In its latest court filing, Apple gives the term "commission" a new meaning unsupported by dictionary definitions and commercial reality

Sooner than I would have thought when I publshed the latest Epic Games v. Apple filings (688 pages in total), I already feel an irresistible urge to comment on something because it is just intellectually dishonest.

There's nothing wrong per se with Apple comparing the iOS app distribution situation to the old days of software publishing: I, too, remember the "shrink-wrapped software" business. You can find some game credits from the mid to late 1990s that list me in sales & marketing and localization functions (Warcraft II: Tides of Darkness, Starcraft, Diablo). In 1996, I served on the board of the Software Publishers Association (SPA) Europe, and even though the World Wide Web existed at the time, we were all still selling software in boxes. Apple accurately notes that consumers "had to drive to the store, find it on the shelf, buy it in the shrink-wrapped box, and load it up onto their device." It's also plausible that, according to Apple pointing to his testimony, Epic CEO Tim Sweeney "found it difficult to sell games through traditional retail channels in the early 1990s." At the same time, I also dealt with publishers, distributors, and retailers. I had to negotiate discounts, cooperative advertising allowances, or grant early-payment discounts when payments would actually arrive only months later, making mockery of the term. It wasn't a land of milk and honey for sure (though at least you had multiple retailers and not just one per platform)--and Apple has every right to point that fact out.

But there's everything wrong with Apple's reality distortion field. Let's have this debate. Let's talk honestly about how software distribution changed over the course of time. But if we want to have an honest conversation, then we must face the facts, including those facts that don't support Apple's App Store feudalism.

Now I'm going to quote a paragraph that distorts a term in an outrageous way:

"150. When Epic agreed to distribute other developers' games around 1996, it collected a 60% commission—which Mr. Sweeney characterized as a fairly favorable royalty for developers. Sweeney TT. Most distributors at the time charged at least a 70% commission. Sweeney TT; Schmalensee TT." (emphases added)

By mislabeling distributor and retailer margins as "commissions," Apple seeks to distract from structural differences between shrinkwrapped software distribution and today's app stores.

Apple doesn't take any risk, nor does it do any warehousing. Distributor margins, however, involve the physical shipment of goods, and while some agreements with distributors and resellers allowed them to return some or all of the merchandise, some didn't. Even if the customer had the right to return goods, they still incurred significant logistical costs. None of that applies to downloads from a server.

The margin that a publisher or a distributor makes is anything but a "commission." A commission is when someone gets paid without taking a risk, without warehousing goods, without producing merchandise, without giving you shelf space, which (unlike the number of apps available for download from a server) is scarce. The Free Dictionary provides multiple dictionaries' definitions of the term "commission" and none of them is comparable to a publisher or reseller margin:

• "A fee or percentage allowed to a sales representative or an agent for services rendered." (American Heritage Dictionary)

• "the fee allotted to an agent for services rendered" (Collins English Dictionary)

• "a sum or percentage allowed to agents, sales representatives, etc., for their services." (Random House Kernerman Webster's College Dictionary)

Apple's App Store "commission" is largely just a tax. But it's not a margin because they don't buy from you and resell. They collect and pass certain revenues on to you.

For the many who don't even remember shrinkwrapped software publishing anymore, let me provide a quick overview. Back in the day, you could

• grant an IP license to a publisher who would make and sell the physical product, with you receiving a royalty like a book author from a book publisher;

• or you made the physical product and could

  1. sell it on an exclusive or non-exclusive basis to distributors (wholesalers) who would resell your product to retailers, who in turn would resell it to end users;

  2. sell products directly to retailers; or

  3. sell it directly (mail order).

  Of course, combinations and hybrids were possible as well.

For example, when my Blizzard Entertainment friends sold their first Warcraft title, the company that had just acquired them (Davidson & Associates, an educational software publisher) acted as their distributor in the U.S. market. So from Blizzard's point of view, it was model #1; from the vantage point of Davidson as a whole, it was #2. I don't remember whether they also offered Warcraft by mail order, but they might have.

In Europe, however, Davidson didn't have a distribution network or any other presence at the time. Blizzard's founders knew another games company, Interplay, which became their exclusive European partner. But it was a bad deal because Interplay merely paid Blizzard a royalty of a few bucks per unit. Interplay then made the physical products for Europe, and sold them to the channel (partly directly, partly through other distributors).

Before they launched Warcraft II, I came in. I was the first person to work for Davidson and Blizzard in Europe at the time, and I wasn't even a full-time employee, but a consultant. Blizzard's parent company thought the Interplay deal was suboptimal, and I agreed. They adopted my advice to just set up an Irish subsidiary for tax reasons, have the European versions of the product manufactured there, and to appoint exclusive distributors (in that case, importers) in each European country. We granted a 60% discount to our German distributor (Bomico). We had an alternative that would have taken only 55% (no alternatives to Apple's App Store, though). But we believed we were ultimately going to be more successful with Bomico, and we were indeed: Warcraft II became #1 in the German Media Control sell-through charts a few months before it became #1 in the United States.

We sold about 300,000 copies in Germany. When we launched in December 1995, Bomico had placed pre-orders amounting to an aggregate of 70,000 copies if I recall correctly. It was a major logistical effort. In order to make it in time for the Christmas Selling Season, we actually had to fly the first 20,000 or more copies on a chartered freight plane from Dublin to Frankfurt, while the remainder of the initial order volume was on its way by truck and ferry. So we had ship over land, sea and air--and what made Warcraft II different from its predecessor in terms of gameplay was that you had not only land units, but also sea and air units. A funny anecdote.

Nowadays, you don't need freight planes, trucks, ferries. You just upload your app to Apple using Xcode (Apple's development system) or, which is what my company did because we used Unity, we sent it to Apple from a Mac with a special uploader app provided by Apple. Apple doesn't need a warehouse: the cost of storing an app on a server amounts to almost nothing (cloud storage is really cheap, while computing time can get expensive, but if your app needs a backend, then you, the developer, have to operate it yourself on Amazon AWS or wherever).

Again, developers faced challenges in the 1990s. Retailers had significant market power, but at least they normally weren't monopolists. Even if a shop was "the only game in town" somewhere, there was nothing stopping a competing retail chain from opening an outlet across the street. With iOS, it's a whole new situation. There are not only drawbacks but also certain advantages. However, Apple didn't invent the distribution of software by download. In the late 1990s, others were doing that already, such as Beyond.com (which I visited in Sunnyvale in 1999--just a couple of miles from Apple's Cupertino HQ) and its acquirer, Digital River.

