DOJ downgrades Delrahim letter to IEEE on standard-essential patents: inter-agency rapprochement with FTC on SEP enforcement?

The language of diplomacy and other governmental communications is very nuanced, like the British Queen's spokespersons saying she's "not amused" when she's actually outraged. The Antitrust Division of the United States Department of Justice ("DOJ-ATR") has taken this concept to a higher level. In what could be described as a digital form of body language, the Biden Administration's DOJ has unequivocally dissociated itself from the Trump Administration's position on standard-essential patent (SEP) enforcement without saying or writing a single word: just by relegating a link to a document (with the PDF remaining in the same place as before) to a long list of links that is, for the most part, merely an archive. Parts of that archive are little more than the dustbin of DOJ-ATR history.

Look at it this way: if a colleague of yours had a picture of her sweetheart on his desk, but all of a sudden decided to put it into a dark storage room, wouldn't that tell you something?

On September 10, 2020, less than two months before the election Donald Trump lost, Qualcomm-aligned Antitrust Assistant Attorney General Makan Delrahim tried to use his remaining time in office--he was going to leave anyway, and he knew what the polls said--tried to deal one final blow to net licensees of SEPs. He supplemented, updated, and appended the DOJ-ATR's 2015 Business Review Letter (BRL) to the Institute of Electrical and Electronics Engineers (IEEE). An IEEE standard all of us use in our everyday lives is WiFi (IEEE 802.11). IEEE has been a strategically important forum at the forefront of how standard-setting organizations could set more specific rules governing SEP enforcement than, for example, ETSI, whose FRAND pledges (which must be interpreted under French law wherever in the world they are enforced) come with a lack of clarity that is fully intended (though some interpretations are still clearly less reasonable than others).

Mr. Delrahim's BRL 2.0 was meant to make the IEEE change course by giving companies like Qualcomm--which in all fairness is a tremendous WiFi innovator--ammunition for IEEE-internal discussions. Qualcomm executives publicly predicted on various occasions that the IEEE was going to make its rules more patentee-friendly under pressure from the federal government. Last month, MLex's Khushita Vasant reported on a recent clash between Qualcomm, Apple, Huawei, and other companies at an IEEE patent policy meeting. It was a clash between the progressives like Apple--who wanted to continue on the path of setting implementer-friendly rules--and those seeking a revision, led by Qualcomm.

What I mentioned at the start of this post obviously doesn't apply to the Trump Administration. Mr. Delrahim's letter to IEEE suggested that the Obama Administration's 2015 BRL to IEEE had been misinterpreted. But Mr. Delrahim also disparaged his predecessor's work by claiming that "[t]he Department's assessment in 2015 of the 'direction' of U.S. law interpreting FRAND commitments on royalty rates and damages assessments was not well-supported and has not proven accurate."

In late March, I was wondering whether the DOJ and the FTC would continue to fundamentally disagree on the application of antitrust law to SEP abuse, given that the FTC didn't seek a Supreme Court review of the Ninth Circuit's FTC v. Qualcomm ruling and mentioned its coordination with the DOJ. But that was just a question, not speculation. Also, the Solicitor General would have had to represent the FTC before the Supreme court, not DOJ-ATR.

Apparently, the Biden Administration is inclined to undo at least some of Mr. Delrahim's SEP policy initiatives. The full extent will become clearer with time. But it's already certain that change has come to DOJ-ATR.

Currently, DOJ-ATR is being run by Acting Assistant Attorney General Richard Powers. Just like we've recently seen quadruple-antisuit injunctions, which I abbreviate as A4SIs and others as AAAASIs, Mr. Powers has a quadruple-A title: he's the Antitrust Acting Assistant Attorney General. What an alphabet soup.

Mr. Powers could have done his own "update" to the 2020 Delrahim letter. That update could simply have stated that the 2020 letter was an aberration, and the 2015 letter was in full force and effect again. But doing so would have required a communication style closer to that of the Trump Administration.

That's where the hierarchical structure of the DOJ-ATR website came in handy. There's one section where one can find the currently valid BRLs. From that one, Mr. Delrahim's letter has been silently removed. His letter to the Avanci patent pool is still there, and it remains to be seen what--if anything--will change in that context. But the 2020 IEEE letter is no longer there. The 2015 BRL to IEEE can still be found on that page. That makes it the one that currently counts.

The original and now-restored BRL tends to strengthen those favoring component-level SEP licensing.

The Delrahim letter to IEEE is now on the page listing "comments to state and other organizations". That page is hidden deep down in the hierarchical structure of the DOJ-ATR website. The dark storage room I mentioned further above.

This move has been clearly interpreted by the tech industry. Cisco's Senior Director, Antitrust and Competition, Gil Ohana, replied to a tweet of mine that this marked the "end of an error":

The end of an error.

— Gil Ohana (@Gilohana) April 15, 2021

A nice wordplay. Few people in California would refer to the Trump years as an "era" not only because #45's reelection bid failed but also for substantive reasons.

But let's also be realistic that there'll be a lof of wrangling over SEP issue now. The downgrade of the Delrahim letter to IEEE is a significant first step.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|

Will the FTC/DOJ divide over antitrust enforcement against standard-essential patent abuse persist under President Biden?

