Robert Giles took over the Chief IP Counsel role at Qualcomm, the world’s leading wireless technology innovator, in May 2021. In that role, Giles shepherds a team that is responsible for managing and growing 140,000 IP assets and oversees some of the most high-profile patent disputes in the world. Prior to that, Giles helped lead Qualcomm’s successful efforts in its global litigation with Apple. The litigation blossomed into more than 100 cases around the world before Apple finally agreed to settle.
On January 19, Qualcomm filed a brief in opposition to Apple’s petition for certiorari to the U.S. Supreme Court, arguing Apple failed to make the requisite evidentiary showing to obtain Article III standing. In 2017, Qualcomm filed suit against Apple, alleging Apple’s mobile devices infringed five of its patents, two of which are at issue here, U.S. Patent No. 7,844,037 (the ‘037 patent) and U.S. Patent No. 8,683,362 (the ‘362 patent). Apple counterclaimed, urging the court to invalidate those five patents. Additionally, Apple filed a simultaneous challenge to two of the patents through inter partes reviews (IPRs).
In mid-November, consumer tech giant Apple filed a petition for writ of certiorari asking the U.S. Supreme Court to review the Federal Circuit’s decision to dismiss Apple’s appeal of unsuccessful inter partes review (IPR) challenges to the validity of several patents owned by Qualcomm. In that ruling, the Federal Circuit found that Apple’s choice to enter a patent licensing agreement with Qualcomm covering the patents-at-issue extinguished Article III standing as to Apple’s appeals from the Patent Trial and Appeal Board (PTAB). The question presented by Apple’s petition is: “Whether a licensee has Article III standing to challenge the validity of a patent covered by a license agreement that covers multiple patents.”
The U.S. Court of Appeals for the Federal Circuit (CAFC) today dismissed Apple, Inc.’s appeal of four decisions of the Patent Trial and Appeal Board (PTAB) in favor of Qualcomm. The CAFC found that an April 2021 CAFC decision (Apple I) on related PTAB rulings, in which the court found Apple lacked Article III standing, controlled. The opinion for the court was authored by Judge Prost. Judge Pauline Newman dissented. In part, the court in Apple I held that a global settlement between Apple and Qualcomm on the terms of a license agreement meant that “the validity of any single patent would have no effect on Apple’s ongoing payment obligations,” and that Apple had therefore failed to establish standing under the reasoning of MedImmune, Inc. v. Genentech, as it asserted. The court in Apple I explained: “Ultimately, Apple’s assertions amount to little more than an expression of its displeasure with a license provision into which it voluntarily entered. Such allegations do not establish Article III standing.”
The U.S. Court of Appeals for the Federal Circuit (CAFC) yesterday dismissed two appeals filed by Apple against Final Written Decisions of the Patent Trial and Appeal Board (PTAB) finding that Apple did not prove certain claims of two Qualcomm patents obvious. The appeal stems from a suit brought by Qualcomm in the U.S. District Court for the Southern District of California for infringing claims of its U.S. patents 7,844,037 and 8,683,362. Apple subsequently petitioned for inter partes review (IPR) of claims 1–14, 16–18, and 19–25 of the ’037 patent and claims 1–6 and 8–20 of the ’362 patent. The Board held that Apple did not prove the challenged claims in either patent would have been obvious, but then Apple and Qualcomm settled all worldwide litigation between them. The parties thus moved to dismiss Qualcomm’s district court action with prejudice, which the district court granted, but Apple appealed the Board’s final written decisions anyway.
The Court of Justice of the European Union (CJEU) last week ruled against Qualcomm in an antitrust case over UMTS-compliant baseband chipsets. The case dates back to April 2010, when UK company Icera Inc. filed a complaint accusing Qualcomm of predatory pricing by supplying three chipsets to its customers Huawei and ZTE at below cost price…. The judgment gives the Commission the green light to seek a broad range of information in antitrust investigations, which may have implications for actions against other tech companies.
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.
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.
The U.S. Court of Appeals for the Ninth Circuit is set to hear oral arguments tomorrow in the closely-watched case of FTC v. Qualcomm, which will review the issue of whether Qualcomm is required to license its standard essential patents (SEPs) to modem-chip suppliers, after the district court determined that the company’s “no license, no chips” policy violated U.S. antitrust law. In May 2019, Judge Lucy Koh of the U.S. District Court for the Northern District of California 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.”
On November 25, former Director of Homeland Security Michael Chertoff wrote an opinion piece in the Wall Street Journal that chastised the Department of Energy for filing an amicus brief on behalf of Qualcomm in a case that can only be properly described as the ongoing persecution of Qualcomm at the hands of the Federal Trade Commission (FTC). What Chertoff fails to state, however, is that not only has the Department of Energy come out in support of Qualcomm, but so too has the Department of Justice, as well as many others, including former Federal Circuit Chief Judge Paul Michel. Chertoff also conveniently fails to mention the genesis of the Qualcomm case; namely that it was filed by the FTC several days prior to the end of the Obama Administration at the behest of Apple.
