Yesterday, Judge Koh of the U.S. District Court Northern District of California entered a Judgment following the January 2019 trial based on her Findings of Fact and Conclusions of Law that Qualcomm violated the Federal Trade Commission Act. This is a lengthy, 233 page decision and we will provide a summary soon, but provide now
Last week, the U.S. Federal Trade Commission (FTC) Staff filed a response that attacks the U.S. Department of Justice (DOJ) Statement of Interest in the FTC v. Qualcomm case. (See May 3, 2019 post on DOJ Statement of Interest). FTC Staff stated that it did not request the DOJ filing, which FTC Staff called untimely. FTC Staff also indicated that the focus of DOJ’s Statement of Interest–the need for briefing and an evidentiary hearing on remedy–was misplaced because evidence of remedy already has been considered and the trial court already decided not to consider remedy separately. And FTC Staff disagrees with DOJ’s view of the law.
The FTC Staff position is not unexpected given the differing views of the role of competition law with standard essential patents between the FTC Staff’s position (which was set when this case was filed as a parting-shot in the last few days of the old administration) and the current DOJ administration. That FTC Staff would take off the gloves so soon and start exchanging public, adversarial blows with its sibling agency is a bit unexpected. But, of course, they may argue that DOJ drew first blood in filing the Statement of Interest. …
Today, the U.S. Department of Justice (DOJ) filed a Statement of Interest of the United States of America in the Federal Trade Commission’s (FTC) antitrust lawsuit against Qualcomm about standard essential patent licensing. DOJ does not currently take a position on the merits of the FTC’s liability claim against Qualcomm that is awaiting decision by the district court following a January trial, but is making the court aware that there should be separate briefing and an evidentiary hearing on remedy if the court finds that Qualcomm is liable. This is a very interesting development with implications beyond the instant case with much reading between the lines–and the good stuff buried in footnotes–as to what is to come. Somewhat like the first 10 minutes of last week’s Game of Thrones episode “The Long Night” where warriors lined-up for some kind of battle to happen but it was not clear what exactly that would be.…
This is the first of a couple posts we intend to make on the FTC v. Qualcomm litigation that recently concluded a bench trial last week and is awaiting decision by Judge Koh in the Northern District of California (San Jose Division) federal court. This case occurs at a historical point of opportunity and transformation…
Administrative Law Judg (ALJ) Lord at the U.S. International Trade Commission (ITC) recently issued an Order striking patent misuse claims against Philips Lighting (Philips) raised by WAC Lighting and other respondents that were premised on Philips filing its Complaint in the ITC without making a license available “on standard (reasonable) and non-discriminatory terms.” This ruling provides incremental guidance on the specificity needed to plead a competition law claim based on standard essential patents (SEPs), including allegations of specific facts showing the anticompetitive effect of alleged improper SEP licensing activity.…
Magistrate Judge Fallon recently Recommended Dismissing competition law counterclaims brought by TCT Mobile (TCT) against Godo Kaisha IP Bridge 1 (IP Bridge) and Panasonic and Judge Bataillon has now Adopted that ruling. Those counterclaims were based on alleged improper conduct relating to standard essential patents (SEPs) on European Telecommunications Standards Institute (ETSI) 2G, 3G and 4G wireless standards that IP Bridge acquired from Panasonic after those standards were adopted. While the standards were under development, Panasonic had committed to license the SEPs on fair, reasonable and non-discriminatory (FRAND) terms. TCT’s competition law counterclaims generally concerned allegations that:
- Panasonic made FRAND commitments it did not intend to keep in order to induce the standards body to keep Panasonic’s technology in the standards;
- After the standards were adopted, Panasonic transferred the patents to IP Bridge which offered to license the patents on terms that were not FRAND and
- There was some type of improper concerted action between Panasonic and IP Bridge (this aspect is fairly redacted and unclear).
This case presents an interesting nuance of competition claims against a party (IP Bridge) that acquired SEPs from an original owner (Panasonic) who made a FRAND commitment. In this case, TCT alleged that something about the transfer of the patents to IP Bridge was meant to circumvent Panasonic’s FRAND commitment (but the details of those allegations are redacted in the public court documents).
This case also indicates that an antitrust injury-in-fact cannot arise solely from a patent owner filing an infringement lawsuit on FRAND-committed SEPs. That’s because a successful FRAND defense by the accused infringer will lead to remedies consistent with the FRAND commitment and, in any event, any relief ultimately granted by the court would be lawful.
The decision also has a unique procedural posture. This is a decision by a magistrate judge that recommends to the presiding district court judge how to rule on the issue. Such magistrate judge recommendations are common in patent cases. The presiding district court judge usually adopts a magistrate judge’s recommendation, but is not required to do so. So we will await the district court judge’s decision whether to adopt Judge Fallon’s recommendation here.
