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. 
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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.
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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:
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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.
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On Friday, the U.S. Department of Justice (“DOJ”) announced that it was closing its investigation into Samsung’s use of standard essential patents, which investigation had “focused on Samsung’s attempts to use its SEPs to obtain exclusion orders from the [ITC] relating to certain iPhone and iPad models.”  DOJ stated that further investigation was no longer

Late last week, the American Antitrust Institute submitted a very interesting petition to the U.S. Dept. of Justice and the Federal Trade Commission.  In the petition, which is titled “Request for Joint Enforcement Guidelines on the Patent Policies of Standard Setting Organizations,” the AAI urges these agencies to step up their enforcement of the antitrust laws with respect to SSOs themselves — not merely the participants in the standard-setting process.  To that end, the AAI requests that the FTC/DOJ (1) issue specific guidelines for what should be included in SSO patent policies, and (2) hold SSOs liable for not adopting procedural safeguards to prevent patent hold-up behavior.
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Back in December 2012, the Federal Trade Commission and the Department of Justice held a joint workshop to explore the impact that patent assertion entities (PAEs — or non-practicing entities/NPEs) may be having on innovation, competition, and the U.S. economy.  The FTC and DOJ invited the public to submit comments for consideration by the agencies, even extending the deadline for submission until early April.  All in all, 68 separate submissions have been received and posted on the FTC/DOJ workshop’s site.

The commenters represent a wide variety of industries and interests, and express divergent viewpoints and positions about the effects of PAE activity.  Many comments focus on the newly-reintroduced SHIELD Act.  Given that the main focus of this blog is on standard-essential patent issues, we won’t even try to give a comprehensive rundown of all of the comments — we’ll leave the focus on non-practicing entities to others.  But several of the comments do express particular concern about the interplay between PAEs, standard-setting organizations and standard-essential patents.  After the jump, we’ll discuss some of these issues that are being flagged as troublesome.


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