BioNTech, Pfizer file complaint against CureVac in District of Massachusetts, seeking declaratory judgment of non-infringement of three mRNA patents

This is the first time for FOSS Patents to report on a life sciences case--a first that is warranted by the extraordinary significance of the related dispute. Less than three weeks after CureVac, a biopharmaceutical company headquartered in Germany and funded by (inter alia) SAP co-founder Dietmar Hopp, announced its Dusseldorf patent infringement action against BioNTech over the alleged use of foundational mRNA-related patents in the latter's COVID vaccine (named Comirnaty), BioNTech and its strategic partner Pfizer filed a declaratory judgment action in the District of Massachussetts taking aim at three of CureVac's U.S. patents.

While BioNTech and Pfizer need no introduction anywhere in the civilized world, there as a time when politicians were bullish about the prospects of CureVac delivering one of the first COVID vaccines--if not the first. Then-President Trump even offered a funding bonanza to CureVac--in exchange for which the company would have had to relocate to the U.S. at least with respect to its work on a coronavirus vaccine. Alarmed by those overtures, the German federal government became minority shareholder, and the European Commission--together with the European Investment Bank--entered into a financing agreement with CureVac. In the end, CureVac wasn't among the winners of the race, though the company is working on a next-generation COVID vaccine that may ultimately be approved.

The question on which it is still too early for me to take a position is whether CureVac is a "sore loser" who is now attempting a patent shakedown of the glorious winner of the race to the first truly effective COVID vaccine--or whether BioNTech was "standing on the shoulders of giants" from the get-go, in which case CureVac would clearly be entitled to substantial compensation. It is potentially a multi-billion dollar question, and it would be wrong to harbor prejudice toward one party or the other, as the idea of patent law is not to reward success in the marketplace but to incentivize research and development. It's not a ball game where you just count the goals. It's a lot more complex and nuanced than that. Simply put, if CureVac made a wrong call in its COVID vaccine development, but had the right vision before BioNTech even started to develop Comirnaty, then its case may be perfectly meritorious and patent law may then be more meritocratic than the marketplace. We just don't know yet.

Here's the U.S. complaint:

https://www.documentcloud.org/documents/22121278-22-07-25-pfizer-biontech-dj-non-infr-complaint-v-curevac

CureVac's German complaint is not seeking an injunction--just fair compensation. CureVac emphasized that it never intended to disrupt the development or delivery of COVID vaccines in the midst of a pandemic, and that the company waited even with its complaint for monetary relief until this point. That makes sense.

At the same time, Pfizer and BioNTech have made a strategically very smart move, too:

• With its narrative that portrays CureVac as a sore loser (without using that term), the complaint is directed not only at the court of law (and the jury to be selected further down the road) but also at the court of public opinion.

• Pfizer is headquartered in New York but has a home-field advantage anywhere in the United States, and BioNTech has one of its two U.S. offices in the Bay State--and that's where CureVac's U.S. office is based, so it would be hard for CureVac to get the case transferred to another district.

  As a cross-jurisdictional patent litigation watcher I don't agree with CureVac's choice to bring only a Dusseldorf case. If CureVac had brought the first U.S. case as well, it could have tried to pick the most favorable district. Some of the preferred districts for patent holders (Eastern District of Texas, Western District of Texas, Eastern District of Virginia) would probably not have been defensible choices as they are merely target markets for Pfizer and BioNTech just like, say, the Southern District of Alabama. But CureVac could have sued in the Southern District of New York (Pfizer HQ), which has recently also been a pretty good venue for patent holders to assert their rights, or in the District of Delaware (Pfizer is a Delaware corporation, as are possibly other parties).

• Pfizer and BioNTech are seeking declarations of non-infringement, not of invalidity. That makes sense for two reasons: U.S. juries are very hard to persuade of invalidity contentions, and when you are already being sued in Germany and don't know whether the patentee may at some point throw in an additional prayer for injunctive relief, any determinations by foreign courts that confirm the validity of the patents-in-suit will dissuade a German court from staying the infringement proceedings pending a local invalidity action. Should Pfizer and BioNTech have reasonably meritorious invalidity arguments, they might instead file for PTAB inter partes reviews.

At this point it looks like Pfizer-BioNTech is the more sophisticated side here, which may be attributable to Pfizer's ample experience more than anything else. But litigation tactics won't prove decisive in the event that CureVac truly did pioneer mRNA-related technologies relevant to mRNA-based COVID vaccines.

It also remains to be seen whether CureVac will enforce its intellectual property rights against other COVID vaccine makers, which would be the logical thing to happen if CureVac's patents are truly mRNA-essential, and whether other companies holding mRNA-related patents will sue BioNTech and/or Pfizer.

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Unease growing in Europe over 'America First' agenda behind O-RAN initiative: telecommunications infrastructure treated as geopolitical football

Yesterday was the first of two days of a conference organized by the European University Institute's Florence School of Regulation on Transatlantic Relationships in Innovation Policies: Converging Agendas?

I tuned in because "IP and standard-setting" (with a focus on 5G) were announced as key topics. However, that first day, apart from a keynote by Qualcomm's Alex Rogers (in which he called out Apple on taxing app developers while complaining about SEP royalties), was largely about technology-related trade policy in general, and the O-RAN initiative (for modularizing telecommunications network infrastructure) was actually the key topic.

About two months ago I discussed the implications of O-RAN for patent licensing and litigation. Since then, I've seen two articles in German media that reflect European skepticism of OpenRAN:

1. Two weeks ago, Frankfurter Allgemeine Zeitung published an opinion piece on O-RAN by Professor Torsten Gerpott, who teaches strategic and telecommunications management at a German university. He does not consider subsidies for O-RAN projects a wise use of German taxpayers' money as it does nothing to increase the country's digital sovereignty. In Professor Gerpott's opinion, Open RAN is more of a geopolitical football than a solid technological concept. To that expert it's pretty clear that open interfaces do not make an entire network infrastructure open: if you connect multiple black boxes over open standards, you need more energy and still depend on those black boxes--and on a systems integrator, which is a similar dependency as a single-vendor relationship. In other words, it's not as "open" as the name suggests, and it's certainly not the same as relying on 100% open-source modules.

   Professor Gerpott mentions the absence of evidence that "open" network concepts have enabled major new entrants to compete in infrastructure markets. But in any event, he says, breaking up network infrastructure with O-RAN is "not necessarily desirable from an EU point of view as two European vendors--Ericsson and Nokia--have a strong market position." Instead, the O-RAN architecture would benefit U.S: tech companies and platform operators that do not play a major role in the current RAN market.

   The op-ed concludes that O-RAN is not a "(r)evolutionary network architecture driven by technical ideas" but rather "a geopolitical approach in order to shut out Chinese vendors and strengthen U.S. tech companies." The headline of that article warns against "false hopes" connected to Open RAN.

2. Just two days ago German tech news website Golem reported on statements by Vodafone's chief technology officer, who said Vodafone did not want to "prematurely commit" to Open RAN. Vodafone is actually running some Open RAN trials in a few European countries, but is concened about "losing our two major vendors" Nokia and Ericsson. The CTO said Vodafone "does not want to shift the emphasis to North America[n vendors]."

