Apple's latest outrageous attack on app developers--ads on individual app pages--shows lawmakers and regulators must press ahead

"Human rights" is a broad term, and some people's (and companies') interpretation is broad beyond belief. Here's a very effective technique for analyzing claims of human rights violations: ask yourself with what more specific word the first part--"human"--could be (more) appropriately replaced in the given context.

Yesterday it became public in Colombia that Apple is--I kid you not--claiming a human rights violation and invoking Article 8 of the Universal Declaration of Human Rights because of Ericsson's preliminary injunction in Colombia over a 5G patent. Nowhere on the 48 pages of the motion did I find a human rights violation in the sense in which most reasonable people would understand it. All I found was a bunch of run-of-the-mill appellate arguments. The more appropriate term is "defendants' rights in commercial litigation." Arguably, we're talking about patent infringers' rights--and the problem is then that patent holders' rights are really a constitutional matter (property). Whether or not Apple actually will be deemed an infringer when all is said and done, the proper procedural avenue for that is a (regular) appeal.

Interestingly, Apple has just been warned against being sanctioned by the United States District Court for the Eastern District of Texas over a "misuse" of court rules. They brought an emergency motion instead of a regular motion.

When I ran a Twitter search for Apple in connection with human rights, one of the first tweets that came up linked to a Wired article, The Fallout from Apple's Bizarre, Dogged Union-Busting Campaign." The tweet talked about "the depths that #Apple will sink to in order to deny their workers basic human rights." (emphasis added)

Here again, the question is whether we're talking about human rights in a narrow sense or, more specifically, workers' rights. The freedom of association, which enables employees to form and join unions, is the latter. What happened at some of Apple's suppliers may be a different story, but as long as we're just talking about union-busting, I'd call it an attack on workers' rights--which is bad enough (don't get me wrong).

Now let's talk about developers' rights. Apple is taking its disdain for developers' rights to a new level now by expanding its Search ads--after wreaking havoc to businesses and entire business models, and potentially contributing to a recession as a venture investor noted--to individual apps' App Store pages.

They're now adding insult to injury. It means that app developers who already invest in development and marketing to get potential downloaders to visit their App Store page--where they're one click away from what you want them to do, which is to download your app--may have to pay off the big gatekeeper bully again or their competitors will redirect that precious traffic on the final screen on which you're vulnerable to competitors' ads.

Tim Sweeney, the CEO of Epic Games, accurately says "Apple will litter your own app page with ads for competing apps" (after already running Search Ads before people even get there)--and he's right that "Apple must be stopped":

They front-run searches for your trademarked app name, and place ad results above the result for your app.

But now, there’s more: Apple will litter your own app page with ads for competing apps. And keep all the ad money for themselves.

Apple must be stopped.

— Tim Sweeney (@TimSweeneyEpic) July 29, 2022

What's the solution? It's not impossible--but won't work in every jurisdiction--to combat this kind of abuse under existing laws. New digital platform laws such as the EU's Digital Markets Act may provide a fundamentally better basis, but won't necessarily close each loophole either, at least not immediately. However, what the DMA allows is bypassing Apple's App Store through direct installations and alternative app stores. That could help indirectly. If Apple faced competition from third-party app stores, Apple as well as its competitors would have an incentive to treat developers better. In the absence of such competition, you have the Kodak/Newcal situation of a single-brand market: while the iPhones competes with Android devices in the smartphone or smartphone operating system foremarket, there's no competitive constraint in the aftermarket of iOS app distribution because Apple can do almost anything it wants to app developers--even violate developers' human rights as long as there's no outcry in mass media--without losing any market share in the foremarket.

Lawmakers, regulators, and courts can see that Apple is shamelessly exploiting its monopoly power in the aftermarket by taxing app developers, massively diminishing a key revenue source for developers (in-app ads, at least until Apple introduce its own system), and further increasing user acquisition costs, which in part means money in Apple's pockets (example: app developers paying for ads related to their own app and place them on individual apps' pages just to reduce the likelihood that someone else's ad will appear on their own App Store page). The worst-case scenario would be that Apple places ads for its own apps on competing app developers' App Store pages--Sherlocking on Apple Search steroids.

Apple is unrepentant. Class action after class action gets filed. Antitrust investigation after antitrust investigation gets launched. But lawmakers and regulators must act more swiftly and more decisively, lest this end up like The Tortoise and the Hare. It was a major mistake--though easily explained against the political backdrop--that too many politicians and regulators initially let Apple get away with its "privacy" pretext.

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BREAKING: Apple alleges human rights violation by Colombian court that ordered 5G iPhone/iPad sales ban, Ericsson, and its lawyers; invokes Art. 8 of Universal Declaration of Human Rights

BREAKING NEWS

Apple leaves no stone unturned in its efforts to get Ericsson's Colombian iPhone/iPad injunction over a 5G standard-essential patent (SEP) lifted, and is now accusing Ericsson, its lawyers, and the court that ordered the injunction to violate basic human rights, invoking even Art. 8 of the famous Universal Declaration of Human Rights. I wonder what's next--voting rights for iPhones?

Just yesterday, Judge Rodney Gilstrap (Eastern District of Texas) denied Apple's antisuit motion as he declined that invitation to interfere with a foreign patent case. Now I've been able to obtain a copy of a publicly-accessible court document that is truly astonishing:

Apple has asked the Tribunal Superior de Distrito Judicial de Bogotá (Superior Court of the Judicial District of Bogotá) for a "tutela"--a form of emergency relief--against

• Ericsson,

• its Colombian law firm (OlarteMoure),

• Carlos R. Olarte (a name partner of that firm and Ericsson's lead counsel in the Colombian part of the Apple patent dispute), and

• the Civil Court No. 43 of the Bogotá Circuit.

Here's the header section (click on the image to enlarge):

Incredibly, Apple bases its motion for that emergency measure on Colombia's constitution as well as

• Article 8 of the Universal Declaration of Human Rights (UDHR)--a document famously adopted by the United Nations General Assembly in 1948-- and

• Article 25 of the American Convention on Human Rights, which has been ratified by two dozen Central and South American countries.

Here's the passage that invokes those international human rights declarations (click on the image to enlarge):

Art. 8 UDHR says this:

"Everyone has the right to an effective remedy by the competent national tribunals for acts violating the fundamental rights granted him by the constitution or by law."

This obviously doesn't mean that every time you disagree with a judge, this article applies. In fact, the Equality and Human Rights Commission, a governmental entity in the UK entasked with protecting and promoting human rights, explains its meaning as follows:

"Article 8 protects your right to respect for your private life, your family life, your home and your correspondence (letters, telephone calls and emails, for example). [...] The courts have interpreted the concept of ‘private life’ very broadly. It covers things like your right to determine your sexual orientation, your lifestyle, and the way you look and dress. It also includes your right to control who sees and touches your body. For example, this means that public authorities cannot do things like leave you undressed in a busy ward, or take a blood sample without your permission."

Now, no one has left an Apple executive undressed in Colombia or taken a blood sample without permission. By extension, Art. 8 UDHR "also covers your right to develop your personal identity and to forge friendships and other relationships. This includes a right to participate in essential economic, social, cultural and leisure activities." (emphasis added)

The unlicensed use of patents, however, is not exactly an "essential economic activity" protected by Art. 8.

So what is it that Apple wants to prevent Ericsson and its lawyers from doing?