Yesterday, the Federal Trade Commission's Acting Chairwoman Rebecca Kelly Slaughter issued a statement on the fact that the FTC did not file a petition for writ of certiorari (Supreme Court review) in the Qualcomm case. On the decision itself I had already commented a few days ago, with a particular emphasis on the fact that Qualcomm's lawyers are now representing Epic Games against Apple and Google.

The FTC's press release is now the first high-profile statement by a federal government agency on standard-essential patent (SEP) matters since President Biden took office, deserving a closer look.

I totally agree with Mrs. Slaughter that the agency's "staff did an exceptional job presenting the case" at the trial stage. And it's a good thing to give Judge Lucy H. Koh credit. It obviously looks strange that the trial court agreed with the FTC all the way (except for a duty-to-deal theory that the FTC didn't defend on appeal) while the appeals court reversed everything it could and vacated the remainder (the FRAND contract interpretation) as moot. Judge Koh deserved better. The Trump presidency was really bad for her. She had already been nominated to the Ninth Circuit, but her confirmation got derailed by the 2016 presidential election. And then the Antitrust Division of the Department of Justice, under Trump appointee Antitrust Assistant Attorney General Makan Delrahim, fought hard against her ruling--and against the FTC.

It's often easy to be wise after the event, but if there's only one aspect of trial management that Judge Koh could have done better in retrospect, it's that she could have allocated more time to a discussion of the law with counsel. This was a complex case with multiple claims and theories. After all the witnesses had been heard, some more extensive back-and-forth between judge and counsel, partly in writing perhaps, might have helped to reach more solid conclusions--maybe the same result in the end, even on the duty to deal (for a component-level license), but on a more appeals-proof basis. Instead, the parties were basically just viewed as delivery boys: they had to present the facts, but the judge thought she knew all about the law. Then, I also sometimes disagreed with Judge Koh in the Apple-Samsung context (as did the appeals court, the Fedreal Circuit in that case), but all in all she is and remains an impressive judge especially on technology industry issues.

The FTC's Acting Chairwoman didn't concede the battle to Qualcomm without a stern warning to SEP abusers:

"I am particularly concerned about the potential for anticompetitive or unfair behavior in the context of standard setting and the FTC will closely monitor conduct in this arena."

Maybe the automotive SEP licensing and enforcement context would provide the FTC with another bite at the apple that is called component-level licensing. Tesla has apparently just been coerced into an Avanci license. Obviously, Tesla itself would find it hard to enforce the antitrust laws against those who sued it over patents, after just signing a settlement agreement. But the FTC could step in and investigate what happened, and possibly take action. If the FTC won, the Avanci-Tesla agreement might be annulled. Tesla wouldn't have to violate any enforceable agreement because it would simply have a legal obligation to answer the FTC's questions.

In the automotive context, SEP holders can't argue that the industry they're dealing with has traditionally taken licenses at the end-product level. The opposite is the case. And it's a multi-tier supply chain: baseband chips get incorporated into network access devices, which in turn are incorporated into telematics control units, and the TCUs are finally built into cars.

Addressing the component-level licensing issue in the SEP context would help not only Tesla but also other U.S. car makers such as Ford and GM. And, by extension, it would benefit Apple.

But there is a significant roadblock: under the aforementioned Mr. Delrahim, the DOJ cleared Avanci's business model by means of a non-binding business review letter.

That roadblock isn't insurmountable, and as a side effect of helping Tesla, GM, Ford, Apple and especially consumers, a victory over a licensing model designed to coerce OEMs into end-product-level SEP license agreements would be the best way to dedelrahimize U.S. SEP policy.

But what about the Biden DOJ? That question already came up in my podcast a couple of months ago, where I asked DC-based antitrust attorney Jay Jurata of Orrick Herrington Sutcliffe for his thoughts on how U.S. SEP policy might evolve after the transition of power.

Mrs. Kelly Slaughter's statement starts by acknowledging "the significant headwinds facing the Commission in this matter." That passage may or may not hint at a continuing FTC-DOJ divide over this case.

My most optimistic scenario would be that the "new" DOJ will pick up where the Obama Administration left off in terms of SEPs, and the same would ideally happen at the USPTO as well, in which case we could soon return to a better SEP licensing and enforcement framework. In that case, the term "headwinds" might have been limited to the fact that the outcome before the Ninth Circuit was obviously disappointing for the FTC and Qualcomm (through its allies) had succeeded in portraying FTC v. Qualcomm as an Obama case, which wouldn't help when you face a Supreme Court with a 6-3 conservative majority.

A moderately optimistic scenario would be that the FTC talked to the DOJ, as the Solicitor General (the second highest-ranking DOJ official) would represent it before the Supreme Court, and the DOJ discouraged a cert petition not because it still shared Delrahim's positions but because it genuinely believed that chances were slim (such as for the "Obama case" reason I just mentioned, and/or because of the significant challenge that it would have been to come up with a couple of good questions for review).

The pessimistic scenario is that DOJ-ATR and FTC are still far apart on the issue.

It won't take long before we find out. For example, if DOJ-ATR again supported Fortress Investment against Apple and Intel (who recently brought a second amended complaint, with Mr. Delrahim having played a key role in enabling Fortress to get earlier versions dismissed), then there would clearly be the same divide as before.