   A Nokia executive who spoke at the same event (hosted by the German ministry in charge of infrastructure) said that "despite lots of progress a lot remains to be done" concerning O-RAN, as some technical hurdles have yet to be overcome.

Against the background provided by those two articles, some of what I heard yesterday at that transatlantic trade policy conference was easier to understand:

• The European Commission's head of unit for trade relationships with the USA and Canada, Matthias Jørgensen, didn't specifically mention O-RAN. He did, however, note that the U.S., Europe and other major players on the global stage all want digital sovereignty (yet also aspire to be world market leaders). And he noted different perspective on, for instance, platform regulation, though I think those differences may be greater between the executive governments on both sides of the pond than between lawmakers (for example, the "Open App Markets Act" in the U.S. won't necessarily be weaker than the EU's Digital Markets Act).

  Mr. Jørgensen noted that the EU had a better relationship with the Biden Administration than its predecessors, but that "America First" was still the U.S. approach to trade policy.

  I find it hard to see how the EU would embrace O-RAN, a Trumpian initiative that the Biden Administration appears to be supportive of, given the damage it might do to Ericsson and Nokia only to create opportunities for certain U.S. hardware makers and cloud operators like Amazon (which also had a speaker at that conference).

  Also, the European Commission is known to be involved with O-RAN at the ETSI level, and it is the Commission's responsibility to consider all implications of a proposal like O-RAN, including the security aspects of relying on (non-European) cloud service providers.

• Deutsche Telekom's EU affairs VP Roland Doll sounded a bit like Vodafone's CTO in the Golem article I mentioned further above. It looks like Deutsche Telekom, too, would want to ensure that European vendors continue to be major players in the telecommunications infrastructure market. Deutsche Telekom is concerned that the only major cloud service providers in the world are American (Amazon, Microsoft, Google), and Europe cannot compete in that field.

It's easier to see why Europe isn't enthusiastic about O-RAN than to argue that Europe stands a lot to gain from it. As long as that is the situation, there is even a risk of a split, with different world regions potentially developing their own standards and relying on their own vendors.

This could have profound implications, ultimately even for cellular standards, so I'm going to keep an eye on developments related to O-RAN.

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Trump's standards czar makes unbelievably stupid statements in amicus brief supporting Ericsson against Samsung's Federal Circuit appeal of anti-antisuit injunction

Be warned that further below you're going to read about a couple of insults to human intelligence.

One week after Ericsson responded to Samsung's Federal Circuit appeal of an anti-antisuit injunction from the Eastern District of Texas, a former Trump Administration official was the first of what may be a long list of amici curiae ("friends of the court") supporting the Swedish failed handset maker against the Korean electronics giant (this post continues below the document):

21-04-09 Amicus Brief Walte... by Florian Mueller

Under President Trump, Dr. Copan was Under Secretary of Commerce for Standards and Technology, which means he also served as Director of the National Institute of Standards and Technology (NIST). NIST joined the DOJ's Antitrust Division under Assistant Attorney General Makan Delrahim and the USPTO under Andrei Iancu (who has, as I predicted, returned to the L.A. patent litigation firm of Irell & Manella, which typically represents NPEs) in replacing a really good and balanced policy statement on standard-essential patent (SEP) enforcement with pro-patentee crap.

While I disagreed with that policy paper, it was undoubtedly well-thought-out in its way. That's more than the authors of Dr. Copan's amicus brief in support of Ericsson can say. That amicus brief contains at least two statements that are--no kidding--among the absolutely most stupid things I've ever read in the SEP context.

The word "provincial" occurs four times in the Copan brief, in each case as a derogatory attribute to the Wuhan Intermediate People's Courtin China that granted Samsung an antisuit injunction against Ericsson in December:

• "appellant Samsung’s anti-suit injunction ('ASI') from a provincial Chinese court" (emphasis added)

• "to allow a provincial Chinese court to unilaterally determine a global FRAND rate" (emphasis added)

• "Samsung unilaterally sought to use a Chinese provincial court" (emphasis added)

• "Samsung’s request that a provincial Chinese court determine a global FRAND rate" (emphasis added)

Theoretically, the word "provincial" could be meant non-judgmentally in terms of "relating to a province." However, intermediate people's courts are generally not run by the provinces of China, but (according to Wikipedia) "found at the level of prefectures, autonomous prefectures, and municipalities across China." Wikipedia lists the relevant court as the "Wuhan City Intermediate People's Court" (emphasis added). The English translation of the name of Chinese courtss at the level of the provinces is "high people's court" (see Wikipedia).

Therefore, the adjective "provincial" must be understood in a derogatory sense. Now, I wouldn't necessarily blame someone who would argue in a U.S. technology industry dispute that a state court in a small and thinly-populated state might be "provincial" by comparison to, say, the United States District Court for the Northern District of California.

But for someone supporting Ericsson against Samsung, it's utterly stupid to call the Wuhan court "provincial":

• Wuhan is the most populous city in Central China with a population of well over 11 million, and one of the ten largest Chinese cities.

• Ericsson obtained the injunction at issue in the thinly-populated Eastern District of Texas, or more specifically, from Judge Gilstrap in Marshall, TX, a "city" with a population of only about 20,000--and even if you throw in the surroundings (Harrison County), that's just about 65K people. The other "cities" in which you find federal courthouses in that district are Beaumont (population size: 120K), Lufkin (35K), Sherman (42K), Texarkana (35K), and Tyler (105K; that's the federal judiciary district's HQ). The entire district has only 3.5 million inhabitants according to the DOJ.

There's absolutely no factual basis for calling the Wuhan court "provincial" in what is essentially a venue fight in which the alternative favored by Ericsson is Marshall, TX.

Let me show you a second absurdity:

"Companies in that chain 'invested $1.8 trillion in infrastructure and R&D from 2009 through 2013, relying almost exclusively on private-sector funding.' Id. Those investments are reportedly protected by more than 150,000 declared SEPs." (emphases added)

If patents can protect anything in that context, it's R&D. But infrastructure investments are not protected by patents in any way--in fact, patents can be enforced against infrastructure, so they represent a threat: a sword, not a shield.

I didn't plan to discuss the details of those amicus briefs before I would have had the opportunity to read them all, and to reflect. But this stuff is so crazy I wanted to comment on it immediately.

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Op-ed by EU Commission president reflects floating border between censorship and competition issues surrounding digital platforms

Policy makers and opinion leaders increasingly distinguish between the desirability (or at least understandability) of major digital platforms blocking Donald Trump's accounts and the broader implications of private-sector regulators having such enormous power. It already came a bit of a surprise that German chancellor Angela Merkel, never one to like Trump's political positions and style, raised concerns over Twitter's decision to ban The Donald (for my position on impeachment, see this recent post). Last week, European Commission president Ursula von der Leyen said in a German-language op-ed that it might have been "tempting" for Twitter to block Trump's account, but such a far-reaching restriction of the right to free speech shouldn't be decided by companies: the framework must be set by lawmakers.

President von der Leyen's op-ed (which is a reply to an open letter by Axel Springer CEO Matthias Doepfner). Without making a clear distinction between censorship and competition, she acknowledges Mr. Doepfner's concern over Big Tech's unfettered power, and touts the Commission's proposals for a Digital Markets Act and a Digital Services Act.

