Posts Tagged: "Antitrust"

Judge Douglas Ginsburg of the U.S. Court of Appeals for the D.C. Circuit, Professor Joshua Wright, and attorney Lindsey Edwards of Wilson Sonsini Goodrich & Rosati, have condemned the decision in FTC v. Qualcomm Inc. (N.D. Cal. May 21, 2019) in the George Mason University Law & Economics Research Paper Series. In their paper, “Section 2 Mangled: FTC v. Qualcomm on the Duty to Deal, Price Squeezes, and Exclusive Dealing,” the authors characterize the decision as being a part of “the misguided trend of using antitrust law to intervene in contract disputes between sophisticated parties negotiating over intellectual property rights.”

On July 15, retired Federal Circuit Chief Judge Paul Michel filed an amicus brief in Qualcomm’s appeal of the Federal Trade Commission’s (FTC) antitrust case to the U.S. Court of Appeals for the Ninth Circuit. The following day, the United States government filed a statement of interest with the appellate court as well. Both parties filed in support of Qualcomm’s request for a partial stay of an injunction handed down this May in the Northern District of California, which requires Qualcomm to license its standard essential patents (SEPs) to modem-chip suppliers after determining that the company’s “no license, no chips” policy violated U.S. antitrust law.

A hearing of the House Subcommittee on Antitrust, Commercial, and Administrative Law held yesterday examined whether big tech companies—Amazon, Google, Facebook, and Apple—are becoming too powerful and deterring innovation. In “Online Platforms and Market Power, Part 2: Innovation and Entrepreneurship,” Subcommittee Chair, Representative David Cicilline (D-RI), said that Google controls search, Amazon controls nearly half of all online U.S. commerce, Facebook captures over 80% of global social media revenue, and Apple has total power over their customers’ devices. In his opening statement, Cicilline took issue with the 30% commission Apple charges on every developer sale in the first year, and 15% thereafter, pointing to this year’s Supreme Court decision in Apple v. Pepper which held that iPhone owners can sue Apple for monopolizing the retail market for the sale of apps, thereby raising prices for consumers. “A former Apple executive who oversaw app store approvals for seven years has also described Apple as having ‘complete and unprecedented power over their customers’ devices and using this power as a weapon against competitors,’” Cicilline said.

On May 2, the Antitrust Division of the U.S. Department of Justice (DOJ) took the unusual step of submitting a Statement of Interest in the Federal Trade Commission’s (FTC’s) case against Qualcomm to take a position contrary to the FTC. The DOJ argued that “[b]ecause an overly broad remedy could result in reduced innovation, with the potential to harm American consumers, this Court should hold a hearing and order additional briefing to determine a proper remedy that protects competition while working minimal harm to public and private interests.” In response, the FTC informed the court that it “did not participate in or request” the DOJ’s filing, that it “disagree[d] with a number of contentions” made by the DOJ, and that the DOJ “misconstrues applicable law and the record.” In the end, the court agreed with the FTC and issued injunctive relief against Qualcomm without conducting the further remedy proceedings the DOJ advocated. The public feuding between the two federal antitrust enforcement agencies about how to resolve a case litigated by one them was a remarkable spectacle. It also brought into focus a broader divide between the FTC and DOJ on the role of antitrust law in addressing patents that are essential to industry standards (SEPs) and subject to commitments to license on fair, reasonable, and non-discriminatory (FRAND) terms.

This week on Capitol Hill, the Senate IP Subcommittee will hold its third and final hearing on patent eligibility issues that currently exist in the U.S. patent system. Elsewhere in the Senate, hearings will focus on privacy issues posed by data brokers as well as Federal Communications Commission oversight. Hearings over at the House of Representatives will discuss topics including NASA’s science mission, sexual harassment issues within the scientific professions, and research leading towards increased use of renewable energy sources. The Information Technology and Innovation Foundation will also host an event to explore new tax models affecting U.S.-based Internet services companies.

In a June 4 op-ed to IPWatchDog, James Edwards launched a scathing attack against Judge Koh and her 233-page ruling, which found Qualcomm to have engaged in anticompetitive behavior against competitors within the cellular chipset market. However, just as Mr. Edwards claims Judge Koh failed in her undertaking, so too has Mr. Edwards by ignoring the context and facts of the case. His argument against Judge Koh, deliberately or otherwise, does not mention the fact that this case involved the licensing of standard essential patents (SEPs) subject to the FRAND commitment, a contract between the patent holder and the standard setting organization to license the relevant patents on “fair, reasonable, and non-discriminatory” terms. Indeed, Mr. Edwards makes no mention of standard essential patents in a deliberate attempt to obfuscate the facts and fit a narrative that intellectual property rights writ large are under attack by this decision.

If a judge ever botched an antitrust case involving patents, the prize may go to federal district Judge Lucy Koh for her ruling in favor of the Federal Trade Commission (FTC) in its antitrust action against Qualcomm. The intersection of intellectual property and antitrust is riddled with land mines and booby traps. The danger of getting an IP issue in this vicinity wrong becomes all the more likely after the Koh ruling and, thus, all the more dangerous and far-reaching. Judge Koh managed to step on several trip wires in her decision for the FTC in a case that should never have been brought, never tried, and should have been withdrawn or dropped. The damage from this ruling will reverberate far beyond the global leader in wireless connectivity technology the FTC unfairly hammered in this case. “Patents are a form of property,” Assistant Attorney General for Antitrust Makan Delrahim has said, “and the right to exclude is one of the most fundamental bargaining rights a property owner possesses. Rules that deprive a patent holder from exercising this right . . . undermine the incentive to innovate.” Basic principles like property rights, exclusivity, dynamic competition and the incentive to innovate escaped Judge Koh’s grasp.