As an app developer, I'm personally most interested in the FTC and the DOJ combating the abuse of mobile app store monopolies. The decision to abandon the Qualcomm case freed up agency resources.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|

Ten patent and antitrust predictions for 2021

Happy New Year!

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

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

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

   • Viral Days is a brand new strategy game that supports the fight against COVID-19 (Pocket Gamer)

   • Viral Days is a must play in these days of COVID-19 (IZTech)

   • "[I]t’s a really great way to spend some time that’s going to keep you on your toes and teach you something as well." (AppAdvice)

   • Viral Days is a Mobile Game That Shows us the Best Way to Handle Pandemics: "an entertaining mix of strategy and management with a message that we all should be heeding right now" (Gamezebo)

   • Viral Days, el videojuego para móvil para crear conciencia de la infección de la Covid (El Español)

   • "Estamos ante el primer juego para móviles que demuestra el beneficio de usar mascarillas, el distanciamiento social y la cuarentena como medios para combatir las infecciones virales." (APPerlas)

   • "Improves people's awareness ... a very meaningful gameplay experience ... fits very well with real life"
     (逗游网 doyo.cn)

   • "Melhores jogos para Android e iOS da semana [24/12/2020]" (tudocelular.com)

   • Best iOS app released the week before (iPhoned.nl)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|

Dallas-based federal judge dismisses Continental's antitrust complaint against Avanci, Nokia, Sharp, and some patent trolls

After Judge Lucy H. Koh of the United States District Court for the Northern District of California granted a motion by the Avanci patent pool to transfer Continental's antitrust case over component-level licensing to the Northern District of Texas, I stopped following the case. Meanwhile, the complaint was amended once, but on Thursday, Chief United States District Judge Barbara Lynn dismissed the entirety of the first amended complaintwith prejudice (this post continues below the document):

20-09-10 Order Dismissing C... by Florian Mueller

The first hurdle for Conti's complaint was Article III standing and ripeness. Judge Lynn did not consider the mere possibility of car makers like Daimler seeking indemnification from Continental to satisfy the ripeness requirement:

"Plaintiff does not allege in the FAC that any OEMs with which it has entered into indemnity agreements have been or will likely be forced to take a non-FRAND license from Defendants. Plaintiff also does not allege that those OEMs will, or even can, pass the costs of those licenses onto Plaintiff through indemnity obligations."

As a litigation watcher I'm in a position to say that Nokia and Sharp (who are among Avanci's co-defendants) are definitely trying hard, through the pursuit of standard-essential patent (SEP) injunctions in Gemany, to coerce Daimler into a license agreement. But I can also understand that the district court would have wanted to see something more than a merely hypothetical possibility of indemnification claims arising from certain Avanci members' unwillingness to license component makers.

What isn't even mentioned in the decision is the fact that Sharp has meanwhile licensed Huawei, which in turn also benefits Continental, but in and of itself shows that

• Sharp, unlike Nokia, is willing to extend exhaustive component-level licenses, and

• the existence of the Avanci pool indeed doesn't prevent such license deals from being concluded.

The Dallas-based court nevertheless found that Continental had Article III standing on the basis of its allegation that the defendants refused to grant Conti a license. But with indemnification no longer being part of the consideration in the further analysis, the next problem Conti's complaint faced (after easily overcoming the Foreign Trade Antitrust Improvement Act hurdle with respect to foreign patents) was that, in Judge Lynn's opinion, "[t]he anticompetitive conduct allegedly directed at the downstream OEMs does not create an antitrust injury for the upstream TCU suppliers, like Plaintiff." Instead, the court held that OEMs (i.e., car makers in this context) would be the correct parties to complain.

I understand the court's rationale, but I struggle with the result as I find it hard to imagine how a car maker like Daimler could bring an antitrust complaint to the effect of requiring a SEP holder like Nokia to license its suppliers. Daimler could, as it does in Germany, raise an antitrust affirmative defense to infringement cases on that basis. But it's hard to understand how and why the would-be willing licensee (here, Conti) "is not the best entity to bring this antitrust action to vindicate the injury alleged" (which alleged injury, as explained before, was recognized by the court with respect to the refusal to license Conti).

The court's dismissal with prejudice (meaning that Conti can appeal this to the Fifth Circuit, which as the decision notes has limited case law on SEPs, but it's game over in district court now, short of successful defibrillation) is additionally based on a complete disagreement with Conti's federal antitrust theories under the Sherman Act. I'm a frequent critic of Antitrust Assistant Attorney General Makan "Macomm" Delrahim's amicus brief and business review letter campaign favoring SEP abusers and even foreign patent trolls like the Softbank-owned Fortress group, but there's no denying that his activities are impactful. Between the lines of Judge Lynn's decision it's clear that the Justice Department's Antitrust Division strongly influenced the court's thinking and particularly persuaded the judge of the idea that SEP issues aren't really antitrust problems but should be resolved under other laws (contract law, patent law).

The DOJ's statement wouldn't have been needed, however, for the dismissal of Conti's theory that Avanci's members--contrary to what Avanci's contributor agreement actually says--engaged in parallel conduct to the effect of either not licensing component makers or doing so only at the same prices at which the Avanci pool licenses car makers. In this regard, Conti simply had no facts to allege. They wanted a fishing expedition, but by failing at this early stage of proceeding, Conti never got (and probably never will get) the chance to prove that the Avanci group is an anti-component-maker conspiracy.

