Vast majority of ACT | The App Association's funding comes from Apple, former employees tell Bloomberg: astroturfing against app developers' interests

In the final scene of the Eraser movie, Arnold Schwarzenegger's character--an officer in the witness protection program--tells the passengers of car, seconds before a train crashes through it:
"You've just been erased."

Today's message to ACT | The App(le) Association--one of the worst enemies of the app developer community--sounds pretty similar:
"You've just been exposed."

Bloomberg just published a masterpiece that combines investigative journalism with great analysis based on a profound understanding of industry issues: Apple Flexes Muscle as Quiet Power Behind App Group

I don't want to exhaust my fair use rights to quote from the article, as I'd rather encourage you all to read the original piece, so let me just mention two simple facts it reveals:

1. ACT | The App Association itself conceded that more than half of the organization's multi-million-dollar budget comes from Apple.

2. Four former ACT | The App(le) Association employees spoke with Bloomberg on condition of anonymity and said the percentage is much higher (than "more than 50%"), with Apple paying a "dominant behind-the-scenes role shaping the group's policy positions."

What more do I have to say? This is astroturfing.

These revelations come as no surprise at all. I'm just one of various people dealing with App Store and standard-essential patent issues, and it was transparent that no genuine app developer organization would take positions that exclusively benefit Apple and harm us, the real developers.

The question of what it tells us about Apple's business ethics to engage in this is very relevant, but Apple is not going to answer it. We'll see whether Apple will now defund ACT. Certainly, ACT's other sponsors should ask themselves the same question. Now, finally, it's time to defund ACT.

In yesterday's post--Biden Administration will support Epic Games at October 21 Ninth Circuit hearing--and may soon bring its own antitrust lawsuit against Apple--I noted that "Apple is supported only by its own astroturfers and by parties whose own treatment of app developers and content creators is controversial." The Bloomberg story also mentions ACT's amicus curiae brief in support of Apple against Epic Games. In reality, virtually 100% of all app developers who are aware of Epic Games v. Apple are rooting for Epic.

Ericsson and the Office of Unfair Import Investigations (OUII, or "ITC staff"), which participates in United States International Trade Commission investigations as a third party protecting the public interest, insist on conducting discovery of the "monetary and nonmonetary consideration" Apple provides to ACT, which filed a "public" interest statement in support of Apple. Bloomberg's Emily Birnbaum has been able to find out. So should the ITC. I hope Administrative Law Judge Bryan F. Moore will now grant Ericsson's and the ITC staff's (or, at a minimum, just the staff's) motion(s) to compel Apple.

I would also strongly encourage the European Commission to reject any submissions by ACT | The App(le) Association on whatever topic. And should one or more antitrust decisions come down against Apple in the App Store context, the European Court of Justice should not allow an organization mostly funded by Apple to join as a "third-party" intervenor.

Other lobbying entities--some of which are funded by Apple as well--cooperate with ACT on its "Save Our Standards" (as if the system of industry standard-setting had ever been endangered) campaign. They should draw the appropriate conclusions now.

Investigative journalists may very well find other entities beholden to Apple, such as a set of Twitter accounts (not even sure those are actually distinct persons) called FAIRREP, which claims to speak for more than a billion Apple customers, but by and large (apart from low-priority exceptions) just echoes Apple's arguments in support of its App Store monopoly and against the right to repair.

While low-key compared to Apple, the "(Application) Developers Alliance" is basically the same thing as ACT, just that they're funded by Google. That organization supported Google's appeal of the European Commission's Google Android ruling--which fortunately failed for the most part--as a third-party intervenor. I wish the CJEU could conduct an inquiry into the extent to which that Developers Alliance is simply a Google front, and sanction Google should it turn out that Google's influence over that organization is (as I suspect) comparable to Apple's over ACT.

