Is there a duty to license Standard Essential Patents to competitors? FTC v Qualcomm Case 5:17-cv-00220-LHK C. Nor

This post will discuss a summary judgment by a district court in California – the one responsible for most cases in Silicon Valley – on whether Qualcomm’s refusal to license its Standard Essential Patents (SEPs) to competitors infringed the non-discrimination limb of RAND commitments and, by extension, s. 5 of the FTC Act. The decision is available here. Background Cellular communications depend on widely distributed networks that implement cellular communications standards. These standards promote availability and interoperability of standardized products regardless of geographic boundaries. Standard-setting organizations (“SSOs”) – such as the Telecommunications Industry Association (“TIA”) and the Alliance for Telecommunications Industry Solutions (“ATIS”) in the United States, and the European Telecommunications Standards Institute (“ETSI”) in Europe – have emerged to develop and manage the relevant cellular standards. The cellular communications standards that SSOs develop and adopt may incorporate patented technology. In order to prevent the owner of a patent essential to complying with the standard—the “SEP holder”—from blocking implementation of…

When is a licence FRAND? The Court of Appeal judgment in Unwired Planet v Huawei

This judgment – which can be found here – is on appeal from Unwired Planet v Huawei judgment on the licensing of Standard Essential Patents (SEP) that I reviewed here. The Court of Appeal begins by explaining the link between the potential for anticompetitive abuse of SEPs and the imposition of FRAND licensing terms. After all: ‘the potential for anti-competitive behaviour is obvious. The owner of a SEP has the potential ability to “hold-up” users after the adoption and publication of the standard either by refusing to license the SEP or by extracting excessive royalty fees for its use, and in that way to prevent competitors from gaining effective access to the standard and the part of the telecommunications market to which it relates.’ It then moves on to review the factual background of the case and the High Court’s decision. In short, Unwired Planet acquired patents from Ericson that cover many of the foundational technologies that allow mobile devices…

Ashish Bharadwaj ‘A note on the neglected issue of reverse patent holdup’. (2018) Journal of Intellectual Property Law & Practice 13(7) 555

The purpose of this article – which can be found here – is to provide a comparative analysis of EU, US and Indian case law on reverse patent holdup in the context of standard essential patent licensing. The piece is structured as follows: The paper begins with a discussion of patent holdup and reverse holdup in general terms. Technological standards have become ubiquitous. Such standards foster interoperability, avoid inefficient rivalry between competing systems and facilitate competition in downstream product markets. It has been held that firms that commit their patents to a standard – and thereby own standard essential patents (SEPs) for the purposes of that standard – often abuse their dominant position by demanding excessive royalties or by seeking injunctive relief against infringers of their essential patents. Owning a SEP provides its holder with a certain amount of market power, because users of the standard must reach a licensing agreement with the patent holder. Theoretically, a SEP holder can…

David Bailey ‘The New Frontiers of Article 102 TFEU: antitrust imperialism or judicious intervention?’ (2018) Journal of Antitrust Enforcement 6(1) 25-53

This paper – which can be found here – addresses the way in which EU competition law cuts across and interferes with other legal regimes such as pharmaceutical regulations (Astra Zeneca and patent settlement cases), energy rules (Gazprom) and data protection (Facebook). This has led to a debate about whether EU competition law and policy should be able to trespass on turf that is properly subject to other areas of law, and whether it is appropriate for it to act as a “repair service” for other fields of economic law that lack sanctioning mechanisms. The article is structured as follows: The second section examines four situations in which Article 102 TFEU controversially overlapped with a different area of law. Competition law applies to unilateral business conduct whenever there is an act (or omission) of a dominant undertaking that distorts the competitive process or is directly exploitative of consumers. On the other hand, the application of competition law is usually precluded by…

Thomas Hoppner ‘A Duty to Treat Downstream Rivals Equally: (Merely) a Natural Remedy to Google’s Monopoly Leveraging Abuse’ (2017) European Competition and Regulatory Law Review (3)208

This  paper – which can be found here – reviews the European Commission’s decision in the Google case, and the remedy that the Commission imposed in that decision. It argues that this decision follows settled law regarding anti-competitive extensions of dominance from a primary market to a distinct, but related, secondary market. It also seeks to refute the argument that the decision created a novel rule that a dominant company may not favour its own services – instead, it is argued that this requirement is merely the remedy that the Commission imposed to bring Google’s infringement to an end. The paper is structured as follows: A first section provides an overview of the decision and some critical reactions to it. The Commission fined Google for having abused its market dominance as a search engine by promoting its comparison shopping service, Google Shopping, and demoting rival services. Describing the abuse, the EC explained that it: “objects to the fact that Google…