On the subject of the Digital Markets Act I strongly recommend this panel discussion hosted by the UK-based Centre for Competition Policy. One of the panelists, Professor Damien Geradin of Brussels-based Geradin Partners, regularly writes about these policy topics on his Platform Law Blog, which I strongly recommend (just like I've repeatedly recommended Professor Thomas Cotter's Comparative Patent Remedies blog on patent remedies and, particularly, FRAND licensing issues.

President von der Leyen's op-ed shows an interesting parallel between the platform regulation and competition discussions in the United States and in Europe: free speech issues get conflated with antitrust enforcement and antitrust-like regulatory interventions such as those envisioned by the DMA--and while it's a rule of thumb in politics that the broader your range of issues is, the smaller your coalition will be, this context is a rare exception: here, the combination of those issues actually helps build a consensus. An oversimplified way to put it is that Twitter's Trump ban increases the regulatory risk for online platforms like Facebook, but also the likelihood of competition enforcement against other tech companies and business models:

• In the U.S., there's an ideological divide: Democrats are concerned about antitrust underenforcement (I very much agree with what Senator Klobuchar said about that in Justice Barrett's confirmation hearing) while Republicans fear that competition enforcement often amounts to governmental overreach and runs counter to Ronald Reagan's "Get government out of the way" approach. But more and more Republican politicians are uncomfortable with the notion of mostly left-leaning Silicon Valley companies (ab)using their Section 230 freedoms in order to suppress free speech by conservatives. Theoretically, those are separate topics, but practically, they're part of a wider #techlash agenda. That agenda has better chances of being implemented without a Republican knee-jerk reaction to competition enforcement.

• In the EU there's a divide between its member states. In France and other Mediterranean countries, the idea of government running or at least directing everything is more popular than in Germany, the Netherlands, and the Nordic countries. With the UK, the most clearly pro-free-market country in Europe has left the EU. And in Germany, the political spectrum as a whole has shifted very much to the left. Seriously, the actual policy differences between President Biden and his predecessor are even smaller than between Biden and Merkel (who is actually a center-left politician, though nominally center-right). The political climate in Europe is definitely amenable to initiatives such as the DMA and DSA (which I, by the way, welcome in principle, though the devil is in the details). But to the extent any politicians might have reservations, concerns over Big Tech undermining democracy and free speech are sure to bring everyone together.

I won't go into detail on particular political initiatives for now. The purpose of this post is just to highlight a certain parallel between developments in the U.S. and in the EU.

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Subjectiveness of app reviews: Viral Leaders Trump & Johnson (satirical fun game) approved by Google, inexplicably found objectionable by Apple

[Update on 02/09/2021] A subsequent, refocused version of Viral Leaders, the "Impeachment Edition" (on the occasion of the Senate impeachment trial of former president Donald Trump), was approved by Apple. [/Update]

One of the issues raised in the Coronavirus Reporter v. Apple antitrust complaint in the District of New Hampshire is the allegation that Apple's app reviews are "arbitrary and capricious" to the extent that one app might be rejected though a similar or more problematic app is approved. I've also heard people say this about Google, and I can prove at least an inconsistency with respect to the application of its rule on COVID-related metadata, where a game is allowed to use the term "pandemic" in its Google Play Store description though this is expressly prohibited by Google unless an app is (co-)published by a governmental or recognized healthcare entity, which isn't the case.

Some criticize Apple and Google for collecting 30% of some companies' in-app revenues while others get a free ride even though, as those critics argue, they should be subjected to that "app store tax" as well. I haven't formed an opinion on that assertion yet, but it wouldn't surprise me if it was true.

One week ago, Apple's App Review Department sent my app development company the following email:

"Your app, Viral Leaders Trump & Johnson 1.0.0 (0), has been reviewed, but cannot be made available for TestFlight beta testing.

"For details, or to contact App Store Review, visit Resolution Center in App Store Connect."

In App Store Connect, Apple merely referenced its app review guideline 1.1 Objectionable Content. No further explanation given--and we weren't even allowed to test that app via the TestFlight beta version distribution system.

Google, however, approved it about 24 hours ago for the Google Play Store. It had previously been approved for testing on the 17th (Sunday).

Seriously, there is nothing objectionable about Viral Leaders Trump & Johnson. It's simply a special edition of my Viral Days real-time strategy game. In Viral Days, you take care of little cartoony people walking the streets of a fictional town during a virus pandemic. In that game you can buy and distribute masks, quarantine or hospitalize people, disperse groups, and impose lockdowns. It comes with 25 levels. Now, Viral Leaders has just one level, and features cartoony versions of ex-president Donald Trump and British prime minister Boris Johnson. Both famously caught a virus last year after downplaying its significance. In Viral Leaders, they spread the virus to ordinary citizens, so you best send them home as soon as you can afford it (2,000 virtual coins).

The politicians stop from time to time to say something. Many of those quotes are real, while others are just fun, but there's nothing offensive in the game.

Here are a few social media posts so you can see how far this is from "objectionable content":

In this little fun game, Donald #Trump can't deal with the fact that Joe #Biden is now in the White House. #SendTrumpHome! Download the #Android app, or play the browser game on a Mac or Windows PC. https://t.co/bWEvp0vZkO (We also made an iOS version, but Apple disallowed it.) pic.twitter.com/G9a97nTCIr

— Viral Days (real-time strategy game) (@ViralDays) January 22, 2021

#Trump #Pelosi #Impeachment #ViralLeaders pic.twitter.com/O6zmTivKiT

— Viral Days (real-time strategy game) (@ViralDays) January 22, 2021

Sieh dir diesen Beitrag auf Instagram an

Ein Beitrag geteilt von Viral Days Game (@viral_days_game)

When we submitted the app, we provided to Apple a complete list of all the things those politicians say in the game. If Apple had taken issue with any particular ones of those utterances, they'd have let us know. So Apple's concern must have been more fundamental.

But what is it? It can'be about the virus context, given that one of the most popular games on the App Store, named Plague Inc., is traditionally (they now call it the "main game") about "infect[ing] the world". By contrast, Viral Leaders, just like Viral Days, is all about preventing the spread of the virus.

It can't be about poking fun at Trump either. In my game, all that one can do to him is click on him, spend 2,000 virtual coins, and then he says "I'm fired!" and goes home. There are various Trump fun apps on the App Store, and at least one of them, named Slap Donald Trump, even depicts and thereby encourages physical violence against him. The icon of that app (which you can see if you click on the link I just provided) shows a photo of Donald Trump's face, a hand hitting him, and that side of his face turning red. If Slap Donald Trump is allowed, how in the world can Viral Leaders Trump & Johnson be deemed objectionable?

I immediately thought of this when I read in the Coronavirus Reporter v. Apple complaint that "the Apple App Store violates antitrust law by disallowing third-party applications using arbitrary and capricious standards."