The motion wants them to stop sending allegedly "threatening communications" to Apple's "contractual partners and resellers" and "damaging the good name of Apple Colombia S.A.S. through whatever communications channel." (Note that the original motion is in Spanish, and I'm just translating it myself--I've used that language in various professional contexts for almost two decades, though I'm obviously not a certified translator.)

Apple generates only about a fifth of a percent of its worldwide sales in the South American country, but is currently unable to sell its latest iPhones and latest cellular iPads there. Not only is Apple's Colombian subsidiary, Apple Colombia S.A.S., enjoined but the injunction specifically states that resellers are not supposed to sell the products deemed to infringe, and Colombia's customs authority has been instructed to confiscate any new shipments.

Apple's 48-page "Hail Mary"-style motion asserts that "Apple has done everything in its power to reach an agreement with Ericsson, other than caving to Ericsson's supra-FRAND demands." As we know from the U.S. part of the dispute, Ericsson is actually convinced of having made Apple a FRAND offer.

Apple's motion complains not only of the "broad and illegal interpretation" of the injunction by Ericsson and its lawyers in letters sent to Apple's contractual and commercial partners in Colombia, but also accuses them of "providing deceptive information to the media," which according to Apple "created a media circus":

"As a result, in addition to the damages caused, the costs that Apple Colombia has incurred in order to comply in good faith with the broad and illegal interpretation Ericsson and its lawyers have given to the court orders, the loss of profits, and among others, Apple Colombia has been publicly treated as a patent infringer [...]"

Well, ten years and two weeks ago, this blog reported on Apple sending letters to Samsung's commercial partners in the U.S., portraying Samsung as a patent infringer and urging Samsung's resellers to stop selling certain Galaxy devices. The difference is that Samsung--though it sharply disagreed with Apple's course of action--didn't allege a human rights violation by Apple...

Apple says it's suffering "irreparable harm" and, therefore, "cannot wait until the legal options ordinarily available to it (appeals) have been adjudicated."

Section 6 of Apple's motion claims that the court order has various "legal defects." These are the subheads:

• "6.1 Material defect: Court No. 43 did not base its decisions in applicable statutes and did not state the reasons for tis decisions"

• "6.2 Absolute procedural defect: Court No. 43 ignored the procedural stage, which led to the violation of basic rights of Apple Colombia"

• "6.3 Factual defect: Court No. 43 ignored the evidence that would have allowed it to conclude that a preliminary injunction was not warranted"

• "6.4 Ignorance of legal precedent: Court No. 43 ordered the preliminary injunction ignoring the Constitutional Court's legal precedent"

• "6.5 Direct violation of the Constitution: Court No. 43 ignored Art. 29 of the Political Constitution"

As I read the motion, I can't help but conclude that Apple's Colombian counsel portrays as constitutional issues what are run-of-the-mill appellate arguments in a preliminary injunction context.

Unfortunately for Apple, patent rights also have a constitutional dimension in many jurisdictions (examples: Article 1, Section 8, Clause 8 of the United States Constitution; and in Germany it's recognized that intellectual property, too, falls under Art. 14 of the country's Basic Law, as explained on this German WikiBooks page).

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U.S. court declines to complicate Ericsson's enforcement of Colombian 5G iPhone/iPad sales ban, warns Apple against sanctions for misuse of court rules

Earlier this month, Ericsson secured a preliminary injunction against Apple in Colombia over a 5G standard-essential patent (SEP), in response to which Apple ran to the United States District Court for the Eastern District of Texas and requested an antisuit damages order. Ericsson's enforcement is ongoing, and the impact can be seen on Colombian store shelves--and is furthermore evidenced by media coverage, such as an opinion piece in Colombia's largest newspaper. It's a high-profile achievement for Ericsson's Colombian counsel, OlarteMoure's Carlos R. Olarte.

While Apple generates only about a fifth of a percent of its global sales in the South American country, the patent license fees Ericsson is seeking on a worldwide basis are modest compared to the average selling price of an iPhone.

Judge Rodney Gilstrap held a motion hearing one week ago, and this morning published his decision. The antisuit part was denied, and only a limited part of a discovery-related request by Apple was granted. Technically, this means the motion was granted-in-part and denied-in-part, but rather tellingly, the docket text of the order emphasizes the denial of the antisuit-related core part of the motion:

"ORDER denying 116 Motion for Relief Against Ericssons Attempt to Use Secret, Ex Parte Actions in Bogota, Colombia to Subvert Proceedings in This Court. Signed by District Judge Rodney Gilstrap on 7/28/2022. (nkl, ) (Entered: 07/28/2022)"

Footnote 5 distinguishes this matter from last year's anti-antisuit injunction (or "anti-interference injunction") in Ericsson v. Samsung, and notes the following:

"Here, Apple invites this Court to inject itself into an ongoing proceeding in Colombia. The Court declines Apple’s invitation."

While expressing "some level of for the frustration visited upon Apple by Ericsson’s strategic conduct in other diverse forums," Judge Gilstrap doesn't think it constitutes "imminent, irreparable harm" to Apple that it may--as a result of enforcement actions in other jurisdictions--have to sit down and negotiate a license with Ericsson. The Texas FRAND case will go to trial in December, and no later than September, Apple and Ericsson have to engage in formal mediation.

It almost sounds like Apple is an unwilling licensee. Ericsson v. Apple cases are pending in three German courts, and should Apple be deemed an unwilling licensee there, it will feel far greater settlement pressure than presently in Colombia.

There's also a procedural issue. Apple should have brought a regular motion as opposed to an emergency motion. "Emergency motions are to be filed only in truly extenuating circumstances and should not be used as a means to secure an expedited briefing schedule and hearing before the Court," Judge Gilstrap clarifies--and "finds that Apple has misused and misapplied the rules for emergency motion practice in this Court." Therefore, he places Apple "on notice that further such conduct will warrant, and likely result in, sanctions against it."

The antisuit damages order that Apple wanted--which wouldn't have formally barred Ericsson from continuing its Colombian PI enforcement, but would have made it costly--was the motion's primary objective. In addition, Apple wanted the U.S. court to "expand the terms of [its] [P]rotective [O]rder to permit Apple to provide its Colombia counsel [who personally attended last week's hearing in Texas] with copies of the Colombia filings Ericsson recently produced in this litigation together with the two Ericsson-Samsung licenses also produced." While I've seen § 1782 discovery requests for use in foreign litigation on a number of occasions, this one seemed a bit odd to me. According to the order, Apple withdrew "its request to share license agreements with Colombian counsel." So, in the end it was just about 76 documents from the Colombian part of the dispute--where Ericsson had brought multiple ex parte motions--that Apple listed in a notice last week. Pursuant to Judge Gilstrap's order, "[s]uch documents shall be delivered by Apple to its Colombian counsel only upon condition that those receiving them are fully bound by, and subject to, the Protective Order entered in this case."

Arguably, this consolation prize for Apple also constitutes some form of interference with proceedings in a foreign jurisdiction. From a U.S. perspective, defendants' limited access to ex parte injunction requests in Colombia may appear unfair. But if that's the law in Colombia, it might be appropriate to defer to that country's legislature, given that the U.S. proceedings aren't affected. And it's hard to see how that part of Apple's motion would satisfy the standard for emergency motions in the Eastern District of Texas, which the antisuit part failed to do.

Whether Apple will get any mileage out of the provision of those documents to its Colombian counsel is doubtful.

If Apple wants to sell 5G iPhones and iPads in Colombia again, it either has to successfully appeal in Colombia--or take a license, which will be the outcome anyway (the question is just when and on what terms).

