Posts in Antitrust

Implementers of standard essential technology such as Long-Term Evolution (LTE) are constantly attempting to reduce costs for implementation. This behavior has led to certain inefficiencies in the marketplace, such as innovators not being compensated for their contributions to technological standards. The symbiotic relationship between innovators and implementers cannot continue where one side takes all the risk and the other side reaps all the reward. One construct put in place by innovators to extract compensation from the marketplace are patent pools that license patents that are declared essential for technology standards.

The U.S. Department of Justice and Attorneys General from 11 U.S. states filed a complaint on Tuesday in the United States District Court for the District of Columbia against Google, alleging the company is “unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States through anticompetitive and exclusionary practices.” The complaint maintains that Google has for years entered into exclusionary agreements and used anticompetitive practices to “lock up distribution channels and block rivals,” and comes after more than a year of investigation.

The 2019 USPTO-NIST-DOJ Joint Policy Statement on Standard-Essential Patents Subject to Voluntary RAND or FRAND (fair, reasonable and non-discriminatory) commitments “intended to solve [judicial] misinterpretation, and to encourage balance in our patent ecosystem, and to further strengthen patent rights,” USPTO Deputy Director Laura Peter said in her keynote at a recent IP-antitrust event. Peter delivered the remarks at an event hosted by the Eagle Forum Education & Legal Defense Fund, a conservative public policy and grassroots organization founded by the late Phyllis Schlafly, titled, “Inventing Dynamic Competition: Intellectual Property, Antitrust, and Competition” September 30 in Washington, D.C.

The Federal Trade Commission (FTC) just can’t take “no, you’re wrong” for an answer. Despite its embarrassing reversal by the Ninth Circuit Court of Appeals in August, the FTC has now appealed its Qualcomm case to the full Ninth Circuit. A three-judge appellate panel overturned the trial court’s errant ruling, giving the FTC a comeuppance in its antitrust suit against Qualcomm, the trailblazer in wireless technology with thousands and thousands of patented inventions. The sheer cliff the FTC seeks to climb features daunting crags. The appellate judges ruled unanimously. They also found fundamental problems in the trial court’s (and FTC’s) legal and factual analysis, and so they gave basic aspects of the case fresh eyes, or de novo, review. And several federal departments, including the Justice Department Antitrust Division, weighed in with the trial court in opposition to the FTC.

On August 23, Microsoft filed a declaration in support of Epic Games, Inc.’s August 13th Complaint for Injunctive Relief against Apple, Inc., in which Epic alleged that Apple has been using “a series of anti-competitive restraints and monopolistic practices” through its distribution of software applications (apps) and its processing of consumers’ payments for digital content used within iOS mobile apps (in-app content). The declaration emphasized that Epic Games’ Unreal Engine is “a critical technology” for game creators, including Microsoft. It explained that game engines provide game creators with a “developmental environment that delivers the necessary graphics, rendering, physics, sound, networking, and other technologies that enable them to build games that run on multiple platforms.”

Several weeks ago, the Antitrust Division of the U.S. Department of Justice announced a positive Business Review Letter (BRL) concluding an eight-month review of Avanci’s new platform for licensing 5G standard essential patents. “In sum, the proposed 5G Platform has the potential to yield efficiencies by reducing transaction costs and streamlining licensing for connected vehicles,” wrote Assistant Attorney General Makan Delrahim, who heads the DOJ Antitrust Division. “Together these efficiencies may allow cellular standards-essential patent owners and vehicle manufacturers to focus resources elsewhere, such as investment in further research and development in emerging 5G technologies and applications. This possibility could enhance competition in these technologies, improve safety, and benefit American consumers.” The finding that the Avanci 5G platform could enhance competition is critically important for Avanci, and positively affects the technology licensing landscape.

The U.S. Court of Appeals for the Ninth Circuit today vacated a decision of the U.S. District Court for the Northern District of California finding that Qualcomm had engaged in unlawful licensing practices and reversed a permanent, worldwide injunction against several of Qualcomm’s core business practices. In May 2019, Judge Lucy Koh issued a 233-page order finding that Qualcomm had engaged in unlawful licensing practices and ordered in part that Qualcomm “must make exhaustive SEP licenses available to modem-chip suppliers on fair, reasonable, and non-discriminatory (“FRAND”) terms and to submit, as necessary, to arbitral or judicial dispute resolution to determine such terms…[and] submit to compliance and monitoring procedures for a period of seven (7) years.” Koh’s ruling was widely criticized, and today’s unanimous opinion was a total reversal of her findings.

Notwithstanding its negative effects on the world at large, COVID-19 quarantine has been a boon to a growing group of entertainment-based apps and services. Netflix, Amazon, Zoom, and Instagram are a few of the best-known apps that many have used to break the monotony of pandemic-induced isolation. TikTok is also on the list of apps experiencing a growth surge, though chances are that your kids are more likely to have participated in a viral TikTok dance challenge than you. Unfortunately for the Chinese-owned company, this popularity among the tween-and-under set is the source of its ongoing struggles with privacy advocates and regulators.