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Make Trolls Great Again: Antitrust Assistant Attorney General Makan Delrahim serves Patent Trolls, not President Trump

As the most vocal Trump supporter among intellectual property bloggers, I want Four More Years for #45, but should "Quid pro quo Joe" win, I would take some comfort in the fact that Antitrust AAG Makan "Macomm" Delrahim would have to return to private practice. His shameless and increasingly distasteful pro-patent-troll lobbying is a disgrace for the entire Donald J. Trump Administration. Instead of supporting America's innovation economy and protecting American consumers (all of which is even more important in the face of the coronavirus crisis), he's advancing an agenda that runs counter to the President's focus on creating jobs. Patent trolls are all about rent-seeking for a few shrewd businessmen--Judge Posner likened them to "highwaymen"--and don't create or sustain jobs; the real economy--with Apple and Intel being two particularly good examples--needs to be protected against patent abuse, but the United States now has an "antitrust chief" who couldn't care less about innovation, competition, jobs, and consumer welfare. He's a lobbyist for patent trolls--not because he's got any connection to trolls, but because his former and presumably future client, Qualcomm, shares many strategic interests with trolls, which is why Qualcomm is a member of pro-troll lobbying groups whose membership consists mostly of trolls.

Last month, probably for the first time in U.S. history, the federal government threw its weight behind a dubious foreign organization against two of America's most innovative companies. The DOJ's antitrust division filed a Statement of Interest (i.e., an amicus curiae brief in the name of "the United States") supporting Fortress and its various patent trolls, such as Uniloc, against Apple and Intel. The Uniloc group (just one part of foreign-owned Fortress's holdings) has brought about 600 (!) lawsuits, and courts have exposed some its lies. Just two examples--the first one is about Uniloc's connection to the Eastern District of Texas, which they made up in part just to keep a lawsuit there:

"Mr. Burdick, Uniloc's only party witness residing within the Eastern District of Texas, does not spend the majority of his time in the Plano office. [...] Mr. Burdick spends equally as much time in Plano, as he does in Boise, Idaho and in southern California. [...] In addition, Mr. Etchegoyen [the CEO of Uniloc Luxembourg] spends about twenty percent of his time in either Newport Beach or Irvine, California and owns a residence in Newport Beach, which he uses when he 'is doing business in Orange County.' [...] Both Mr. Burdick and Mr. Etchegoyen have held around one hundred 'top-level strategy meetings' in southern California, for Uniloc business purposes. [...] Mr. Etchegoyen separately travels to southern California every month to meet with Mr. Turner, Uniloc Luxembourg S.A.'s CFO. [...] All of these facts fly in the face of Uniloc's prior representations: that Uniloc had only one full-time employee, Tanya Kiatkulpiboone, working at its office in Irvine, California as of April 2017 [...]; that Mr. Etchegoyen has lived in Hawaii since well before the filing date of the Complaint and does not maintain a residence in California [...]; and that Mr. Burdick does not work in California [...] ; and that Apple 'attempts to exaggerate Uniloc's ties to California'" (emphasis added)

Source: Memorandum Order and Opinion at 16-17, Uniloc USA, Inc. v. Apple Inc., No. 2:17-cv-00258 (E.D. Tex. Dec. 22, 2017)

A judge also suspected that Uniloc creates shell entities only for the purpose of letting them go bankrupt in case a prevailing defendant obtains an award of legal fees:

"The Court suspects that Uniloc's manipulations in allocating rights to the patents-in-suit to various Uniloc (possibly) shell entities is perhaps designed to insulate Uniloc Luxembourg from any award of sanctions in the event Uniloc loses this litigation (or some substantial part thereof)." (emphasis added)

Source: Uniloc 2017 LLC v. Google LLC, No. 2:18-cv-00553 (E.D. Tex. Jul. 1, 2019), Dkt. 28 Exhibit V

When a company--particularly a foreign organization--engages in such shady practices, "the United States" (federal government) should not intervene--much less at the district court level--to support that kind of party. But "Macomm" Delrahim is out of control, and Attorney General Barr may not even be aware of what's going on (and, especially, going wrong).

Apple and Intel have replied to the DOJ's brief, but not on the basis of the issues I just raised. The purpose of Apple and Intel's submission is to point out some major inconsistencies

• between positions taken by the DOJ in the past in similar contexts and the pro-foreign-troll anti-American-innovators brief filed last month;

• between the DOJ's current merger guidelines and the position taken in the pro-foreign-troll anti-American-innovators statement; and

• even between two sections of that pro-foreign-troll anti-American-innovators submission (which is just absurd and shows that the DOJ's Antitrust Division is now only seeking to support certain types of parties as opposed to defending overarching principles).

On the first part of Apple and Intel's responsive filing, a footnote provides examples of AAG Delrahim's "expanded amicus program through which the Department increasingly files amicus briefs":

• Motion for Leave to File Statement of Interest, Continental Automotive Systems, Inc. v. Avanci, LLC, No. 3:19-CV-02933-M (N.D. Tex. Feb. 27, 2020);

• Statement of Interest of the United States; Lenovo (United States) Inc. v. IPCOM GMBH & CO., KG, No. 5:19-CV-01389-EJD (N.D. Cal. Oct. 25, 2019); and

• Notice of Intent to File a Statement of Interest of the United States of America, U-Blox AG v. Interdigital, Inc., No. 3:19-CV-0001-CAB (BLM) (S.D. Cal. Jan. 11, 2019.

The Apple-Intel brief doesn't even mention the DOJ's interventions on Qualcomm's behalf, but Qualcomm is not a troll. In the three cases listed above, the DOJ supported trolls (Avanci is a pool/platform company, some of whose members are trolls).

Whatever Judge Edward Chen ultimately decides, Apple and Intel's reply may have helped to mitigate the impact of the DOJ's Statement of Interest. But Mr. Delrahim will likely continue to make such disgraceful and distateful filings with courts all across the United States, unless and until he gets replaced.

Finally, here's the Apple-Intel brief:

20-04-13 Apple Intel Respon... by Florian Mueller on Scribd

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France seeks to drag rest of Europe into senseless trade war with U.S. over ideologically-motivated digital services tax

Yesterday, the United States Trade Representative (USTR)--which is the title of a presidential appointee at the rank of an ambassador (presently Robert Lighthizer), who has an entire agency, the Office of the USTR, working under him--published the findings (PDF) from the first segment of its Section 301 (Trade Act of 1974) investigation into France's Digital Services Tax. In July I reported and commented on the initiation of the investigation.

The USTR's proposed action "includes additional duties of up to 100 percent on certain French products," such as French wine. The approximate annual trade volume of those goods is $2.4 billion. Today, the French government threatened retaliation, seeking to leverage the collective economic power of the EU (which leverage is the whole reason why French politicians pretend to be pro-European) against the U.S., but President Trump remains optimistic that he'll "be able to work it out."

There are some European countries whose existing or envisioned digital tax regimes may come under pressure, so France will have some allies. But there are also many European countries that simply cannot have an interest in an escalating trade war with the U.S. only to defend of one of failing Macron's pet projects.

I've read the USTR's report in detail. The comments submitted by various stakeholder representatives to the USTR during the course of the investigation are also worth reading (you can find them on the public docket).

The U.S. government has reason and logic on its side, as well as longstanding principles of international tax and trade policy. By contrast, France has almost nothing to offer but envy and ideology.