Finally, let me show you the court order:

https://www.documentcloud.org/documents/22122790-22-07-28-edtx-376-order-denying-in-part-apples-emergency-motion

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Qualcomm, Samsung sign seven-year extension of license agreement: possibly first major patent license to cover 6G

Qualcomm has just announced that is "strategic partnership with Samsung Electronics Co., Ltd." has been extended through the end of 2030. The patent license, which is a key part of the deal besides collaborations related to Qualcomm's Snapdragon platforms, will cover "3G, 4G, 5G and upcoming 6G mobile technology." This may very well be the first major patent license agreement to cover patents that will be essential to the future 6G standard that is being developed.

In early 2018, these two parties announced a five-year extension, which would have expired by the end of this calendar year. At the time, there was considerable risk of litigation. The Korean Fair Trade Commission (KFTC) was investigating Qualcomm's business practices, which presumably had to do with complaints by Samsung and/or LG. In 2017, Samsung filed an amicus curiae brief in support of the U.S. Federal Trade Commission (FTC) that leveled some of the same accusations of monopoly abuse at Qualcomm that Apple was making at the time. Yet they overcame their differences.

The renewal with Samsung is a major success for both Qualcomm's chipset division and its licensing business. It strengthens Qualcomm's position vis-à-vis other licensees--above all, Apple. The 2019 Qualcomm-Apple settlement was borne out of necessity: Apple needed 5G chips, and didn't believe it could rely on Intel to deliver high-quality 5G chips in time. Apple then acquired Intel's baseband processor division. There may or may not be delays with the development of Apple's own 5G baseband chip, but in any event Apple wants to become independent from Qualcomm's chips. If and when that happens, Qualcomm is still going to want to get paid for the use of its intellectual property in wireless standards.

Qualcomm executives have criticized Apple's policy positions on standard-essential patents (SEPs) on several recent occasions, sometimes highlighting the stark contrast between Apple's positions on FRAND royalty rates for SEPs and its app tax. Ericsson apparently intends to raise the same issue at the December trial in the Eastern District of Texas.

In a hypothetical future FRAND dispute between Qualcomm and Apple, the most comparable license agreement for the courts in different jurisdictions to consider will most likely be the one with Samsung that Qualcomm announced today.

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Portuguese consumers file antitrust class actions against Apple and Google over their 30% app tax, seeking $200M: fifth country after U.S., UK, Australia, Netherlands

Today the Hausfeld law firm--the global leader in the recovery of antitrust damages--announced that "[c]ollective competition claims [i.e., antitrust class actions] against Apple and Google have been filed with the Portuguese Competition Court with a view to recovering compensation of up to €198 million total on behalf of 6.5 million Portuguese consumers and businesses who made purchases of apps or digital content, services and subscriptions within apps on both Apple’s iOS and Google Android devices."

This makes the westernmost European country the fifth jurisdiction in which the world in which consumer class actions have been brought against Apple and Google over their infamous 30% app tax. The following earlier-filed cases are pending in four other jurisdictions:

• United States:

  • Pepper v. Apple: The Pepper case (official caption: In Re Apple iPhone Antitrust Litigation) in the Northern District of California was filed in 2011. Judge Yvonne Gonzalez Rogers dismissed it, but was overruled by the Ninth Circuit and, ultimately, the Supreme Court. (There already was a class action of that kind in the late 2000s, but it went nowhere.)

  • Carr v. Google (PDF) and Bentley v. Google (FOSS Patents post) are class actions in the same district that were brought in 2020, shortly after Epic Games v. Google. In mid-2021, 36 U.S. states filed a lawsuit against Google over its Google Play terms, and all those Google cases are proceeding in sync.

• United Kingdom:

  • Dr. Rachael Kent v. Apple Inc. and Apple Distribution International Ltd is a British case that passed the Competition Appeal Tribunal's legal and factual plausibility test about a month ago. The plaintiff class (from which UK consumers can opt out, while foreign consumers who were harmed in the UK can opt in) compromises approximately 19.6 million Apple device users and alleges "aggregate losses of between £621 million [US$747 million] and £1.7 billion [US$2.5 billion]."

  • Elizabeth Helen Coll v. Alphabet Inc. and Others is the parallel consumer class action against Google. At a hearing last week, the Competition Appeal Tribunal certified an opt-out class of 19.5 million Android device users seeking redress of up to 920 million UK pounds (now approximately US$1.1 billion).

• Australia:

  Specialized class-action law firm Phi Finney McDonald, with support from litigation funder Vannin Capital, brought cases last month against

  • Apple (law firm's webpage, litigation funder's webpage) and

  • Google (law firm's webpage, litigation funder's webpage).

  Those lawsuits assume that out of 20.6 million smartphones in Australia, 55% are iPhones and 45% are Android devices.

• The Netherlands:

  • Against Apple, there are two different Dutch class actions. One of them--brought by the App Stores Claims Foundation ("stichting app stores claims")--specifically represents Dutch consumers while the other--brought by the Consumer Competition Claims Foundation--seeks approximately $5 billion on behalf of EU citizens (even including those outside the Netherlands).

  • The App Stores Claims Foundation is also suing Google and seeking a total of approximately 1 billion euros (in the total of the Apple and Google cases, but limited to Dutch consumer claims). What makes that initiative interesting is that it's chaired by Dutch Internet entrepreneur Alexander Klöpping, represented by Hausfeld, and funded by Fortress Investment, an investment firm with which Apple settled various patent cases last year.

  The App Stores Claims Foundation informs on its website that no agreement with Apple was reached, so the proceedings have entered the next stage. With Google they're apparently still talking, but I doubt that a deal will materialize. So both cases will have to proceed to trial.

And now there's the new pair of Portuguese class actions. The initial plaintiff and proposed class representative for 2.9 million App Store users and 3.6 million Google Play Store users is Fabrizio Esposito, Assistant Professor in Private Law at Lisbon-based NOVA School of Law. The J+Legal firm represents Apple customers while Cardigos represents Android users. The Portuguese firms are being supported by Hausfeld and Spanish law firm Eskariam, who have significant experience with class actions under EU competition law.

We'll see what country will become the sixth in which consumers bring class actions against Apple and Google over their app tax regime.

All those consumer class actions are a serious threat to Apple, which doesn't really care about whether developers feel treated fairly as Tim Cook's deposition at last year's Epic Games v. Apple trial showed, but which does want to be loved--if not worshipped--by consumers. Now imagine a scenario in which at least some of those class actions succeed and many millions--potentially hundreds of millions--of Apple customers worldwide receive letters informing them of the fact that Apple has been found by the courts to have illegally overcharged them, and has been ordered to refund the excessive parts of those App Store charges. It would be devastating--the modern-era equivalent of a medieval pillory.

Google won't like it either, but most Android devices are not made by Google itself, and consumers would still use Android as well as Google's search engine. But Apple's brand would suffer greater damage.

The problem for Apple and Google is that it wouldn't even look a lot better if they settled. Consumers would still receive those letters notifying them that Apple and Google were sued for having overcharged end users, and in that hypothetical scenario would have agreed to make payments.

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Chief Judge of Western District of Texas does Chief Justice Roberts's bidding: patentees now have less than 10% chance of given case being assigned to Judge Albright

Judge Alan Albright managed to attract roughly a quarter of all U.S. patent infringement complaints to the Waco division of the United States District Court for the Western District of Texas. Without a doubt, plaintiffs went there for the combination of the following two factors:

• Many large technology companies have operations in that district that weigh against a transfer to another venue under TC Heartland.