Further, this decision concerns a Rule 12(b)(6) motion to dismiss causes of action based on the initial pleadings. Such motions are difficult to win because of the tremendous deference the court must give to the challenged pleading — e.g., the court considers whether TCT states a “plausible” claim if the court assumes (without deciding) that all factual allegations TCT raises are true and draws all reasonable inferences in TCT’s favor. And courts are even more reluctant to grant a Rule 12(b)(6) motion against competition law claims, which may be factually complex and require information in the hands of the alleged wrong-doer that can be obtained only in discovery. In this case, however, TCT apparently had almost a year of discovery and two attempts to plead its competition law claims, which may have provided the court more comfort in its dispositive ruling here.…
Yesterday, the U.S. Department of Justice (DOJ) Assistant Attorney General (AAG) for the Antitrust Division Makan Delrahim spoke in Brussels about maintaining a close working relationship and coordination with European Union’s Directorate General for Competition (DG Competition) in competition law enforcement. AAG Delrahim’s remarks included suggestion that the European competition authorities shift toward the more balanced approach to standard essential patents (SEPs) that he recently articulated for the U.S. (See our Dec. 20, 2017 post on AAG Delrahim’s remarks on shift in U.S. DOJ’s SEP enforcement approach). Some key points in AAG Delrahim’s remarks include:
- “I believe that strong protection of these [IP] rights drives innovation incentives, which in turn drive a successful economy.”
- “I worry that we have strayed too far in the direction of accommodating the concerns of technology licensees who participate in standard setting bodies, very likely at the risk of undermining incentives for the creation of new and innovative technologies.”
- The tension between innovators and implementers “is best resolved through free market competition and bargaining. And that bargaining process works best when standard setting bodies respect intellectual property rights … including the very important right to exclude.”
- If a patent owner violates a standard-setting commitment, “remedies under contract law, rather than antitrust remedies, are more appropriate to address licensee’s concerns.”
Below is a a complete excerpt of AAG Delrahim’s remarks in Brussels with respect to intellectual property and SEPs:…
European and U.S. competition authorities may be making a course correction toward a more balanced approach to standard essential patents (“SEPs”) following contemporary enforcement activity that had favored implementers over patent holders.
Specifically, recent remarks by the new administration’s U.S. Department of Justice (“DOJ”) antitrust head explained that patent hold-up by patent owners may not be as big an issue as some had suggested and that patent hold-out by implementers may be a bigger concern. Indeed, he expressed concern about improper collusion among implementers within standard setting organizations (“SSOs”) to enact intellectual property rights (“IPR”) policies that unduly devalue patents and undermine innovation. These remarks from the new administration has caused many to question the viability of the IEEE ‘s 2015 IPR Policy change that was perceived as very implementer oriented, but not challenged by the prior DOJ administration. (See our Feb. 5, 2015 Post about the prior DOJ administration’s business review letter on the IEEE policy change).
Further, the European Commission (“EC”) recently issued non-binding guidance for SEPs that did not suggest bright line rules urged by implementers for negotiating SEP FRAND licenses–e.g., did not suggest component-level licensing and royalty base, rather than end product level—and reflects a balanced approach more consistent with long-standing industry custom and practice in implementing FRAND licensing commitments.
We provide a summary of these statements, but encourage you to read the DOJ remarks and EC guidance directly for yourself (they are not long), which may allow you to detect and avoid interpretive spin from those entrenched on either side of the issues. For example, some have suggested that the EC guidelines support licensing at the component level; but that’s not what the EC guidelines actually say and its been reported that the EC intentionally declined to suggest component-level licensing in these guidelines.…
The U.S. Trade Representative (USTR) issued its annual 2017 Special 301
Report FINAL that “reviews the state of IP protection and enforcement in U.S. trading partners around the world.” (Report at 1). The report aims to “call out foreign countries and expose the laws, policies, and practices that failed to provide adequate and effective IP protection and enforcement for U.S. inventors, creators, brands, manufacturers, and service providers.” (Report at 1). Among the issues raised in this report are concerns that a foreign government may force U.S. standard essential patent (SEP) holders to enter license terms that devalue the patent and subject them to improper competition law enforcement.…
The Korea Fair Trade Commission (“KFTC”) recently issued a press release stating its intent to issue a written decision that will impose an $865 Million sanctions and a corrective order against Qualcomm for abuse in licensing standard essential patents (“SEPs”) in the mobile communications industry. Specifically, on December 28, 2016, the KFTC released a three-page English-translated summary of a 27-page Korean-language press release. Qualcomm issued its own press release, which includes an unofficial English translation of the 27-page KFTC press release.
This was only a press release by the KFTC and an actual written decision has yet to issue from which any action will be taken. Accordingly, at this point we provide a summary of the KFTC Press Release and conclude with important questions or issues to look for when the actual written decision of the KFTC issues. For example, Korean-based Samsung had some of the same or similar licensing practices as U.S.-based Qualcomm and prevailed in U.S. litigation on whether such practices breached the same ETSI FRAND obligations at issue here. The KFTC written decision may show why Samsung’s activities were okay, but Qualcomm’s were not.
To be clear: This is a summary based on a review of an unofficial translation of the KFTC Press Release and may not reflect actual facts or the facts and theories upon which the KFTC ultimately bases its written decision. In other words, assume that the qualification “The KFTC Press Release may indicate that …” applies to everything below since there could be error in the KFTC’s factual findings, the unofficial translation of it, or our summary thereof.…