I wrote "almost" because there is a problem that does need to be addressed, and the U.S. doesn't deny it as it's affected by it as well: it's called "base erosion and profit shifting" (BEPS). The OECD is working on that one, and it's a difficult one to tackle. Donald Trump has had some success in that regard: he basically struck a deal with large U.S. corporations under which he gave them a tax rate that made it make business sense for them to repatriate some of the profits they had parked abroad, particularly in Ireland. That kind of deal, however, is only an option if you have a truly strong economy, as the U.S. does and France doesn't to nearly the same extent. It also presupposes a political leader who, like Donald Trump, takes a pragmatic, results-oriented, non-ideological perspective.

President Trump is standing on higher ground here. He's a frequent and sometimes fervent critic of social media giants like Facebook and Twitter, who also in my observation tend to suppress conservative voices by applying dual standards. But as a matter of principle, those compüanies have to be taxed primarily in the U.S., not in France.

The primary obstacle France faces in the BEPS context is simply the European Union. Just like its monetary union is an abysmal failure (as the dysbalance of the European Central Bank's TARGET2 system and ever more negative interest rates and their devastating effects on many low-income earner's retirement savings prove) because it came too early, the "Single Market"--though it does give the EU a lot of political power (500 million reasonably affluent consumers)--is flawed because it has no safeguards in place against abusively low tax rates by small member states: neither can the EU force them to impose higher taxes (though in Ireland's case there would have been a window of opportunity when the country needed a bailout) nor is there even a way of excluding a country from the Single Market if it doesn't meet certain demands (probably the only club in the world that can't get rid of antisocially-behaving members).

There's a parallel between France's Digital Services Tax (DST) and the ill-conceived "state aid" case against Ireland--in reality, against Apple: both measures were taken just because the EU couldn't agree on bloc-wide minimum corporate tax rates. Commissioner Vestager (who's great in many other ways, but misguided in this context) and French president Macron wanted to "do something" at any rate, so the Danish commissioner made up a "state aid" case out of thin air--the Court of Justice of the EU may very well overturn it entirely or for the most part--and the French president had his parliament put that DST in place.

Even that controversial Article 13 (now 17) of this year's EU copyright reform falls in that category. Advocated most aggressively by France, it basically seeks to impose a copyright-based levy on digital content platforms, knowing that Europe's market share in content consumed by European users is greater than its share in platforms. It's a DST by any other name, though not as obviously discriminatory as France's DST.

The biggest mistake those unqualified French politicians made in this context is that they made their intent to discriminate against U.S. companies very clear. The USTR's report refers to ample evidence. At all stages of the political process, and at all levels, French politicians left no doubt that they wanted to target major U.S. digital economy players while defining all thresholds and categories to the effect of not affecting any other companies with very limited exceptions (such as Spotify's advertising-based free music service).

With respect to the discrimination, the following quote from an aide to French finance minister Bruno Le Maire is also telling--it was his response to someone expressing concern over the possibility of Amazon passing on the DST to third parties selling products via its platform:

"“[T]his response makes Amazon less competitive, and so much the better, because its monopoly worries us. [...] This may allow other platforms to recover some of their customers."

It's highly unusual--and equally objectionable--for a government to state publicly that a tax regime is designed to redistribute not only money, but market share.

The French DST is also structurally more discriminatory than the EU's proposed DST (which failed to receive unanimous support) would have been.

The USTR's report makes a very good point: for low-margin businesses, a tax based on revenues (not on sales like a value-added tax, which would affect everyone, and not on profits, which only affects profitable companies) disadvantages low-margin businesses and may even force some of them to exit the French market.

The practical implications of France's DST are also insane. Companies like Amazon or Google would have to put new accounting systems in place so they can track, for the purpose of French DST, whether a transaction came from a user who was on French soil at the given time (even though that may sometimes be the only connection to France--the user may be foreign, and the seller of a good may be foreign). What's worse is that, contrary to longstanding principles of taxation, the French DST is put in place retroactively, and if some companies didn't have the related user-location-based revenue tracking in place before July, then some rough and potentially unfair estimates of the portion of their first-half-of-2019 revenues subject to French DST will have to be performed.

As for who will be affected and how much, the largest volume is presumably digital advertising. Here, the affected players (according to the USTR's report) are Alphabet (Google, YouTube), Amazon, eBay, Facebook (also including Instragram), Microsoft, Snapchat, TWitter, and Verizon (Yahoo)--and only one French company, Criteo.

Where margins are a greater problem, and volumes lower than in digital advertising, is the "marketplace" category. The French law defines marketplace services in such a way that even huge French retailers who sell products directly won't be affected--it's about those who perform eBay-like intermediary services. Here, most are from the U.S., and a few from Japan and other European countries than France. The affected U.S. companies in this context are AirBnB, Google with respect to the Android Play Store (app store), Amazon's retail involving third parties selling via its platform, Apple's App Store, Booking Holdings (booking.com, OpenTable etc.), eBay, Expedia, Groupon, Match Group (Match, Meetic, Tinder), Sabre, Uber, and ContextLogic (Wish). There will be some impact on China's Alibaba, Spain's Amadeus (business-to-business travel services), Germany's Axel Springer media conglomerate (which owns a French real estate site named Seloger) and the Zalando retail site, Japan's Rakuten and Recruit, the Netherlands' Randstad (recruiting), Norway's Schibsted (Leboncoin), and the UK's Travelport.

All in all, 17 of the 27 company groups expected to be covered by the DST will be U.S.-based, and only one French-based.

I wish all of the companies for whose rights President Trump is standing up here were grateful. Some of them are run by ultraliberals who will likely just take this for granted. Some others are more constructive. But should the Democratic Party nominate "Fauxcahontas," one of whose stated goals is to break up various Big Tech players, it will be interesting to see whom Silicon Valley PACs will ultimately donate to...

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United States Trade Representative launches investigation into France's digital tax for good reasons--and should look into copyright law, too

Yesterday the United States Trade Representative (USTR), Robert Lighthizer, announced, officially at the behest of President Donald Trump, the initiation of a Section 301 investigation (i.e., an analysis of whether a foreign government violates a trade agreement or acts unreasonably or discriminatorily against U.S. commercial interests) of France's digital services tax. The next formal step will be a Federal Register notice. This is what Mr. Lighthizer said:

"The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies. [...] The President has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce."

The President and the USTR are rightly concerned. France, with its almost plan-based highly-centralized economy and statist approach (= the opposite of Reagan's take that one has to get government out of the way) is an abysmal digital-industry failure, and TIMSS, the leading international math skills analysis, shows that French students are pretty much at a level with Third World countries, which means things are only going to get worse in the "Hexagon." Geographically, France is part of Europe; in educational terms, it's the worst country in the entire EU. By comparison, Singapore takes 25 times as many students (relative to the total number of students) to the top-performing level; Russia, ten times as many; and even the U.S., with its oft-criticized educational systems, seven times the number of France (again, this is a relative measure, so large countries don't have any advantage). While Germany performs 2.5 times as well as France (still far behind not only East Asia but also the U.S. and even a country like Kazakhstan), its politicans are incompetent and/or ideological enough to believe that France is their best partner in innovation policy, instead of trying to stay away from the failed French approach as much as possible.