• By filing a case with the Waco division, plaintiffs knew for certain that a case was going to be assigned Judge Albright, a former patent litigator--even though he sometimes held trials in nearby Austin.

"Judge-shopping" is what its critics called it. Its days were numbered when the Judicial Conference under Chief Justice John Roberts called for change. Yesterday, Chief U.S. District Judge Orlando Garcia entered a standing order that says this:

Upon consideration of the volume of new patent cases assigned to the Waco Division and in an effort to equitably distribute those cases, it is hereby ORDERED that, in accordance with 28 U.S.C. § 137, all civil cases involving patents [...], filed in the Waco Division on or after July 25, 2022, shall be randomly assigned to the following district judges of this Court until further order of the Court.

There are 12 judges on the list: the Chief District Judge himself, Judge Albright, and ten other judges.

The first question I asked myself when I saw that orders is: why only Waco? Wouldn't it be more principled to say that all patent cases filed in that district would be randomly assigned?

The problem of a disproportionate number of cases being assigned to a single judge was specific to only the Waco division. But if the cases filed in Waco are randomly distributed, and assuming that the number of cases filed with the other divisions combined is going to be small, yet greater than zero, it actually means that Judge Albright will get fewer patent cases assigned to him than his colleagues. That is discriminatory.

With a pool of twelve judges, it's practically impossible that patent holders will be equally pleased with the results they are going to achieve in that district as they have been in recent years. Maybe a couple of judges will have a similar mindset as Judge Albright, and will preside over patent cases with comparable verve, but not all eleven of them.

Wouldn't it have been sufficient to identify a pool of, say, three or four judges with a strong interest in patent law? In that case, there would be a greater degree of predictability.

It is a key characteristic of the U.S. judiciary that all federal district judges are generalists. They may hear a criminal case one day and a patent case the next day. There are "hotspots" where each judge gets at least a few patent cases assigned per year, and Judge Rodney Gilstrap of the United States District Court of the Eastern District probably has a docket that overwhelmingly consists of patent cases. (And he's the Chief Judge there.)

The U.S. judiciary is an outlier on the global stage, where the other major jurisdictions do have specialized court divisions that focus on patent law. In Dusseldorf and Munich, there are three patent-specialized divisions each, and two in Mannheim. In Barcelona, there are three trade judges who hear patent cases. There are patent-specialized judges in the UK, the Netherlands, France, China, Japan, and some other places. At the European level, the Unified Patent Court (UPC) will go into operation next year.

Patent law is a complex field, it has some unique characteristics, and it helps when judges acquire a feel for technical issues. Those are only some of the strong arguments in favor of specialization. The USITC is a great example.

Some cases that would have been filed in the Western District of Texas before yesterday are now going to be brought in other U.S. districts, such as the Eastern District of Texas or the Eastern District of Virginia ("rocket docket"). But some patent holders may conclude that the best strategy is to seek injunctions in Europe (of course, provided that they hold European patents).

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BioNTech, Pfizer file complaint against CureVac in District of Massachusetts, seeking declaratory judgment of non-infringement of three mRNA patents

This is the first time for FOSS Patents to report on a life sciences case--a first that is warranted by the extraordinary significance of the related dispute. Less than three weeks after CureVac, a biopharmaceutical company headquartered in Germany and funded by (inter alia) SAP co-founder Dietmar Hopp, announced its Dusseldorf patent infringement action against BioNTech over the alleged use of foundational mRNA-related patents in the latter's COVID vaccine (named Comirnaty), BioNTech and its strategic partner Pfizer filed a declaratory judgment action in the District of Massachussetts taking aim at three of CureVac's U.S. patents.

While BioNTech and Pfizer need no introduction anywhere in the civilized world, there as a time when politicians were bullish about the prospects of CureVac delivering one of the first COVID vaccines--if not the first. Then-President Trump even offered a funding bonanza to CureVac--in exchange for which the company would have had to relocate to the U.S. at least with respect to its work on a coronavirus vaccine. Alarmed by those overtures, the German federal government became minority shareholder, and the European Commission--together with the European Investment Bank--entered into a financing agreement with CureVac. In the end, CureVac wasn't among the winners of the race, though the company is working on a next-generation COVID vaccine that may ultimately be approved.

The question on which it is still too early for me to take a position is whether CureVac is a "sore loser" who is now attempting a patent shakedown of the glorious winner of the race to the first truly effective COVID vaccine--or whether BioNTech was "standing on the shoulders of giants" from the get-go, in which case CureVac would clearly be entitled to substantial compensation. It is potentially a multi-billion dollar question, and it would be wrong to harbor prejudice toward one party or the other, as the idea of patent law is not to reward success in the marketplace but to incentivize research and development. It's not a ball game where you just count the goals. It's a lot more complex and nuanced than that. Simply put, if CureVac made a wrong call in its COVID vaccine development, but had the right vision before BioNTech even started to develop Comirnaty, then its case may be perfectly meritorious and patent law may then be more meritocratic than the marketplace. We just don't know yet.

Here's the U.S. complaint:

https://www.documentcloud.org/documents/22121278-22-07-25-pfizer-biontech-dj-non-infr-complaint-v-curevac

CureVac's German complaint is not seeking an injunction--just fair compensation. CureVac emphasized that it never intended to disrupt the development or delivery of COVID vaccines in the midst of a pandemic, and that the company waited even with its complaint for monetary relief until this point. That makes sense.

At the same time, Pfizer and BioNTech have made a strategically very smart move, too:

• With its narrative that portrays CureVac as a sore loser (without using that term), the complaint is directed not only at the court of law (and the jury to be selected further down the road) but also at the court of public opinion.

• Pfizer is headquartered in New York but has a home-field advantage anywhere in the United States, and BioNTech has one of its two U.S. offices in the Bay State--and that's where CureVac's U.S. office is based, so it would be hard for CureVac to get the case transferred to another district.

  As a cross-jurisdictional patent litigation watcher I don't agree with CureVac's choice to bring only a Dusseldorf case. If CureVac had brought the first U.S. case as well, it could have tried to pick the most favorable district. Some of the preferred districts for patent holders (Eastern District of Texas, Western District of Texas, Eastern District of Virginia) would probably not have been defensible choices as they are merely target markets for Pfizer and BioNTech just like, say, the Southern District of Alabama. But CureVac could have sued in the Southern District of New York (Pfizer HQ), which has recently also been a pretty good venue for patent holders to assert their rights, or in the District of Delaware (Pfizer is a Delaware corporation, as are possibly other parties).

• Pfizer and BioNTech are seeking declarations of non-infringement, not of invalidity. That makes sense for two reasons: U.S. juries are very hard to persuade of invalidity contentions, and when you are already being sued in Germany and don't know whether the patentee may at some point throw in an additional prayer for injunctive relief, any determinations by foreign courts that confirm the validity of the patents-in-suit will dissuade a German court from staying the infringement proceedings pending a local invalidity action. Should Pfizer and BioNTech have reasonably meritorious invalidity arguments, they might instead file for PTAB inter partes reviews.

At this point it looks like Pfizer-BioNTech is the more sophisticated side here, which may be attributable to Pfizer's ample experience more than anything else. But litigation tactics won't prove decisive in the event that CureVac truly did pioneer mRNA-related technologies relevant to mRNA-based COVID vaccines.