On May 1, Representative and House Judiciary Committee Chairman Jerrold Nadler (D-NY) and a bipartisan coalition of members of the Subcommittee on Antitrust, Commercial and Administrative Law signed a letter addressed to Amazon CEO Jeff Bezos. The letter focuses on antitrust issues posed by Amazon’s alleged use of third-party seller data to develop products competing with those sellers, allegations that directly contradict testimony offered by Amazon last year during a House Antitrust Subcommittee hearing. It also calls upon Bezos to testify before the House Judiciary Committee to clear up any discrepancies between the recent Wall Street Journal article and Amazon’s prior testimony to Congress on the subject of third-party seller data.

The novel coronavirus pandemic has upended our lives, creating a far-from-normal “new normal.” And it has also given rise to countless collaborations between and among universities, hospitals, medical centers, pharma companies and others to pool their talent and resources to discover, test, manufacture and distribute diagnostics, treatments, vaccines, personal protective equipment and other resources needed to fight the pandemic. Antitrust law poses no risk to these collaborations, so long as they remain focused on their core missions. But at the same time, antitrust law recognizes that in cooperating and exchanging information and insights for those missions there is the potential for “spill-over effects” that can create antitrust risk. The trick is to know where that dividing line is and to avoid crossing over it.

Last week, as a part of the Virtual Patent Masters™ Program hosted by IPWatchdog, I had the opportunity to interview Makan Delrahim, who is Assistant Attorney General in charge of the Antitrust Division at the U.S. Department of Justice (DOJ). During his tenure at the Antitrust Division, AAG Delrahim has moved the policy of the federal government in a direction that is viewed as being more friendly to patent owners and innovators. For example, in December 2018, Delrahim indicated that the Antitrust Division was withdrawing its assent to the to the 2013 joint DOJ-U.S. Patent and Trademark Office Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (the 2013 Joint Policy Statement) during remarks delivered at the 19th Annual Berkeley-Stanford Advanced Patent Law Institute. It was the Delrahim’s view that patent remedies shouldn’t be unilaterally unavailable for one category of patent simply because the patent owner may be subject to an obligation to engage in fair, reasonable and non-discriminatory negotiations with implementers.

The U.S. Court of Appeals for the First Circuit has made brand companies think twice about creating patent thickets in the Orange Book by resuscitating an antitrust suit against Sanofi by direct purchasers of insulin glargine. In re Lantus Direct Purchaser Antitrust Litigation (Feb. 2020). The Sanofi decision provides a possible opportunity to seek antitrust liability against brand companies for abusing Food and Drug Administration (FDA) regulations. The decisions should make branded companies reconsider over-listing patents in the Orange Book, and potentially slowing down generic competition. While this decision sets the stage for further fights over what patents should not be listed as covering approved “drugs,” it also sets a clear test for courts to consider when evaluating other tactics that brands have used to create regulatory delays to stall approval of potential rival products.

On February 13, the Ninth Circuit heard oral argument in the FTC v. Qualcomm case. Counsel for Qualcomm and the Federal Trade Commission (FTC) argued primarily about whether Qualcomm’s behavior resulted in anticompetitive harm, while the attorney from the Department of Justice, which had been granted five minutes to argue on Qualcomm’s behalf, faced tough questions about claims that the district court’s injunction posed a threat to national security. While the DOJ’s intervention in this case is interesting, the best summation of the argument came from the bench when Judge Stephen Murphy, District Court Judge of the Eastern District of Michigan sitting by designation stated: “Anticompetitive behavior is prohibited under the Sherman Act. Hyper-competitive behavior is not. This case asks us to draw the line between the two.”

On January 26, CBS broadcast the 63rd Annual Grammy Awards, which celebrated America’s finest recording artists and songwriters. Drawing a global audience with performances by super stars such as Aerosmith, Blake Shelton, and Ariana Grande, the event highlighted the music industry’s talents, innovation, and extraordinary financial success. Yet, what keeps the music flowing in a thriving marketplace is the fair operation of the performing rights license marketplace made possible by vigilant antitrust enforcement. The Department of Justice, Antitrust Division (the Department) is currently reviewing the consent decrees between the federal government and two performance rights organization behemoths: ASCAP (American Society of Composers, Authors, and Publishers) and BMI (Broadcast Music, Inc.). While conducting periodic reviews of antitrust law is smart policy, altering or scrapping the music decrees would be a mistake.

The pharmaceutical industry presents some of the most important and challenging issues lying at the intersection of the patent and antitrust laws. On the one hand, patents play a crucial role in the industry, which is unique in the cost and duration of reaching the market. But on the other, a complicated regulatory regime and the event of generic entry (which dramatically lowers price and which the brand firm has interest in delaying) opens the door for potentially anticompetitive behavior. One area where this tension has surfaced in recent years has involved the settlement of patent litigation. In 2013, in FTC v. Actavis, the Supreme Court held that agreements by which brand-name drug companies pay generics to settle patent litigation and delay entering the market could have “significant anticompetitive effects” and violate the antitrust laws.