After dismissing the federal antitrust claims, the court also exercised its discretion not to deal with state claims (contract or state competition law).

Assuming that Conti won't appeal or, more likely, the Fifth Circuit will affirm this dismissal in the event of an appeal by Conti, what does this mean for the automotive patent wars, and for the Avanci pool?

It merely means that a rather ambitious--almost long-shot--attempt by Conti to succeed with a novel attack vector failed.

Neither does this mean that anyone is now going to take an Avanci license as a result of that decision nor that key Avanci members such as Nokia couldn't still face antitrust liability--or simply lose patent infringement actions--over their conduct further down the road.

If Conti's complaint had succeeded, it would have been--depending on what analogy you prefer-- a hole in one or a lucky punch for the automotive industry at large against Avanci. But the automotive industry still has another option: simply to starve Avanci unless and until that pool agrees to grant exhaustive component-level licenses on FRAND terms.

In its current configuration, Avanci must be treated as troll. Don't feed the troll.

Avanci itself can't bring infringement actions. Only its members can--and some are already litigating against Daimler and Tesla. Car makers should just let those Avanci contributors sue, and then defeat them in court. Most of the time, the patents will be invalid or not actually standard-essential. When a patent is held valid and infringed at all, courts will have to adjudicate any FRAND defenses, be they based in contract law (which is how U.S. courts prefer to address the problem) or antitrust law (which is the European way, and the Dusseldorf Regional Court's upcoming referral of key component-licensing questions to the Court of Justice of the EU spells doom for Avanci's current business model). And sometimes the solution will come from negotiation rather than litigation, as Huawei's exhaustive component-level license to Avanci member Sharp's SEPs shows.

Avanci has been around for years, and it only has small-scale license agreements in place. From what I hear, the seemingly largest Avanci deal ever doesn't even include 4G patents. Avanci will be relieved to see the dismissal of Conti's U.S. antitrust action, but that decision doesn't solve a single one of Avanci's fundamental problems.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|

Macomm Delrahim makes strides toward antitrust action against IEEE over its standard-essential patent policy: updated Business Review Letter

Emboldened by a Ninth Circuit panel's decision to overturn a district court's FTC v. Qualcomm antitrust ruling, Antitrust Assistant Attorney General Makan Delrahim--whom I call "Macomm" because he's a former and presumably future Qualcomm lawyer who has been unabatedly promoting Qualcomm's SEP enforcement agenda in his current office--updated (DOJ press release; supplemental letter (PDF)) the Justice Department's 2015 Business Review Letter to the Institute of Electrical and Electronics Engineers (IEEE) with respect to the DOJ's take on the IEEE's patent policy.

For ten years this blog has tried to provide original content, so rather than provide duplicative commentary, let me just point you to Professor Thomas Cotter's analysis (note the four items he specifically criticizes, "all of which are (in [Professor Cotter's] view) much more of an overstatement than the overstatement [AAAG Delrahim] claims to be correcting") and a 2018 paper by Professor Jorge Contreras on the way Mr. Delrahim changed the DOJ's focus in this context.

I'd just like to add a few thoughts and my opinion to the last two sentences of Professor Cotter's Comparative Patent Remedies blog post

"I would have thought that someone who believes in free markets would conclude that, if a private entity [here, the IEEE] adopts a policy that turns out badly [here, the IEEE patent policy that AAAG Delrahim claims unfairly disadvantages patent holders], that entity should have to suffer the consequences [here, the effects of discouraging innvotators from contributing to industry standards], rather than needing the guiding hand of the Antitrust Division to save it from itself."

The above sentence--to which I added various explanations as I didn't quote the passages leading to it--is a diplomatic way of telling Mr. Delrahim that he--a Republican president's appointee--isn't being a good Republican in the IEEE context...

Unfortunately, conservative talk radio hosts wouldn't ever discuss a topic as esoteric as SEP enforcement. At least a few academics and bloggers do.

"Or could this be a not-to[o]-subtle hint that, if Donald Trump wins re-election, IEEE could find itself in the agency's cross-hairs?"

I'll answer this question, which looks like a rhetorical one anyway: YES, that's what it is all about, in two ways:

• When reading the supplemental letter, I noticed multiple suggestions that the IEEE revise its patent policy to the effect of giving SEP holders more leverage in an enforcement situation and, as a result, in negotiations.

  I doubt that the IEEE will do so in the coming months. We're not even two months away from Election Day, after which Mr. Delrahim's days in office may be numbered.

  Mr. Delrahim presumably doesn't even expect its letter to persuade the IEEE. He just wants to be able to say, at the time of taking enforcement action, that he gave the IEEE one last chance to avoid an investigation. PR and politics are particularly important when doing something very controversial--and even more so, when doing something highly controversial against an extremely well-respected organization. Mr. Delrahim knows that when he announces the investigation he's preparing for, many of America's most innovative companies will side with the IEEE.