The net effect of a functioning market is that the gains of trade--and the gains from technological progress--are split fairly between the parties. That is not the case with mobile app stores, where developers are taxed and tyrannized.

Let's not compare apples to oranges--and let's not name apples oranges.

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Epic Games and Apple file proposed findings of fact and conclusions of law: 688 pages in total

We're only three weeks and a half away from the kickoff of the Epic Games v. Apple App Store antitrust trial in Oakland (Northern District of California). The parties just filed their proposed findings of fact and conclusions of law around midnight Pacific Time. Knowing that many of my readers in many different time zones may be interested in taking a look at these documents, I'm making them available now. It will, of course, take me some time to digest and comment on them, and I can't even predict how many blog posts (whether just one follow-up post or a whole bunch) will be needed as it depends on how interesting the information I discover in those "books" turns out to be.

So, for now, just the document. Let's start with the plaintiff, Fortnite and Unreal Engine maker Epic Games (this post continues below the document):

21-04-08 Epic Games Propose... by Florian Mueller

Here comes Apple's filing, which is only slightly "shorter" than Epic'S (323 pages vs. 365):

21-04-07 Apple Proposed Fin... by Florian Mueller

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Amended Apple-Intel complaint against Fortress alleges monopolization of markets such as 'Generating Alerts Based on Blood Oxygen Level Patents Market'

Earlier this month, Apple and Intel filed their second amended complaint against Fortress Investment. It all started in October 2019 with an Intel antitrust lawsuit in the Northern District of California, which was effectively replaced with a joint Apple-Intel filing in November 2019.

The November 2019 filing was 57 pages long, but not specific enough to meet the pleading requirements in Judge Edward M. Chen's opinion. The complaint has meanwhile grown to 161 pages plus a 17-page table. In many other cases, this would suggest that additional claims have been added. Here, however, the complaint is actually more narrowly focused, and the prayers for relief are the same as in the original complaint except an additional request for "[a]n order directing the termination of the anticompetitive conduct and injunctive relief that restores competition to the markets at issue."

The fact that Qualcomm's Ninth Circuit victory over the FTC won't be appealed to the Supreme Court doesn't make things easier for Apple and Intel, but it makes Apple and Intel v. Fortress even more important: whether this case reaches the appeals court before or after trial, and regardless of who prevails in this case, it will present an opportunity for the Ninth Circuit to clarify that FTC v. Qualcomm doesn't immunize patent-related practices from antitrust liability to the far-reaching extent that some would have us all believe.

Even if--in a totally hypothetical but conceivable scenario--all that Apple and Intel achieved in the Fortress case was a trend reversal from FTC v. Qualcomm, that would be a strategic breakthrough in its own right.

There's also a patent policy dimension to this case. Most patent infringement cases are nowadays brought by non-practicing entities (NPEs) that are affiliated with such groups as Fortress Investment, Acacia, or IP Edge. In other words, there's a trend toward consolidation and economies of scale in the NPE business. This is the rhetorically strongest sentence in the second amended complaint that complains about the effect of such consolidation in light of litigation campaigns such as 25 Uniloc v. Apple and 35 Uniloc v. Google cases (including Google affiliates):

"Fortress and its [patent assertion entities] operate based on volume and repetition, targeting the resolve of the targets instead of establishing the merits and value of the patents."

A slightly longer version of the same allegation is also found in the complaint:

"Patent assertion thus becomes simply a numbers game disassociated from the merits of the underlying patents, with PAEs and their investors betting that serial assertions with aggressive demands will strike a jackpot eventually making up for many other losses."

The question before Judge Chen at this point is whether the pleading requirements for an antitrust case are met. It's not that Apple and Intel didn't state these types of allegations before, but broad assertions just weren't deemed sufficient to go forward with the case.

But long before this case goes to trial, or before an appeals court might hear a dismissal with prejudice, policy makers should pay attention to what Apple and Intel describe in their complaint. How much leverage, such as in the form of injunctive relief, do we as a society want to give patent owners who don't make products that compete with the ones they accuse of infringement? In the U.S., there are limits under eBay v. MercExchange, which some lawmakers on Capitol Hill would like to overturn. In Germany, NPEs have the same access to injunctive relief as all other patent holders (and the patent injunction reform that may be enacted in the coming months won't change that). Interestingly, the complaint notes that "VLSI is seeking to enjoin Intel in multiple litigations in China." That's the Fortress-funded company that recently won a $2.2 billion verdict against Intel in the Western District of Texas. Another VLSI v. Intel trial in the Western District of Texas--where many major technology companies get sued as I discussed in my previous post--will go to trial next month.

Apple and Intel also complain that "by controlling patents across several PAEs (including those with which Fortress’s relationship is not readily apparent), Fortress conceals the true scope of its patent portfolio." Transparency in patent ownership has been an issue for a long time and is by no means specific to Fortress. Less than ten years ago, even Google opposed transparency because it thought it had a bargaining chip against Apple, Microsoft and possibly others by threatening to sue them over patents it described as very powerful but declined to disclose.

Obtaining (through filings or acquisitions), licensing, and asserting patents are legitimate activities. As the complaint notes, "[t]here is nothing inherently illegal with owning many patents or obtaining those patents through acquisition." The problem in patent policy is that politicians often have the "lone inventor" in mind whom some reckless large corporations just don't want to pay. But those "lone inventors" bring very few patent infringement complaint compared to major aggregators. Apple and Intel's Fortress case draws attention to what happens when billions of dollars are invested in the acquisition and enforcement of patent portfolios.

There's one theory of harm underlying Apple and Intel#s complaint that Judge Chen is, in principle, prepared to entertain: the monopolization of specific licensing markets by the acquisition of patents covering techniques that could substitute for one another. However, Fortress has consistently complained that Apple and Intel failed to define such markets with sufficiently clear boundaries, and so far Judge Chen agreed and sent Apple and Intel back to the drawing board.

Apple and Intel have gone to extreme lengths, literally speaking, in order to complete their market definition homework. One of the markets they've defined is the "Generating Alerts Based on Blood Oxygen Level Patents Market." It may seem funny, but the reason I provided this example in the headline is simply that this shows how hard Apple and Intel are trying to meet the antitrust pleading standard.