In a 233-page Order issued yesterday, Judge Lucy Koh of the United States Federal District Court for the Northern District of California handed Qualcomm a stinging defeat in the case brought by the Federal Trade Commission (FTC) alleging that Qualcomm engaged in unlawful licensing practices. It was just three weeks ago that Apple and Qualcomm entered into a peace treaty. The revelations about Apple’s coordinated efforts to manipulate the licensing market by shrewdly challenging inferior patents to beat down prices should have led to the FTC dropping its pursuit of Qualcomm. It is no secret that Apple has urged regulators all over the world to chase Qualcomm for alleged anticompetitive licensing practices, but it has now come out in federal court proceedings that Apple just didn’t like the rate it agreed to pay Qualcomm and decided to manipulate the marketplace and then use that manipulation to pull the wool over the eyes of regulators, including the FTC, in an attempt to leverage a better deal with Qualcomm.Apple succeeded in achieving peace with Qualcomm, although the company has been badly beaten by Apple in near collusion with regulators all over the world. So why would the FTC continue to persecute Qualcomm given the revelations in the Apple/Qualcomm litigation that demonstrate that Qualcomm did not seek an unreasonably high licensing rate?

This week in Other Barks & Bites, IPWatchdog’s IP news roundup: the House of Representatives passes drug patent legislation, while antitrust legislation targeting patent-related activities is introduced into the Senate and the Trump administration mandates pricing information for pharmaceutical ads; the Patent Trial and Appeal Board (PTAB) issues a pair of precedential decisions on cases with multiple petitions; the USPTO issues marijuana-related trademark guidelines and a notice on modifying patent term adjustment practices; Gilead strikes a settlement with Teva to bring generic Truvada to the U.S. market in 2020; a new music licensing entity is created in Canada; Fourth Circuit rules that bankruptcy can eliminate damages for trade secret violations; and several amicus file briefs asking the U.S. Supreme Court to eliminate the Federal Circuit’s “blocking patent” doctrine.

This week in Other Barks & Bites: the U.S. Patent and Trademark Office promotes Scott Boalick to Chief Judge of the Patent Trial and Appeal Board (PTAB); the agency also announces a new pilot program for motions to amend at the PTAB; India’s Cabinet votes to bring trademark and industrial design law into accord with international standards; a trial date is set in the copyright case brought by the heirs of Marvin Gaye against Ed Sheeran; a Southern California district judge rules that a Dr. Seuss/Star Trek mash-up is a transformative fair use; Apple alleges that someone has tampered with a key witness in the Qualcomm patent infringement case; and UK finance ministers issue a report calling for more antitrust activity against American tech giants, including Facebook and Google.

This week on Capitol Hill, the Democrat-controlled House of Representatives has planned a number of hearings on climate change and antitrust matters, especially where the T-Mobile/Sprint merger is concerned. In the Senate, cybersecurity takes center stage at the Senate Homeland Security and Energy Committees. Elsewhere in Washington, D.C., the Brookings Institution got the week started early with a look at the impacts of artificial intelligence on urban life; Inventing America hosts a half-day event looking at current issues in the U.S. patent system; and the Information Technology & Innovation Foundation examines the future of autonomous vehicles in the freight industry.

This week in Other Barks & Bites: the Federal Circuit affirms a Section 101 invalidation of patent claims in favor of Mayo Collaborative Services; Apple wins an order to limit damages in Qualcomm patent case; Google frets over proposed European Union copyright rules; India proposes jail time for film piracy; patent validity challenges drag down the stock of a major pharmaceutical firm; and a snag in the U.S.-China trade talks throws Wall Street for a loop.

5G, or 5th generation wireless communication, has reached the point of determining which core technologies will be used. Suddenly, decisions about which companies will be picked are upon us. And the stakes could hardly be higher — for the companies and for our national (and American citizens’) security. The two businesses in the ring, Qualcomm and Huawei, each find themselves in a tough fight to dominate the IP-based 5G technology on which countless devices—from automobiles to mobile phones to who-knows-what—will interoperate. The 5G platform will empower the Internet of Things, artificial intelligence writ large and more—a technological advance with tremendous potential as well as tremendous risk exposure to spies, hackers and such. Both companies face hurdles from the U.S. government. One makes sense. The other makes no sense.

Secure cloud communications provider Ribbon Communications announced it would continue to enforce its intellectual property rights in the face of what it called “baseless attacks” by its UK-based cloud competitor Metaswitch Networks. Ribbon decried a recent antitrust lawsuit filed against it by Metaswitch and charged its competitor with continuing to infringe upon Ribbon’s patent claims despite earlier jury verdicts in district court which found that Metaswitch was infringing upon those asserted claims. Ribbon Communications’ announcement follows a lawsuit filed by Metaswitch Networks on November 19th in the Southern District of New York. “It is disappointing that Metaswitch is attempting to relitigate claims that it already lost in federal court,” said Ribbon CEO Franklin “Fritz” Hobbs. “Ribbon will not be deterred by these actions, and we look forward to having Ribbon’s intellectual property rights vindicated and Metaswitch finally paying for its misappropriation of Ribbon technology.”

On Thursday, August 9th, San Diego, CA-based semiconductor developer Qualcomm Inc. announced that it reached a mutually agreed settlement with the Taiwan Fair Trade Commission (TFTC) which greatly reduces the financial penalty assessed to Qualcomm by the TFTC for antitrust issues. Although the TFTC will retain about $93 million USD in fines which have been paid by Qualcomm through July, the settlement eliminates the remainder of the original fine valued at $773 million USD and issued by Taiwan’s fair trade regulator last October.