On the occasion of ACT having been exposed by one of the most reputable news agencies in the world, let me provide a non-exhaustive list of articles in which I criticized ACT's astroturfing (in reversely chronological order):

• 09/13/2022: In Apple-Ericsson ITC discovery dispute, Fair Standards Alliance is unfairly lumped together with ACT | The App(le) Association

• 09/07/2022: U.S. government officials insist on knowing how much 'monetary or nonmonetary consideration' Apple provides to ACT | The App(le) Association: public version of motion to compel

• 09/02/2022: Apple refuses to cooperate with U.S. government agency seeking information on its funding of, and influence over, ACT | The App(le) Association: ITC investigation of Ericsson's 5G complaint

• 06/25/2022: ACT | The App(le) Association claims to represent thousands of small developers, but in Twitter debates they are supported only by employees, service providers, other pro-Apple lobbyists

• 06/15/2022: Apple, Continental, astroturfers use IoT as pretext for general devaluation of standard-essential patents in submissions to European Commission

• 04/06/2022: Despicably deceptive: Big Tech's Save Our Standards campaign presents small app developer as victim of standard-essential patent abuse though it NEVER had to license SEPs

• 04/02/2022: Microsoft rightly withdrew support for ACT | The App(le) Association (which it once created) -- why are Verizon, Intel, AT&T, Verisign still behind advocacy against 99.9% of app developers?

• 02/03/2022: Apple's astroturfers try to fool ITC with misleading statement concerning Ericsson's complaint, and Biden Administration and Capitol Hill lawmakers with phony poll: both on the same day

• 10/01/2021: Not a class ACT: the so-called App Association is simply an Apple Association and does NOT represent app developers' interests in fair distribution terms

Finally, a tweet by the founder and CEO of Epic Games:

Bloomberg investigated @actonline, the fake “app developer interest group” that Apple funds to lobby politicians while its monopoly strangles developers. Shame on Apple and shame on this deceitful astroturfing.https://t.co/75xw5K3tJH

— Tim Sweeney (@TimSweeneyEpic) September 19, 2022

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Apple and other WiFi implementers pressuring IEEE not to abandon its 2015 patent policy--but serious impact of negative Letters of Assurance can't be denied

Early last week, largely the same Apple-led crowd that is behind the "Save Our Standards" campaign (whose deceptive lobbying I've recently called out) sent a letter to Sophia Muirhead, the General Counsel of the Institute of Electrical and Electronics Engineers (IEEE). I'm in possession of that six-page PDF, which is dated May 3 and entitled Industry and Public Interest Support for Maintaining 2015 IEEE-SA Bylaw Updates. It's a pressure group effort ahead of a (fairly confidential) meeting of the IEEE-SA's Standards Board; the letter was allegedly authored by outside counsel for Apple; and from what I heard, it's more or less unprecedented for industry players to lobby the IEEE in that fashion.

It looks like some folks are panicking, though a little over a year ago they had reason to celebrate: the Biden DOJ silently downgraded a letter that the Trump DOJ (specifically, then-Assistant Attorney General for the Antitrust Division, Makan Delrahim) had sent to IEEE, urging it to undo significant parts of its 2015 policy change favoring implementers. As I noted at the end of the post I just linked to, the wrangling over IEEE's standard-essential patent (SEP) policy was sure to continue. Mr. Delrahim is now a Latham & Watkins partner (oddly, a firm frequently used by Apple), so he's no longer in a position to push IEEE in the direction he outlined while in public office. But IEEE still has a problem on its hands that no one with an interest in a functioning standard-setting system can responsibly ignore or convincingly explain away.

We'd be having a totally different conversation now if the following sentence from the first paragraph of Apple et al.'s letter were true:

"The IEEE-SA’s Patent Policy is and remains the model for standard setting organization (SSO) IPR policies, particularly following the 2015 update to the patent policy."

The letter says "IEEE-SA distinguished itself positively" in 2015. Now, if SSOs like ETSI had gone in a similar direction, Apple et al. would be in a position to make that claim of IEEE's 2015 policy being and remaining "the model for [SSO] IPR policies." But the reality--certainly a sad one from the implementers' perspective--is that seven years on, IEEE is still an outlier among SSOs. That may simply be due to the fact that other SSOs are more consensus-driven than IEEE, where a majority can just brush aside objections no matter their merit.

Neither does the last sentence of the first paragraph withstand scrutiny once one looks at the broader picture:

"By almost any measure, standardization work at IEEE has thrived in the wake of these updates."