It also remains to be seen whether CureVac will enforce its intellectual property rights against other COVID vaccine makers, which would be the logical thing to happen if CureVac's patents are truly mRNA-essential, and whether other companies holding mRNA-related patents will sue BioNTech and/or Pfizer.

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Xiaomi apparently took codec patent license from VoiceAge EVS: Munich court confirms voluntary dismissals

Munich makes patent holders money.

The same apparently applies--credit where credit is due--to the Wildanger patent litigation boutique.

On May 25, the Munich I Regional Court's Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann; side judges: Judge Dr. Hubertus Schacht and the rapporteur in these cases, Judge Benjamin Kuttenkeuler) heard two VoiceAge EVS v. Xiaomi standard-essential patent (SEP) infringement cases. Decisions were scheduled to be announced last Thursday (July 21) and in early August.

Yesterday evening a spokeswoman for the Munich I Regional Court informed me that both announcements had been canceled as a result of voluntary dismissals. There was a similar pattern last year in some VoiceAge EVS v. Apple cases. Just like then, there is no room for reasonable doubt that this means Xiaomi has taken a SEP license from VoiceAge EVS, as had eight other major smartphone makers before it. I believe that was the rational thing for Xiaomi to do. Well over half the market has a license to those patents.

On the two patents-in-suit, VoiceAge EVS had previously prevailed over HMD in what is an unprecedented winning streak (six out of six). There was no indication at the May trial that VoiceAge EVS wasn't going to win again, which would have extended the streak to eight out of eight, but they're in the licensing business and not competing for an entry in the Guinness Book of Records.

Next month, the Munich court is scheduled to announce at least one decision in a VoiceAge EVS v. OPPO case. We'll see whether history repeats itself.

HMD continues to hold out--and failed to dissuade the Seventh Civil Chamber from ordering another injunction by recently arguing that an injunction was disproportionate as it would cause irreparable harm while disputing that it needed to implement the patented techniques in the first place. How's that for some self-contradiction?

The fact that VoiceAge EVS has signed up another high-profile licensee is also a major success for the law firm I mentioned further above: Wildanger, which also won the Munich injunction against Ford that--based on the sequence of events--must have played a key role in the iconic U.S. car maker's decision to take an Avanci patent pool license. And this month, Wildanger effectively won a Munich non-SEP trial against Pokémon GO maker Niantic (a Google-Nintendo joint venture represented by Quinn Emanuel): Judge Dr. Zigann made it clear that the defendant was on the losing track and should take a license to conserve court and party resources. A decision in that case has been scheduled for August 18 (like the VoiceAge EVS v. OPPO case I mentioned before).

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U.S. court dismissed Lenovo-Motorola's FRAND, antitrust, declaratory-judgment case against IPCom; Deutsche Telekom appeals dismissal of Mannheim 'antitrust' complaint against IPCom

Germany-based patent licensing firm IPCom is technically facing a two-front antitrust war over its monetization of standard-essential patents (SEPs). But there's no such thing as a war without functional weapons, and neither a U.S. case brought by Lenovo and its Motorola Mobility subsidiary nor Deutsche Telekom's German complaint have impressed the courts of law:

• Earlier this month, Judge Edward J. Davila of the United States District Court for the Northern District of California granted IPCom's December 2021 motion to dismiss an amended complaint by Lenovo and its Motorola Mobility subsidiary that alleged breach of contract, monopolization in violation of U.S. antitrust law (Sherman Act Sec. 2), and sought a declaratory judgment of non-infringement of two IPCom patents. I'll show you the documents further below.

  Judge Davila reached that decision for jurisdictional reasons: while IPCom was--and still is--asserting patents against Lenovo in other jurisdictions (UK, Germany), IPCom's contacts with the NorCal forum fall far short of what would establish personal jurisdiction. Consistently with that position, IPCom didn't even bring compulsory counterclaims to the DJ claims--and the court didn't even reach the merits of Lenovo's various claims.

  Lenovo hadn't explicitly requested leave to amend. The dismissed complaint was already an amended one--in fact, the amended came just two days before the order. If Lenovo had presented a theory that would have warranted another amendment, it would have been allowed to do so until July 22, but it appears that Lenovo is either giving up or, more likely, will appeal the dismissal to the Federal Circuit.

  Lenovo is represented in that action by the same law firm--Sheppard Mullin--that has just been on the receiving end of another dismissal: tire manufacturer Continental was definitively denied a rehearing en banc of its Fifth Circuit appeal of the dismissal of its "antitrust" complaint against the Avanci patent pool and some of its licensors (Nokia, Sharp, Optis).

• Yesterday the press office of the Karlsruhe Higher Regional Court confirmed to me that Deutsche Telekom has filed a notice of appeal of the Mannheim Regional Court's rejection of its "antitrust" complaint against IPCom in late May. The appellate case number is 6 U 204/22. I don't see that case going anywhere.

When a licensing firm has to fend off apparently meritless FRAND/antitrust complaints brought by large operating companies on two continents, the question is who's actually "trolling" whom...

Finally, the documents I promised further above:

The last version of Lenovo's dismissed complaint:

https://www.documentcloud.org/documents/22121155-22-07-06-amended-lenovo-v-ipcom-dj-complaint

IPCom's motion to dismiss:

https://www.documentcloud.org/documents/22121154-21-12-29-ipcom-motion-to-dismiss-lenovo-complaint

The order granting IPCom's motion to dismiss:

https://www.documentcloud.org/documents/22121153-22-07-08-order-granting-ipcom-motion-to-dismiss-lenovo-complaint

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Early-stage venture investor says Apple's app tracking 'might bear as much blame for a recession as inflation', harms small and medium-sized businesses

As I've said on other occasions, Apple used to be about creative destruction, but by now is mostly about the non-creative destruction of business models through its abuse of market power. On Thursday, Alex Gurevich--the managing director of early-stage fund Javelin Venture Partners--raised a fundamental concern in a Twitter thread that deserves a closer look. Mr. Gurevich noted the "massive adverse effects" that small and medium-sized businesses (SMBs) as well as "innovative companies everywhere" suffer from Apple's app tracking rules, which "might bear as much blame for a recession as inflation":

1) I'm still surprised by the lack of public discourse around the impacts of @apple's iOS 14 changes - all in the name of privacy - that are leading to massive adverse effects to SMBs and innovative companies everywhere. They might bear as much blame for a recession as inflation.

— Alex Gurevich (@alex_gurevich) July 21, 2022

Mr. Gurevich then explains that "[o]nline brands, small merchants, local SMBS, and the like have been able to leverage [Facebook]'s micro targeting to compete and acquire customers in a capital efficient way." But as a result of Apple's changed policies, customer acquisition costs (CACs) "have doubled across the board, leading to massive drops (sometimes as much as 60%) in revenue for SMBs. In this context, Mr. Gurevich points to a Meta (Facebook) webpage on the impact of Apple's privacy update on small businesses, but later he also references a Harvard Business Review article.

The fourth part of the thread puts this into a wider economic context:

4) This has massive adverse effects on the economy as a whole. SMB's are 44% of GDP and 64% rely on online targeting. A 50-60% revenue drop is massive for such a large swath of the economy. Could be leading to as much recessionary pressure as inflation and other macro factors.

— Alex Gurevich (@alex_gurevich) July 21, 2022

My initial assessment is that Mr. Gurevich is indeed onto something, and I absolutely agree that it is in the interest of the economy at large not to let Apple get away with this. However, there is one sentence in the tweet I just quoted that I consider an overstatement:

"A 50-60% revenue drop is massive for such a large swath of the economy."