The court also wants Apple and Intel to plead competitive harm in the form of excessive royalties having been obtained as a result of patent aggregation in certain markets. Here are a few passages that demonstrate Apple and Intel's efforts in that regard:

"[T]he success of this aggregation and its anticompetitive effects can be seen in the disparity between (1) the prices at which Fortress and [its affiliates] acquired substitute and complementary patents and/or valued such patents before aggregation and (2) the significantly higher amounts that Defendants have obtained as royalties or sought in damages for these same patents after they have been aggregated under Fortress’s control in the relevant patent markets."

"{T]he value to the prior owners of asserting the transferred patents was outweighed by the costs of doing so before aggregation because the value of the patents was constrained by competition in the markets for those patents and the owners lacked market power. The prior owners thus did not assert them. Likewise, the prior owners could not have obtained the licensing amounts for the aggregated patents that Defendants have obtained or seek without the benefit of eliminating competition through aggregation. If the prior owners had been able to obtain such supracompetitive royalties, they would not have sold their patents to Defendants for amounts far below what Defendants have obtained or seek in royalties, and instead either would have sought to license the transferred patents themselves or sold them to Defendants at far higher prices. Indeed, except for limited exceptions described below, the aggregated patents had not previously been offered to Apple or Intel to license, and thus, on information and belief, nor to other similarly-situated potential licensees. The prior owners thus were seeking no royalties for the aggregated patents before their sale."

"To the extent that Fortress and the other Defendants have patents that would actually be of value to potential licensees, the transfer of those patents to Fortress’s control limits access to them because those patents are now held by entities that, in light of the elimination of competition that constrained their prices, now have no incentive to license patents in a way that captures royalties that are commensurate with their actual value. Instead, those entities have incentives to obtain excessive monopoly rents by exploiting patent portfolios that aggregate substitute patents with many meritless patents."

Fortress and its affiliates will deny this. For example, I guess they will argue that prior owners simply didn't fully understand the value of those patents. But if Judge Chen or the appeals court finds that those arguments just go to the merits, then Apple and Intel will get their day--actually, a number of days--in court.

The deadline for Fortress and its affiliates to file an answer to the complaint or a renewed motion to dismiss (or similar motion) has been pushed back to April 26. In the event there will be another motion, the deadline for Apple and Intel's opposition is June 14 (in which case Fortress can reply by July 8).

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Has European Commissioner Thierry Breton already announced that Apple will have to allow alternative app stores? A matter of interpretation.

One of the first LinkedIn posts I read this morning was from the Coalition for App Fairness, which was founded last year by Epic Games, Spotify, Match Group and others. When the CAF started, I firstly wanted to wait and see, but at the start of this year I already predicted on this blog that it would keep growing. My own app development company may at some point apply for membership, but even in that case I'd obviously retain my independent opinion. It was high time someone founded the CAF, given that a couple of other organizations claim to represent app developers while in reality being paid and remote-controlled by Apple in one case, Google in the other. It's laughable when an entity claims to represent app developers but doesn't support Epic against Apple, for example.

So the CAF pointed to an article published by EU Internal Market Commissioner Thierry Breton on LinkedIn, entitled DSA/DMA Myths -- What is the EU digital regulation really about?

According to CAF's interpretation of the article, Mr. Breton is "stressing the importance that all gatekeepers allow other app stores on their platforms. This would mean that for the first time, there will be real competition for the App Store." (emphasis added)

It's obvious that I would want this to happen. Competition works wonders. This isn't just about the commission on in-app payments. When they reject your app and won't let you publish it at all or force you to give up on your original concept, your focus is not on 15%, 30% or any percentage for that matters. As Epic will argue in the May trial, alternative app stores can do a better job at curation (app reviews). I don't know whether the Epic Games Store, if it already existed on iOS, would have accepted my app (we'd have to build a Windows version and submit it to them to find out), but considering that similarly-themed games are available on Steam (a pretty meaningful point of reference), the Samsung Galaxy Store, the Microsoft Store etc., I'd be reasonably optimistic. At a minimum I would know that whoever (Apple, Epic, or any third party) rejected it would have to assume that some other app store might carry it. That would discipline all of them, and rejections would become more reasonable. Some people blame the reviewers, such as the Coronavirus Reporter complaint against Apple; I prefer to focus on structural and systemic issues, but regardless of how structural or not a problem is, competitive constraints can only help.

The European Union's envisioned Digital Markets Act could become the most important piece of legislation in the technology space ever, way above such laws as the U.S. Digital Millennium Copyright Act (the substance of which I don't mean to criticize; I vocally supported its enforcement in a case involving Blizzard Entertainment).

But the question is: is Mr. Breton actually saying in that LinkedIn article that there will be alternative app stores on iOS (and Android)?

Here's the only passage in his statement that mentions apps:

"Gatekeepers will keep digital opportunities; providers of operating systems will always be able to offer all sorts of software and apps as they wish. In addition, the DMA empowers the users who do not like the preinstalled apps to switch to a different service or use a different app offered by another provider." (emphasis in original)

The narrowest interpretation would be that users must be provided with alternatives to any preinstalled apps, either by selecting different services within an app (such as by selecting a different search engine in a search app) or installing "a different app" made by another developer. In that case, one would interpret "provider" as "service provider" in the same sense that users could switch to a different service within an app.

But one doesn't even have to interpret "by another provider" as "by a different app store" in order to arrive at the CAF's desired outcome. The Apple App Store is an app itself (as is the Google Play Store). And it's a preinstalled one. So, arguably, Apple would have to offer an alternative by another service provider (such as the Epic Games Store) to the App Store. At a minimum, the CAF's interpretation is defensible, even though I'm not going to take a definitive position on whether it's the only proper interpretation (absent additional evidence).

What Mr. Breton primarily sought to accomplish with his LinkedIn article is to debunk the "myth" that Apple couldn't offer, say, a music streaming service. Instead, the DMA would impose obligations requiring "that business users and end users are not unfairly deprived of their free choice, a fundamental postulate of [the EU's] single market." An alternative app store would be as consistent with that vision as it gets. Many roads lead to a multi-app-store ecosystem, and the DMA is one of them, at least potentially.

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Caltech seeks to extend billion-dollar patent win over Apple, Broadcom to Microsoft: new lawsuit in Western District of Texas over Surface, Xbox

According to a patent infringement complaint filed on Friday, Microsoft--famously headquartered in Redmond, WA--has offices at 10900 Stonelake Boulevard, Austin, TX, USA 78759 and 401 East Sonterra Boulevard, San Antonio, TX. Those offices don't seem to be very large, but the per-square-foot cost of doing business there could be staggering: both these places are in the Western District of Texas, the most attractive venue for U.S. patent plaintiffs even ahead of the Eastern District of the same state.