There are two French computer game makers I think highly of: Ubisoft and (in the segment of "snackable" minigames) Voodoo.io. Other than that, I can't even think of a French technology product that would matter.

The French digital-tax initiative is ill-conceived because they don't want to tackle the real issue. The real issue is simply that the EU as a whole is a fundamentally-flawed supranational structure that does more harm than good. I sometimes recommend a great Wall Street Journal article (which doesn't even mention all of the problems), "Incredible Shrinking Europe."

Just like it was stupid and irresponsible in the first place to put a common currency in place without a common economic policy (as a result, the European Central Bank hasn't increased its interest rates even once in more than a decade, while the U.S. had half a dozen hikes during the same period), it was also incompetent and irresponsible to create a "Single Market" without some minimum tax standard or, in the alternative, an easy way to exclude members taking unfair advantage of this by positioning themselves as a low-tax access point to a market of 500 million consumers. As a conservative I'm all for tax competition, but fair tax competition and not just leeching.

The EU and the large member states of the eurozone are so poorly run that they didn't even seize the historic opportunity they had when Ireland needed a bailout. They could have conditioned the bailout on Ireland agreeing to some minimum tax standard. Obviously, leeches like Luxembourg (Juncker's country) wouldn't have liked this anyway, but Ireland is the #1 problem in this regard.

The Apple "state aid" case is the only crazy thing Mrs. Vestager did during her first term (other than that, I disagree only gradually, not fundamentally, such as with respect to some aspects of the Android case; I'm now looking forward to her second antitrust hammer--the final one for this term--coming down on Qualcomm soon; and on Twitter I repeatedly voiced the view that she was the best potential candidate for the presidency of the European Commission). That Apple-Ireland case has nothing to do with "state aid" and everything to do with "buyer's remorse" in the sense of the EU now seeing the problems that a Single Market without a common fiscal policy (at least a minimum tax standard) creates. Apple is not responsible for the EU's structural issues.

What France is doing with its digital tax is really odd. It's not a sales tax because there is no physical sale occurring in France when Facebook, for instance, displays an advertisement. Nor is it a tax on profits. Instead, France argues that because major digital platform companies are very profitable, foreign entities owe France a percentage of revenues attributable to the French market.

France wanted to make this happen at the EU level, but never got real traction as Germany was reluctant to support this with a view to potential backlash affecting its automotive industry. So France decided to implement something at the national level, and I'm glad the U.S., under its best president in decades, will seriously consider some retaliation in order to dissuade France from this idiocy. Maybe the U.S. International Trade Commission, with its investigative resources, will also be of help in the process. The top-listed candidate of Macron's party in this year's EU Parliament elections made it very clear that they view Google, Amazon, Facebook and Apple as enemies of the state, or collectively as the equivalent of a rival world power, all of which is downright insane.

While I'm not going to do any more copyright reform-related posts on this blog (maybe a new blog further down the road), I would like to just say that Articles 15 and 17 (previously Articles 11 and 13) of the EU Copyright Directive adopted this year are also the equivalent of a digital tax discriminating against U.S. Internet platform makers. France was the driving force behind Article 17 (upload filters), while Germany was more interested in Article 15 (link tax). In fact, France politically blackmailed Germany by threatening to block the Nord Stream 2 pipeline deal with Russia at the EU level if Germany hadn't supported Article 17 of the copyright bill. That is not a conspiracy theory. It was confirmed by reliable sources and reported by Frankfurter Allgemeine Zeitung, and it was obviously no coincidence that both the gas pipeline issue and copyright reform were the only two "A items" on the EU Council's April 15, 2019 agenda (so as to make it clear to Germany, which was having second thoughts, that derailing copyright reform would trigger some energy-related blowback).

The "upload filter" paragraph of the copyright bill is practically a digital tax because it creates a liability regime that is so strict that even the term "strict liability" the way it is reasonably understood in the U.S. would be an understatement. It gives enormous leverage to copyright holders (many of whom are European collecting societies and publishers) against major Internet platform companies in licensing negotiations. There are, as we all know, many very significant U.S. copyright holders (Hollywood, music industry etc.), and they'll benefit from this, too, but the European share of copyrighted works consumed in Europe is hugely greater than the European share of digital platforms used by Europeans. Therefore, this is another means of unreasonably and discriminatorily sucking money out of major U.S. Internet platform companies. It's like the digital tax, but indirect: collecting societies and publishers will initially receive the money, but obviously this will result in incremental tax payments in Europe, including France.

EU member states have some limited flexibility--a modicum of wiggle room--regarding the transposition of Article 17 into their national laws. France is already pressing ahead with the most draconian and unbalanced implementation imaginable, and other European countries may follow, though there's clearly less enthusiasm for this elsewhere.

I will follow the Sec. 301 investigation of the digital tax issue, and I strongly recommend to major Internet platform companies and the industry bodies representing them to raise the EU Copyright Directive, or at least its transposition into French law, in this context. It really is an indirect digital tax. Doing so now might dissuade other EU member states from adopting France's copyright extremism. While that is not what President Trump was elected for, it would happen to have significant benefits for European Internet users, too.

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FTC chairman recused from Qualcomm antitrust litigation: The Capitol Forum

The Capitol Forum (with whom I'm connected on social media) has just broken the following news:

"Qualcomm: Simons Recused from FTC v. Qualcomm Litigation; Democrats at FTC Have De Facto Veto Power Over Consent Agreement"

The subscription service cites "sources familiar with the matter." They contacted spokespeople for two FTC commissioners and Qualcomm, but they declined to comment or elected not to respond.

One of the sources said the remedy resulting from a settlement could involve arbitration. It's unclear what exactly would be arbitrated. The question of whether Qualcomm must extend a license to rival chipset makers such as Intel is binary and does not lend itself to arbitration, and I just recently, in connection with Huawei v. Samsung, reiterated my longstanding position on coerced FRAND arbitration.

I don't know what exactly caused Chairman Simons's recusal. I do, however, have concerns about the ties of certain key FTC officials (not commissioners, but nevertheless highly influential) with Qualcomm.

While I can imagine why the Capitol Forum's headline puts the chairman's recusal into the context of a potentially partisan vote, I absolutely positively don't view this here as a left-right, conservative-liberal, Republican-Democrat issue. Case in point, no senator was a more positive force in the previous fight against SEP abuse (when Motorola Mobility and Samsung were the culprits) than Sen. Mike Lee (R-Utah). I would recommend to any Republican concerned about the Qualcomm case being a "Democrat" affair to read some of the letters and listen to some of the speeches Senator Lee gave at the time.

No IP/antitrust blogger I know supported Donald Trump's campaign as early as I did in a January 2016 blog post. On social media, I've also declared myself a supporter of such people as "The People's Sheriff" David Clarke and a big Rush Limbaugh fan. I expressed my disappointment over Judge Robart's factually and legally erroneous positions on the travel ban, and supported the #ConfirmGorsuch and #ConfirmKavanaugh campaigns. Believe me, if I thought there was anything leftist or heavy-handedly statist (a term Rush also uses from time to time) about the FTC case against Qualcomm, I'd have said so. But there simply isn't.