• The only outcome of an IEEE investigation led by Mr. Delrahim would be a holding that the IEEE's patent policy is "anticompetitive" in the sense of limiting SEP holders' ability to aggressively enforce their rights. The DOJ would have to sue the IEEE, and the previous Business Review Letter would have complicated any litigation. In court, the DOJ could have made the same argument as in its supplemental letter: the IEEE allegedly misrepresented the 2015 BRL as an "endorsement" of its patent policy. Regardless of whether an agency's decision not to take action against something is accurately called an "endorsement" (a question on which even reasonable people could fail to agree), the retraction of the 2015 letter is simply a necessary step with a view to what Mr. Delrahim undoubtedly has in mind.

If President Trump does it again, Mr. Delrahim will likely stay on, and then the IEEE knows what's going to happen, but fortunately the courts will decide.

In the other scenario, Mr. Delrahim could theoretically do what the outgoing Democratic majority of the Federal Trade Commission did in the last days of the Obama Administration by filing an action against Qualcomm. However, the difference is that an FTC action may continue (as one could see in the Qualcomm case) even after a presidential transition, while the DOJ would be 100% under the control of the new party in power. That's why such an investigation or litigation might be short-lived.

The updated BRL is disconcerting at any rate.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|

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

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|

YOUR TAX DOLLARS AT WORK: Justice Dept. defends foreign-owned patent trolls against Apple and Intel

Apple and Intel--two American high-tech icons--are suing Softbank-owned Fortress Investment on antitrust grounds in the Northern District of California. Their complaint admittedly raises legal questions of first impression. Fortress brought a motion to dismiss the complaint just on the basis of the legal theories it is based upon. Apple and Intel obviously oppose that motion.

Over the last couple of days, various parties filed amicus curiae briefs with the court. Apple and Intel are notably supported by

• Unified Patents, CableLabs, Patreon, and Bitmovin;

• the Fair Standards Alliance (whose members include many major information & communications technology as well as automotive companies); and

• the R Street Institute, the Center for Democracy & Technology, Public Knowledge, Engine Advocacy, and the Electronic Frontier Foundation (while that brief is formally filed in support of neither party, it does side with Apple and Intel on the only subissue it addresses, which is the market power that even weak patents--due to the difficulties in getting them invalidated--confer upon their owners).

But Fortress has an ally that you wouldn't expect to back a foreign-owned patent troll group trying to extract money from some of America's greatest tech companies (having filed dozens of lawsuits against the likes of Apple, Google, and by extension, Intel): the United States Department of Justice, claiming to speak on behalf of the United States (i.e., the federal government).

Makan "Macomm" Delrahim, a former Qualcomm lawyer and now the Assistant Attorney General heading the DOJ's Antitrust Division, stops at nothing in his tireless efforts to help patent holders maximize their returns at the expense of the wider economy and actual innovation (this post continues below the document):

20-03-20 Statement of Inter... by Florian Mueller on Scribd

Mr. Delrahim and his subordinates' submission supports Fortress with respect to the claims brought by Apple and Intel under federal antitrust law. The fact that Fortress is Japanese-owned doesn't mean that the DOJ couldn't have good reasons for supporting them: it's about fundamental legal questions that also affect American patent holders. The real issue here is that even if Fortress were American-owned, it would simply be irreconcilable with the America First philosophy to back hyperagressive patent trolls (who sometimes bring dozens of lawsuits against just one defendant such as Apple or Google).

It's shocking, and I wanted to share the news. In a future post I may go into detail on the motion to dismiss (possibly after Fortress's reply brief). The case is still on my watchlist.

The ongoing coronavirus crisis--in which Fortress was about to prevent essential research, but then backtracked under public pressure, while Apple offered a major contribution--is not going to go away anytime soon. Short of a vaccine or effective and reliable cure, many restrictions will remain in force for some time, and many people's lives won't return to normal. The damage that virus is causing to the global economy is beyond belief. Governments around the world will soon face an ecomomic policy challenge of unprecedented proportions. For a swift recovery, it's advisable to support product-making and service-providing companies (like Apple, Intel, and Google) against patent trolls like Fortress and its numerous shell companies who just siphon off money from those who create many jobs. The real economy needs to highlight that simple fact to President Trump and his closest advisers. Enough is enough.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|

Four IT industry bodies support FTC against Qualcomm's appeal: once again, The Industry v. Qualcomm

In the January 2019 trial, Qualcomm's #1 problem was that virtually the entire mobile device industry testified against it (apart from a very few companies who, like Qualcomm, refuse to license chipset makers, though a couple of them once lodged their own antitrust complaints against Qualcomm for that reason). In terms of amicus briefs filed with the Ninth Circuit, it's pretty much the same picture again: companies who failed in the mobile phone business and trolls support Qualcomm (as does Makan "Macomm" Delrahim, the Antitrust Assistant Attorney General who used to work for Qualcomm), while the rest of the industry presents a united front and supports the FTC.

The collective membership of the four high-tech industry bodies who filed amicus curiae briefs in support of the FTC goes far beyond the ones whose testimony mattered to the district court. That's because those organizations have many members who care about standards but don't necessarily implement the cellular standards at issue in this particular case.

The groups who have now made filings for the FTC and against Qualcomm cound companies like Amazon, Apple, Google, Facebook, Microsoft (those five are sometimes collectively referred to as "GAFAM") among them, but also the likes of Intel, Cisco, eBay, Salesforce, Uber, and major carriers like Sprint, T-Mobile, and Verizon.