Via a footnote, that sentence refers to a 2018 IPlytics report (PDF) that says "contributions to IEEE standards and technical work within IEEE working groups have only increased since the updated patent policy was approved." But as standards grow more complex, the number of contributions are on the rise--and more than anything, that conclusion reflects a disconnect:

A number of major wireless SEP holders and innovators (including, but not necessarily limited to, Ericsson, GE, Huawei (notably, a large-scale WiFi implementer as well), InterDigital, LG, Nokia, Orange, Panasonic, and Qualcomm (in alphabetical order)) have declined to provide Letters of Assurance ("LOAs") that would force them to adhere to the IEEE's 2015 policy. Some if not all of them clarified that they remained willing to abide by the prior policy (which was more similar to what is still found in the cellular standards space). But a refusal to be bound by the new policy is deemed a "negative LOA," regardless of a contributor's stance on a superseded version of that policy.

The disconnect here is that there wasn't a major disruption on the technical side (though Professor Ron Katznelson, a member and past Chair of the IEEE's U.S. IP committee, did identify some negative impact in his paper The IEEE controversial policy on Standard Essential Patents -- the empirical record since adoption) despite those negative LOAs. That approach is not sustainable. Sooner or later, an SSO runs into a serious problem if a significant part of all technical contributions isn't subject to positive LOAs.

We're talking about a legal issue, a licensing problem--not just a political one that may simply be solved by an Administration overriding its predecessor's policies.

Unlike in politics, where a majority vote is often the answer, that won't work here either. Apple et al.'s letter stresses that there are far more companies favoring implementer-friendly policies than a proposal to revert to the previous one. That means nothing. Seriously, there are more people out there buying bread than owning or working at bakeries, yet customers can't just set the terms on which they want the supply side of the market to do business with them. The fact that there are so many implementers makes successful standards valuable. It doesn't devalue them. And even if a vast majority of SEP holders preferred a policy (typically because they are net licensees), in the end implementers need a license to all the SEPs, not just some or most of them.

WiFi 6 is the first generation of IEEE 802.11 to have been affected by negative LOAs. WiFi 7, which is now in the works, will be the first one to have been developed with some companies having submitted negative LOAs at the outset.

Those negative LOAs--coupled with the continuation of standards development as if nothing had changed--are a ticking time bomb. Arguably, it has detonated in some places already. IEEE ran into problems with the American National Standards Institute (ANSI) finding itself unable to approve as national U.S. standards those IEEE standards that were clearly impacted by negative LOAs. The International Organization for Standardization (ISO) has similar problems according to a JDSupra article and a LinkedIn article (both by the same author, David Cohen)). It's not a question of whether those organizations like IEEE's patent policy: it's all about the fact that there are negative LOAs in place, normally a no-go in standard-setting, for good reason.

The current situation is a mess. Contrary to what Apple et al.'s letter claims (asking this rhetorical question: "Why would IEEE-SA want to return to a world in which the cost of implementing IEEE-SA standards like 802.11 was uncertain, inevitably discouraging adoption?", negative LOAs are anything but a path to legal certainty. That is not a question of whether or not one would like to bring down SEP royalties. Apple et al.'s letter fails to present a solution as it only advocates perpetuating the problem. With Apple's annual litigation budget in the billions of dollars, that may be workable. For the technology industry at large it is not.

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Despicably deceptive: Big Tech's Save Our Standards campaign presents small app developer as victim of standard-essential patent abuse though it NEVER had to license SEPs

I am outraged. What Save Our Standards, a "coalition" formed last fall, has recently employed is by far the most disingenuous lobbying and campaigning tactic ever in the context of standard-essential patents (SEPs). It's an utter disgrace, brutally unethical and shockingly incompetent at the same time. The companies who funded that particular effort--mostly Big Tech, but also automotive industry players--should be ashamed. Very ashamed.

In an infomercial, they presented a small contract development firm from Alabama as an example of a small business that allegedly has reasons to worry about standard-essential patent (SEP) abuse. But the facts are 100% clear. It's all a lie. A damn lie, just for political gain. Deceptive lobbying at its worst. The truth of the whole matter is that the company in question never had to license a single SEP--and not even the customer for which it developed the only existing app mentioned in the infomercial incurred the slightest risk related to SEPs. One just needs to understand the basics of U.S. patent law to understand why, and I'll explain it further below based on a transcript of that Save Our Standards infomercial. If you want to skip the other explanations and go straight to the most absurd part of that infomercial, click here.