An important matter for U.S. innovation and consumers shouldn't be stigmatized because the FTC filed the lawsuit in the waning days of the Obama Administration. It's a just cause regardless. I'd be a hundred million times more concerned about some other things Obama and his people did shortly before leaving office, such as sending $221 million to the Palestinian Authority, which is known to make payments to the surviving family members of "martyrs," or more accurately, suicide terrorists.

The United States is the cradle of antitrust law, and the Qualcomm case, which involves three major U.S. companies (Qualcomm, Apple, Intel), is a key case and an opportunity for the U.S. to assert and maintain its thought leadership.

With a view to future elections, including President Trump's reelection, I also think it would actually be better for Republicans--of course to the extent that the law and the facts so merit--to pursue the Qualcomm matter since a successful FTC trial would pave the way for a payout to 250 million Americans. In the alternative, if the FTC settled but the class action succeeded regardless, it would look as if Republicans didn't want people to get some of their money back that they overpaid on past smartphone purchases.

In 2009, Rush Limbaugh famously wanted President Obama to fail, a statement that was widely misunderstood. Now I just find it ridiculous how the former president claims credit for the fruits of President Trump's #MAGA economic policies. Assuming the FTC v. Qualcomm trial goes forward and succeeds, I don't think Democrats would be able to get any mileage out of it regardless of when the complaint was filed.

Let us hope that any vote held by the FTC will be driven by fact-specific considerations and principles that are important not to protect companies from the market, but to protect consumers from egregious, abusive conduct.

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EU Commission refuses to face reality about Apple's record repatriation tax payment

As I wrote more than two weeks ago, one of the key conflicts to watch in 2018 is The (failed) EU vs. Silicon Valley. Long gone--really long--are the days when European technology companies were among the leading ones in the world. The more digital the world becomes, the more Europe gets marginalized in the most important fields of technology--fields in which Mediterranean statism never succeeded in the first place.

On Wednesday, Apple announced what is a huge victory President Trump and Republicans in Congress: a $350 billion contribution to the U.S. economy over the next five years (that's at a level with the entire public debt of the failed state of Greece) including a $38 billion repatriation tax payment to the Dept. of the Treasury.

That payment is due to the fact that Apple essentially parked money in Ireland at times when U.S. corporate tax rates were much higher. While other politicians thought they could name and shame Apple and other U.S. companies for totally lawful behavior, the dealmaker-in-chief, a businessman himself, simply recognized that the United States faced only two realistic choices: make those companies an offer they can't refuse and get them to bring a lot of money back to the U.S.--or otherwise they'd have to do what's best for their shareholders, which led to the absurd situation of Apple borrowing money so it could pay its dividends while it actually had plenty in Ireland.

When Apple announced that it "expects to invest over $30 billion in capital expenditures in the US over the next five years and create over 20,000 new jobs through hiring at existing campuses and opening a new one," it confirmed that the President's "Buy American, hire American" strategy is working out nicely so far, unlike the EU's failed economic, fiscal and monetary policies. The Trump tax reform is indeed increasing America's competitiveness, and the primary loser is that old, complacent, bleeding-hearted continent run by politicians who have everything in mind (even Africa) but the competitiveness of their economies in the digital age and opportunities for their citizens.

The EU "state aid" "case" against Apple--formally, against Ireland, which the EU even sued last year for alleged non-compliance with a ruling to recover "up to" 13 billion euros--is still on appeal. Last February I criticized the EU decision (after reading it a couple of times in full detail), among other reasons for misrepresenting an important thing:

In its decision, the Commission does recognize that under Irish tax law a company can be registered in Ireland without being subject to Irish taxes. The Commission describes those companies as "stateless," which again sounds like "never paying taxes anywhere, anytime" and is not the way it is: if a company is registered in Ireland but practically operates outside of Ireland and is managed in the U.S., its profits will be subject to U.S. taxes, just that the point in time when this occurs depends on repatriation.

The EU Commission doesn't say that such companies cannot legally exist. It's all about allocation: it's about how much is taxed in Ireland (and, in that case, taxed immediately) versus how much can be kept in Ireland for a while but will ultimately be subject to U.S. repatriation tax.

Now "the point in time when this occurs" is near. Apple is going to make that payment. A reporter then asked a spokesman for EU competition commissioner Margrethe Vestager at a daily Brussels press briefing what bearing Apple's U.S. tax payment would have on the EU "case." Reuters reports that Mrs. Vestager's spokesman said "nothing has changed" with a view to that matter. He obviously had to say so. The only alternative would have been for the EU to recognize its fundamental legal error and drop the "case."

At this stage of proceeding, the Commission is just a party to the case. Since both the Commission and the judges on the EU courts are appointed by the same national governments, it's not a given that Apple will be treated fairly, but at least there is the possibility of the judges finding the "rationale" underlying the Commission decision so irrational that they'll overturn Mrs. Vestager's decision.

I actually agree with her spokesman in the sense that "nothing has changed" about the decision having failed to distinguish between tax avoidance and deferred taxes (see this explanation by Apple and another one by Fortune). What has changed is the tax rate for Apple in the U.S., and that made it a better choice for Apple to repatriate mountains of cash. But the overall cross-jurisdictional framework, with the deferred tax system in the U.S. that applied to the years at issue in this "case," hasn't changed retroactively. The idea of any of Apple's money ever having been "stateless" (not taxed by anybody) was a complete misconception.

What has changed, however, is that it's now just a matter of legal structures but (additionally) a matter of fact. Apple can point to its U.S. repatriation tax payment and, on that basis, focus the whole debate on allocation (how much of its taxes it owes in the U.S. and how much in Ireland) as opposed to tax avoidance.

Considering that Apple's products are designed and engineered in the U.S., and not even manufactured in Europe, it shouldn't be hard to understand that most of Apple's taxes are due in the U.S., too. It doesn't make sense to me that the Commission wants Ireland to collect €13 billion (almost $16 billion), almost half as much as the $38 billion Apple expects to pay as a U.S. repatriation tax. If those EU jurisdictions got even 20% of the amount Apple pays in the U.S., that would already seem very high (almost outrageous, actually) to me.

While nothing has changed about what the law was in the years the EU "case" relates to, it's now easier than ever for the judges to see that Apple never engaged in tax avoidance. The Commission can no longer argue that Apple's "stateless" subsidiaries would never ever pay taxes anywhere.

What Apple announced this week ups the political ante for Mrs. Vestager in three ways:

1. The kind of propaganda that influenced public and political sentiment in the past won't work anymore.

2. While the details are not known, there's no question that an unjustified "recovery" of taxes from Apple by Ireland (under pressure from Brussels) affects the United States. At a minimum, any taxes Apple is required to pay in Europe reduce the amount of money it can repatriate. Possibly, there are other implications as well. So there is a potential a major political conflict between the United States and the EU.

3. Mrs. Vestager wields a big stick but depends on being backed by the governments of the EU member states. I haven't managed to find out what positions various governments have communicated to the EU court. There is, however, a possiblity of some governments now recognizing that Mrs. Vestager's approach is not going to be fruitful. Apple's public statement emphasizes that jobs are going to be created in the U.S., while Apple doesn't do much more in Europe than sales and marketing. The EU Commission's antagonistic attitude does nothing to spur investment in Europe. It just benefits the United States--and President Trump. It could be that some EU member state governments will understand this and be ever less prepared to back Mrs. Vestager's crusade.