"A 50-60% revenue drop is massive" for everyone, not just SMBs. But the "large swath of the economy" that he refers to (SMBs, which account for 44% of GDP) doesn't experience that drop across the board. It's not an average, or a median. It's unclear how many companies are hit to that extent.

That inaccurate wording (which is attributable to Twitter-style brevity) changes nothing about the facts that

• companies of all sizes are impacted,

• the SMB sector is usually a growth and job engine,

• many SMBs are affected, some of them even to the extent of a 50-60% revenue drop, and

• there are companies that are forced out of business by such dynamics, and other must give up their independence (see this example or another Twitter user's observation of educational technology companies becoming unsustainable).

I'd like to add that many online companies--including app makers--are experiencing a terrible squeeze as their user acquisition costs go up while their revenues from selling their so-called ad inventory go down.

It's definitely not a stretch to express major macroeconomic concerns over all of that.

One common misconception is that the impact of Apple's app tracking policy is limited by the fact that there are even more Android devices in use. This here is a particularly good response I found on Twitter:

How they are unaffected if budgets switch to compensate it! Ads there are getting more expensive too.

— Borat Zimmerman (@mesak1) July 22, 2022

It's not just that Android ads are "getting more expensive." There was an immediate meteoric impact on Android ads when Apple's ATT rules took effect. On some ad networks it was even impossible for a few weeks to start new campaigns because there was so much demand.

Also, let's never forget that the average spending power per iOS user is far greater.

Then there are some Apple apologists who argue that it's a good thing if consumers buy only what they really need, and that product makers should simply adjust to the situation and/or make better products. The best response to that one that I've seen so far is this:

Not a lot of marketers in this thread I see…those saying that products should just be better are naive& obv. don’t understand the landscape. A great product can be buried by the sheer mass of the internet. Even the most innovative need an efficient CAC.

— pt (@ltltrb) July 22, 2022

It's simply not realistic to assume that the world of commerce is totally meritocratic and the best products will get all the word of mouth they need.

Some harp on the theme of Meta/Facebook being no better than Apple--just another monopolist that SMBs would depend on. But it doesn't make sense to assume that each Big Tech player uses its market power in equally problematic ways. Apple is the most arrogant and aggressive abuser of its power, followed by Google. There are reasons to assume that Facebook is fundamentally more benevolent. I remember an interview in which even Senator Ted Cruz (R-Tex.) was talking about his experience in discussing tech policy issues with Big Tech CEOs and gave Mark Zuckerberg credit for being receptive to certain concerns--and constructive.

From a competition policy point of view, I'm one of many people who think--and I already thought so at the time those deals were announced--that Facebook shouldn't have been allowed to acquire Instagram and WhatsApp. But that's water under the bridge, and didn't really hurt SMBs. So I also concur with the following tweet by Mr. Gurevich:

7) .@Meta is no saint of a company, but we need to acknowledge the positives the micro targeting model has had for the SMB and innovation economy over the past decade plus.

— Alex Gurevich (@alex_gurevich) July 21, 2022

Some people may gloat over how Meta/Facebook was impacted by this. But that's a case of cutting one's nose to spite one's face. In the end, the economy at large depends on innovation, fair competition, and healthy SMBs. I don't care how many or how few Hawaiian islands Mr. Zuckerberg can afford--but I do care about Facebook's ability to serve companies of all sizes, especially SMBs.

On Thursday, Snap Inc. (Snapchat) announced its Q2 figures, and its Investor Letter accurately notes that "[p]latform policy changes have upended more than a decade of advertising industry standards."

In a way, Snapchat "deserved" it as its CEO attempted to help Apple on the last day (apart from closing argument) of last year's Epic Games v. Apple antitrust trial. But again, I refuse to cut my nose to spite my face.

This tweet promotes a free 14-day trial to access an expert Q&A platform, but I'll share it nevertheless because the highlighted part is really instructive:

First-hand example of how Apple’s privacy changes drastically impacted advertising tracking for $SNAP $META TikTok, etc.

Free 14 Day Trial (no credit card required) to access Stream’s 17,000+ expert interviews on 3,000+ companieshttps://t.co/HsVL3wnfYx pic.twitter.com/u1OPnkYOGc

— Austin Lieberman (@LiebermanAustin) July 22, 2022

The first highlighted answer says:

"[App tracking has] wrecked the whole ecosystem, not just Facebook. Facebook, TikTok, Google, everybody has felt it. I've seen businesses go out of business. I've seen multiple companies go under. I've seen agencies go under jsut because it was such a bold move on Apple's side, and it's fake. All they're doing is keeping the data for themselves to release what it is that they're going to release. It's not about privacy. There's no privacy."

Now, some Apple apologists say that one shouldn't complain about Apple's rules but convince users to allow app tracking. But that's unrealistic as Apple simply doesn't allow it on iOS. Users are systematically scared away from granting that permission to third-party apps, but it sounds rather different when Apple itself requests access to user data:

Apple going full Russell Conjugation here

I personalize, you track across apps, they invade your privacy. https://t.co/w55sVWEb2q

— tobi lutke (@tobi) June 3, 2022

That tweet by Shopify founder Tobi Lutke is spot-on. It's a Russell conjugation type of hypocrisy. Shopify is an excellent example of a big company that's affected by those rules in a way that hurts many small companies: SMBs relying on Shopify to sell products online. The alternative to Shopify or its competitors would basically just be Amazon...

I noted last year that Apple's privacy hypocrisy is also evidenced by the fact that it asks for location data to sell music (even in the Android version of Shazam, an app it once acquired) while Apple didn't let governments use voluntarily-provided location data for COVID tracking purposes.

This tweet correctly explains how Apple leveraged "privacy" for the purpose of monopolization:

Because Apple led with a privacy PR campaign to woo the media with an obscure privacy mantra, then proceeded with its plan to eliminate competition, wall-in users, and enjoy an effective monopoly.

— Annalisa Fernandez (@BecauseCulture) July 22, 2022

Apple's app tracking rules are structurally similar to its long-standing practice of "Sherlocking."

There was an early attempt in France to thwart Apple's plan. But what happened is that the French antitrust authority (Autorité de la concurrence, Adlc) couldn't order interim measures because the country's privacy watchdog effectively vetoed it. That case hasn't been definitively decided yet, and meanwhile Germany's Federal Cartel Office is looking into abusive self-preferencing in connection with app tracking.

Let's come full circle back to the question of whether Apple's ATT rules "bear as much blame for a recession as inflation." There can be no doubt that the economy at large is increasingly suffering from Apple's abuse of market power. Lawmakers, regulators, and the courts of law must combat this problem. Privacy activists and watchdogs must be educated that it's largely a pretext in Apple's case. And it would be good if a renowned economic research institute could undertake to quantify the impact of ATT on the wider economy as well as, more specifically, on SMBs and on certain categories of startups.

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Fifth Circuit denies Continental's SECOND petition for rehearing en banc of its failed 'antitrust' case against Avanci, Nokia, others over automotive patent licensing

A couple of weeks ago, Continental brought--which is rather unusual--a second petition for rehearing en banc, desperately trying to revive its "antitrust" action against patent pool firm Avanci and some of its licensors (Nokia, Sharp, Optis). A prior rehearing petition had resulted in a modification of the panel opinion but the same outcome: there is no such thing as a case here.