The Western District has displaced the Eastern District. Waco-based Judge Alan Albright is no less patentee-friendly (an understatement) than Judge Gilstrap, but many major tech companies from the West Coast have additional operations in the Austin area, while the Eastern District is rural and easy to avoid. For example, you won't find any Apple Store in the Eastern District by now (though some are just across the border of the federal judiciary district). A certain presence by a defendant is, however, what it makes it easy for patent plaintiffs to avoid that their cases get transferred out of their chosen district under the Supreme Court's TC Heartland case law (PDF).

The California Institute of Technology ("Caltech") is now suing Microsoft in Waco, claiming that the Microsoft Surface portable computers and the Xbox gaming console infringe a handful of WiFi-related--but apparently not standard-essential--patents (this post continues below the document):

21-03-19 Caltech v. Microso... by Florian Mueller

The Caltech v. Microsoft complaint immediately brings two spectacular (or, from the perspective of true innovators, shocking) patent damages verdicts to mind:

• this month's $2.175 billion verdict in VLSI v. Intel in the Western District, and

• last year's $1.1 billion verdict against Apple and Broadcom in the Central District of California (Los Angeles) ($838 million against Apple, $270 million against its supplier Broadcom), which Apple and Broadcom are appealing. The three patents underlying that damages verdict are among the five patents-in-suit in the new Microsoft case.

Caltech is trying to get the best of both worlds: while leveraging its victory in L.A. (though I wish Apple and Broadcom luck on appeal and don't expect the verdict to be upheld, at least not in full), Caltech transparently attempts to benefit from the Waco patent bonanza.

Caltech is being represented by Quinn Emanuel and a small local firm, Mann Tindel Thompson. Quinn Emanuel is more often seen representing plaintiffs against Apple than against Microsoft, but this blog reported on various cases in which QE worked for Motorola against Microsoft, including the case in which Judge Robart's famous antisuit injunction came down.

I'll follow developments in the Western District more closely now, given that it's the world's #1 hotspot for patent damages just like Munich is the world's #1 venue for patent injunctions.

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Central issue in upcoming Epic Games v. Apple trial: Apple's refusal to allow Epic Games Store and other alternative app stores on iOS

On Friday, Epic Games and Apple submitted tentative witness lists for their antitrust trial that will start on May 3 in Oakland. But Epic attached something far more informative: summaries of the opinions offered by its expert witnesses. In the previous post I discussed how two professors are going to debunk Apple's security pretext for its App Store monopoly. This here is the third and final part of the trilogy on Friday's filings.

When Epic Games filed its complaints against Apple and Google in August, many people thought this was just about bringing down Apple's 30% App Store commission and requiring Apple to allow Fortnite to return to the App Store despite its alternative in-app payment system. In response to Epic's activation of the latter, Apple not only removed Fortnite from the App Store but even announced the termination of another Epic developer account: the one used for the development of Unreal Engine. A temporary restraining order (TRO), which Judge Yvonne Gonzalez Rogers later converted into a preliminary injunction (PI), barred Apple from terminating the Unreal Engine account.

It's a common misbelief that Epic just wants to get Apple to reduce the 30% commission. Epic's original complaint raised some more fundamental issues, and Epic wants to open up iOS more generally for developers and consumers. The most important part here is that Epic--and others--could provide alternative app stores and thereby act as a competitive constraint on Apple in the iOS app distribution market. In its August 2020 complaint, Epic already said the following:

"Epic approached Apple to request that Apple allow Epic to offer its Epic Games Store to Apple' iOS users through the App Store and direct installation. Apple's response was an unequivocal 'no'."

"The Epic Games Store provides access to more than 250 games from more than 200 developers, and those numbers are growing rapidly. The Epic Games Store offers personalized features such as friends list management and game matchmaking services. Absent Apple’s anti-competitive conduct, Epic would also create an app store for iOS."

In Friday's summaries of what Epic's economic experts say, the possibility of the Epic Games Store (and similar app distribution channels) competing with Apple's monopolistic App Store plays a key role. Stanford professor Susan Athey discusses the importance of "middleware" with en mphasis on "an independent Multi-Platform App Store" (this post continues below the document):

376-2 Susan Athey Opening O... by Florian Mueller

Professor Athey describes today's "market for mobile smartphone operating system platforms [as] a duopoly, with market leaders Apple and Android together accounting for almost 100% of mobile smartphone revenue share outside of China." Practically, either platform is a monopoly in its own right, as "[}a user who considers leaving one platform and joining another faces app-related switching costs, including the costs of migrating and synchronizing her apps, purchases [download fees as well as in-app purchaes] and app data (and, in many cases, the costs of re-purchasing apps on the new platform)."

While multi-platform app stores, multi-platform in app-payment systems, or cross-platform streaming platforms could help, "Apple imposes a set of technical and contractual restrictions that block critical categories of middleware, interfering with the competitive process and maintaining the market power of the iOS Platform."

Another Epic expert witness, Michael Cragg, a summary of whose opinions I've uploaded to Scribd (PDF), says Apple's experts focus "on the wrong product and not Epic's role as a would-be direct competitor to the App Store." Apple would like the court to consider the entire game distribution market (across all platforms) as the relevant antitrust market, but Epic's expert says those Apple experts "do not focus on the right market definition question."

Both Michael Cragg and another Epic expert, Nancy Mathiowetz (summary of opinions (PDF)), emphasize in this context that the mere access to, or even the regular use of, alternative devices by iOS users doesn't really mean much for the purposes of this case. As Michael Cragg notes, "by [Apple's experts'] logic, refrigerators and TVs (let alone stereos and TVs) are in the same market because users 'have access' to or 'regularly use' both." But in order for the distribution of games on other platforms to be part of the same relevant antitrust market, there would have to be evidence that "a small but meaningful change in the price or quality of app distribution on either device" would make "users switch from using one distribution channel to another" to an extent that it would be a competitive constraint on Apple's own decisions.

Here's another important point:

"When it comes to distribution, iOS games do not have unique characteristics that make them separable from other iOS apps. All iOS apps (including iOS games), however, do have unique characteristics that make them separable from non-iOS apps, including non-iOS games."

Due to restrictions imposed by Apple, there is no way to access a multi-platform app store on iOS; as a result, switching costs are too high for switching to take place to a meaningful degree, which is why "iOS app distribution remains a market unto itself."