That's basically the most vibrant part of the U.S. economy. (We'll also talk about a couple of briefs filed by automotive industry groups, but not in this post.) And as the briefs note, those companies invest huge amounts in R&D and hold vast numbers of patents.

Unfortunately, Macomm Delrahim can make--or tell his subordinates to make--filings in the name of "the United States." But in reality he just advances his own agenda, which is precisely that of his former long-time (and presumably future) client--and it has nothing to do with MAGA. With almost the entire U.S. tech industry against him, he's clearly a liability for the Trump Administration. Former Republican government officials such as former Secretary of Homeland Security (under President George W. Bush) Michael Chertoff and former FTC chairman (under the same president, but also in senior FTC positions under President Reagan) Professor Timothy Muris publicly disagree with Mr. Delrahim.

I regret to say so despite, to the best of my knowledge, being the only tech/IP blogger to have declared himself a Trump supporter roughly four years ago and having repeatedly (mostly on social media) supported the President. But the DOJ Antitrust Division's amicus briefs in this context here are absurd, and that's why I'm glad the industry tells the United States Court of Appeals for the Ninth Circuit what's truly in the interest of the U.S. economy.

For the most part, the four briefs just reinforce the FTC's points and explain the importance of standard-setting and compliance with FRAND licensing commitments (including licenses to chipset makers) from an industry perspective. While it's very important that the industry at large makes this effort, there's nothing surprising in there, apart from a reference in ACT | The App Association's brief--which also talks about the need for thousands of small IoT innovators to have access to SEPs on FRAND terms--to a case in which SEP-related issues allegedly prevented innovative products from being created:

"The Association has direct experience with the deleterious effect of SEP abuses. For example, one of our members sought to develop a novel drone device (and associated software platform) for firefighting agencies, which would have enabled firefighters to monitor and address dangerous conditions. Concerns over after-the-fact SEP abuses ultimately swayed the member not to bring the product to market, however. In short, the company’s inability to have certainty regarding product costs undermined an otherwise-innovative new business."

It's important to know that ACT's members are thousands of small and medium-sized companies, though it also has a few supporters among large players.

Here are the four filings by tech industry associations (in alphabetical order--ACT | The App Association, CCIA, Fair Standards Alliance, and High Tech Inventors Alliance):

19-11-27 ACT acb by Florian Mueller on Scribd

19-11-27 CCIA acb by Florian Mueller on Scribd

19-11-29 FSA acb by Florian Mueller on Scribd

19-11-29 HTIA acb by Florian Mueller on Scribd

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|

Former Secretary of Homeland Security, former FTC chairman, and conservative think tank dismiss Qualcomm's and DOJ's "national security" arguments

In its answering brief to Qualcomm's Ninth Circuit antitrust appeal, the FTC says Qualcomm simply "abandoned" its national security argument before the district court and can't revive it now. Nevertheless, many of the (by now) 14 amicus curiae briefs supporting the FTC address the topic to some extent--and the one filed by the R Street Institute (a think tank close to the GOP) even focuses entirely on why any "national security" concerns over Judge Lucy H. Koh's ruling are unfounded because, if anything, Qualcomm's monopoly poses a threat to national security (this post continues below the document):

19-11-28 R Street Institute... by Florian Mueller on Scribd

The author, Charles Duan, is a well-known amicus brief writer. He always writes persuasively and comes up with interesting thoughts. In the past I agreed with his views in some cases and disagreed in others. With respect to FTC v. Qualcomm, I find parts of his brief a bit far-fetched, but in principle I agree with most of what he wrote.

The R Street Institute argues that "patents and even market concentration can also foster innovation, but only to a degree." Healthy competition is still required: "[S]trong patent protection is complementary to strong competition; the former does not promote innovation without the latter."

The brief gives examples of cases in which there was either hard evidence or at least some indication that patent holders who enforced their monopolies too aggressively or sought to charge unreasonably high royalties imperiled U.S. national security. Those examples include the Wright Brothers' patent enforcement against competitors, which had a chilling effect on the U.S. aviation industry (compared to European counterparts) in the early 19th century, a temporary shortage of torpedoes (which forced the U.S. to buy them from a power that was on the verge of becoming an enemy), or the problems the U.S. government faced when chemical company Bayer wanted to charge a rather high per-unit price for Cipro, its anthrax drug, at a time when the U.S. (after 9/11) had to fear a large-scale anthrax attack. Mr. Duan describes those situations in a balanced way, also pointing to criticism of certain views.

What doesn't convince me is his "monoculture" argument. That's a strong point with respect to software (operating systems and key applications) that can be infected by viruses. I can't imagine a virus could take control of a Qualcomm baseband chip.

But he does have a point that competition fosters innovation and, ultimately, is the best recipe for U.S. technological superiority. The notion that Qualcomm should now be afforded special protection because it drove various U.S. competitors out of business (which is basically what Qualcomm and its friends at the DOJ suggest) is truly absurd.

The R Street Institute's brief points to a recent op-ed by former Secretary of Homeland Security (under President George W. Bush) Michael Certoff in the Wall Street Journal, arguing that it's actually Qualcomm's monopoly that poses a threat to national security.