With their small-business lie they're trying to get other small businesses to sign up for a newsletter (presumably so they can subsequently make some of them "members" and argue that their agenda is not just about Big Tech and car makers' interests' in devaluing SEPs). They even try to fool the DOJ, USPTO, and NIST into believing there's a small-business concern here.

Once policy makers around the globe figure this out (for which they just need to read this post), they'll see that Save Our Standards is, in part, an astroturfing campaign. Save Our Standards just can't be trusted. If they have to come up with a fake story like that in order to make a "small business" argument, it just shows the bankruptcy of the whole claim that small app developers are impacted by SEPs. They also conflate app development (software) and IoT products (hardware). I will always be in favor of solutions--such as fair patent pools--that truly help small IoT companies license SEPs. But I reject--and even despise--scare tactics targeting small businesses (which may not figure this out for lack of IP expertise) and attempts to disinform policy makers like the DOJ or the European Commission.

While Saved Our Standards described itself in its original announcement as "a broad-based group of 28 innovators that includes small, medium and large businesses, associations, academics, and civil society organizations," it's just ACT | The App(le) Association by any other name. The initial press release quoted only one person--ACT's president--and provided an ACT email address in its Media Contact section:

I've previously criticized ACT's astroturfing and applauded Microsoft for withdrawing from it after more than two decades. The Save Our Standards campaign is just a new label for ACT, with support from Big Tech groups like the High Tech Inventors Alliance (HTIA), Computer & Communications Industry Association, and Software & Information Industry Association (SIIA). Apple, Google, and Amazon are additionally direct members (not just through the aforementioned Big Tech groups). And there are some automotive companies like Continental and Honda, as we ll as their Alliance for Automotive Innovation (AAI).

That's obviously not a "a broad-based group of 28 innovators that includes small, medium and large businesses" (emphasis added). If you wonder where all those small businesses are, they have a fig leaf, though, and it's named MotionMobs. I venture to guess they either pay that one directly for its services or there are some indirect incentives in place.

MotionMobs is a contract software developer, especially contract app developer. It's not a lie that MotionMobs is small. The untruth here is that MotionMobs allegedly has a problem with SEPs. MotionMobs doesn't need to license SEPs or fend off SEP infringement lawsuits any more than you or I need to license patents on nuclear reactor technology.

Here's what Save Our Standards tweeted just about a week ago (on March 29). Being the drama kings and queens they are, their Twitter profile picture says "SOS." If they're drowning in anything, it's the disingenuity of the following:

Let that sink in:

"Our member @motionmobs joins @gigastacey 'The Internet of Things Podcast' to discuss the impact of #sepabuse on #smallbusiness"

@gigastacey is Stacey Higginbotham, an IoT blogger and podcaster. She got paid by Save Our Standards to spread patent policy propaganda. I don't blame her: she probably doesn't understand patent law, thus couldn't know what she was being used for.

Episode 364 of Stacey's Internet of Things Podcast podcast (dated March 24, 2022) was sponsored by Save Our Standards. The relevant part begins at 36m06s, and it's so obvious that MotionMobs just parroted talking points prepared by ACT and most likely recorded those messages as opposed to answering in real time. Here's my transcript, with comments:

STACEY HIGGINBOTHAM: "But first a message from our sponsor [...] This week's sponsor is Save Our Standards. Save Our Standards brings together a cross-section of industries to advocate for a fair and transparent standard-essential patent licensing system. And I have Emily Hart, who is the COO of MotionMobs, which is a software consulting and development firm based in Birmingham, Alabama, here to talk to us about Save Our Standards."

COMMENT: If they want to advocate for a fair and transparent SEP licensing system, maybe they should do so in a fair and transparent way. The sponsorship notice is, of course, transparent. But it's astroturfing to claim that MotionMobs has any SEP issues.

STACEY HIGGINBOTHAM: "Hi Emily, can you talk a little bit about standard-essential patents and the way MotionMobs uses them when developing tech-driven solutions for your clients?"

COMMENT: The honest answer would be that MotionMobs uses SEPs in its app development just like anybody uses them when making a phone call or browsing the Web with a smartphone. They don't implement standards, period.

