Wednesday, June 16, 2021

Former Assistant Attorney General Makan Delrahim, fighting for his legacy, says yet-to-be-named successor should have 'regulatory humility' in face of court rulings

As the keynote speaker of a Concurrences webinar held today (and ongoing as I write this post), former Antitrust Assistant Attorney General--and now UPenn professor--Makan Delrahim gave an impassioned speech. He's trying to dissuade his successor, who (as Mr. Delrahim noted) has yet to be named almost eight years after the elections, from undoing his patentee-friendly policies.

The result of a poll of webinar participants will have done nothing to soothe Mr. Delrahim. A majority of the panel, including the moderator, is on the same side as Mr. Delrahim (which obviously does not apply to Judge Fabian Hoffmann of the Federal Court of Justice of Germany and Orrick Herrington Sutcliffe's Jay Jurata), but 68% of participants responded with "yes" to the following question:

"Is there a role for antitrust to play in the debate over component-level licensing where all implementers of the standard are assured of their ability to practice the standardized the technology?"

When Mr. Delrahim was in charge of DOJ-ATR (the Antitrust Division of the United States Department of Justice), the opinion of the "United States" (as the federal government is called when filing amicus curiae briefs) was a resounding "never."

In today's webinar speech, Mr. Delrahim mostly focused on access to injunctive relief over SEPs, but he twice referenced the Ninth Circuit's FTC v. Qualcomm decision, in which case Qualcomm's refusal to grant exhaustive SEP licenses to chipset makers played a key role. The former U.S. antitrust chief also lauded a couple of European high-court rulings: the UK Supreme Court's Unwired Planet v. Huawei and the German Federal Court of Justice's Sisvel v. Haier opinions.

Mr. Delrahim's position is that the "ability to exclude" is a key "incentive" for filing for patents, and this right should not be limited except by the legislature. He does say--as he could hardly claim the opposite--that FRAND commitments should be enforced under contract law. That works in the U.S., which recognizes third-party beneficiaries' rights, but in some jurisdictions it would not even be an option. Judge Hoffmann noted toward the end of today's webinar that in Germany the courts have no problem applying the antitrust laws to a duty to extend licenses, and Germany's seminal Orange-Book-Standard case involved a de facto standard without a FRAND commitment. Microsoft v. Motorola Mobility is an example Mr. Delrahim mentioned for the enforcement of contractual rights. But violations of a FRAND pledge "do not somehow conjure up an antitrust violation," said Mr. Delrahim. He went on to stress that a breach of a FRAND contract "should NEVER be a violation of the antitrust laws." And this line of thought culminated in the view that "using antitrust law with its triple damages and hammers in [his] view is a misuse."

In the first part and again toward the end of his speech, Mr. Delrahim basically addressed his former government agency via a prime-time (shortly after the usual start of business in DC) webinar. He described the new U.S. Attorney General (and former circuit judge) Merrick Garland as "very thoughtful" on antitrust. But he does take issue what he sees happening below, such as the downgrading of his IEEE threat letter and recent comment by the Acting Assistant Attorney General at an IAM event that they were "rethinking [their] policy on SEPs." He didn't specifically mention those activities, but he asked the rhetorical question of why there should be "change in policy without debate, real argument, why do that?" And Mr. Delrahim said this made no sense "given recent legal decisions in the US" (besides FTC v. Qualcomm, he may also mean Continental v. Avanci in the Northern District of Texas). He also defended himself against some article that apparently said enforcement of SEP-related obligations "went to the wayside" under him.

Mr. Delrahim reinforced that message to the Biden (or Garland) DOJ by saying he "can't imagine" the DOJ would depart from his SEP policies "given the strength of the Ninth Circuit decision" in FTC v. Qualcomm. Admittedly, that decision gained weight when the Ninth Circuit declined to hold a rehearing en banc and the FTC didn't file a petition for writ of certiorari (request for Supreme Court review). Those circumstances make the decision stronger within that circuit, which is the economically most important one, but do not make it broader, nor does FTC v. Qualcomm become binding precedent on a nationwide basis.

The final message to his future successor was that "for an executive agency not to factor in [court rulings, particularly FTC v. Qualcomm] lacks the regulatory humility antitrust enforcers should have." This begs the question of whether Mr. Delrahim himself acted with "regulatory humility" as he filed countless amicus briefs, even in support of foreign-owned patent assertion entities...

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