Finally, the opening and rebuttal opinions by Epic's primary expert on platform economics, David Evans, also place great emphasis on "the competitive effects of Apple's foreclosure of alternative channels of iOS app distribution":

376-8 David Evans Opening O... by Florian Mueller

376-9 David Evans Rebuttal ... by Florian Mueller

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Harvard and Georgia Tech professors debunk Apple's security pretext for App Store monopolism: Epic Games v. Apple

This is the second part of a trilogy of posts on a slew of documents Epic Games filed on Friday. In the previous post, I published and briefly discussed Apple's and Epic's tentative witness lists for their May antitrust trial in Oakland. In the next one, planned for later today (Sunday), I'll discuss the economic analysis underpinning Epic's market definition.

Apple would have us--and especially competition authorities and courts--believe that there cannot be security without tyranny: in the world according to Apple, there's either a monopolistic App Store with all its unfair rules and their arbitrary application, or malware will take over our phones.

To software developers like me, this is transparent fearmongering. But Apple has to say something to defend the indefensible. It can afford more easily than any other company in the world to get some people to say things that independent experts couldn't possibly say with a straight face. And it may just hope that judges or the decision-makers in competition authorities could be gaslighted when a topic is technical and uneasiness may just be enough to let Apple sustain a harmful monopoly in app distribution.

Come May, Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California will hear what Apple has been telling antitrust authorities around the globe for a while. Fortunately, the other side--Epic--will also be heard. Based on the summaries of the opinions of Epic's experts on security that were filed on Friday, renowned experts will help the court see through what is just a smokescreen.

Professor James W. Mickens of the Harvard John A. Paulson School of Engineering and Applied Sciences will testify that "Apple considerably overstates the security benefits of its own centralized App Store model" and that "if Apple allowed iPhone users to opt into app distribution via third-party channels, those users would not suffer from a meaningfully less-secure experience" (this post continues below the document):

376-13 James Mickens Openin... by Florian Mueller

Professor Mickens's analysis identifies "five security properties for iPhone apps: sandbox compliance, exploit resistance, malware exclusion, user consent for private data access, and legal compliance." While Apple argues that its operation of an exclusive app store and its review process are key to the enforcement of those security properties, Professor Mickens notes that the first three of those properties are enforceable by an operating system (here, iOS) alone, and with respect to the other two, which an operating system can enforce only to some degree, "a variety of empirical evidence suggests that, in practice, the App Store does a weak (at best) job of enforcing these additional security properties."

Everyone knows that Apple has always enables users to directly download and install third-party apps for MacOS. But even on iOS--and in connection with mission-critical applications--Apple itself actually relies on its iOS security architecture rather than an app review process: "In particular, the Apple-sanctioned Developer Enterprise program5 allows a third-party business to distribute the company’s proprietary apps to company employees. These apps are not reviewed by Apple."

To the extent that iPhones obtain information such as location (by GPS) or motion (accelerometers) that Macs don't have, there is no restriction to data synchronization between iPhones and Macs--and on Macs, third-party apps that users installed without Apple ever having reivewed them could access that treasure trove of data anyway.

While Android app distribution is also restricted, that is not going to be a topic of discussion in May. However, Apple's claims of iPhones being more secure than Android devices will probably come up. In my observation, Android security is only a problem if it takes too long between the emergence of a security loophole and the availability of fixes for particular devices, and with the Android devices I have and use, all of which are from first-rte vendors, I'm not concerned about that. Professor Mickens's summary says the following about the Android-iOS security comparison:

"[A] variety of evidence suggests that iPhones are not significantly more secure than Android devices. For example, a recent security evaluation of hundreds of iPhone apps found that those apps suffered from many of the security problems observed in Android apps. As another example, the open market for smartphone security vulnerabilities currently assigns a higher monetary value to Android security exploits. These market dynamics imply that Android is actually more secure than iOS."

Epic's expert is fair and does recognize that "Apple’s reputation for caring about security is not undeserved," but cautions against blowing this out of proportion, as some of this is attributable to "historical beliefs that are no longer true" even if they were in 2007 after the launch of the first iPhone.

As far as filtering out "religiously-offensive images" and similar content is concerned, it is obviously not a feature of today's operating systems to identify and block such material. But third-party app stores could also hire reviewers. I love the following sentence:

"For example, any reasonable person can determine whether an app provides 'lasting entertainment value'; being an employee of Apple is not a bona fide occupational qualification for issuing such a judgment."

Part of the problem really is hubris: Apple somehow believes that it has a patent on knowing and determining what's good for iPhone users. In reality, Apple just has an app store monopoly, and the world would be a better place with alternative app stores putting competitive pressure on Apple. Competition drives quality.

Last summer, shortly after Epic filed its complaint, a developer I don't remember explained on Twitter that any security benefits iOS has are attributable to technical features such as sandboxing, while it's just as easy to sneak malware through Apple's app review process as it is in Google's case.

This leads us to another Epic security expert: Professor Wenke Lee, the director of the Institute for Information Security & Privacy at Georgia Tech, was a member of a group of researchers who already presented a paper at a 2013 conference on how they managed to sneak malware through Apple's app review process. They submitted an app that was supposedly just about news from Georgia Tech, but inside the Trojan Horse--the researchers preferred the term "Jekyll app"--there were "dormant" code segments that could take control over your phone and generate tweets, text messages, or emails, or could take pictures without you even knowing. The related code segments were actually generated later, so an analysis of the code at the time of the app review wouldn't have found it. I've never written malware, but the first article ever that I successfully submitted to a computer magazine, back in 1985, discussed a variety of unorthodox coding techniques including self-modifying code, so I'm familiar with the concept.

Professor Lee will deliver an opening opinion and a rebuttal to Apple's claims that only Apple, through a monopolistic App Store, can achieve certain security goals, while Epic's expert explains others can do the same, the MacOS model could also be applied to iOS, and companies like Square and Stripe have already shown how to build security payment systems:

376-17 Wenke Lee Opening Op... by Florian Mueller

376-18 Wenke Lee Rebuttal O... by Florian Mueller

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Epic Games and Apple submit witness lists for their App Store antitrust trial starting May 3 in California

Six weeks prior to their May 3 antitrust bench trial in the Northern District of California, plaintiff Epic Games and defendant Apple submitted their tentative witness lists (this post continues below the two documents):

21-03-19 Epic Games witness... by Florian Mueller

21-03-19 Apple Witness List by Florian Mueller

As expected, Apple CEO Tim Cook and Apple Fellow (and App Store chief, as well as former marketing chief) Phil Schiller will testify extensively, as will, of course, Epic CEO Tim Sweeney.

