There's three pieces of news regarding Qualcomm's antitrust issues, none of which has huge impact in its own right, but the combination of the three warrants an update.
First, Judge Gonzalo P. Curiel of the United States District Court for the Southern District of California issued an order on Wednesday, denying a motion for judgment on the pleadings through which Apple sought to prevent Qualcomm from seeking, at the trial starting April 15, a declaratory judgment that Qualcomm has met its FRAND obligations under ETSI (a standard-setting organization based in Europe) through its licensing offers (this post continues below the document):
19-03-20 Order Denying Judg... by on Scribd
The legal standard here is that declaratory judgment is available if there's a definite and concrete controversy, and in case of doubt, courts tend to be permissive. In this particular case, the question was whether Qualcomm would stand to gain anything from the declaration it's seeking if it prevailed that it wouldn't already gain from successfully defending itself against Apple's FRAND breach claims. In other words, Qualcomm's defenses would require the court to either agree or disagree with Apple that Qualcomm breached its FRAND obligations; if the court agreed with Apple, Qualcomm would lose anyway, and if the court disagreed with Apple, it would conversely mean that Qualcomm met its obligations. So why issue a specific declaration? Judge Curiel has decided that such a declaration may have value beyond what a successful defense can provide.
Judge Curiel agrees with Apple that the requested declaration of FRAND compliance "will not resolve Apple's antitrust cause of action or disgorgement claims." That's simply the case because Qualcomm's declaratory judgment claim relates to a limited period of only a couple of years (the parties' negotiations in 2015-2017), while the antitrust claims here cover the time since 2008. However, pointing to an Eastern District of Texas decision (HTC v. Ericsson, December 17, 2018), which is obviously not binding on a district court in a different circuit and generally not too persuasive outside of that particular patentee-friendly district, Judge Curiel notes that the theory of an "unwilling licensee" no longer being entitled to the benefits of a FRAND licensing commitment "has been recognized as a legitimate basis for declaratory relief and is legally sufficient to survive Apple's motion." But, in any event, all of the evidence required to resolve this declaratory judgment claim will have to be put before the jury at any rate (just to adjudicate the claims that the parties agree must be resolved)--and Judge Curiel doesn't see a risk of confusion of the issues.
The idea of an implementer of a standard forfeiting its rights to a FRAND license through its conduct in negotiations looks like the kind of pro-patentee extremism the Eastern District of Texas is known for. It's already debatable whether a patent holder may have access to injunctive relief against the products of an unwilling licensee. But the idea that someone's (alleged) failure to make a FRAND counteroffer affords the patent holder the freedom to seek supra-FRAND terms, or hypothetically even to decline granting a license on any terms, is absurd simply because two wrongs don't make a right.
Given the facts, such as that Qualcomm collects about 25% of all patent license fees (counting all industries) in the world and the lion's share of all wireless patent license fees, it's hard to imagine that anyone would find its terms to be FRAND. In fact, Judge Lucy H. Koh's upcoming FTC v. Qualcomm decision may make this clear in a way that the Southern District of California could rely on the Northern District's decision. Even if a jury got confused or misled, the trial judge or, at the latest, the appeals court would certainly find that no reasonable jury could have considered Qualcomm's royalty rates (and various other terms) fair, reasonable, and non-discriminatory. That's why I guess the Ninth Circuit won't even get to decide on whether or not to adopt the Eastern District of Texas line on FRAND compliance declarations.
The second development to report briefly comes down "See I Told Ya So" with respect to a 2009 antitrust fine imposed on Qualcomm by the Korea Fair Trade Commission. As I had explained after a recent decision by South Korea's Supreme Court, it was only about an adjustment in the tens of millions of dollars, while the aggregate of the old 2009 fine and the late-2016 decision that basically kicked off the current wave of Qualcomm antitrust actions is on the order of a billion dollars.
As Reuters reports, the 2009 fine was lowered by 18% to $200 million.
The single most important issue facing Qualcomm in Korea is actually a requirement (resulting from the December 2016 order) to extend SEP licenses on FRAND terms to rival chipset makers. Continued non-compliance could at some point result in criminal charges.
The third tidbit relates to another very old Asian antitrust ruling: a 2009 cease-and-desist order by the Japan Fair Trade Commission. A week ago, Qualcomm issued a press release according to which the nine-year proceeding in Japan resulted in the conclusion that Qualcomm doesn't violate Japanese antitrust law through its cross-licensing requirements and non-assertion covenants. Qualcomm's attorneys also filed the Japanese decision with Judge Koh in the FTC case and announced they'd submit a certified translation later.
I have no idea what exactly the antitrust standard in Japan is and don't even know who the complainants were. What I do suspect very strongly is that the JFTC's about-face has a lot--or simply everything--to do with changes in market shares. In 2009, Japanese device makers played a far greater role in the worldwide handset market than today. They're still around, unlike their European counterparts, but almost insignificant outside of their domestic market compared to their rivals from the U.S. (Apple), Korea (Samsung), and China (Huawei, ZTE, Xiaomi etc.). And Sharp even got acquired by a Chinese company (Foxconn). Therefore, I believe the Japanese government's perspective on what benefits the likes of Sony and Panasonic changed fundamentally during the protracted process. Obviously, Qualcomm would have us believe that it simply prevailed in the end because of a more thorough analysis than the one underlying the original decision. But antitrust agencies don't hand down cease-and-desist orders (the most incisive remedy!) on a whimsical basis--they do so after in-depth investigations (and it's hard to imagine the standard would be lower in Japan). That's why a change in economic-policy priorites, with the JFTC potentially looking at Japanese companies as future net licensors, is the most plausible explanation.
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