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Happy New Year -- and a brief overview of key industry issues and conflicts in 2018

First, I wish all of my readers a Happy, Healthy, and Prosperous New Year!

Primarily this first post after the turn of the year is about a quick overview of some key industry issues and conflicts to watch in 2018. In addition, I'd like to mention that my app, Quizcover, is now available on the U.S. App Store (click here to download), and I've just issued a press release on it. But as I promised in a recent post, I'm going to keep those two activities--the trivia game app and the patent/antitrust/policy blog--perfectly separate from now on.

The following industry issues and conflicts were big in 2017 and should be very interesting to watch in 2018:

• The World v. Qualcomm

  Ever since I can remember, no information and communications technology company has ever faced as many simultaneous and earth-spanning antitrust problems as Qualcomm: unilateral-conduct investigations by competition authoritities in the United States, Europe and Asia; thorough merger reviews of Qualcomm's proposed acquisition of NXP; and antitrust lawsuits brought by Apple in multiple jurisdictions. Then there's at least one other company (analysts believe it's Huawei) that stopped paying license fees. Some early-stage decisions made by federal judges in the Northern and Southern Districts of California didn't work out well for Qualcomm. It's losing the most momumental multi-front war any company in this industry has ever been embroiled in.

  From the outside it's always easy to say: they should settle, especially since they can't realistically win. It's never a bad idea to promote peace, and here it's just impossible to imagine that all those regulators and judges and private parties are wrong and Qualcomm (plus Maureen Ohlhausen, the last woman standing in Qualcomm's corner) are right. But let's be realistic: there is so much at stake here that Qualcomm will most likely still be the first item on my list for next year's first blog post, too.

• The (failed) EU vs. Silicon Valley

  In the past, the EU was more selective about which IT antitrust issues to pursue, and it got a lot of support from various stakeholders all the time. But by now it looks like DG COMP (the EU Commission's antitrust enforcement unit) and policy makers are trade warriors and completely out of control. The EU's take on U.S. technology giants appears to be: "If you can't beat'em, tax'em." Literally, by creating a new digital tax and/or other measures that have the same effect; slightly less literally, by making up "state aid" cases (such as the one involving Apple) out of thin air and imposing huge fines.

  The two key questions about the continuation of the EU's war on Silicon Valley will be: how far will the EU institutions (including the Court of Justice of the EU) ultimately go? And when will there be some serious backlash?

  The question we don't have to ask--since the answer is the most resounding "no" you can imagine--is whether any of this will make Europe more innovative or more competitive. Europe will fall further behind in the age of the digital economy. It's more concerned with its history than with its future. As an Australian politician once said, Europe is like an endless seminar about itself. I seriously don't believe it has a bright future. It's going down the tubes already, with entire generations being lost in some EU member states that have youth unemployment rates beyond imagination. The EU is part of the problem, not part of the solution, though it does get something right every once in a while, such as its recent guidelines on standard-essential patents.

• Silicon Valley vs. The White House

  Since President Trump took office about a year ago, Silicon Valley has engaged in political activism that went beyond what made business sense. Obviously, companies don't like restrictions regarding whom they can hire, so "buy American, hire American" runs counter to their global ambitions. And some major U.S. companies were presuambly afraid of losing business opportunities with governments, corporations and consumers in certain countries, and with parts of the U.S. economy and population, if they didn't distance themselves from various decisions and statements by President Trump. Up to a certain point, that's just corporate interests. But Silicon Valley companies opposed Trump in ways that clearly weren't justified to any significant extent by business interests, and at times they took positions that the Supreme Court largely disagreed with and that amounted to Trump-bashing and cheap shots.

  Some of the things that happened last year should give companies pause. The tax reform that Congress passed and President Trump signed into law before Christmas is great news for tech companies of all sizes. The aforementioned EU trade war on U.S. tech companies may increasingly make it necessary for them to get help from the Trump Administration. Then there are subjects such as net neutrality. I don't mean to imply that the Trump Administration retaliated against tech giants in that context, but it definitely didn't help their cause to be at loggerheads with the President all the time.

  I hope there will be a more constructive and rational relationship in 2018.

• Whatever little is left of Apple v. Samsung (design patent damages)

  If the Supreme Court had allowed the Federal Circuit's statutory interpretation with respect to a disgorgement of a design patent infringer's unapportioned profits to stand, the consequences would have been really bad. Design patents would overnight have become the most lucrative arrow in any patent troll's quiver. Fortunately, the Supreme Court already made it clear in 2016 that infringer's profits are formally unapportioned but limited to the relevant "article of manufacture" (which may or may not be the entire end product). After that strategic victory for reasonableness, the two most important questions left to be answered were the test for determining the article of manufacture and the related burden of proof. Judge Koh answered those questions in ways that Apple can live with and Samsung and many are happy about. Compared to the questions before the SCOTUS and subsequently before Judge Koh, the remaining proceedings are significantly less strategic, but there still is the risk of an award that will encourage design patent trolling. Imagine this kind of "negotiation" between a troll wielding a (possibly overbroad) design patent against an accused infringer:

  TROLL: You know § 289 (unapportioned disgorgement of infringer's profits). Why don't you just pay us X million dollars to eliminate the risk of a devastating defeat.

  COMPANY: We don't think there really is much of a risk. The Supreme Court held that the relevant article of manufacture must be determined. The Department of Justice proposed a test that the Northern District of California adopted and probably all other courts will view very favorably, too.

  TROLL: So what? Samsung ended up paying Apple half a billion dollars at any rate. Shouldn't we negotiate?

  COMPANY: Well... we really don't think the outcome of Apple v. Samsung has a bearing on what we're discussing with you because our lawyers will present a strong "article of manufacture" argument to the court and the jury from the start, optimized for the DoJ's proposed test. But...we are willing to pay you half of what you're demanding.

  That fictitious conversation explains why I hope the outcome will be a reasonable one this spring.

• Nobody (?) v. Amazon

  To be clear, I'm a very happy Amazon customer (store and AWS alike). I have nothing against that company, and this final bullet point is actually an expression of my admiration for how Amazon has managed to avoid the kinds of disputes that other major players have to deal with all the time. For example, those "smartphone patent wars" never hit Amazon. Little Barnes & Noble had to defend itself against a Microsoft suit, but no major patent holder ever went after Amazon (just trolls).

  It could be that certain strategic "anti-Android" patent holders--none of whom ever even mentioned Amazon to me in connection with patent infringement lawsuits--didn't want to lose Amazon as a reseller. So nobody sued them, and there weren't any antitrust complaints that I'd have heard of.

  There's a good chance that Amazon, apart from maybe having to pay the U.S. Postal Service a bit more in the future and the EU's "if you can't beat'em, tax'em" kinds of challenges, will continue to be able to steer clear of major disputes and conflicts. Admirable, but in no small part attributable to its unique (and enviable) position. While some thought that Jeff Bezos' private acquisition of The Washington Post would add to his clout, it probably isn't an asset under President Trump, but it may still help Amazon in Washington circles.

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