Among the parties' expert witnesses I'm particularly interested to hear what Stanford Professor Susan Athey (with her combined background in economics, mathematics, and computer science) will say.

There will also be witnesses from major tech companies that are not parties to this case, such as Facebook, Microsoft, and Nvidia. Some of them are known to be (very) critical of Apple's App Store terms and policies.

The industry at large, with every respect for Apple's and Google's success, believes it's high time for decisions that open up the market. A few days ago, one of the opinion leaders of Silicon Valley's venture investment community, Benchmark Capital's Bill Gurley, wrote the following on Twitter:

When two parties move price 100% in concert with each other, it is definitive "proof" of a hard two-party oligopoly and lack of market competition. This should invite MORE regulatory consideration, not less. https://t.co/VhsHNVcx8h

— Bill Gurley (@bgurley) March 16, 2021

Whether Android is a competitive constraint on Apple's App Store will probably come up as well. I'd like to add something here to my recent post, Apple may already have lost the strategic battle over antitrust market definition in multiple European jurisdictions: App Store monopoly. Even though the French competition authority (Autorité de la concurrence) denied a group of complaints a preliminary injunction against Apple over its new ad tracking (IDFA) rules because the ultimate decision-makers prioritized data privacy considerations over fair competition, it found that there likely is a distinct market for iOS apps (in which Apple has a monopoly, obviously):

This ruling has another aspect: #antitrust market definition. The preliminary opinion that there likely IS a distinct market for #iOS apps bodes well for an important group of non-parties to this particular case: app developers like @EpicNewsroom and @Spotify @appfairness

— Florian Mueller (@FOSSpatents) March 17, 2021

In Russia, a court hearing on Apple's appeal of a regulatory decision (regarding the rejection of apps) was postponed on short notice. At some point, Apple apparently threatened to exit the Russian market because of a law requiring the pre-installation of apps determined by the Russian government, but is now going to keep serving that market. Apple used to be adamant about not pre-installing apps chosen by someone other than Apple. It remains to be seen whether the new legislative framework moots the antitrust case. In any event, those developments in Russia show that the App Store monopoly can be broken--and Epic's case in the United States District Court for the Northern District of California has that potential, too.

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Huawei's announcement of 5G license fee structure favors Apple, Samsung, while countering Nokia/Ericsson-style patent royalty stacking

To focus on just one number--$2.50 (per-unit 5G SEP royalty cap)--doesn't do justice to a bilingual event (video) that lasted more than two hours and featured such speakers as former WIPO Director General Francis Gurry. On the same occasion, Huawei released a 47-page White Paper (PDF). Among other things, it was interesting to hear that Huawei is one of the top three contributors to the Linux kernel. Yet we live in a world of ever shorter attention spans, so what made headline news yesterday was the announcement that "for every multi-mode 5G smartphone, Huawei will provide a reasonable percentage royalty rate of the handset selling price, and a per unit royalty cap at US$2.5."

Many of the questions reporters asked Dr. Song Liuping, Huawei's Chief Legal Officer, and Jason Ding, Huawei's IP chief, also focused on 5G licensing.

Due to a trade war started by the previous U.S. president, with Nokia and Ericsson constantly stoking the flames through lobbying, Huawei is restricted in its ability to serve customers in several major markets. Against that backdrop, I was a bit concerned that the Chinese company would become more aggressive in its patent licensing business. Figuratively speaking, I breathed a sigh of relief when I saw that--regardless of the political landscape--Huawei is still clearly in the camp of product-focused innovators. Rather than align its IP policies with those of Qualcomm, Ericsson, Nokia, or InterDigital, it's clear now that Huawei wants IP to be licensed in ways that enable innovation in smartphones, connected cars, and the wider IoT field.

Huawei is considered to own more actually-essential 5G patent families than any other company. I would summarize the message from yesterday's Forum on Innovation and IP Prospects in 2021 and Beyond as striking a balance: while Huawei doesn't have a "free lunch" or "zero-zero" cross-licensing strategy, it agrees with companies like Apple and Samsung that

• the aggregate royalty burden on device makers should not be inflated by "royalty stacking" (a big part of that problem is, by the way, the excessive "privateering" practiced by Nokia and Ericsson, who feed the trolls all the time), and

• cellular SEPs should not be used to tax other valuable components of innovative products, which is why Huawei's per-unit royalty cap is relatively low compared to the license fee demands made by companies with less (and sometimes much less) valuable portfolios. That cap suits makers of high-end smartphones, such as the two organizations I just mentioned.

Non-practicing entity InterDigital, which isn't even among the top contributors to 5G, wants up to $1.20 per 5G device (0.6% of a royalty base capped at $200). In connection with the Federal Trade Commission's and Apple's antitrust cases against Qualcomm, I've frequently criticized the chipmaker's royalty demand: for its SEPs, Qualcomm seeks to be paid up to $13 per unit (3.25% of a royalty base capped at $400). Nokia's cap is at €3.00, and Ericsson has been vague, potentially seeking a lot more than even Nokia.

Ex ante disclosures of maximum royalty rates provide much-needed transparency. Standard-setting organizations could require them, but patent monetization-focused member companies typically oppose making such disclosures mandatory.

Huawei's announcement definitely has policy implications. If a company with few 5G SEPs of its own took a position on royalty rates, it would be suspected of merely being interested in bringing down licensing costs (case in point, Qualcomm pointed to an Apple-internal presentation that made it a strategic goal to "devalue" SEPs). Huawei's IP chief Jason Ding said that Huawei wants to be a top contributor, but not ask for top royalty rates. This attitude is compatible with Apple's IP policies. It's also good news for the automotive industry (to which Huawei is a very significant supplier).

I offer a prediction: Huawei's $2.50 per-unit royalty cap will be mentioned a lot in the years ahead in 5G royalty disputes. I would not be surprised if, for example, Samsung pointed to that figure in its ongoing dispute with Ericsson. And if I were a device maker who'd have to defend against InterDigital, I'd argue that a reasonable per-unit royalty cap for InterDigital's patents is but a fraction of the $1.20 it wants, for a pretty small portfolio compared to Huawei's.

