Venture Beat - Apple and Qualcomm offer billion-dollar sob stories at FTC antitrust trial

In Venture Beat, Jeremy Horwitz reports Apple and Qualcomm offer billion-dollar sob stories at FTC antitrust trial.

The article gives more details on the negotiations leading to the FTC trial than what is described in Wired - The FTC Thinks You Pay Too Much For Smartphones. Here’s Why. For example, the article mentions initially Apple was willing to pay $7.50/phone in 2011 and meet other conditions including advocate against a budding wireless standard WiMax. Then Qualcomm decided to leverage the need for the CDMA chips used by Verizon on the sale of other chips and increase the patent license from $7.50/phone to $8-10/phone plus retain exclusivity. It looks like the "straw that broke the camel's back" as Apple had further developed Intel as a second source for the chips.

Copyright © 2019 Robert Moll. All rights reserved.

Wired - The FTC Thinks You Pay Too Much For Smartphones. Here’s Why

In Wired, The FTC Thinks You Pay Too Much For Smartphones. Here’s Why, FTC is investigating if Qualcomm has committed an antitrust violation (a "tax" on cell phones that drives up prices and hurts competition) in demanding 5% of the value of a cell phone up to $20 max for licensing its patented wireless technology to Apple and Huawei.

From the article:

"Qualcomm charges companies like Apple a set percentage of the total price of a phone in exchange for the right to use its technology, according to the antitrust suit filed by the FTC. The percentages vary, but Qualcomm generally charges 5 percent of the value of a device, up to a maximum of about $20 per device, according to a legal brief filed by Qualcomm. Phone makers like Apple and Huawei argue that Qualcomm demands a larger cut of each phone sale than is fair, but that they pay because Qualcomm essentially threatens to cut off their supply of important wireless chips if they don’t. The FTC describes this as a "tax" on cellular phones that drives up prices and hurts competition.

In court Friday, Apple executive Tony Blevins accused the chipmaker of strong-arm tactics. Blevins said that during negotiations in 2013, Qualcomm president Cristiano Amon told him, "I'm your only choice, and I know Apple can afford to pay it,” CNET reports."

It appears Apple was able to buy its replacement chips from its second source Intel but incurred some delays as it scrambled to integrate the Intel chips to cover for Qualcomm's refusal to reduce its price. It sounds like the mobile computing patent wars have resumed.

Copyright © 2019 Robert Moll. All rights reserved.

IP Watchdog: What Mattered in 2017: Industry Insiders Reflect Biggest Moments in IP

IP Watchdog: What Mattered in 2017: Industry Insiders Reflect Biggest Moments in IP does a nice job of using industry experts to highlight the key events in patent law in 2017.

Copyright © 2017 Robert Moll. All rights reserved.

US Supreme Court - Oral Arguments Transcript - Kimble v. Marvel Enterprises, Inc.

The US Supreme Court heard oral arguments in Kimble v. Marvel Enterprises, Inc.

The issue in Kimble: Whether this Court should overrule Brulotte v. Thys Co., which held that "a patentee's use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se."

Here's a PDF copy of the transcript of the oral arguments.

Copyright © 2015 Robert Moll. All rights reserved.

Professor Robin Feldman - Kimble v. Marvel Enterprises - Royalty Payments Beyond the Patent Term?

Professor Robin Feldman filed a Supreme Court amicus brief in Kimble v. Marvel Enterprises which is before the U.S. Supreme Court. This case reviews whether a patent owner's use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se. 

Some of the highlights from that brief co-authored with professor Alice Armitage:

"The case concerns contracts in which the patent holder insists on receiving royalty payments after the patent expires. The doctrine of patent misuse, however, frowns on attempts to expand the time or scope of the patent.

Over the last few decades, some lower courts have tried to eliminate the doctrine of patent misuse by holding that patent misuse exists only if the behavior rises to the level of an antitrust violation

Petitioners in this case ask the Supreme Court to apply the antitrust rule of reason to patent misuse cases. The antitrust rule of reason, which is complex and burdensome, is commonly perceived to be the death knell for any antitrust case and would certainly be the death knell for patent misuse cases

In the brief, Professor Feldman argues that patent law is not antitrust law, and antitrust tests are not appropriate for patent law questions.

Antitrust law is primarily concerned with parties that have market power, but the patent rules apply to all patent holders, regardless of whether they have market power; One cannot ask the patent office to extend the patent for a few years because 20 years is not long enough to determine its true value. That is a decision for Congress to make.