EMILY HART: "Standard-essential patents are part of wireless standards that go far beyond smartphones. They're used in everything these days from smart manufacturing to vehicles. One of the reasons that we joined SOS is really to deepen our knowledge of what's going on in the policy landscape around SEPs and to share our perspective as a small business. As app developers at MotionMobs we fairly rely on a healthy functioning ecosystem that grants us access to the hardware components that our software needs."

COMMENT: Are you kidding me? You're worried about "access to the hardware components [y]our software needs?" What's the problem then? You can't buy an iPhone at the next Apple Store? LMGTFY: the nearest one is on 217 Summit Boulevard, Birmingham, AL.

EMILY HART (cont'd): "When we developed GuideSafe, Alabama's official COVID-19 exposure notification app in 2020, that software hinged entirely on privacy-protecting Bluetooth tech and right now we have another health tech product that's in development. It's being designed for a very specific line of healthcare display units in hospital. Neither of these projects would even be possible without fair access to the standard-essential-patented components in the units that we're developing for."

COMMENT: Give me a break. There's nothing in or about your app that would expose you to any SEP-related risk (other than the risk any of us have when we use our phones).

Let's even forget about the fact that Bluetooth practically never gives rise to any litigation (or to complaints about unfair licensing terms). Even if we assumed for the sake of the argument that there were lots of abusive Bluetooth SEP holders out there preying on small businesses, MotionMobs wouldn't have to worry because its app just uses the Bluetooth functionality of an iPhone or Android phone. Your "fair access to the standard-essential-patented components" is provided by the iOS or Android APIs (application programming interfaces), and it's free apart from Apple's and Google's app store tax.

Any direct infringement of Bluetooth SEPs would have to occur by the device maker, and the device maker would then infringe with or without your app. There's no indirect--for example, compulsory--infringement either. It starts with the fact that MotionMobs doesn't even publish that app. It just sold software development services to the State of Alabama, which published the app. And, by the way, even the State of Alabama doesn't have to worry: if all else failed (and there'd be other strong defenses), U.S. states are not liable for patent infringement because patent law is federal law, which the states are immune to under the Eleventh Amendment. (The federal government waived its immunity, but the only remedy patent holders have is fair compensation in the Court of Federal Claims.)

STACEY HIGGINBOTHAM: "And as a small business in the IoT ecosystem, why is it important to educate yourselves about licensing standard-essential patents?"

EMILY HART: "Small businesses like us have limited resources and most don't have access to a general counsel for navigating malicious threats from SEP holders or hostile negotiations. Education is the key in protecting all small businesses against being forced to take a bad deal or halting production or distribution due to a licensing dispute or--even worse--a small business can be shut down entirely due to defending those threats."

COMMENT: Oh my. So after some weird references to access to patented components, she's now talking about the need to license patents (which for the reasons I explained above MotionMobs simply doesn't have to), she then makes it sound like MotionMobs' development work could be "halted" or their apps couldn't be distributed.

Now, I do agree with those astroturfers that "education is the key." That's why I'm writing this post: to debunk a total lie.

EMILY HART (cont'd): "MotionMobs also supported a recent draft statement from DOJ NIST USPTO on regulating the licensing of standard-essential patents because we believe it would lead to a more balanced system for all players. Standard-essential patent holders, of course, would receive fair compensation for their patented technologies, but we also need to make sure that small and large innovators alike would be ensured of their access to the standards needed to develop and sell their product."

You don't need to make this sure. It's already ensured. You don't infringe directly (to any greater extent than other smartphone users), nor indirectly--and the State of Alabama is even free to infringe (sovereign immunity). But if Save Our Standards (i.e., ACT | The Apple Association) or any of its backers are your customers, companies like Apple and Google indeed do have to license SEPs.

The DOJ, NIST, and USPTO should not take a submission seriously that is signed by a company that doesn't even face any SEP issues.

STACEY HIGGINBOTHAM: "Great! OK, so where can people find more about Save Our Standards?"

EMILY HART: "For details on the coalition, resources about standard-essential patent licensing and to share your email to stay in touch with our activities and news, visit us at www.saveourstandards.com."

COMMENT: What a puff piece, designed to recruit clueless small companies as members (because they struggle to underpin their small business-related SEP claims). They may even have planned to use that "interview" to disinform policy makers about the structure of their membership ("no, we're not just Big Tech, we got MotionMobs from Birmingham, Alabama") and the impact of SEPs on little app developers.

Pathetic.

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