as persuasive authority if anyone else claims rights under Qualcomm's or other parties' FRAND pledges to ATIS and TIA.

  2. I'd have liked the case to establish an antitrust duty to deal to the effect of exhaustive component-├Âlevel SEP licenses, but the FTC's own theory on appeal was just about an alleged antitrust violation based on a breach of contract. Only a successful attempt to shoehorn this duty to deal into the Aspen Skiing doctrine would have helped. Judge Koh tried, and it was worth trying, but Qualcomm had very strong legal arguments on appeal, unlike the FTC and its amici.

  3. In an alternative universe where the appellate judges had listened to all the trial testimony, the outcome might have been different.

  4. For Apple and Intel's antitrust complaint against NPE conglomerate Fortress Investment, the primary challenge is going to be to distinguish that case from Qualcomm, which is controlling law in the Ninth Circuit at this stage.

  5. There will also be other patent-related antitrust matters with respect to which it will be key to mitigate the damage former U.S. Antitrust Assistant Attorney General Makan Delrahim dealt to those complaining about anticompetitive patent-related business models.

  6. The UK class action lawsuit against Qualcomm over the same business model can't really be distinguished, so the argument there will focus on a different jurisdiction with different statutes (UK antitrust law is still essentially EU antitrust law, though it will diverge with time) and different case law.

  7. Apple itself will try to get as much mileage out of this outcome in its defense against Epic Games' and some class action plaintiffs' U.S. antitrust lawsuits over the App Store. But only because the App Store, like everything in tech, has some connection with IP doesn't mean it's beyond reach for antitrust law. I actually think Epic's lawyers, some of whom represented Qualcomm by the way, are in a perfect position to distinguish the cases, and the differences are really structural.

  8. Epic can actually take courage in the fact that those Cravath lawyers have previously proven, in such a high-profile antitrust case, that they know how to play and win the long game. In one or more of my comments on the January 2019 FTC v. Qualcomm I already noted that Qualcomm's lawyers had at some point appeared to look past the trial, which they probably knew they were going to lose, and on to the appeals court, where they teamed up with another firm and rocked the boat. Judge Yvonne Gonzalez Rogers, who is presiding over the Epic case, stressed in the summer that the case could go either way, and while she has more of a track record of letting Apple off the hook (Pepper, and now probably also Pistacchio), I don't think Epic will have to go into that trial based on the assumption that it's all merely about preserving arguments for an appeal. But what I'm absolutely sure of is that Epic will proceed very foresightfully. Unless lawmakers open the App Store, it will ultimately be up to the Supreme Court--and in that case the deadline for a cert petition, whoever has to bring it (Epic or Apple), won't just pass without a filing.

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