Nothing changes if the 20-year term is ill-suited for a particular industry, such as the life sciences. (A number of life science groups have filed amicus briefs as ell.) Any arguments to this effect are appropriately directed to Congress.

It is certainly true that when the patent term ends, the patent holder will no longer be able to exclude all others from the use of its invention. With the patent system, however, every potential innovator matters. A contract provision that limits the capacity and incentive for even one potential innovator to make scientific leaps after the expiration of the patent disrupts the balances created by Congress in the Patent Act.

Professor Feldman urges the Court to clarify that antitrust principles are not appropriate for a patent law, and to allow the courts to develop flexible approaches, based on patent principles, to this types of licensing issues."

Copyright © 2015 Robert Moll. All rights reserved.

Morton & Shapiro - Strategic Patent Acquisitions

Morton & Shapiro's Strategic Patent Acquisition:

"We report data on patent litigation activity initiated by patent assertion entities and discuss the tactics used by these entities to monetize the patents they acquire. We develop a simple economic model to evaluate the effect of enhanced patent monetization on innovation and on consumers. We then study the economic effects of several different categories of patent acquisitions based on the type of seller, the type of buyer, and the patent portfolio involved."

Copyright © 2014 Robert Moll. All rights reserved.

Europe's Top Regulator Warns Nokia - Patent Licensing Will Trigger Antitrust Action

On December 9, Europe's top regulator warned although he approved the $7.2 billion sale of Nokia's business to Microsoft, he was concerned Nokia would attempt to "extract higher returns" from its patents. He said this seeking higher returns (e.g., a higher royalty rate in patent licensing) was behaving "like a patent troll, or "a patent assertion entity" and  he would not tolerate Nokia taking "illegal advantage" of its patents but instead sue it for the antitrust violation. So what can you Nokia do with its patents in Europe? Put them on a bookshelf-- and promise never to assert them.

See Associated Press article EU Warns Nokia Not to Become 'Patent Troll'

Copyright © 2013 Robert Moll. All rights reserved.

FTC Finalizes Settlement in Google & Motorola Mobility Case

On July 23, the Federal Trade Commission (FTC) approved its Final Order settling allegations that Google had reneged on its commitments to license its standard-essential patents (SEPs) held by its subsidiary Motorola Mobility on fair, reasonable, and non-discriminatory (FRAND) terms and instead pursued or threatened to pursue injunctions and exclusion orders against companies making smart phones, laptop and tablet computers, and gaming consoles.

After considering the twenty-five public comments, the FTC modified certain provisions in the Final Order, including those pertaining to the arbitration to resolve disputes over FRAND terms. The FTC also explained certain provisions in a letter sent to the commenters on July 23.

The FTC noted the proposed Consent Order resolved its concerns regarding Google pursuit of injunctions and exclusion orders based on infringement of SEPs subject to FRAND terms, and established a process to allow implementers of Google's SEPs to obtain a license on FRAND terms and a neutral third party to set those terms.

Copyright © 2013 Robert Moll. All rights reserved.

FTC Plan to Investigate Patent Trolls Confirmed

On June 20, The NY Times published an article F.T.C. Head Seeks End to Misuse of Patents confirming the FTC is planning to investigate patent assertion entities or pejoratively "patent trolls."

FTC chairwoman Edith Ramirez's stated: A Federal Trade Commission investigation into the practices of "patent trolls" is necessary because there is little real evidence about the costs and benefits of a rising tide of patent litigation. This insight strikes at the assumption that the rising tide of PAE lawsuits is damaging the economy.

Ms. Ramirez noted "Despite the rapid growth in the number of lawsuits filed by those patent-focused companies, regulators have little more than anecdotal evidence of how patent trolls affect business innovation and whether the patent-enforcement companies help to produce benefits that small companies could not enjoy on their own. We have a role to play in advancing a greater understanding of the impact of P.A.E. activity and using our enforcement authority where appropriate to curb anticompetitive and deceptive conduct."

Although this is framed as an investigation, PAE's should be prepared to articulate how they actually level the playing field for small entities and in the end benefit America. If they cannot, well life can be tough. On the other hand, if they do a good job stating the value, it could be FTC investigation will inform the American public that not all PAE are alike nor deserving of the same treatment.

Copyright © 2013 Robert Moll. All rights reserved.