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In aftermath of $2.2B verdict, Apple and Intel file 161-page overhauled antitrust complaint against Softbank-owned patent litigation funder Fortress, others

Apple and Intel just threw a book at Softbank's patent assertion conglomerate Fortress Investment. Not literally, but what I meant by book is a 161-page complaint with a 17-page table as its Exhibit A. That voluminous monster of a filing--talk about a battle of materiel--had been scheduled a while ago and now happens to come on the heels of

• a record $2.175 billion verdict that one Fortress front, VLSI, just won in the Western District of Texas against Intel (who are, of course, going to appeal), and

• a flurry of bad news for Apple from cases in which the iPhone maker is an antitrust defendant.

Let's put it that way: either complainant got slapped last week. But they keep on fighting, and in the Fortress context I'm glad Apple doesn't cede an inch (an Apple trait that left me no choice but to root for the app store liberation movement started by Spotify and Epic Games).

This second amended complaint is already the fourth in total--originally Intel had filed a complaint alone (#1), which it withdrew only to refile an extended version with Apple (#2), which was amended last year (#3), only for the judge to send them back to the drawing board and present the latest (#4) version along with an exhibit (this post continues below the documents):

21-03-08 Redacted Version o... by Florian Mueller

21-03-08 Redacted Version o... by Florian Mueller

I'm not in a position to offer much commentary--the thing was just filed a few hours ago, and there's so much else going on. But I did run a full-text search for any references to last week's record verdict and found this passage:

"Indeed, it is a core component of Fortress’s anticompetitive scheme to aggressively seek and to obtain such supracompetitive royalties after aggregating patents. Reflecting the seriousness with which Intel takes damage demands, it has disclosed to investors in its securities filings VLSI's damages demands in various cases. Recently, VLSI was awarded $2.175 billion in damages against Intel based on a jury’s finding that Intel infringed two VLSI patents. Although Intel denies that it infringes and that the damages award is proper (and the decision remains subject to appeal), the jury awarded VLSI close to what it sought from Intel, demonstrating that damages demands are not just requests."

I understand the point Intel and Apple want to make there: those exorbitant demands can materialize in the form of damages awards. However, the second paragraph of the complaint says "Defendants [...] aggressively pursue meritless litigation have long been recognized to harm and deter innovation," and Fortress will be sure to counter this by pointing to its (non-final and hopefully never final) victory in Texas.

I'll write about the legal theories and factual allegations in the second amended complaint on another occasion. I just wanted to be of service to my readership and put out the documents quickly.

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Apple may already have lost the strategic battle over antitrust market definition in multiple European jurisdictions: App Store monopoly

Never before has there been so much hope that the mobile app store tyranny may come to an end. It's a marathon, not a sprint. There'll be appeals, and the freedom fighters of the Digital Era may experience setbacks. But the first week of March  2021 may very well be judged by history as the end of the beginning.

I've previously commented on the app store bill adopted by the Arizona House of Representatives. This is just the first legislative hurdle of three, and there may be court challenges even if the state senate voted in favor and the governor signed. But it shows that the app store liberation movement is able to build political majorities and overcome Apple and Google's counterlobbying. Initiatives are underway in multiple states, and it varies by state whether Democrats or (as in Arizona) Republicans take the lead.

On the other side of the Big Pond, Apple's purely pretextual defenses of its app store monopoly are falling apart. There were not one, not two, but three news cycles this week, two of which are bad news for Apple and the third is more likely than not to portend another decision against Apple:

• The Day of Reckoning is coming for Apple in Brussels, with the European Commission's Directorate-General for Competition (DG COMP) preparing a Statement of Objections (SO). Apparently the EU antitrust authority plans to issue the SO--further to a complaint by Spotify (there was also a similar one by a Rakuten subsidiary)--before the summer vacation season.

  An SO is not a final decision. Subsequently to the SO, a company under investigation gets to make its case again--and then there's a hearing and, finally, a ruling, which in turn is appealable. I repeat myself in the same post: It's a marathon, not a sprint.

  In Europe, Apple's market share is only about 30%. A dominant market position (the EU term for what is called a monopoly in the U.S.) can, therefore, be identified only by--which I consider absolutely correct in this case--defining a single-brand market. It's clear that Apple has failed to convince EU competition experts that the market should be defined more broadly, such as all mobile apps or all music distribution channels.

  The situation on the market definition front could be even worse for Apple: DG COMP may agree with Spotify's tying theory, which involves two markets: an iOS app distribution market and an iOS in-app payment services market. With a view to what may be the winning theory here in the EU, let me point you to the December 2020 version of what has already become a true app store antitrust classic: Professor Damien Geradin and Dimitrios Katsifis's The Antitrust Case Against the Apple App Store (Revisited).

  Apple's argument against tying is that the App Store and the payment system are just one product. Indivisible. Well, atoms were considered indivisible (thus the Greek name) until subatomic particles were discovered, and Epic Games achieved nuclear fission by an act of civil obedience, as its CEO called it in a CNN interview. Epic simply delivered proof that there is demand for alternative payment systems. Even if Epic had not done so, one would just have to download Amazon's shopping app or a parking or public transport app to come to the same realization.

  A Commission SO holding Apple responsible for tying might even give rise to a request for judicial notice in the period between the Epic Games v. Apple antitrust trial in the Northern District of California and Judge Yvonne Gonzalez Rogers's ruling.

  For a long time I was somewhat skeptical of whether Spotify's complaint was just going to lead to a "Lex Spotify" or help the developer community at large. Having researched the app store antitrust situation in greater detail since last summer, and considering that Epic--which doesn't specifically complain about direct competition from Apple, while Spotify is concerned about Apple Music--has joined the investigation, I'm definitely rooting for Spotify now. If Spotify prevails on market definition, Apple's App Store monopoly is finished in Europe.

  The closer I looked at the Spotify-Apple issue, the clearer it became to me that what Spotify is facing there is even worse than the problems experienced by major professional soccer clubs who are regulated by associations that are economic operators at the same time. To some degree, the associations' own soccer tournaments, especially some that involve national teams, also compete with club tournaments, and those sports bodies regulate them all. There are serious issues there, but Apple has an "octopus" growth strategy, seeking to grab market after market by leveraging its iOS app monopoly. Apple Arcade is another example.

• Another Reuters article reported on a letter sent out by the Authority for Consumers and Markets (ACM) of the Netherlands to developers and announcing that the investigation is complete and a ruling in the making. The Dutch antitrust agency didn't indicate what the decision would be. It's independent from DG COMP. But both are part of the European Competition Network and obviously in close contact. In light of DG COMP's upcoming SO, the odds are rather long against an acquittal unless there's something deficient about those specific complaints, which I doubt.