Another official who served in Republican administrations, Professor Timothy Muris, filed an amicus curiae brief this week (this post continues below the document):

19-11-29 Timothy Muris Acb by Florian Mueller on Scribd

Professor Muris was a senior FTC official under President Reagan, and FTC chairman under President George W. Bush. His brief is mostly about general principles of sound competition enforcement. This is a Republican, not a statist. More than anything else Professor Muris's brief is a response to Antitrust Assistant Attorney General Makan (I tend to call him "Macomm" because of his constant support of Qualcomm and his Qualcomm past) Delrahim's filing(s) in support of Qualcomm against the FTC--just a "historical anomaly" as Professor Muris explains.

Professor Muris recalls how somewhat similar concerns were raised almost 50 years ago in connection with the "MaBell" (AT&T) breakup, but ultimately competition had huge benefits for everyone and actually made the U.S. even more secure.

He shares a concern I also had immediately when I saw the Ninth Circuit motion panel's order granting Qualcomm a stay of the enforcement of two parts of the FTC's injunction: the order says that Judge Koh's ruling may be affirmed, but in that case it would be a "trailblazing application of the antitrust laws." Professor Muris contradicts and says the decision "fits squarely within traditional antitrust law." With respect to Qualcomm's "No License--No Chips" policy, Professor Muris notes that "[c]onditioning purchase of a monopoly product on taking a patent license is standard antitrust fare, ripe for examination under well-accepted antitrust principles."

Macomm Delrahim has a position that, according to the brief, "departs sharply from historical practices" and "abandoned the consensus among policymakers, SSOs, and courts concerning patent holdup in favor of an unprecedented position that impermissibly treats patents like natural rights—all of which underlie its position in this case." It's a widespread fallacy to consider patents a type of property like real estate with respect to the right to exclude (or to deny licenses). It's a problem in other jurisdictions as well.

Toward the end, Professor Muris also addresses "national security." He, too, points to former Secretary of Homeland Security Michael Chertoff's op-ed and argues that "[t]he better view is that the loss of innovation from Qualcomm's anticompetitive conduct, giving Qualcomm monopoly protection, is as much, if not more, a national security issue. Some reduction in SEP royalties that Qualcomm may receive going forward doesn't pose a fundamental threat to a company that "is extremely well capitalized with over $12 billion in cash, cash equivalents, and marketable securities on its balance sheet at the end of its last fiscal year—more than half of its annual revenues," and "[since 2015] has authorized double that amount in stock buybacks."

In light of all of that, Professor Muris rejects the idea of givign Qualcomm "special treatment" and instead wants the company to "play by the rules and focus on contributing to American innovation without illegally excluding its rivals."

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|

USPTO Director Iancu looking to fix standard-essential patents policy that just ain't broke

Four weeks ago, USPTO director Andrei Iancu gave a keynote address at a Brussels conference on standard-essential patents (SEP) strategy. That event, organized by commercial conference organizer Premier Cercle, covered a wide range of SEP-related topics (unlike my upcoming conference, which is focused on the #1 hot-button issue, component-level licensing).

After explaining the importance of standards, Director Iancu recalled the 2013 joint statement with the USPTO on SEP remedies. Mr. Iancu, without attributing this view to any particular organization or person, said that the 2013 policy statement has been interpreted "as putting the thumb on the scale against injunctive relief for FRAND-encumbered standard essential patents in most cases." And he then mentioned the recent decision of the DOJ Antitrust Division, under Antitrust Assistant Attorney General Makan Delrahim, to withdraw their agency's support for that joint statement.

In that Brussels speech, Mr. Iancu repeatedly indicated that the 2013 policy might not give SEP holders as much leverage as he--a former patent litigator--would like them to have. While the USPTO had not and has not withdrawn its support for the statement yet, he said his agency was "now carefully studying the issue and discussing it internally, with [their] stakeholders, and with other relevant government agencies." He describes the possibility of a new policy in the hypothetical, but let's be realistic: he's not going to stick to the 2013 policy, and the question is just how radical (on a scale from "grossly unbalanced" to "extremist") its replacement will be.

Rutgers Law School professor Michael A. Carrier published a reply to Director Iancu's speech on Law360 (and SSRN) a few days ago. Professor Carrier diplomatically exposes Director Iancu's quest for balance as unwarranted, given that the 2013 policy statement already struck one between SEP hold-up on the one hand and delay tactics by unwilling licensees on the other hand. As the paper notes, the Federal Circuit even cited to that policy statement in a decision clarifying that injunctive relief was available to SEP owners in more situations than a district court had said.

That Law360 article is not the first call on Director Iancu not to join AAG Delrahim in disowning the 2013 policy statement. Earlier this year, an open letter by multiple stakeholders and groups (which I had previously linked to on two occasions) delivered the same message.

Those efforts aren't totally in vain, but the most one can hope for is that the new policy statement won't be totally outrageous, though chances are that it will be.

Messrs. Delrahim and Iancu represent almost precisely the same school of thought with respect to patent policy. There's only a difference in style. While Mr. Delrahim doesn't seem to care about coming across as rash, radical, and highly partisan (as former outside counsel to Qualcomm) and won't even refrain from utterly absurd initiatives such as suggesting that standard-setting organizations that seek to give meaning to FRAND might violate the antitrust laws (while SEP abusers don't in his view) or making an untimely filing in a court case reflecting ignorance of the record, Mr. Iancu is more concerned about perception. He's a more sophisticated pretender. Now he's pretending to be on a quest for balance. He sure isn't.