FTC Expected to Investigate Patent Trolls - NY Times Article

On June 19, The NY Times published an article F.T.C. Is Said to Plan Inquiry of Frivolous Patent Lawsuits that said FTC chairwoman Edith Ramirez is planning to request a sweeping general investigation including issuance of subpoenas to the patent assertion entities or pejoratively "patent trolls." Hopefully this investigation will result in an accurate detailed view of PAEs. I know we all hate to pay nuisance settlements, but not all patents lawsuits are frivolous and it is time to examine PAEs based on practices rather than lazily labeling them all as patent trolls.

Copyright © 2013 Robert Moll. All rights reserved.

Google Agrees to Change Business Practices to Resolve FTC's Concerns

On January 3, 2013,  the FTC announced it has reached an agreement with Google to change some business practices. The agreement, reached after 19 months of investigation, grants competitors the ability to license Google's standard-essential patents (e.g., obtained from the Motorola Mobility acquisition) at fair, reasonable, and non-discriminatory (FRAND) terms. Google cannot seek injunctions of the SEP unless the infringer is unwilling to license the SEP under FRAND and follows certain procedures. The FTC's concern was granting injunctions based on SEPs would be used to hold up competitors in an industry where interoperability is required to compete. The agreement also gives advertisers greater flexibility to use rival search engines.

The FTC's press release Google Agrees to Change Its Business Practices to Resolve FTC Competition Concerns In the Markets for Devices Like Smart Phones, Games and Tablets, and in Online Search has the details and links to the related papers.

Copyright © 2013 Robert Moll. All rights reserved.

FTC and DOJ Workshop - Patent Assertion Entities - Revisited

On November 25, 2012, I posted an article that the FTC and DOJ was hosting a free workshop on December 10 to consider the impact of patent assertion entities (PAEs) on innovation and competition and if the PAEs raise antitrust issues.

If you are interested in what leading academics, attorneys, economists, and industry representatives had to say, please see their videos and slide presentations at the Patent Assertion Entity Activities Workshop Page.

Copyright © 2012 Robert Moll. All rights reserved.

FTC and DOJ Workshop - Patent Assertion Entities

The FTC and DOJ is hosting a workshop to consider the impact of patent assertion entities (PAE) on innovation, competition, and any implications for antitrust enforcement.

It's a free workshop, with a great set of panelists, including academics, attorneys, economists, and industry representatives in Washington DC on December 10, 2012.

If you are interested in attending, submitting comments, or learning more, see Federal Trade Commission, Department of Justice to Hold Workshop on Patent Assertion Entity Activities and Patent Assertion Entity Activities Workshop Page.

Copyright © 2012 Robert Moll. All rights reserved.

Google Complains Microsoft and Nokia Using Patent Trolls to Attack Android

Tonight, CNET has an interesting article Google blasts Microsoft, Nokia for hiding behind patent trolls that discusses Google's submission of reports to the FTC and European Commission that claim Microsoft and Nokia are acting anticompetitively by using patent trolls to wage litigation against companies that might otherwise adopt the Android operating system. The reports are private to Google and the agencies.

Thanks again to Alan Cooper for sending the article my way.

Copyright © 2012 Robert Moll. All rights reserved.

Rambus' Patent Roller Coaster Ride

I tend to post late at night. With kids and clients, it doesn't make sense to start before 10 pm to read articles and papers, select a topic and write up the post. If it's been a long day, however, sometimes I just give a link to the article that was the best of the set. Tonight that article is: Corporate Counsel's Inside the Failed Patent Litigation of Rambus, Inc. Whether you like or don't like Rambus, it is clearly a company built on the idea that patents matter.

Copyright © 2012 Robert Moll. All rights reserved.

DOJ Closes Investigations of Google's Acquisition of Motorola Mobility and Apple, Microsoft and RIM's Acquisitions of the Nortel Patents

On February 13, 2012, the Department of Justice's Antitrust Division issued a statement that it is closing the investigations of Google's acquisition of Motorola Mobility, Apple's acquisition of patents held by CPTN (formerly owned by Novell), and Apple, Microsoft, RIM and other's acquisition of the Nortel patents. DOJ believes each acquisition is unlikely to substantially lessen competition given Apple and Microsoft's clear commitment to license its standard essential patents (SEP) on fair, reasonable, and non-discriminatory (FRAND) terms and not seek an injunction on the SEPs. In contrast, the DOJ appears to criticize Google's unwillingness to make a clear commitment on future use of its patents. The DOJ also stated a willingness to jump into the fray to stop any anticompetitive use of SEP rights. Hopefully, the DOJ's statement and analysis will bring some order in the mobile computing patent war. I think this is welcome news for consumers (Click here for the DOJ's statement)

Copyright © 2012 Robert Moll. All rights reserved.