The FTC v. Qualcomm trial in a narrow sense (ten days of testimony) has just wrapped up, and closing arguments will be delivered later today. Not only has the underdog team--the FTC's litigation staff--had (and managed) to square off with multiple top-notch law firms but Qualcomm, through its allies and hacks, has intensified a barrage of opinion pieces in different media to pressure the competition enforcer to settle the case. Yesterday, the Wall Street Journal's website published an op-ed by star attorney Ted Olson (I first heard about him in connection with the dispute in 2000 over ever more recounts in Florida). He explains why it's a good thing that the FTC is pursuing this case.
Mr. Olson does disclose the fact that his law firm, Gibson Dunn, represents Apple's contract manufacturers in the San Diego Apple v. Qualcomm case. But all those Qualcomm puff pieces bashing the FTC weren't any more balanced. I'm not aware of anyone else right now who would express clear opinions on the issue in the case but also acknowledge when the other side has a point like I agreed with Qualcomm's 2017 motion to dismiss in part, found Qualcomm had a potential point in the timing of a consumer antisuit motion (which Judge Koh denied, for the time being, for that very reason), and in connection with the trial I concluded that part of MediaTek's testimony was useful to Qualcomm and that Qualcomm destroyed one of the FTC's three experts, Mr. Lasinski, whom I've criticized sharply. Also, I commented favorably on the testimony of a Qualcomm employee-expert, Mr. Casaccia, and gave Qualcomm unsolicited advice on who should be their lead counsel and deliver their closing argument.
I sincerely wish I could find someone who, unlike me (a FRAND advocate for 12 years), promotes maximum leverage for standard-essential patent holders, but who would also concede at least from time to time where the FTC has a point--and who would focus on the issues rather than a Chinese bogeyman or FTC-Apple conspiracy theories. Should I find such a counterpart, I'd really like to have a reasonable debate, which is impossible with trolls and hacks. Until then, I'll welcome the modest incremental balance the debate gains from contributions such as Mr. Olson's WSJ piece, knowing that he (described by IPWatchdog as "undoubtedly" one of the two most famous U.S. attorneys) is someone who even with his firm being involved in the wider dispute simply wouldn't have to take positions that aren't his own.
Mr. Olson's op-ed mentions that Apple's contract manufacturers (Foxconn, Wistron, Pegatron, Compal) are suing Qualcomm over $27 billion. I wasn't aware of that number, but googled it in this Yahoo Finance article and another place. Apparently, it's three times $9 billion: treble damages.
In October, Qualcomm's lead counsel in the San Diego case, Cravath chairman Evan Chesler, claimed "$7 billion in property damages" because of royalties not paid by Apple's contract manufacturers on devices made for Apple between the spring of 2017 and October 2018 (therefore, the actual number is likely already north of $8 billion, and may be even closer to $9 billion or $10 billion by the time of the mid-April trial). In a hypothetical scenario in which Qualcomm would get this amount, it might try to seek damages enhancements as well. Let's assume $8 billion (and I would almost guarantee Qualcomm will want more), and a hypothetical attempt by Qualcomm (whether meritorious or not) of treble damages, then the total amount of money at stake in the San Diego case is already more than $50 billion: that's the differential between the best-case scenario for Qualcomm (getting approximately $30 billion and not paying anything to Apple's contract manufacturers) and its worst-case scenario (paying $27 billion and getting nothing).
Those numbers dwarf the $1 billion in contractual payments Apple is seeking (which almost all of the original reports on this case focused on).
Even if one discounted all those numbers aggressively, the financial implications of that trial will probably represent an opportunity for event-driven investors.
In light of those quantities, it's also clear now why the extremely limited leverage Qualcomm gained from the enforcement of a pair of German patent injunctions (requiring Qualcomm to post bonds over more than $1.5 billion)--it's just symbolical--didn't make Apple cave.
The San Jose trial concluding today is/was "David vs. Goliath" (given the resource constraints of the FTC's litigation team). In San Diego there'll be a "Clash of Titans." Over tens of billions of dollars.
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