Wednesday, November 27, 2019

FTC v. Qualcomm: Amicus Briefs in Support of the FTC

Happy Thanksgiving to my U.S. readers.  You (and others) may be interested to note that the following amicus briefs have now been filed in support of the Federal Trade Commission in FTC v. Qualcomm:

1.  Brief of Amici Curiae Law and Economics Scholars in Support of Appellee and Affirmance.  This brief, signed by forty scholars--including lead authors Mark Lemley, Doug Melamed, and Steve Salop, along with inter alia Rich Gilbert, Herb and Erik Hovenkamp, Dan Rubinfeld, and Fiona Scott Morton (and me)--focuses primarily on why Qualcomm's no license, no chips policy constitutes unlawful monopoly maintenance in violation of Sherman Act section 2.

2.  Brief of Amicus Curiae Professor Jorge L. Contreras in Support of Appellee and Affirmance.  Professor Contreras has posted the brief on ssrn, along with the following abstract:
Qualcomm participated in the development of 3G and 4G wireless telecommunication standards under the auspices of two SDOs, the Telecommunications Industry Association (“TIA”) and the Alliance for Telecommunications Industry Solutions (“ATIS”). Each of these SDOs had adopted intellectual property rights policies (IPR Policies) that required their participants to grant licenses of SEPs to implementers of their standards on FRAND terms. Yet, over the course of several years, Qualcomm refused to license its SEPs to numerous actual and potential modem chip rivals including MediaTek, Project Dragonfly (a joint venture of NTT DoCoMo, Samsung and several Japanese manufacturers), Samsung, VIA Telecom, Intel, HiSilicon (a subsidiary of Huawei), Broadcom, Texas Instruments, and LGE. The district court also found that when Qualcomm did license its SEPs to smartphone vendors, its royalty rates were “unreasonably high.”
Accordingly, the district court found that Qualcomm violated its FRAND commitments to ATIS and TIA, as well as Sections 1 and 2 of the Sherman Act, and Section 5 of the FTC Act. As a remedy, the district court entered an injunction that, inter alia, required Qualcomm to license its SEPs on FRAND terms to rival chip makers, and to renegotiate its existing SEP licenses to reflect reasonable royalty rates. Qualcomm now appeals.
This brief seeks to draw to the Court’s attention historical, practical and policy matters pertaining to technical standardization that bear on the arguments made on appeal by Qualcomm and its federal agency amici curiae. In particular, this brief argues that: (1) the district court was correct to conclude that Qualcomm is required to license its SEPs to all applicants on FRAND terms, (2) the “reasonable” royalty level required by Qualcomm’s commitments to the relevant SDOs should not be measured by Qualcomm’s own royalties charged to others, and (3) enforcement of the district court’s injunction against Qualcomm will not threaten U.S. national security, and the arguments made to that effect mischaracterize or misunderstand the nature of both patent law and standards.
Qualcomm has undeniably played a significant role in the development of wireless telecommunications technology. However, the antitrust laws must be enforced rigorously and even-handedly to eliminate anticompetitive conduct. An enterprise that has engaged in anticompetitive conduct should not be excused simply because it contributes to the national economy or to national infrastructure or defense. Giving Qualcomm special treatment in this case would open the door to such arguments in practically every antitrust case involving major industrial or technology players. And, as such, the force of the antitrust laws would be severely weakened to the detriment of American competition and consumers. Accordingly, this brief urges the Court to affirm the decision and order of the district court.
3.  Three other amicus briefs also have been filed today--by the Open Markets Institute, the Computer and Communications Industry Association, and by ACT | The App Association--and argue, inter alia, that Qualcomm has an antitrust obligation to license its patents on FRAND terms.

Update:  Several more amicus briefs were filed on Friday, November 29, by among others Intel, MediaTek, R Street Institute, and the American Antitrust Institute and Public Knowledge.  I'll try to catch up on these over the coming week. 

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