• The UK has left the EU, giving the UK Competition and Markets Authority (CMA) the opportunity to rule on high-profile cases that it previously had to leave to DG COMP. The primary author of the paper I mentioned further above, Professor Geradin, mentioned on Twitter that his firm, Geradin Partners, represents the companies whose UK complaints against Apple are now being investigated by the CMA.

  In the UK, the iPhone market share is approximately 50%, so the CMA might not even have to reach the question of a single-brand market: there's no plausible market definition in the UK that wouldn't make Apple's app distribution monopoly in that market subject to antitrust law.

A few years ago, Qualcomm appeared to be under similar antitrust pressure around the globe, but--unless a major surprise still happens somewhere--ultimately got off the hook. However, Qualcomm was able to do deals with key players such as Apple (which needed Qualcomm's 5G chips) and Samsung. It got a lot of support from the DOJ's antitrust chief at the time (a former Qualcomm lobbyist). There are reasons for which I believe Apple cannot extricate itself from this predicament the way Qualcomm did. But, again, this is going to be a rough ride and, to mention this word for the third and final time in this post, a marathon.

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Arizona House of Representatives adopts law untying in-app payment method from mobile app store monopolies: now on to the State Senate

Here's a follow-up to my very recent commentary on HB2005, a legislative proposal preventing Apple and Google from requiring developers to use only one payment system per mobile app store. Republican state lawmakers Dr. Regina Cobb and Leo Biasiucci sponsored the bill.

Today, the Arizona House of Representatives--one of the two chambers of the state legislature--PASSED the bill!

This screenshot is from the status webpage (click on the image to enlarge; the "PASSED" information may not be visible otherwise):

The result of the third reading vote was 31-29. There are 31 Republicans and 29 Democrats in the Arizona State House, and one member per party crossed the aisle, thereby canceling each other out.

A couple of proposed amendments failed, while a proposal by Dr. Cobb (enabling app developers to complain to Arizona's Attorney General about any failure by Apple or Google to comply) was adopted. (Technically, the App Store part of HB2005 was an amendment to a multi-purpose bill, which amendment then in turn got amended in the way just described.)

The Coalition for App Fairness is pleased, but notes that this is merely a first step toward a level playing field for all:

The Coalition for App Fairness is pleased to see the House passage of #HB2005, which will encourage business innovation in Arizona and protect consumer choice. While this is cause for celebration, it is only a first step toward achieving a truly level playing field for all.

— Coalition for App Fairness (@appfairness) March 3, 2021

In order for this measure to be passed into law, the Arizona Senate would have to adopt it as well, and the Governor would have to sign it (as opposed to vetoing it). The (counter)lobbying onslaught by Apple and Google has been massive already, and may further intensify. There are 16 Republican and 14 Democratic senators. It is counterintuitive that Arizona Democrats have such strong reservations concerning this measure, considering that the Democratic majority in the United States House of Representatives took a clear position on tech monopolies and walled gardens in October.

This remains interesting, and meanwhile there are initiatives in various other states. Today, the Minnesota Reformer website published an opinion piece by Justin Stofferahn and Pat Garofalo, calling on the Minnesota state legislature to "curb anti-competitive tactics" in order to become, once again, "an innovation center."

And in precisely two months from today, the Epic Games v. Apple antitrust trial will start in Oakland, California.

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Wac(k)o record verdict: jury in Western District of Texas says Intel owes Softbank-owned patent troll $2.175 billion over two patents

Texas has a reputation for being big and going big. With respect to patents, it's unfortunately also notorious for going off the deep end at times--not all parts of the Lone Star State, but two of its federal districts. For a long time, the Eastern District was synonymous with patent troll-friendly pretrial rulings and juries. More recently, the Western District's Waco division has put into evidence that nothing is ever so bad it couldn't get worse.

What happened in Waco yesterday is shocking for most of us while it's precisely what patent trolls' political friends like Senators Thom Tillis (R-N.C.) and Chris Coons (D-Del.) would like to see on a monthly if not weekly basis: the potential of money being sucked out of companies that make innovative products by those in the business of patent assertion. VLSI, which used to make products decades ago, went out of business, and whose empty shell formed the basis for a patent troll belonging to the Softbank-owned Fortress Investment group, has won a jury verdict worth (unless overturned or adjusted) $2.175 billion against Intel (click on the image to enlarge):

As the above screenshot shows, this is the sum of a $1.5B damages award for U.S. Patent No. 7,523,373 on a "minimum memory operating voltage technique" and $675 million for U.S. Patent No. 7,7254,759 on a "system and method of managing clock speed in an electronic device."

Intel will obviously appeal. Theoretically, District Judge Albright could set aside or adjust this verdict, but that would be a huge surprise. So it will all depend on the Federal Circuit. In this case, there won't be damages enhancements (up to "treble damages") either, as the jury did not find Intel's infringement to be willful. It's astonishing that a jury practically agrees with a patent troll's damages theory all the way over an incidental infringement (while Intel argued that even if it was found to infringe, the amount should be on the order of a couple million). Intel is a large and deep-pocketed company, but it's not an Apple or Google. If one extrapolates the outcome of this jury trial to a hypothetical case in which similar claims would have succeeded against Apple, you could add another zero on the right side of the damages figure...

The '373 patent was found to be literally infringed; for the '759 patent, the jury found an infringement under the doctrine of equivalents, and rejected Intel's invalidity contentions.

The judge was so eager to hold this trial that he conducted an in-person patent trial despite the COVID-19 pandemic.

The verdict is the highest one ever in an information technology patent case. Only one patent damages verdict in U.S. history was larger; it was about a pharmaceutical patent and, as Professor Mark Lemley (Stanford) notes on Twitter, was "erased on appeal."

The verdict comes just a week before Intel and Apple will file their second amended complaint (i.e., "version 3.0" in total) in their antitrust action against Fortress in the Northern District of California. Last year they already amended the complaint once, but the case has to be narrowed further.

This week's Texas verdict makes next week's filing in California even more significant. The same law firms (Irell & Manella for Fortress/VLSI, and Wilmer Hale for Intel and, in California, also for Apple) are working on the infringement cases as well as the antitrust action.

Here's the complete verdict form:

21-03-02 VLSI v. Intel Jury... by Florian Mueller

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