There were signs of the renewed petition being viewed unfavorably by the United States Court of Appeals for the Fifth Circuit. First, Conti's request for two additional weeks was denied. Second, the Fifth Circuit treated the tireless, tiresome tire company as a nuisance by not even ruling on its modified request for more time (other than denying it as moot--but only after the deadline Conti sought to get extended). Third, unlike in the case of the first petition, the defendants weren't invited to respond.

On Friday (July 22), the renewed petition was formally thrown out "[b]ecause no member of the panel or judge in regular active service requested that the court be polled on rehearing en banc":

https://www.documentcloud.org/documents/22118637-22-07-22-order-denying-contis-2nd-petition-for-rehearing

Two amicus briefs had been filed again, but they didn't cure the deficiencies of the petition.

Apart from a similarly non-promising case in Delaware state court against Nokia, the only thing left for Conti to do in its U.S. litigation campaign against Avanci and its key licensors is to file a petition for writ of certiorari with the Supreme Court. But this case is doomed either way--while the Fifth Circuit panel's original holding that Conti lacked Article III standing went a bit far, the modified opinion affirmed the district court. Under the affirmed decision, Conti lacked antitrust standing and failed to plead Sherman Act claims. The panel opinion 2.0 didn't mention standing explicitly, but whatever the panel meant: Conti is still at least two steps away from even being allowed to begin discovery. And how can Conti tell the Supreme Court that there is a circuit split when the modified panel opinion is unpublished and non-precedential?

A smart company in Conti's place would try to preserve its credibility with the top U.S. court with a view to cases it could actually win, and which might be even more important (for example, there could be legal issues that are relevant to its core business of making rubber tires). Having watched that "case" for three years now (and having voiced skeptical opinions at all stages, though recently I've mostly been bored and annoyed by it), I guess Conti will file for cert and employ the same tactics I've seen from them lately, which means they'll take some sentences out of context. If one looks at the whole picture, Conti's complaint is utterly deficient as a matter of law, and even if--in an alternative universe--they got discovery, Conti could never establish any wrongdoing here.

Conti and its counsel should be grateful to the Fifth Circuit not imposing abuse-of-procedure sanctions.

While Conti is living in the past and appears unwilling to recognize its error, things are moving fast in the real world. Avanci announced that the window for its early-bird licensing terms is closing. Car makers have until August 31 to take a 4G license on the same terms as the very first licensee, BMW. Come September 1, the rate will go up by a third. I'd be surprised if this didn't result in the remainder of the automotive industry taking licenses. No automaker has so far had a benefit from choosing litigation over licensing. Tesla (obvious given near-simultaneous dismissals, though never officially confirmed), Daimler, Ford, and (with respect to an upgrade from 3G to 4G for its volume brands) Volkswagen all ended up taking the one-stop license rather than deal with roughly four dozen individual patent holders. At the moment, a number of standard-essential patent (SEP) assertions by Avanci licensors against Stellantis (Fiat Chrysler, Opel etc.) and Nissan are pending in Munich, but the rational thing would now be for those companies to take the license ahead of the rate increase.

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USPTO-WIPO agreement on resolution of SEP disputes won't truly 'enhance the efficiency of licensing of standard[-]essential patents'--institutional self-importance meets Big Tech's SEP devaluation agenda

Normally, neither the World Intellectual Property Organization (WIPO) nor the United States Patent & Trademark Office (USPTO) should advance a patent devaluation agenda. It's plainly inconsistent with those institutions' mandates. But yesterday the USPTO and WIPO issued a press release on an agreement "to partner on dispute resolution efforts related to standard[-]essential patents" that I don't view favorably at this stage.

When President Biden appointed Kathi Vidal, a patent litigator known for her Big Tech ties, to head the USPTO, there was widespread concern in the IP community that she might take initiatives that benefit infringers rather than innovators. With respect to PTAB inter partes reviews, it's too early to tell. With the stroke of a pen she undid some of her predecessor's PTAB rules favoring discretionary denials. We'll see what comes out of the current decision-making process, and it's important that stakeholders on both sides of the debate accept her invitation to submit amicus briefs.

With respect to standard-essential patents (SEPs), three of the Biden Administration's agencies (DOJ, USPTO, NIST) refrained from adopting a policy statement that was heavily criticized by SEP holders (or reinstating an older policy position of that kind). The question is now what the USPTO's partnership with WIPO means.

It could be that in the end it's just bureaucratic activism: governmental agencies like to draw attention to their work on a hot-button issue regardless of whether such work will actually have much of an effect. But there is also the possibility that Director Vidal is indeed pursuing a SEP devaluation agenda, while WIPO just has a "business development" objective with respect to its alternative dispute resolution (ADR) services. As I'll discuss in a moment, it looks like WIPO's SEP ADR initiative isn't going too well.

The press release quotes Director Vidal as saying that "SEP policy is an international issue of international importance." That is correct: SEP licenses are typically global portfolio licenses.

Given that WIPO and the USPTO agree on the international dimension of SEP policy, antisuit injunctions and antisuit damages motions should actually be the number one item on their list. Instead, they leave the heavy lifting to the courts. Case in point, later today (Thursday) Judge Rodney Gilstrap of the United States District Court for the Eastern District of Texas will hold an Ericsson v. Apple motion hearing on Apple's request for an antisuit damages order as the iPhone maker is currently unable to sell 5G devices in Colombia due to a SEP injunction obtained by Ericsson.

There is nothing in the USPTO-WIPO announcement to specificially suggest that WIPO and the USPTO seek to "enhance the efficiency of licensing of standard essential patents" (a quote from Director Vidal's statement) in a balanced fashion. To increase the efficiency of SEP licensing, one needs to tackle the problem of hold-out, which is widespread, and of outlier cases of hold-up. But this is all that the announcement says about the scope of the five-year agreement:

• Cooperate on activities that will lend efficiency and effectiveness to the resolution of disputed standard essential patent matters by leveraging existing WIPO Arbitration and Mediation Center and USPTO resources, and

• Engage in stakeholder outreach to raise awareness of the services provided by the WIPO Arbitration and Mediation Center through joint USPTO-WIPO programs.

The second bullet point is laughable: the stakeholders on both sides of the SEP licensing negotiation table are sufficiently sophisticated to know that WIPO offers arbitration and mediation services. This is not like teaching traffic rules to children.

Toward the end of the press release, WIPO Director General Daren Tang promotes WIPO's ADR services. On WIPO's website I found the following information:

"In recent years, the WIPO Arbitration and Mediation Center (the 'WIPO Center') has administered some 55 WIPO mediation cases relating to FRAND licensing negotiations."

Interestingly, they're not saying anything about SEP arbitration proceedings. The key difference is that arbitration will result in a decision, while mediation is just an attempt to bring parties together. The "Summary of WIPO FRAND ADR case examples" is also just about mediation, and WIPO can't even claim that its mediation efforts actually resolved a single dispute. The first example just "prompted renewed licensing negotiations" between a patent pool and implementers, half of which were Asian companies. The second one is that "IP courts in China have referred ten ICT patent infringement cases to WIPO Mediation. Seven of those cases involved claimants from Europe." And then "a large Asian manufacturer submitted a unilateral request to WIPO Mediation concerning its SEP infringement litigation against a large European SEP holder"

If this was the track record of a private mediator, he or she would find it hard to be hired again.

There are reasons to suspect here that it's not really SEP holders who expect WIPO's ADR services to be of any help to them. It's more like some players on the implementer side hope to be deemed willing licensees based on their requests for WIPO ADR.

