Maybe Apple believes that the US International Trade Commission (USITC, or just ITC)and its Administrative Law Judges (ALJs) lack antitrust expertise. Whatever the reason or motivation may be, Apple keeps telling the ITC that Ericsson engages in "tying" because it's simply seeking a U.S. import ban over some non-standard-essential patents (non-SEPs) while simultaneously enforcing SEPs (in parallel cases before the ITC and elsewhere).
This the same Apple that keeps denying the very real tying between its app distribution monopoly and the app tax it imposes on developers. The district judge sided with Apple on that one, but by now I've identified some fundamental misconceptions on her part in connection with market definition. The appeals court will probably disagree with her at least in part, and possibly (even hopefully) overrule her on tying, a context in which the DOJ is supporting Epic (starting with the part that even something that isn't sold or licensed separately can constitute a market).
So, the same Apple that would like to narrow the scope of tying in the App Store context to an extent that has the DOJ concerned--and that will certainly dispute any allegations of tying in connection with its future iPhone subscription service--is telling the ITC a tying story that turns antitrust law on its head.
Let's look at what Apple says, and let's then compare it to what tying actually means. To quote what Vice President Harris said in Munich: "I mean, listen, guys..."
By now, Apple and Ericsson have responded to each other's ITC complaints. Ericsson brought three complaints (one over SEPs, two over non-SEPs), while Apple retaliated with one non-SEP (mmWave) complaint. Apple's response to Ericsson's SEP complaint is sealed for the time being, as is Ericsson's response to Apple's countercomplaint. But Apple's responses to Ericsson's two non-SEP complaints are now publicly available. I've uploaded them to Scribd (337-TA-1300, 337-TA-1301).
Apple already made that "tying" claim in its public interest statements. In its responses to the complaints, Apple raises the issue twice: in connection with the public interest (once again), and as a "patent misuse" theory. Apple claims that "Ericsson is illegally tying the broad SEP portfolio license to the non-essential Asserted Patents." (emphasis added)
Apple says Ericsson is trying to force Apple into a SEP license by enforcing non-SEPs: "Ericsson promised to license its declared SEPs under fair and reasonable terms, and using the threat of injunctive relief in this Investigation to coerce Apple into taking an SEP license is a breach of that agreement."
As a litigation watcher I know what to think of a claim of a breach of an agreement when a party doesn't substantiate it with specific references to one or more relevant terms of that agreement. Apple doesn't do that because it can't. The FRAND pledges of standard-setting organizations like ETSI say nothing about what companies can do with other patents than the ones subject to that pledge. The declared-essential patents are FRAND-encumbered; not entire portfolios involving even non-SEPs.
The contract law claim is devoid of substance. But the antitrust claim is even worse because it's grounded in a theory that portrays tying as the very opposite of what the term really means.
The FTC provides a great explanation of tying:
"For competitive purposes, a monopolist may use forced buying, or 'tie-in' sales, to gain sales in other markets where it is not dominant [...] This may limit consumer choice for buyers wanting to purchase one ("tying") product by forcing them to also buy a second ('tied') product as well. Typically, the 'tied' product may be a less desirable one that the buyer might not purchase unless required to do so, or may prefer to get from a different seller. If the seller offering the tied products has sufficient market power in the 'tying' product, these arrangements can violate the antitrust laws."
Here, Apple claims that Ericsson's non-SEP licenses are the "tying" product and its SEP portfolio license is the "tied" product. In other words, Ericsson allegedly lacks market power in SEPs but does have it by virtue of its non-SEPs, and must use its super-valuable super-powerful non-SEPs to get Apple to take a license to its SEPs...
In reality, market power is a concern related to SEPs, which is addressed by the FRAND commitment.
If there could be any concern about tying, it would have to be the opposite: a SEP holder forcing a company to take a non-SEP license may do so just to inflate the effective royalty rate. I've never seen that happen, though. In FTC v. Qualcomm and Apple v. Qualcomm, it was undisputed that Qualcomm offered a SEP license and a totally optional non-SEP license on top. When Ericsson replied to Apple's public-interest statements, it stated clearly:
"Ericsson offers to license its SEPs without licensing its NEPs."
Theoretically, Apple is free to work around any NEP (non-SEP), whether or not it takes a license to Ericsson's SEPs. At the same time, Ericsson is free not to license its non-SEPs at all, or to offer them only as part of a portfolio license.
Apple's tying-related defenses may be thrown out at an early procedural stage because they make no sense.
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