In his Brussels speech, European-born Mr. Iancu tried to portray himself as understanding both sides of the SEP negotiating table, and called himself "sensitive to the business realities of licensing--both in and out--patent portfolios," including FRAND-encumbered ones. I don't doubt that his former firm (which he'll presumably return to), Irell & Manella, also advised implementers of standards and defended alleged infringers. But I've usually seen them represent plaintiffs, and their page on IP litigation primarily touts their record and expertise in IP enforcement. They also have an IP transactions practice that focuses on the maximization of the value of IP portfolios--which is exactly Mr. Iancu's mission (make bad patents strong again).

Apart from focus, it's good for the IP litigation business when even bad patents are kept alive (take Mr. Iancu's PTAB guidelines for an example) or when even FRAND-pledged patents can be asserted aggressively in litigation, regardless of whether a given litigator is on the asserting or defending side in a given situation. They get paid either way.

I'd love to be wrong on this, but I'd be surprised if Mr. Iancu didn't simply agree with Mr. Delrahim on virtually every aspect of SEP enforcement, just that Mr. Iancu tries to mislead people to think that he's open-minded about it. He's a patent enforcement extremist, the proverbial fox in charge of the hen house, and even Professor Carrier's strong defense of the existing SEP policy statement sadly won't change Mr. Iancu's mind, I'm afraid.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|

U.S. DOJ, Nokia, InterDigital, Dolby, 20 law profs among amici curiae supporting Qualcomm's Ninth Circuit appeal of antitrust ruling in FTC's favor

On Friday (August 30), one week after Qualcomm's opening brief in its Ninth Circuit appeal of Judge Lucy H. Koh's antitrust ruling in favor of the Federal Trade Commission as well as the Ninth Circuit's August motions panel's decision to grant Qualcomm a stay of two injunctive remedies, eight amicus curiae briefs were filed in support of Qualcomm--some officially claiming to support neither party, but practically all of them supporting Qualcomm's positions.

I'm not overwhelmed because neither the filers nor, at first sight, their views are a suprise. But inundated I do feel.

So far I've just commented on one part of Qualcomm's opening brief: its argument, with which I agree in two respects but not in all others, against the component-level licensing obligation. I'm going to do a follow-up to that one because I've concluded that SEPs really are subject to compulsory licensing, as they already were in Germany a long time ago under the Orange-Book-Standard doctrine there, and I found an interesting old U.S. case where the DOJ imposed a compulsory-licensing obligation on a patent holder. But before I even got there, much less found time to address the other parts of Qualcomm's opening brief, there's been that flood of amicus curiae briefs.

Let's start with the one that will bear most weight with the judges based on the submitter--the Antitrust Division of the Department of Justice (DOJ) filed an amicus brief on the United States' behalf (this post continues below the document):

19-08-30 DOJ acb by Florian Mueller on Scribd

Once again, Antitrust Assistant Attorney General Makan Delrahim's division is doing his former client a favor. In addition to backing Qualcomm's core positions on the merits, the DOJ argues that even if any liability finding was affirmed, the United States Court of Appeals for the Ninth Circuit should vacate the injunction and remand the case to the United States District Court for the Northern District of California for a remedies hearing. Additional briefing and a hearing on remedies are procedural steps the DOJ already suggested a few months ago.

Two former chief judges of the Federal Circuit are also among the individuals and organizations rallying behind the San Diego chipmaker. Retired Chief Judge Paul R. Michel, who already supported Qualcomm's motion to stay, argues among other things that the Smallest Salable Patent-Practicing Unit (SSPPU) rule isn't all that important and, if it was, it should be applied differently here. His successor Randall R. Rader, who stepped down over allegations of being improperly close to a patent litigator, is one of 20 antitrust and patent law professors who also filed an amicus brief. On the list of signatories of that one I saw several names of professors who have previously taken pro-SEP-holder positions. The usual suspects, one might say, but that also applies to Nokia's and InterDigitroll's (okay, the company is named "InterDigital") briefs. No company other than Qualcomm has such a strong and immediate interest in the outcome of this appeal as Nokia, which is a defendant to automotive industry supplier Continental's FRAND/antitrust case against the Avanci patent pool firm and some of its contributors (Avanci, Nokia, Sharp and others are trying to get that one dismissed or to be transferred out of Judge Koh's San Jose court, but Continental's opposition brief appears more than strong enough to prevent a venue transfer). And it bears repeating that Nokia itself once formally complained about Qualcomm's business practices at a time when Nokia was the market-leading handset maker.

Interestingly, I haven't seen a filing by Ericsson (hopefully not due to an oversight of mine)...

Dolby Laboratories is another patent monetizer who has repeatedly supported SEP abusers through amicus briefs.

The International Center for Law and Economics and an organization named Alliance of U.S. Startups & Inventors for Jobs ("USIJ") have also made filings.

I've uploaded all eight documents to Scribd, and linked to them from this post. I may very well comment on their content later on as I digest and discuss the different pillars of Qualcomm's appellate strategy. The FTC is going to get an extension until shortly before Thanksgiving to file its responsive brief, so there still is a lot of time to talk about the issues--and the hearing probably won't take place before late January at the earliest, with February being more likely.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Share|