Hopefully I'm just being too skeptical and this is more than a scheme to facilitate hold-out and devalue SEPs. In the short term, I actually think an initiative like LIFT--which was announced this week-- is more likely to enhance the efficiency of SEP licensing. Gustav Brismark and Bowman Heiden discussed it in an IAM article, Building incentives to overcome the SEP licensing prisoner’s dilemma (paywalled).

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Google's new European in-app payment rules insufficient to comply with DMA: overt discrimination against game makers, excessive app tax imposed on everyone

It only takes a look at the first sentence of Google's blog post announcing new Google Play billing rules for Europe to discern disingenuity:

"Google has been a leader in platform openness for more than a decade, allowing for multiple app stores and avenues of distribution on Android, and piloting user choice billing."

• Compared to Apple, Google is a "leader in platform openness" indeed (for example, with respect to mobile browsers or--see my previous post--NFC payments), but that's like Greenland describing its climate as the warmest in a region where the only alternative would be Greenland.

• Those "multiple app stores" can't effectively compete with the Google Play Store. That's why Google's in-app payment rules are subject to regulatory scrutiny and antitrust litigation at roughly the same level as Apple's. Two years ago, Epic Games sued Apple and Google on the same day; there are near-parallel consumer class actions against Apple and Google's app stores in the UK; and in Australia, such cases were brought simultaneously.

• And, finally, "user choice billing" came into being because of regulatory and legislative pressure, not because Google wanted to "pilot[]" something. The term User Choice Billing is revealing: users already had the choice betwen different payment methods; what's needed is Developer Choice.

I do, however, agree with the gist of the second sentence--change is coming:

"[T]he recent passage of the Digital Markets Act will require Google Play and other industry players to adjust their current operating model for users in the European Economic Area (EEA)."

It's just that Google will have to do a lot more. If the only objective is to come across as more constructive and cooperative than Apple, yesterday's announcement may do the job, especially since Google is indeed acting "in advance of the DMA's effective date." But at least for now there is no indication of Google truly intending to avoid a clash with the European Commission over the question of whether it complies with the DMA. There are two identifiable issues: discriminatory treatment of app categories, and excessive charges.

Without providing any justification, Google says that games will not be allowed to offer alternative in-app payment methods:

"Google Play’s billing system will continue to be required for apps and games distributed via Play to users outside the EEA, and for games distributed to users within the [European Economic Area]." (emphases added)

There is no basis in the DMA for treating games differently. I've run a full-text search on the 193 pages of the DMA (Council version, which was also adopted by the European Parliament), and terms like "game", "gaming", or even "entertainment" don't occur even once. But "discriminatory" appears seven times (plus one occurrence of "discriminating" and one of "discrimination").

According to BusinessofApps, Google Play game revenues amounted to $37.3 billion in 2021, while non-game app revenues totaled $10.6 billion. So Google allows alternative payment methods only for the kinds of apps that account for less than a quarter of Google Play revenues.

On iOS, the split is different: $32.8 billion for non-games (39%) v. $52.3 billion for games (61%).

Google argues that its terms ensure its continued ability "to keep people safe on [Google's] platforms and invest in Android and Play for the benefit of the entire ecosystem." There is no reason for which alternative payment systems are less safe when used by games than by other apps. As for Google's ability to invest in Android, it has of course chosen a different business model than Apple. Google doesn't sell huge numbers of devices (though its Pixel business is growing); it monetizes the platform in various ways, one of which is Google Play. But that doesn't justify discrimination either.

Even non-game apps won't practically benefit from Google's new European in-app payment terms.

As I've already discussed in connection with Google's similar approach in South Korea, alternative payment systems that are taxed at the same rate (when considering the cost of using third-party payment systems like Stripe) don't open up the market in the slightest.

In the EU, that discount is 3%, which is also what Apple is trying to get away with in the Netherlands.

There's a clear pattern: Apple and Google ("Goopple") want to go into any rate-setting litigation with a maximum demand. So they impose the same app tax as before by merely reducing their commissions by what third-party payment processors charge. And they want to delay, delay, and delay.

The DMA won't change everything overnight. The Commission will have to designate gatekeepers. And there won't be public enforcement against everyone at the same time. Google may be hoping that it can just do enough that enforcement will focus on Apple for as long as possible.

Like any law, the DMA is interpretable, though it is a lot more detailed than similar legislation in other places. In Korea, just a few sentences were added to the country's Telecommunication Business Act. The DMA--including recitals--is almost 200 pages long.

Article 6(4) of the DMA focuses on app stores:

The gatekeeper shall allow and technically enable the installation and effective use of third party software applications or software application stores using, or interoperating with, its operating system and allow those software applications or software application stores to be accessed by means other than the relevant core platform services of that gatekeeper. The gatekeeper shall, where applicable, not prevent the downloaded third party software applications or software application stores from prompting end users to decide whether they want to set that downloaded software application or software application store as their default. The gatekeeper shall technically enable end users who decide to set that downloaded software application or software application store as their default to carry out that change easily.

The gatekeeper shall not be prevented from taking measures to ensure that third party software applications or software application stores do not endanger the integrity of the hardware or operating system provided by the gatekeeper, provided that such measures go no further than is strictly necessary and proportionate and are duly justified by the gatekeeper.

Furthermore, the gatekeeper shall not be prevented from applying measures and settings other than default settings, enabling end users to effectively protect security in relation to third party software applications or software application stores, provided that such measures and settings go no further than is strictly necessary and proportionate and are duly justified by the gatekeeper.

For third-party app stores this means that "Goopple" are allowed to take security measures, but those must not go beyond what is "strictly necessary and proportionate and [...] duly justified by the gatekeeper." The way Android currently treats sideloading and alternative app stores is clearly unjustified, disproportionate, and not necessary in its current form.

What the statute does not say is that gatekeepers are not allowed to charge app developers a cent. The DMA does, however, make it clear that any "general conditions of access" and other business terms must be "fair, reasonable, and non-discriminatory" (FRAND). In recital 62, the DMA specifically discusses this with a view to app stores:

"[...] In particular, gatekeepers which provide access to software application stores are an important gateway for business users that seek to reach end users. In view of the imbalance in bargaining power between those gatekeepers and business users of their software application stores, those gatekeepers should not be allowed to impose general conditions, including pricing conditions, that would be unfair or lead to unjustified differentiation. Pricing or other general access conditions should be considered unfair if they lead to an imbalance of rights and obligations imposed on business users or confer an advantage on the gatekeeper which is disproportionate to the service provided by the gatekeeper to business users or lead to a disadvantage for business users in providing the same or similar services as the gatekeeper. The following benchmarks can serve as a yardstick to determine the fairness of general access conditions: prices charged or conditions imposed for the same or similar services by other providers of software application stores; prices charged or conditions imposed by the provider of the software application store for different related or similar services or to different types of end users; prices charged or conditions imposed by the provider of the software application store for the same service in different geographic regions; prices charged or conditions imposed by the provider of the software application store for the same service the gatekeeper provides to itself. [...]"

There will be a foreseeable fight over what level of an app tax is FRAND. The Goopple duopolists have a history of making and supporting public statements in connection with standard-essential patents (SEPs), such as Apple complaining about "royalty stacking" even though its total iPhone SEP royalty spend is roughly 2%, and arguing that the royalty base should be capped. The fight over what constitutes a FRAND app tax appears inevitable, and it will likely be the biggest and hardest-fought FRAND dispute in history.

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