This week in Other Barks & Bites: the U.S. Supreme Court hears oral arguments over copyright status of the Official Code of Georgia Annotated; the Federal Circuit remands Ericsson appeal to calculate release payment in patent license; Apple, Ford and others urge the USPTO to retain policy against injunctions on companies practicing SEPs; Huawei asks the Fifth Circuit to undo the FCC’s ban preventing it from supplying U.S. networks; Sergey Brin and Larry Page relinquish executive duties at Google; U.S. antitrust regulators explore Amazon’s cloud business; Washington politicians send letter to ALI over Copyright Restatement Effort concerns; and Qualcomm challenges Judge Koh’s class action certification at the Ninth Circuit.
The Patent Trial and Appeal Board (PTAB) recently issued its first-ever preliminary guidance on motions to amend claims filed by patent owner Sanofi and, although the substituted claims haven’t escaped an obviousness challenge from Mylan, patent owners might be able to use that guidance as a roadmap for their own motions to amend claims. In other PTAB decisions between October 1 and 16, USAA escaped covered business method (CBM) reviews based on the technological invention exclusion, NHK Spring factors led the PTAB to deny two inter partes reviews (IPRs) petitioned against TRUSTID patents, oral hearings were held in Apple’s IPRs against Qualcomm, despite the patent settlement agreement between the two firms, and NuCurrent failed to avoid Samsung IPRs after arguing issue preclusion based on district court litigation of a forum selection clause in a contract between the two companies.
Here we go again! Another day, another ridiculous attack on the U.S. patent system. This time the attack comes from the R Street Institute, who claims that patents are too strong and are inhibiting American companies from achieving success in the race for leadership in the 5G marketplace and continued leadership in Artificial Intelligence (AI). R Street will hold a panel discussion on their wildly outlandish theory, for which they can’t possibly have any factual support, on Tuesday, October 15, in the Capitol Visitor Center. In the announcement they claim that patents are inhibiting American companies because Chinese telecommunications company, Huawei, asserted more than 200 patents against Verizon Communications earlier this year. Therefore—and ipso facto—patents are too strong and American companies are suffering. There may be legitimate security concerns around Huawei’s infrastructure, but to suggest that the company’s patents are at the root of these threats is in a word—Absurd!
Last week the United States Court of Appeals for the Federal Circuit issued an important decision that might be easy to overlook. In Intellectual Ventures I LLC v. Capital One Financial Corporation, the Federal Circuit dodged the antitrust question presented by finding that a prior ruling had collateral estoppel effect. Still, the arguments raised by Capital One against Intellectual Ventures are part of a disturbing trend. Unwilling licensees who engage in a scheme of efficient infringement to avoid paying for patent licenses are increasingly looking to creative antitrust theories to escape liability for their actions. Efficient infringement is a cold-hearted business calculation whereby businesses decide it will be cheaper to use patented technology without paying than to license it and pay a fair royalty to the patent owner. This calculus is made on the part of large entities who realize there are a certain number of patent owners that are just simply not going to assert their patents for one reason or another, frequently because they don’t have the money to do so. Then there is another group of those that will assert their patents but will not win. The calculation progresses to realize that there is a small group of those who are likely to both assert patents and prevail, thanks to all the hurdles put in place (i.e., patent eligibility challenges, the Patent Trial and Appeal Board, etc.). The calculation further recognizes that even if a patent owner prevails, a permanent injunction is virtually impossible to obtain as the result of the Supreme Court’s decision in eBay v. MerchExchange, and damages are likely to be minimal thanks to a continual judicial erosion in damages available to victorious patent owners. This cold-hearted business approach to using intellectual property without paying has gone on for decades, but with the weakened state of the U.S. patent system since 2006, it has grown progressively worse.
On August 30, a number of amicus briefs were filed in the FTC v. Qualcomm appeal in the U.S. Court of Appeals for the Ninth Circuit. The appeal stems from a May 2019 order finding Qualcomm liable for anticompetitive behavior and issuing “sweeping” injunctive relief. Following Judge Koh’s ruling, her opinion has been called “disastrous,” an “utter failure,” and “based on scant evidence,” and further been accused of “mangling” antitrust law. The Ninth Circuit, in granting a partial stay of the injunction, noted there were “serious questions on the merits” of Judge Koh’s decision. Three of the amicus briefs in particular point out the errors in Judge Koh’s opinions that have given rise to these “serious questions.” Retired Federal Circuit Chief Judge Paul Michel filed an amicus brief focusing primarily on patent law issues, including the smallest salable patent-practicing unit (SSPPU) concept and reasonable royalty calculation. The International Center for Law & Economics (ICLE) and Scholars of Law and Economics filed an amicus brief arguing that Judge Koh’s decision “is disconnected from the underlying economics of the case” and will cause serious harm to antitrust law. Finally, a number of Antitrust and Patent Law Professors, Economists, and Scholars filed an amicus brief highlighting how antitrust overreach, as they allege is present here, will harm innovation and arguing that the district court failed to engage in the level of real-world economic analysis as is required by this case.