José Azar, Ioana Marinescu and Marshall Steinbaum ‘Labour Market Concentration’ NBER Working Paper No. 24147

The paper – which can be found here – seeks to quantify the level of labour market concentration across a wide range of occupations and for almost every commuting zone in the US. In a nutshell, it finds that labour market concentration is high, and that higher concentration is associated with significantly lower posted wages. Given current high concentration levels in labour markets, mergers have the potential to significantly increase labour market power. The authors argue that this type of analysis could be used by antitrust agencies to assess whether mergers can create anti-competitive effects in labour markets. With this, they seek to challenge how little attention antitrust regulators have devoted to labour markets, despite the labour economics literature finding that firms can have substantial market power in these markets. The paper is structured as follows: Section 2 describes the data and how the paper will go about measuring labour market concentration. They use proprietary data from CareerBuilder.com, the largest…

Ioana Marinescu and Herbert Hovenkamp ‘Anticompetitive Mergers in Labour Markets’ (forthcoming) Indiana Law Journal (2018)

The paper – which can be found here – looks at mergers that facilitate anticompetitive wage and salary suppression from an antitrust perspective. It also looks at other potentially anticompetitive practice in labour markets, so the paper’s title is misleading. The paper’s fundamental argument is that that antitrust law is under-enforced as regards mergers affecting employment markets, and that this is important for several reasons. First, the share of the gross domestic product (GDP) going to labour has been declining at an alarming rate, and this seems to be correlated with an increase in market concentration. Second, US antitrust law does not condemn unilateral price setting by dominant firms – including the setting of wages. A second best solution to the problem of suppressed wages can therefore be found in merger law, which can interdict wage-suppressing mergers before they occur. Third, antitrust law is properly directed at all output reducing practices, and there is certainly no principled reason for excluding…

Suresh Naidu, Eric A. Posner, and E. Glen Weyl ‘Antitrust Remedies for Labor Market Power’ Harvard Law Review (forthcoming)

The paper – which can be found here –  criticises the historic imbalance between product and labour market antitrust enforcement, which has no basis in economic theory: from an economic standpoint, the dangers to public welfare posed by product and labour market power are exactly the same. It is argued that antitrust agencies should take more seriously the danger that mergers may lead to labour market power as well as product market power. The paper is organised as follows: The introduction tries to explain why antitrust has traditionally ignored labour markets. Four explanations are advanced: (i) while economic theory treats product and labour markets similarly, legal theory has placed more emphasis on product markets as a result of a focus on consumer welfare; (ii) it was assumed that labour markets are reasonably competitive, and that labour market power was not an important social problem; (iii) the traditional legal approach to protecting workers, which took place “outside” antitrust law, may have…

ric Biber, Sarah Light (Berkeley), J. B. Ruhl, and James Salzman (UCLA) “Regulating Business Innovation as Policy Disruption: From the Model T to Airbnb” (2017) 70 Vand. L. Rev. 1561

The argument of this paper – which can be found here – is straightforward: scholarship about the platform economy has been ahistorical; focusing on the immediacy and novelty of the platform economy misses the fact that its interaction with the legal system does not raise fundamentally new questions from a law and policy perspective. From a business or economic perspective, history is full of technological and management advances that fundamentally disrupted business models over a brief period of time. This is not to say that current developments do not pose challenges to public policy. Regulatory policy generally—even necessarily—presumes a certain kind of organizational model for the activities that it regulates.  When business innovation upends that pre-existing model, the result is a disjunction between the structure of the regulatory system and the industry that is being regulated: a policy disruption. This has occurred in the past. Debates over whether and how the regulatory system should adjust to the rise of platforms…

Kenneth A. Bamberger and Orly Lobel ‘Platform Market Power’ (2018) 32 Berkeley Tech. L.J. 1051

In this paper – which can be found here – the authors seek to develop a framework for considering the market power of platform companies that use digital technology to connect a multisided network of individual users. Throughout, they use Uber as an example.  The framework identifies a number of questions that may be helpful in assessing whether a platform has market power. The first question one should ask is whether the success of a platform is a result of innovation or of undesirable regulatory arbitrage. The authors argue that understanding the net impact of digital platforms requires careful inquiry into the gains arising from the entry of platforms into mature markets and their disruption of staid industries; and to the harm they may pose to regulatory protections set out to protect valuable social goods. This means that antitrust law cannot be asked to answer – as it has been asked to do by some authors – questions of regulatory…